AGS - The Association of Geotechnical and Geoenvironmental Specialists

It is common for Clients to request that their consultant obtains “sign off” of proposals for site investigation, risk assessment and in particular remediation verification reports. In the Client’s mind, this means a letter from the regulator on their headed paper absolving the Client from any responsibility for additional investigations etc or from any further “interference” on their site subsequent to remediation works.

Often the consultant can be caught between a rock and a hard place as the regulator may often refrain from commenting upon such reports, let alone “signing them off”. So what is it reasonable for the Client to expect, the Regulator to agree and the consultant to deliver? In addressing this aspect in recent guidance (Ref 1), text was drafted, reviewed and eventually agreed by both Environment Agency and local authority representatives and is reproduced below.

Normally, on receipt of a Verification Report, the local planning authority will take advice from their environmental health / contaminated land officers (and the Environment Agency in some circumstances) and if satisfied, formally discharge the relevant planning condition by writing to the applicant. If there is no such planning condition, the local authority or Environment Agency should nevertheless acknowledge receipt of the Verification Report. While liability remains with the developer / their insurers, they will often look to obtain ‘sign off’ of these reports by the relevant regulator(s). Regulators will not do this however, or issue their own verification of the works, but they may be willing to do one or more of the following:

It is important to understand that it remains the developer’s responsibility to ensure that they have met the remediation objectives, made the site suitable for use and adequately protected all of the relevant receptors.

It is therefore important when a consultant is agreeing a scope of works with a Client that any requirement for “sign off” in the contract is clearly framed along these lines. Consultants should not promise to obtain a commitment from the Environment Agency and/ or the local authority contaminated land officer that are beyond these limitations. Equally, it is in the interests of all parties that the positive engagement with the regulator on a project is recognised by written acceptance of a report by the regulator, along the lines set out above.

For those involved in the Remediation of a site that has been “determined” as contaminated land under Part IIA of the Environmental Protection Act the expectations of sign off, should be even more constrained. This is because in these cases the Statutory Guidance states that any person who has carried out remediation as described in a Remediation Statement can notify the local authority (ie by submitting a Verification Report) providing the details of the “remediation claimed to have been carried out”. The local authority is then under a duty to include the details of the remediation which is claimed to have been carried out on its Register. The guidance then states that “Although Part 2A does not include any formal “signing off” procedure, the Enforcing Authority may wish to consider writing to the Appropriate Person, confirming the position with respect to further enforcement action.” - - - and that the local authority “might confirm that it does not consider that it needs to serve a Remediation Notice, which it would need to do if appropriate remediation had not been carried out”.

Water Testing Cost Amendments

DEFRA's Water Classification Directions to the Environment Agency

Could water testing costs (either as part of due diligence work or operationally in relation to discharge consents) be set to rise in the future? Darren Wilcox of Peter Brett Associates LLP ponders this and other questions raised as a result of the draft Directions.

In October 2008, DEFRA issued a draft “Directions to the Environment Agency on classification of water bodies” for consultation as part of its duties under the Water Framework Directive (WFD). PBA has reviewed the draft and contributed to the consultation process through a direct response to DEFRA.

Surface Water Classification
We note that the proposed new requirements for classifying surface waters are significantly more complex than the existing Environment Agency General Quality Assessment (GQA) scheme for rivers and canals.

With the GQA scheme, analytical costs for determining the classification of a river sample are typically less than £20. To classify the same river sample using the proposed method in the new draft Directions could cost in excess of ten times this amount.

The Directions are also not clear on how many exceedances of the 33 environmental standards would be required in order to classify an surface water body as failing to achieve good chemical status.

Groundwater Classification
To classify groundwaters, DEFRA has produced different assessment standards for different aquifers in different catchments of England and Wales. This has lead to the publication of a 160 page annex detailing different groundwater quality thresholds.

In many cases, the proposed threshold values are lower than prescribed concentrations for UK drinking water (specified in the water supply regulations). PBA has questioned the sustainability of aspiring to a situation where groundwater quality is superior to tap water quality.

The low groundwater threshold values proposed may lead local authorities or the EA to set unreasonably stringent remediation target values for groundwater where brownfield sites have recorded slight groundwater contamination issues. This in turn could lead to excessive costs for brownfield redevelopment in the future.

