NEWSLETTERS

Newsletter May 2008 No.15

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Employer’s liability for suicide – Killian O’Reilly

The House of Lords ruled in February 2008 that an employer must pay compensation to the widow of a former employee after her husband had committed suicide having sustained serious head injuries in a workplace accident.

In June 1996 Thomas Corr was employed as a maintenance engineer for IBC Vehicles and worked on a manufacturing line for panels for vehicles. While carrying out maintenance on an automated arm for lifting panels, the machine picked up a metal panel and hit Mr Corr on the right side of his head, severing most of his right ear. The accident left Mr Corr disfigured and he suffered from loss of balance, mild tinnitus, severe headaches and had difficultly sleeping. After the accident, Mr Corr also became depressed and this depression gradually worsened, which resulted in Mr Corr committing suicide in May 2002.

In 1999, Mr Corr had commenced proceedings for damages for both his physical and psychological injuries suffered as a result of the accident. After his death, his wife continued with the claim and also brought a claim on her own behalf for the financial loss she suffered from her husband’s death.

The High Court found in Mrs Corr’s favour for the case her husband had originally brought and awarded her £82,520 in damages but her own claim was rejected because suicide was not reasonably foreseeable resulting from the accident. She appealed this decision to the Court of Appeal, who ruled that she was entitled to compensation for her husband’s suicide. Subsequently, IBC Vehicles appealed this decision.

The Law Lords ruled unanimously in Mrs Corr’s favour. They held that IBC Vehicles had breached their duty of care to Mr Corr, which caused the accident, his resulting injuries and ultimate suicide. The Law Lords found that it was now known that between one in six and one in ten people who suffer from depression commit suicide. The state of medical knowledge today is such that it is now understood suicide can be an involuntary act if a person suffers from depression.

The Law Lords found that if it was not for the employer’s negligence, the accident at work would not have happened, Mr Corr would not have become clinically depressed and he would not have attempted suicide.

On the matter of contributory negligence, the Law Lords decided by majority that there was no contributory negligence on the part of Mr Corr for his death. On the issue as to whether the psychiatric injury was reasonably foreseeable, Lord Scott reiterated the general rule: if it were reasonably foreseeable that physical injury would be caused by the negligence, a defendant cannot limit liability by contending that the extent of the injuries could not be foreseen. He held that the same principle should apply to psychiatric injury.

 


Health and Safety Guidelines for Directors from HSA – Helen H. Whelan

The Health and Safety Authority recently published guidance for Directors and Senior Managers on their responsibility for workplace safety. These guidelines are intended to explain the responsibility of Directors and Senior Managers for health and safety in the workplace following the introduction of the Health, Safety and Welfare at Work Act 2005 (“the Act”).

The Act places a duty of care on all employers whether they are companies, sole traders or partnerships to manage and conduct their business so that their employees have a safe work environment. In turn, employees are required to work in a safe and responsible manner and co-operate with their employer in complying with the Act.

The importance of health and safety in the workplace is highlighted by two recent reports. In 2007, 67 people died in workplace accidents and according to the HSA, there was over 7,000 non-fatal injuries reported to their offices. Recently the Department of Enterprise, Trade & Employment commissioned a report that estimated that €3.6 billion was lost to the Irish economy due to work-related accidents and ill health.

Boards of Directors as part of their overall responsibility for good corporate governance fulfil their responsibilities for health and safety by setting appropriate objectives and targets for management. It is the job of the management team to determine how best to ensure proper practice in health and safety.

Each of the Directors, Officers and Managers of a business who authorise or direct work activities must understand their individual responsibility and their role in governing health and safety in the workplace. Senior management should insure that Board members who do not direct or authorise work activities, possess a clear understanding of the key health and safety issues for the business and are continually appraised as to issues which are likely to arise. In the event of a serious breach of the Act, Directors may be prosecuted for failing to manage the workplace appropriately.

Section 80 (2) presumes that the breach or neglect was authorised by a Director unless the contrary is proved. Therefore, it is for the Director, Officer or Manager to show that he did all that could be reasonably expected of him to ensure that the workplace was safe. It is important to note that the burden of proof therefore lies with the Director and not with the Health and Safety Authority. The offence is punishable by a fine of up to €3 million or two years imprisonment.

In order to avoid prosecution under the Act, Directors should ensure that appropriate
workplace risk assessments are carried out and that improvements identified are implemented. These assessments are required by Section 19 of the Act and must be included in a business’s safety statement.

Section 20 of the Act requires all businesses to prepare a safety statement which is a business’s organisational plan for Health and Safety. The HSA recommends in its guidance that the safety statement should be endorsed by the Board of Directors as an illustration of its commitment to the statements, objectives and plans.

The safety statement must set out the specific health and safety responsibilities of each level of management within a business and in particular how they will work together to ensure the health and safety of all employees. The safety statement must start with a health and safety policy. This policy should be specific to each workplace in a business; if there are a number of workplaces, a safety statement should be prepared for each one. In order to implement a safety statement properly, a business must put in place an efficient monitoring system suited to its needs.

