Article

Key considerations before winding down your company

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Article drafted by James Hutchinson and Sophie-Rose Bowen from Beale & Co.

This article will consider the following:

1. Matters to consider before closing down your company;

2. Obligations to ensure that your company is insured once it has ceased trading; and

3. Why it is important to protect your company against future claims that arise once your company has ceased trading.

1. Matters to consider before closing down your company

Procedure

In terms of how to wind down your company, there are various methods available. For the purposes of this article, we will assume the company is solvent at the time of closure.

Strike-off

You may choose to voluntarily strike your firm off the Companies Register maintained by Companies House register using the method known as “voluntary strike-off” (in accordance with section 1003 of the Companies Act 2006). Note that you will need to distribute all cash and assets in the company before the company is dissolved as otherwise such assets will vest bona vacantia i.e. belong to the Crown.

This method of dissolution is often an attractive procedure as it is relatively quick, straightforward and cost-effective. Once a company is struck off the register it is deemed to be dissolved and there is no longer a legal entity (and therefore there is no one to sue).

However, note that despite the company’s strike-off and dissolution, future claimants can apply to restore the company to the register at any time, if they have claims against the company.

Although a company does not have to formally discharge all of its liabilities before it is struck off, it must however notify all contingent and prospective creditors (which would include a party to whom an existing obligation is owed but in respect of which a present liability has not arisen and may never arise e.g. a potential claim). Note that failure to inform such creditors would constitute an offence under the Companies Act 2006. It will be an aggravated offence punishable by a term of imprisonment if the person’s failure to perform this duty is with the intention of concealing the application.

Solvent liquidation

Another method of dissolution is via voluntary liquidation, which is the costliest procedure. There are two main types of liquidation – creditors’ voluntary liquidation (CVL) and members’ voluntary liquidation (MVL). A CVL is entered into when a company is insolvent (which we will not be discussing in this article) and an MVL is entered into when a company is solvent.

To initiate an MVL, you must make a Declaration of Solvency (for English and Welsh companies). You will need to review your company’s assets and liabilities before making a declaration.

To make a declaration of solvency you must produce a written statement stating that the directors have assessed the company and that they believe it can pay its debts in full together with any interest within a specified period, not exceeding 12 months from the commencement of the winding up of the company (pursuant to section 89 of the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016). You will also need to include the statement of your company’s assets and liabilities. Once this has been confirmed, a shareholders’/members’ meeting is convened to appoint a liquidator to wind down your company.

It is important when making a statutory declaration of solvency that the directors assess the actual and contingent liabilities of your company (including pending or potential claims) and have reasonable grounds for the opinion that your company would be able to pay its debts in full within the period specified in the declaration (which must not exceed 12 months from the commencement of liquidation).
Should a declaration of solvency be made falsely or if it is found to be inaccurate the repercussions for the directors can be very severe, including an unlimited fine and up to 2 years imprisonment. It is therefore prudent to ensure that the company holds adequate professional indemnity insurance to capture any potential liabilities that arise in the period specified in the declaration of solvency.

How can I protect my company against future claims?

Ensuring that there is adequate insurance in place to protect the interests of yourself and your company against the possibility of future claims is a key consideration to be had before winding down your company.

It is possible to take out professional indemnity insurance to provide protection against claims that are made once a company has stopped trading. This is called run-off cover.

Run-off cover is important as professional indemnity insurance is provided on a claims made basis. This means that if a claim is made against your company and you want cover to be provided, professional indemnity insurance needs to be held on the date the claim is made against your company, rather than the date of the incident giving rise to the claim.

2. Obligations to ensure that your company is insured once it has ceased trading

In considering whether to take out professional indemnity insurance run-off cover, it is important to consider your company’s contractual and professional obligations:

i. Contracts may contain contractual obligations to maintain insurance for 6 or 12 years from completion of the services or practical completion. Therefore, it would be prudent to ensure professional indemnity run-off cover is in place until these periods have expired.

ii. In addition to your contractual obligations, you may also have professional obligations to maintain run-off cover, as a member of your professional body.