Payment and Protection

In the present economic climate every business is feeling the pressure and it has never been more important to take all available steps to ensure you are paid for the services you provide. This article attempts to provide some guidance to assist with recovering consultants’ fees. Firstly it outlines some pre-emptive steps which can be taken by consultants to safeguard their position should they ever have to launch a fee claim. The second half then highlights some of the options available for recovering those fees.¹

1. Establish that your client has a legal obligation to pay you;
2. Satisfy both the procedural and legal requirements for a recovery of your fees.

Firstly, make sure you identify who your client actually is. This is an obvious but crucial point. Consultants are often engaged through an intermediary or by one member of a group of companies, which can often cause problems later. To avoid this, always ensure you know who your true client is and, where possible, be engaged by a company with assets (rather than a shell or off-shore entity). If you have concerns about your true client’s ability to pay, then consider requesting third party security or advance payments. In certain situations it is possible to recover your fees from a party acting as the agent of the client, but ultimately fee recovery is so much easier if you have established who your client is before you undertake the work.

Secondly, the importance of agreeing and recording all the terms of your appointment in writing cannot be overstated. Subject to statutory intervention, parties are generally free to negotiate and agree whatever payment terms they want. However you should aim to make the terms as clear and unambiguous as possible. It is also important, especially when working for a lump sum fee, to define in writing the scope of your services and the value, scope and anticipated duration of the project. Ideally the appointment should contain mechanisms for varying the lump sum when these matters change. At the very least make sure you record the basis on which the fee is agreed. It is particularly important to ensure that all information or statements are recorded in the appointment, as the presence of an ‘entire agreement clause’ may well preclude you from relying on anything not specifically referred to in the document. Finally, the written appointment should also provide an entitlement to payment for additional services.

In the absence of a formal written appointment, keeping accurate written records is of paramount importance. To this end you should ensure oral agreements are confirmed in writing (usually by sending a letter to the client as soon as possible after discussions). In addition, even where there is no express agreement for payment, there is a rebuttable presumption that services provided by a professional will be paid for at a reasonable rate. However, again, fee recovery is so much easier if payment terms are clearly set out in writing before you undertake the work.

When it comes to preparing a fee claim you must relate all sums claimed under the appointment back to the relevant terms to show that the requirements of the appointment have been complied with. The key to this is good housekeeping. Make sure you keep written records which:

Good housekeeping is equally crucial when undertaking additional services. Firstly, check the requirements of your appointment in relation to additional services. In any event, you should obtain prior written confirmation from the client that you are instructed to proceed with the additional services, their scope and the agreed fee/method of calculation. In addition, obtain written confirmation that they are additional services under your existing appointment, to avoid creating a separate contract. This will assist you if you later decide to adjudicate for any outstanding fees.

When claiming fees it is necessary to show that the work has been done and the contractual stage for payment has been reached. The following quote from a judge in a fee claim case illustrates this point:

So, you have set up your appointment correctly and provided the services in accordance with the appointment. However the date for payment has passed and your client has not paid. What can you do?

Most fee claims are claims for payment of monies due under a contract. Your client has promised payment in return for you providing services. Therefore once the services have been duly performed (and the contractual final date for payment has passed), you have a cause of action in debt for payment. To recover your fees you must prove that the debt is due and payable, however you do not have to prove any actual loss and also the rules for recovery of damages (e.g. as to remoteness, mitigation and penalties) do not apply. However you should of course be prepared for any counter arguments the client may put forward, whether they be abatement, set off, cross claim or counterclaim.

If the debt claim arises out of a simple contract you have six years to bring a claim from when the cause of action accrued, whilst if the contract is a deed the period is 12 years. In addition it is worth remembering that you can usually claim interest on the amount outstanding.

Firstly, there is of course the traditional option of commencing proceedings through the courts. Alternatively there is the fashionable option of attempting ADR (Alternative Dispute Resolution). Where applicable and appropriate, you could negotiate, mediate, arbitrate or adjudicate. However in addition to these now well known options there are a range of other, perhaps less well known weapons in the fee recovery armoury.

Instructing your solicitor to send a formal letter demanding payment frequently prompts the client to pay. Often the involvement of solicitors also assists in disposing of unmeritorious claims and defences.

In addition, a well drafted solicitor’s letter also has the benefit of kick starting the Pre-Action Protocol for Construction & Engineering Disputes, which must be complied with anyway before you commence court proceedings.