In addition, the Board of Directors or the senior management team (where appropriate) must ensure that all business decisions reflect the safety policy. This policy should be reviewed regularly at board level to ensure that it is sufficiently robust for the health and safety risks posed by a particular business. In essence, the Board needs to integrate health and safety into the main corporate governance structures within the business.


Noise Assessment – Louise Davis

In January this year, the High Court awarded €15,000 damages to a garda. The garda was a dog handler from 1979 and claimed that in his job, he was exposed to high levels of noise from the dogs barking which was greater than those permitted under Noise Regulations. In June 1990 Regulations were introduced in respect of exposure to noise in the workplace (Noise Regulations 1990).

This judgement raises two main concerns for employers. First, the Garda Siochana failed to act after the introduction of the Noise Regulations Act in 1990 to implement the appropriate health and safety standards. In Mr Justice Quirke’s opinion had these steps been taken in 1990, the garda’s exposure to this health risk would have been detected sooner.

Second the Garda Siochana failed to protect the garda in question after the Health and Safety unit of An Garda Siochana had conducted an assessment in 1999 on the noise levels in garda vehicles. Following this assessment, no improvements were made to the garda’s working conditions. The employer had failed to take adequate provisions to protect the garda ‘from the risk of injury’ that resulted from the noise of barking dogs.

 


Case Dismissed! Liability for False Evidence – Sean MacBride

The introduction of the Personal Injuries Assessment Board Act 2004 and the Civil Liability and Courts Act 2004 (“the 2004 Act”) have radically reformed the personal injury litigation system.

Section 14 of the 2004 Act requires Plaintiffs and Defendants to swear Affidavits of Verification confirming the truth of any facts and assertions made in any legal documents delivered in a case. The Courts now have the power to dismiss a claim where a Plaintiff gives evidence that they know to be false or misleading (Section 26 of the 2004 Act). These provisions were considered by Mr Justice Peart in October 2007 in the case of Carmello-v-Casey and Another.

Facts

On 25th October 2002, the Plaintiff (Mr Carmello) was a passenger in a car driven by the First Named Defendant and owned by the Second Named Defendant. The Plaintiff was injured when the car went out of control on a bend, hit the ditch and rolled over. Mr Carmello was wearing his seatbelt. Liability was admitted and the claim was one for assessment of damages only.

The Defendants’ insurers alleged that the Plaintiff both in his evidence and in his instructions to his Solicitors had deliberately given false and misleading evidence in order to exaggerate his claim. The Defendants consequently sought to have Mr Carmello’s claim dismissed in its entirety under Section 26 of the 2004 Act.

The Plaintiff alleged that he suffered numbness to the left side of his face as a result of the accident. The Defendants became aware of a subsequent accident in May 2003 when a branch of a tree struck him on the left side of his face. The Plaintiff did not disclose this accident in the course of the case; it was alleged that the numbness to his face arose as a result of the car accident. As required under the 2004 Act, the Plaintiff gave an Affidavit of Verification confirming the truth of the facts and allegations outlined in the proceeding.

Mr Carmello’s doctor in a report dated the 9th January 2003 indicated that the Plaintiff informed him that he had suffered a fractured nose as a result of the accident. The Plaintiff was seen in September 2003, by an Ear, Nose and Throat Surgeon and by a Neurologist in February 2007. The Doctors noted that the Plaintiff had numbness to his left cheek. Mr Carmello informed the Ear, Nose and Throat Surgeon that he had hit his nose and the left side of his face off the dashboard. The Neurologist concluded that the facial numbness was a direct result of his injuries. The Plaintiff in oral evidence confirmed he suffered a fracture to his nose and numbness to his left cheek.

Mr Justice Peart in his judgement referred to Section 26 of the 2004 Act and stated: “The question is whether on the balance of probability, the court can be satisfied, that in relation to his evidence and/or his Verifying Affidavit in respect of his Statement of Claim and Replies to Particulars, the Plaintiff has knowingly given false or misleading evidence in a material respect”.

Mr Justice Peart examined the Plaintiff’s evidence, the surrounding circumstances including the pleadings, Replies to Particulars and medical evidence. He concluded that the Plaintiff had been deliberately untruthful in his pleadings, his evidence on Affidavit and oral evidence in an effort to obtain an award of damages to which he was not entitled.

Justice Peart dismissed the Plaintiff’s claim in its entirety “on the basis that the claim is substantially fraudulent.” In his view the Plaintiff had deliberately attributed the effects of the later facial injury to the accident in 2002. He was satisfied that the Plaintiff had knowingly given false or misleading evidence within the meaning of Section 26. The Defendants also obtained an Order for their legal costs against the Plaintiff.

Conclusion
This decision clearly indicates that the reforms introduced in the Civil Liability and Courts Act 2004 have teeth and that Plaintiffs should think twice about pursuing false or exaggerated claims and providing false evidence in support of such claims.