In the past, Courts have allowed claims to be brought against a professional in their personal capacity in the absence of professional indemnity insurance. If you enter into a contract knowing that you will be closing down your company and that you will not have run-off cover in place, then you risk a potential claimant bringing a personal claim against you (see the decision in Merrett v Babb).

3. Why it is important to protect your company against future claims that arise once it has ceased trading?

Contractual liabilities

Given the nature of construction-related projects, your company may have contractual liabilities that last for a number of years.

If any of the contracts entered into by your company have been executed as simple contracts under hand, then your contractual liabilities under that contract should last for 6 years from the date that any cause of action accrued i.e. there was a breach of contract. If your contract has been executed and delivered as a deed, then your contractual liabilities under this contract could last for 12 years from the date of breach of contract.

Alternatively, some contracts may incorporate bespoke limitation clauses which seek to limit the period of time in which a party can bring a contractual claim against your company. Examples would be clauses limiting your company’s liability to 10 years from the date the practical completion or from the date of completion of your services.

Following the judgment in Inframatrix Investments v Dean Construction, the Courts will try to give effect to bespoke contractual limitation provisions provided that they are clearly worded.

Before winding down your company, it is important to take a look at the contracts entered into by your company to determine how long professional indemnity run-off cover ought to be required.

Latent defects

Latent defects are a common problem in the construction industry. A latent defect is one that appears after a project has been completed and that is not discoverable at the time of its completion.

A claim in tort can take advantage of an elongated limitation period under section 14A of the Limitation Act 1980 which allows a claim in tort to be brought within 3 years of the date when the claimant had the ‘knowledge’ required to bring such an action and the right to bring such an action up to a maximum of 15 years from the date of damage.

As professional indemnity insurance is provided on a claims made basis, where a latent defect is discovered several years after completion of the project and a claim is made against your company, the professional indemnity insurers on risk at the time of the discovery of the defect will need to be notified, as opposed to the professional indemnity insurers on risk at the time the cause of action accrued i.e. when there was a breach of duty.

It is important to ensure that there is adequate run-off cover in place following the closure of your company because a latent defect may only be discovered several years after practical completion, at a time where your company has ceased trading. This is especially so where the client has not taken out a latent defects insurance policy for the project.

“Contribution” Claims

In addition to claims in contract and tort, it is possible for a defendant party to issue a “contribution” claim under the Civil Liability (Contribution) Act 1978 (the 1978 Act) against any other parties involved in a project that also contributed to the alleged damage. Contribution claims are particularly common in construction disputes where parties are jointly and severally liable to the client. In those circumstances, a client would be able to bring a claim against only one of the parties it considers to be responsible for the damage, leaving the defendant party to recoup its losses from the other “contributing” parties by pursuing claims under the 1978 Act.

A claim under the 1978 Act can be brought up to two years after the right to contribution accrues, which is the date on which the liability of the original defendant is quantified either by settlement agreement or judgment. A party shall be entitled to recover contribution under the 1978 Act notwithstanding that they have ceased to be liable in respect of the damage in question since the time when the damage occurred. Therefore, the fact that any contractual or tortious claim against your company is now statute-barred would not prevent a party from being able to bring a “contribution” claim against your company, provided that this is done within the prescribed two-year period under the 1978 Act.

It is pivotal to consider the possibility of “contribution” claims arising on particular projects when considering professional indemnity run-off cover to suit your company.

Key Take Away Points

If you are considering closing your company, we recommend that you give careful consideration to your continuing contractual and professional obligations, the potential for claims to arise as a result of latent defects and the potential for “contribution claims”. It is prudent to maintain appropriate run-off cover, to ensure that you can meet any future contractual liabilities and also that you comply with the obligations of your professional body. By choosing not to purchase run-off cover once you have ceased trading, you will lose any benefit of having had any insurance in the past. You will therefore not be insured for any claims that may arise out of your past work, even if you had professional indemnity insurance at the time you provided the services.

Whether you choose voluntary strike-off or an MVL, you will need to consider any actual and contingent liabilities (and again maintain adequate run-off insurance cover).

We appreciate that many engineers are finding it difficult to purchase run-off cover at an affordable price and on a basis which does not require annual renewal, leaving the risk that it might not be available in the future. It is therefore essential that you speak to your insurance broker about what options are available. You should also seek financial advice from an accountant/insolvency practitioner about what closure process is most appropriate and take legal advice on any potential liabilities and obligations your company may have.