A statutory demand is usually used as part of the insolvency process, as the failure to comply with it provides the court with proof that a company is insolvent. However it is also a powerful weapon in the fee recovery armoury.

A statutory demand requires the debtor to pay the outstanding amount within a specified period, which is clearly stated in bold on the front of the demand. The advantage is that a debtor knows that failure to comply can be relied upon by a creditor when presenting a winding up petition against the debtor.

However a statutory demand should only be served where there is no dispute that the sum is due, there is no genuine argument to resist the demand and no prospect of the claim of set off being raised. If the debtor produces a credible argument of a genuine triable issue then it may be better to withdraw the demand rather than have it set aside with a potential adverse costs order.

You are entitled to retain documents you have prepared as part of your services until the client has paid for them. However, the lien will be lost if you provide copies of the documents. Beware of terms in proposed appointments which would nullify your ability to exercise your lien.

Where a client has paid money without appropriating it to a particular debt (i.e. paying a cheque but not in respect of a particular application for payment or invoice), you may appropriate the money to any debt you choose. However, the money must be due as a debt (e.g. it cannot be appropriated against an invoice which is not in law due).

Frequently, cheques for less than the full amount due are sent in ‘full and final’ settlement of fee claims. Banking or retaining a cheque and not rejecting the offer immediately is viewed by the courts as strong evidence of acceptance of the offer. If you accept the cheque as part payment only, the safest course is to hold the cheque and seek immediate confirmation from the payer that it can be banked on account, alternatively, return it. A further, but more risky, option is to bank the cheque whilst immediately rejecting the offer, to demonstrate that it has not been banked in satisfaction of the claim.

If you are engaged in an ongoing project for a client, but they are refusing to pay you as your fees become due under the appointment, then the following two options may also be relevant:

In certain situations a breach of contract may entitle the innocent party to terminate the contract. However the breach must either be so fundamental that it deprives the innocent party of substantially the whole benefit that it was intended to obtain from the contract, or the parties have agreed (expressly or by implication) that the breach will entitle the innocent party to terminate.

Non payment may constitute such a breach and you may therefore be able to terminate the contract. However, this option comes with a health warning especially when dealing with failure to pay by instalments. Whether a failure to pay by instalments due under a contract is a sufficiently fundamental breach is a question of fact in each case. However there is case law indicating that the failure to pay three instalments was insufficient, where the client had not demonstrated an intention not to pay at all. In addition if the client can ultimately demonstrate that the instalments relied upon to treat the contract as at an end were not in fact due, then you will have put yourself in breach by having terminated the contract.

Subject to the Construction Act 1996³ applying to the contract, s112(1) provides you with a right to suspend your services. The right can be exercised when a sum due under the appointment is not paid in full by the final date for payment and no effective withholding notice has been given. However the right cannot be exercised without first giving to your client at least 7 days’ notice of intention to suspend performance, stating the grounds on which it is intended to suspend performance. Furthermore the right to suspend ceases when your client makes payment in full of the amount due.

Suspension of performance can be a very effective threat. However, the risk in suspending is that if the client can demonstrate that the monies were not due as claimed, then you will be in breach for withholding your services.

Finally, if you have agreed terms for settlement for your fee claim it is crucial to record the terms formally. This is of particular importance if it has been agreed that you will compromise your fee claim in exchange for the release of negligence claims which have been notified against you by the client. Do not leave your position exposed by not recording these terms in writing and allowing the client to send you a cheque which purports to be in settlement of the fee claim only. Should the client later pursue the negligence claim, you will have a much more difficult time proving the basis of the settlement if the only written evidence is that of payment of the fee claim. A strategically prepared compromise agreement could obtain a wider release of claims than might be in dispute in the fee claim.

This article is for guidance only and should not be relied upon for legal advice. In any particular case specific legal advice should be sought.

1. This article is based on talks given on 18.11.2008 by Guy Lane, Robert Stevenson & Peter Stockill of Berrymans Lace Mawer solicitors.

