Two employees were killed whilst attempting to repair dangerous machinery. The company’s managing director and several technical managers were prosecuted for breach of health and safety legislation. Defence costs were £890,000.
Disqualification for insolvent trading
Two directors knew that their company could not realistically avoid collapsing, but carried on trading. In the last two weeks before receivership the company incurred VAT liabilities of £50,000, which were never satisfied. For this insolvent trading, the directors were at first disqualified from being company directors in the future. On appeal the courts criticised the directors but decided they were not incompetent enough to deserve the ban, so lifted it. Defence costs to achieve this narrow escape are estimated at £100,000.
A small UK company was involved in building work in Normandy. One of its sub-contractors died from a fall at the site. A director of the company was prosecuted in France for manslaughter and incurred huge defence costs in understanding the foreign procedures and achieving acquittal.
A manufacturer employed a waste disposal contractor to dispose of old oil. Contrary to the manufacturer’s expectations, the contractor dumped the oil in a field and then became untraceable. The Environment Agency brought criminal proceedings against the manufacturers’ directors and considerable defence costs were incurred to achieve their acquittal.
A director of a large training company was sued, along with his company, for allegedly misappropriating trade secrets. £700,000 was spent on defence costs and the case was settled for £1,400,000.
As a result of his company allowing dangerous goods to be carried by air, a director was investigated by the Civil Aviation Authority. Insurers paid legal representation expenses of £21,000 on his representation in that investigation.
(Source: Chubb Insurance Company of Europe – Claims Examples: Private Companies 18 June 2013)