Should you have any queries or are seeking advice on the matters raised in this article, please do not hesitate to contact James Hutchinson (J.Hutchinson@beale-law.com) or Sophie-Rose Bowen (S.Bowen@beale-law.com).
James Hutchinson
Sophie-Rose Bowen

Article

Land Contamination and Development – Guidance from Scottish Regulators

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Article provided by Sarah Hamill, Contaminated land Officer, West Dunbartonshire Council

It is common knowledge that the UK’s industrial history has left us with a legacy of sites with land contamination issues. Everyone is keen to see this legacy dealt with and so the opportunities that development and regeneration of these sites provide are welcomed. Even during these difficult times we are fortunate to still see development and regeneration sites coming forward however with this comes a wide range of reports. As a regulator we receive reports ranging from The Good, to the Bad and even to the Ugly, and there is nothing that frustrates us more than when we receive sub standard reports which fail to address the main issues of addressing land contamination.

Improving the quality of reports relating to land contamination is a popular topic across the contaminated land community and was the subject of a virtual panel discussion hosted by Environment Analyst on 19th January and also a roundtable discussion at the recent Brownfield Land Scotland Virtual Conference (2nd-3rd February). There were several suggestions on how we could ‘raise the bar’ but the one theme that carried through was that as a community (regulators, consultants, contractors) we all have a role to play to educate the developers of what is required. It is evident that many developers do not fully appreciate the importance of dealing with issues from the ground up and so the ground investigation (especially the assessment of the environmental risks) is often an after thought. This can mean that by the time the ground is suitably investigated the design and layout of the development has been decided and so the measures required to deal with what is found can often disrupt the proposals and programme.

As a community we have a responsibility to better engage and inform developers. Pre-application discussions are a good way to do this as this can mean that the ground conditions are considered and sometimes even addressed at an early stage. However, while we may be seeing an increase in pre-application discussions the majority of these are for large scale developments. We therefore have a responsibility to ensure that small scale developers also understand what may be required so that they can assess the potential implications of this to their project. To be faced with numerous conditions at the planning stage may be overwhelming especially when they did not even consider it as an issue.

To try and resolve this, Scottish regulators produced a guidance for developers booklet that was published in 2010. The purpose of this was to highlight the key issues that need to be considered when embarking on projects where land contamination may be an issue as well as highlighting the standards expected by Scottish Local Authorities. The problem with this was that it was a snapshot of guidance at that time with no one organisation taking ownership of it. A revised version was then published in 2019 after a major overhaul of the content as it was felt that a more detailed piece of guidance was necessary including more information on what is, and more importantly, what is not accepted. This time however we were fortunate to be able to do this under the remit of Environmental Protection Scotland (EPS) meaning that the most up-to date version could be made available on their website so that any changes and updates could be easily made.

https://www.ep-scotland.org.uk/wp-content/uploads/2019/09/ConLanDevGuide_12-Aug19-FINAL.pdf

While the original document was titled ‘Guidance for Developers’ this updated version has been written to also benefit local authority officers, consultants and contractors when preparing and/or reviewing site investigations, risk assessments, remediation strategies/schemes and verification plans/reports. This document is recognised and used by the majority of Scottish Local Authorities and is also endorsed by both SEPA (Scottish Environment Protection Agency) and REHIS (Royal Environmental Health Institute of Scotland). To ensure developers are aware of it many authorities ask that it is included in the Planning packs that is sent out with other planning information. EPS had scheduled a launch day for May last year where developers were invited to attend, however the COVID lockdown resulted in this being delayed. It is however still their intention to run this as, possibly as a ‘virtual’ webinar event. In the meantime we would appreciate if everyone could help to promote this document and encourage developers to take cognisance of this especially when working in Scotland.

As is known there are some differences on how land contamination issues are assessed across the nations (in particular in relation to the water environment) and so this guidance has been written specifically for Scotland. In saying that there are also key issues discussed that apply across the UK (e.g verification) and so this document may act as a useful reference for all. Feedback on this document is welcomed and so if after reading it you have any comments then please do email them into admin@ep-scotland.org.uk under the subject title ‘Land Contamination and Development’ so that this can then be forwarded onto members of the steering group.