2. HHJ Thornton QC in CWF Architects v Cowlin Construction Ltd [2006] EWHC 6 (TCC) 35

3. Full title of the Act is the Housing Grants Construction & Regeneration Act 1996 (HGCRA).

Putting Safety First

The Corporate Manslaughter and Corporate Homicide Act 2007

This new Act came into force on 6th April 2008. An offence is committed if the manner in which an organisation manages or organises its activities causes a person’s death and amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased. This is a corporate crime and not an individual crime. There is now no need to identify a person controlling or directing the mind of an organisation, who is also guilty of the offence of gross negligence manslaughter, before the corporation can be convicted of the same offence. The only sentencing option available to the court on a corporate manslaughter conviction will be a fine. However, it is envisaged that considerable stigma will attached to a conviction. In addition senior management might feel compelled to resign and if they do not resign there are likely to be grounds for dismissal of some or all of the senior managers responsible for the gross breach of duty.

The way in which the organisation is managed by its senior management has to be a substantial element in the breach of the duty of care. It is a matter for the judge to establish whether a duty of care is owed.

Factors to be taken into account by the jury are whether there has been a breach of any relevant health and safety legislation, the seriousness of the breach and how much of a risk of death was posed by it. The jury may consider whether the culture, policy, systems and procedures in the organisation encouraged failure to comply with health and safety regulatory legislation or guidance.

Senior management means either those who play a significant role in making decisions about how the whole or a substantial part of the organisation’s activities are to be managed or organised, or those who play a significant role in the actual managing or organising of the whole or a substantial part of those activities.

Under Section 9 of the Act it is open to any court convicting of corporate manslaughter to make an order, called a remedial order, requiring the organisation to take specified steps to remedy the breach, to remedy any matters which contributed to the cause of death, and to remedy any deficiency in the organisation’s policy, systems or practices relating to health and safety.

Under Section 10 of this Act the court has a power to order an organisation to publish the fact that it has been convicted of the offence, to specify the particulars of the offence, the amount of any fine imposed and the terms of any remedial order made.

The Act is clearly a reaction to a long held belief that those who put profit before safety at the expense of lives should suffer a sanction more significant than can be imposed by the Health and Safety at Work Act 1974. The clear target at the time of the consultation and publication of the bill was large organisations whose activities cost life where there should have been no such risk.

The offence will now be committed if the breach that is a substantial cause of the death can be placed at the door of senior management who make the decisions about how an organisation is run from a strategic level, or is made by those at a senior operational level. The Act is not designed to produce a prosecution in circumstances where appropriate strategic management exists, and appropriate operational management exists, but a significant failure is made at a junior operational level.

A more detailed version of the above article will be incorporated into the AGS Loss Prevention Working Group Tool Kit, but until then, if more details are required, please contact Berrymans Lace Mawer on the AGS Legal Helpline.

Understanding Bandings

It’s a red site. So what?

It was the 15th century Swiss medical pioneer Paracelsus, who noted in his journals: "all substances are poisons; there is none which is not a poison. The right dose differentiates a poison.” Although he made this statement almost 500 years ago, it is now known and proven to be correct with substances known to be essential for human existence, such as salt, defined as toxic when administered in sufficient quantities. For this reason the classification used by the British Drilling Association (BDA) Guidance for Safe Intrusive Activities on Contaminated or Potentially Contaminated Land and part four of the Site Investigation Steering Group (SISG), where sites are classified into green, amber or red sites, must be fully understood and not applied casually. Failure to fully appreciate the relationship between quantity and substance classification could be as dangerous as doing nothing or impose expensive non essential protection measures.

The BDA guidance classifies red sites as the most hazardous, attributing this classification to sites where there are: ‘Substances that could subject persons to risk of death, injury or impairment of health. Examples would be any substances that are corrosive, acidic, carcinogenic, cause skin irritation or respiratory problems, affect the nervous system, affect the organs, etc.’ Unfortunately this classification takes no account of the quantities present which are critical to determining the risk category as even uncontaminated soils and dusts, if present in the correct quantities and form, could act as a skin irritant or be harmful to the respiratory system. It would be a rare site investigation which did not include these hazards and on this basis, all sites would be classed as red.

In the BDA guidance, reference is made to the need for a risk assessment and this is the key to correctly determining the nature and category of the site. The green, amber, red categorisation system provides a simple warning and flagging system but where the presence of hazards is known or suspected, an assessment of both the nature and the quantity of the substances is required and this poses a problem for conducting work on contaminated land. In the majority of cases the purpose of conducting a site investigation is to determine the presence and quantity of contaminants for human health risk assessments. Until such time as this is done it is impossible to produce a definitive risk assessment and as such some assumptions need to be made.