Protection of Employees (Agency Workers) (No.2) Bill 2008 – Claire Casey

The Protection of Employees (Agency Workers) (No.2) Bill 2008 aims to provide protection to employees who are employed through employment agencies.

The draft legislation seeks to ensure equal pay, working time, holiday and maternity rights for agency workers. It also prohibits an employer from penalising an agency worker who invokes their rights under the Bill.

The Bill states that agency workers who have worked with an employer for a continuous period of six weeks “shall not be treated in a less favourable manner than a comparable employee”.

For the purposes of the Bill, a “comparable employee” is an employee who performs the same work as the agency worker, under the same or similar conditions and/or is interchangeable with the other in relation to the work.

The Bill requires employers to provide agency workers with information in relation to vacancies and training opportunities to enhance their skills, career development and occupational mobility.

Complaints under the Bill will be made to a Rights Commissioner in the first instance, and on appeal to the Labour Court. Labour Court decisions will be enforceable by the Circuit Court.

The Bill is currently at the Second Committee Stage in the Oireachtas and maybe commenced within a period of six months.

When the Bill has passed into law we shall revisit its key provisions in further detail.


New Money Laundering Regulations 2007 – Noelle McDonald

The new Money Laundering Regulations (MLR) came into effect in the UK and Northern Ireland on 15th December 2007. The Third EU Money Laundering Directive obliges all EU member states to update their domestic legislation. The Irish Government are expected to publish the Criminal Justice (Money Laundering) Bill in 2008.

In order to comply with the new Regulations, legal firms will need to update their existing policy and procedures to ensure that they are fully compliant with the new regime.

The term ‘Money Laundering’ is generally defined as the process by which the identity of dirty money representing the proceeds of criminal conduct is changed (washed) through apparently legitimate transactions and processes, so that the money appears to come from a legitimate source.

The fundamental requirements for solicitors are to:

• take measures to identify new clients;
• maintain records of clients’ identity and keep copies of all relevant documents;
• train staff on awareness on how to detect money laundering and internal procedures to detect same;
• introduce internal reporting procedures;
• report suspicious transactions to Money Laundering Reporting Officer (MLRO).

Failure to comply with any of the above requirements constitutes an offence. The new Anti Money Laundering Regulations also include the financing of Terrorist organisations.

The following is a summary of the significant changes brought about by the new
Regulations:-

Client Due Diligence and Types of Due Diligence/Enhanced or Simplified
Most cases will require a full Client Due Diligence (CDD) on a risk sensitive basis.
Simplified due diligence is defined as very low risk situations i.e., designated bodies, banks and Insurance companies. Generally there is no obligation to carry out identification procedures in respect of another designated body which is/becomes a client of the firm. However it is considered best practice to include such bodies in the precedent Verification form to show that the MLR’s were considered.

Enhanced Due Diligence is defined as measures to be taken to identity clients for non-face to face transactions i.e. a certified copy of a Passport. There must be a distinction between the documents sought from clients that the solicitor meets in person and clients the solicitor only communicates with by phone or email.

The regulations also bring in a new category of person known as Politically Exposed Persons (PEP) and require approval to take instructions from senior management. Adequate measures must be taken to establish the clients’ source of wealth and funds involved.

New Beneficial Owner Definition
The regulations introduce a new category of persons known as the Beneficial Owner. The definition of Beneficial Owner can be either:
1) a natural person who ultimately owns or controls the client or on whose behalf the transaction is conducted i.e. a Principal and Agent; or
2) a person who exercises control over the management of a legal entity. In some cases verification documentation will need to be sought from all directors of a company or partners in a partnership. The definition includes a person who is the beneficial owner or controls at least 25% of the shares in a company or trust.

Warning Signs of Suspicious Transactions
General
A client offers you money, gratuities or unusual favours for the provision of services that may appear unusual or suspicious or they insist that the transaction is done inordinately quickly.

Identity Documents
A client produces seemingly false identification or identification that appears to be counterfeited, altered or inaccurate.

Offences
Failure to comply with the MLR 2003 or 2007 is an offence punishable on conviction by a maximum of 2 years imprisonment and/or a fine, irrespective of whether money laundering has actually take place. The list of offences under the new regulations have not changed.

Defences
Regulation 45 (4) provides that “a person is not guilty of an offence under this regulation if he took all reasonable steps and exercised all due diligence to avoid committing the offence.”

It is also a defence if you have made an authorised disclosure to your nominated officer (SOCA) before the prohibited act has taken place and you received appropriate consent.

Conclusion
For new clients, existing Verification forms will be updated to incorporate the new categories of persons.  Solicitors will continue to keep a complete Identity /Address Verification Form on each file and will take copies of all relevant documents on the file i.e. a copy of the Contract, Folio and Deed/Transfer/Mortgage once they have been stamped and registered.  Employees must report any suspicious transaction to their MLRO if they feel the firm is being used to launder money.

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