Article Report Laboratories

AGS Laboratories Working Group – Update

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Will Fardon, who is the new Leader of the AGS Laboratories Working Group, has provided an update on the top issues the Laboratories Working Group discussed at a recent meeting which took place virtually in January 2021.

New Working Group Leader
Will Fardon has recently taken over as Laboratories Working Group Leader. Will is currently the Technical Sales and Training Manager for i2 Analytical and Will’s background is predominantly within the environmental chemistry and lab testing industry.

As the new Leader of the Labs WG, Will hopes to build on the work done within the group in recent years and expand the discussions on a broad range of subjects across the full selection of analytical areas that contribute within the industry, and also help expand the reach of the group to a new and wider audience.

Sample Qualities / Quantities
A document on sample qualities and quantities is being finalised by the Laboratories WG. This document should assist with obtaining the correct sample qualities / quantities from clients.

BS EN ISO 17892-12
Following discussion within the Laboratories WG, a proposal has been put forward to change the current requirements for the measurement of wear of the cone penetrometer in standard 17892-12.

Increasing member participation
The Laboratories Working Group continues to look for new participants from members and to also encourage more people within the industry to become members of AGS. The aim of the Laboratories Working Group moving forward is to represent all laboratories, bringing more focus to geotechnical and geo-environmental testing. We hope though meaningful discussion and diverse input from across the industry we can help to drive positive change and also provide an increased amount of educational material to our members.

If you do wish to join the AGS Laboratories Working Group, please contact the AGS Secretariat at ags@ags.org.uk.

News

AGS Magazine: December 2020 / January 2021

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The Association of Geotechnical and Geoenvironmental Specialists are pleased to announce the December 2020 / January 2021 issue of their publication; AGS Magazine. To view the magazine click here.

This free, publication focuses on geotechnics, engineering geology and geoenvironmental engineering as well as the work and achievements of the AGS.

There are a number of excellent articles in this issue including;
AGS Yellow Book Photography Competition – Page 4
AGS Upcoming Webinars – Page 8
Contamination in Ground Investigation – Page 16
Professional Indemnity Insurance Update – Page 20
Q&A with David Hutchinson, formerly of Network Rail – Page 26

Advertising opportunities are available within future issues of the publication. To view rates and opportunities please view our media pack by clicking HERE.

If you have a news story, article, case study or event which you’d like to tell our editorial team about please email ags@ags.org.uk. Articles should act as opinion pieces and not directly advertise a company. Please note that the publication of editorial and advertising content is subject to the discretion of the editorial board.

News

New AGS Members in 2020

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The AGS is pleased to announce that in 2020, five member organisations, one affiliate organisation and one practitioner member were accepted by the Membership Panel and approved by the Executive. Fourteen students and graduates were also accepted as new AGS members. The new member organisations are Story Contracting Ltd, Ardmore Point Ltd, Cognition Land and Water Ltd, G7 Geotech Ltd and Jackson Drilling. The new affiliate organisation is Worldsensing and the new practitioner member is James Harrison.

AGS Membership is open to geotechnical and geoenvironmental companies who employ specialist who can provide competent services and affiliate companies who provide support services and supplies to the members. Students and Graduates can also become members of the AGS. Full details of membership criteria can be found at http://www.ags.org.uk/about/become-a-member/

Article Contaminated Land

UKAS Inspection Bodies Surveying Contaminated Land for Asbestos

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The United Kingdom Accreditation Service (UKAS) is establishing a pilot programme for the development of accreditation for ‘ISO 17020:2012 for the surveying of contaminated land for the presence of asbestos’. Essentially, asbestos surveyors (conversant with building surveys relating to management, refurbishment or demolition) could be undertaking the work of a contaminated land professional – without the relevant training, experience, competency or accreditation for investigating potentially contaminated land.

UKAS has held discussions with a number of parties regarding accreditation including representatives of the AGS, the National Brownfield Forum and SAGTA. These parties have raised considerable concerns principally because the proposals fail to understand the contaminated land investigation process.