To make an assessment there needs to be an understanding of the site and surrounding areas. A desk study should be able to identify the history of the site, in particular the industrial uses to which it has been put. This is the first stage but by no means the end of the process as not all uses may have been logged or recorded and they may not reflect the current use. Nothing substitutes a visit to site to examine the visible evidence but commercially, particularly on small sites, this is not always possible so any evidence such as photographs, discussions with clients etc. will help to build the picture.

Once the history and past uses of the site has been identified, an indication of the potential contaminants can be gathered but the available sources of guidance do little to clarify the situation. There are a number of publications used commonly to determine the presence of substances for the purposes of human health risk assessment, with the Environment Agency publication CLR8 - ‘Potential Contaminants for the Assessment of Land’ being recognised as the closest thing to definitive but the purpose for which it was developed does not fully suit our needs in term of occupational safety and health.

CLR8 is intended as an aid to determining the substances to be tested in a contamination study for human health but is not specific enough to assist completely in determining the requirements for the successful management of exposure in the course of site work or activities. CLR8 suggests everything is present in some quantity on nearly all sites but provides little indication of possible concentrations, the form of the substance or the exact location on the site. As an example, CLR8 identifies the presence of ‘oil / fuel hydrocarbons’ at airports, which although suggestive of contaminants which will certainly exist at some points on the site provides little guidance for occupational safety risk assessment. Hydrocarbons used for fuel vary from heavy oils such as diesel and more volatile substances such as pentane and if the whole site is treated as containing such substances, all area would be classified as ‘red’ under the BDA guidance as it is likely these hydrocarbons could contain benzene (a carcinogen), pentane (produces narcosis in higher volumes) and possible lead (causes damage to the peripheral nervous system).

A study undertaken by the author of this article, cross referenced all the potential contaminants present on sites as indicated by CLR8 with the risk phrases attributed to the compounds, suggested every site identified should be rated as the highest possible risk, if the categorisation of sites is dependant on the presence of substances alone, as suggested by the BDA guidance, all geotechnical sites would be classed as ‘red’ which is clearly unfeasible.

Weighing up the Risk

A new framework for assessing risks to ecological systems from contaminants in soils was published by the Environment Agency in October 2008, superseding the draft methodology from 2004. The new methodology is designed to establish whether pollutant linkages are likely to exist between soil contamination and designated ecological receptors, and to gather information for making decisions on whether harm to receptors is occurring or could occur in the future.

The ERA framework fits into the established structure of the Environmental Protection Act 1990 (Part 2A Contaminated Land Regulations) for assessing risks from contaminated soil and is now a standard part of contaminated land assessments where ecological receptors are identified.

As well as the contaminated land regime, the guidance is relevant to planning and pollution control, habitats and conservation regimes, and the Environmental Damage Regulations. ERA will be applicable either for assessing risks during a due diligence process or for under-writing environmental insurance. It is also appropriate for assessments relating to environmental permit applications or for justifying an appeal against an Environmental Damage Notice.

At PBA, we have already updated our existing assessment procedures to take account of the new framework and will continue to provide a full range of contamination and ecological services to enable effective management of ecological risks from soil contamination.

EN 1990 Alteration

EN 1990 Altered to Avoid UK Liability Problems

The head code, EN 1990, has been changed to make sure that civil and structural engineers avoid potentially uninsurable ‘fitness for purpose’ liabilities when using Eurocodes in the UK.

One of the basic requirements of EN 1990, as set out in clause 2.1 (1)P, was that a structure had to ‘remain fit for the use for which it is required’. This has now been altered to, ‘meet the specified serviceability requirements for a structural element’.

The changes have been made as the original version suggested a fitness-for-purpose obligation that would not be covered by professional indemnity insurance. The trouble arises because ‘fit for the use for which it is required’ has a legal meaning in Britain which is does not have in mainland Europe.

BSI is planning to publish a corrigendum to BS EN 1990 shortly which will be free to download from the BSI Eurocodes website.( http://www.bsi-global.com/en/Standards-and-Publications/Industry-Sectors/Eurocodes-a/Eurocodes_Corrigenda/ )

AGS Newsletters

Newsletter Issue 58 - May 2009

Sign off Responsibility