Claims Examples

 

Health & Safety
Breaches of HSE regulation may result in costly and time consuming investigations.  In one instance nearly £900,000 was spent defending a Managing Director and several managers as they faced a criminal prosecution for negligence and failure to provide a safe working environment.

 

Non-Executive Directors – large construction
Non-Executive Directors can also be held liable.  This was clearly highlighted in a case where a full-time director defrauded the company and non-executives were found to be negligent.  The negligence was due to insufficient attention being paid to the operation of the firm.  The claim was settled for an undisclosed sum and was paid out of the non-executives personal assets.  This clearly illustrates that non-executive directors in the UK are principally involved to ensure that there is a second pair of eyes on the company’s executive management.  Non-executives are often exposed to liability as their executive counterparts, which is not something they always recognise.

 

Financial Performance
Two directors were held liable for payments made to another director.  The payments took place shortly before the company went into liquidation.  It was successfully argued by the firms creditors that they should take precedent over the director and an award of £800,000 was made.  Directors have a fiduciary duty to take the correct course of action.  It is also an established part of the UK legislative framework that directors should not profit from their position.

 

Negligence
Defence costs totalling approximately £16,000 were paid after a director was held responsible for allegedly failing to arrange death-in-service insurance coverage

 

Defamation – small construction
Directors can often be sued for comments concerning competitors, as one director found to his cost recently.  His comments regarding one of his company's key suppliers cost insurers £32,000 before the case was dropped by the claimant.

 

Director called to Public Enquiry after fatal accident - construction
The HSE launched an investigation following the death of a site workman, leading to a public enquiry.  A Director of the company gave evidence at the Public Enquiry.  Costs for the Director’s representation were covered by the D&O policy – circa £25,000.

The introduction of the Corporate Manslaughter and Corporate Homicide Bill in 2007 will reform the laws governing killing, and increase the accountability of those who make decisions, which lead to death(s). The new offence will apply to the failings of senior management, either individually or collectively.

 

Company probed by Environment Agency after oil spill
The Environment Agency carried out an investigation at the site of an oil spill into a stream.  Initial findings indicated that the spill was caused by oil leaking into the drainage from machinery on the Insured company’s site.

The D&O policy covered defence costs for legal representation at formal interviews with the Environment Agency. 

 

A bank has taken an action against the directors of a company for failure to disclose material facts when they entered into a financing agreement with the bank.
The projected cash-flow showed that the loan was unsustainable.  The bank accused the Directors of providing misleading information. 

 

Directors of a construction company were successfully sued for losses incurred by an architect who relied on a Director’s assurances that a contract performance bond had been arranged.

 

An action for breach of trust was brought against a Director following the release of an employee’s medical records.

 

The Directors of a Property Owning company were prosecuted after their failure to identify the company correctly on the company notepaper and invoices, in breach of the Companies Act.
 

The Directors of a company which failed to comply with the time limit for delivery of Accounts to the Registrar of Companies and then did not disclose certain Directors’ appointments were prosecuted under The Companies Act.

 

 

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