UKAS has failed to address these concerns and the AGS Contaminated Land Working Group now feel we need to take this issue to our members and we are asking for your feedback by answering the poll below.

If you wish to provide further comments please do so.

The results of this poll will be shared with UKAS. The poll will close on 15th January 2021.

https://www.surveymonkey.co.uk/r/3CDNTDN

Article Data Management

Striding into the Future with AGS 4.1 – The Official Launch

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Members of the AGS Data Management Working Group recently held a webinar marking the official launch of AGS 4.1. Sponsored by Datgel and Geotechnical Engineering, the webinar, entitled, Striding into the Future with AGS 4.1, took place on Tuesday 8th December in front of a live audience including consultants, clients, ground investigator contractors and software vendors.

Over 520 delegates registered to attend the event which was viewed across the world in countries including Australia, Italy, New Zealand, South Africa, USA, Singapore, Malaysia, Hong Kong, United Arab Emirates, Canada, Germany and Estonia.

Event presenters included Jackie Bland (IT and Data Manager at Geotechnics and AGS Data Management Working Group Leader), Mark Bevan  (Associate Director, Data Management Team Leader at Structural Soils), Paul Chaplin (Data Manager, Ground & Water at WSP UK Ltd), Leon Warrington (Principal Hydrogeologist), Romain Arnould (Global Product Owner Digital Applications at Fugro), Peter Hepton (Principal Geotechnical Engineer and Ground Investigation Engineering Manager at SOCOTEC UK), Phil Child (Senior Consultant, Geotechnical Information Management at Bentley Systems) and Julian Lovell, (Managing Director, Equipe Group and AGS Chair).

After a successful webinar on 8th December 2020 AGS 4.1 is now available free of charge for download from www.ags.org.uk/data-format. The original AGS 4.0 document has been completely reviewed and AGS 4.1 represents a substantial update to the Data Dictionary including significant modifications to 14 existing groups and more importantly adding 24 new groups and 788 headings to introduce the following new subjects:

  • Major improvements for handling geoenvironmental data and environmental containers
  • Advanced laboratory testing
  • Drillers descriptions
  • Field geohydraulic testing
  • Wireline geophysics

To support the release of AGS 4.1, we have launched a new website found at www.ags.org.uk/data-format to facilitate:

  • improved discussion board interaction
  • published a road map for the future of the AGS Data Format
  • added a new searchable change log for the updates to AGS 4.1
  • improved search and download facilities for groups and headings, abbreviations, units and data types
  • easier route to proposed new headings, abbreviations, units and data types
  • easy access to previous versions of the format for reference purposes

We are immensely proud of the enormous effort the group has put into both AGSi and AGS 4.1 this year and would like to thank each member of the Data Management Working Group for their dedication to the industry, not forgetting our thanks also to their companies for the work-time donated to the AGS in 2020. The group will be having a well-earned rest over Christmas and the New Year before moving on to plans for the postponed Data Conference now happening on 22nd September 2021 at the National Motorcycle Museum, Birmingham.

If you missed this webinar, the recording is now live and available for free view on the AGS website which can be viewed HERE. Alternatively, it is available on the AGS’ Vimeo channel HERE.

Article Data Management

AGSi Launches Worldwide

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On 25th November, the AGS hosted a webinar entitled, Exchange of Ground Model and Interpreted Data – Introducing AGSi. The event, which was generously sponsored by Jacobs, marked the official launch of AGSi, which has been developed by the AGS Data Management Working Group.

Members of the AGSi sub-working group presented on the new exchange format released as beta during the webinar. Event presenters included Jérôme Chamfray (Chief Geo-Digital Engineer at Jacobs), Neil Chadwick (Independent Consultant & Digital Geotechnical Specialist), David Farmer (Geotechnical Engineer at Arup), Osvaldas Tylenis (Senior Software Engineer at Bentley Systems), Tony Daly (Managing Director at Amageo) and Julian Lovell, (Managing Director, Equipe Group and AGS Chair).

The virtual event was attended by delegates in USA, Canada, Brazil, India, South Africa, Australia, Russia, Malaysia, Europe and beyond.  Over 650 delegates registered for the free webinar, which was attended by specialists from various backgrounds including ground specialists, data scientists and software developers.

AGSi is a new format which has been created for anyone involved in the construction or sharing of ground models, whether they be geological, geotechnical, hydrogeological or geo-environmental, or as a solution for anyone who has found themselves looking for:

  • An industry standard non-proprietary method for transferring a ground model and/or interpreted geotechnical parameters to another organisation.
  • A way of importing your ground model into a BIM model that does not involve lots of reprocessing or data loss.
  • A common data format for ground information that your analysis software can understand, making automation of design workflows much easier.

The AGSi documentation is now live and can be accessed via the AGS website, under AGS Data Format (see below extract).

The AGSi sub-working group is looking for volunteers to contribute further in the development of the format so if you are a software developer, ground specialist with some coding experience or interested to learn more please reach out using the AGSi documentation site or by emailing ags@ags.org.uk.

If you missed this webinar, the recording is now live and available for free view on the AGS website which can be viewed HERE. Alternatively, it is available on the AGS’ Vimeo channel HERE.

Article Instrumentation & Monitoring

AGS Webinar: Critical Links in Ground Engineering

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On 4 November 2020, AGS held the first of what is expected to be a series of Webinars and Seminars under the title “Critical Links in Ground Engineering”.

The subject of the November Webinar was Instrumentation and Monitoring (I&M), with a future Webinar expected to be about Laboratory Testing.

The Webinar lasted for four hours, including a short break in proceedings, with an audience which comprised of nearly 70% consultants and I&M specialists, about 20% contractors, and just over 10% client organisations and academics.

The Webinar was introduced by Julian Lovell, Chairman of AGS, who also – in his capacity as Managing Director of the Equipe Group – contributed to proceedings with a concluding presentation addressing the UK’s strategy to develop training for installation and monitoring technicians which dovetails in with the development of Vocational Qualifications and compliance with the Standards.  Wider issues of education, training and qualifications were also included in this presentation.

Jonathan Gammon, as Leader of AGS’s I&M Working Group and Non-Executive Director / Advisor at Geotechnical Observations Limited, gave the first presentation, describing the scope and types of I&M and identifying the role of I&M as a critical link in Ground Engineering.

Philip Child, Senior Consultant, Geotechnical Information Management, at Bentley Systems followed with a presentation entitled “Data – Overhead, Deliverable, or Opportunity” which tackled the challenging issue of I&M data management and proposed an alternative way of thinking about data.  Attention was given to the specifics of working with monitoring data and the possibilities it provides.

Presenting live from New Zealand in the middle of the night there, Paul Burton, Executive Leader at Geotechnics (New Zealand) described the I&M situation in Australasia, providing a personal perspective on the challenges of I&M work in this region and introducing a valuable global dimension to proceedings.

Andrew Ridley, Managing Director of Geotechnical Observations Limited, then tackled the subject of international standards for geotechnical monitoring, tracing in particular their development and content from 2010 to the present day.  Standards currently in preparation, as well as those anticipated in the future, were identified, as were Technical Committees that have been formed to address I&M.

Opportunities were given to question the presenters during the Webinar.  Matters raised during the Q&A sessions included: responsibility for data interpretation; shortcomings of some Cloud platforms; the ability of AGS Format to accommodate the whole range of instruments and monitoring techniques now available; appropriate training of site staff and the skills set required; data formats developed in other countries in other languages; global growth of I&M and challenges in securing rapid delivery of instruments; the ability to access I&M data collected by others, with reference to national I&M databases available to all; liabilities associated with relying on I&M data provided by others; the specification of correction methods for instruments such as inclinometers; the durability of instruments and increased demands on their longevity.

The work of AGS on matters of relevance to I&M, including the revision of the UK’s “Yellow Book”, was described by Julian as he brought the Webinar to a close.

Additional Polls identified that just under 20% of attendees had a Civil Engineering professional qualification and almost 60% had a Geology professional qualification.  Countries represented stretched around the Globe from South America to New Zealand, so this was truly an international event.

Valuable feedback was received after the Webinar.  This was the first AGS Webinar for which payment was required.  On the day it was also competing for attention with the GE Awards, commencing immediately after the end of the Webinar, and the BGA AGM and Technical Presentation that evening.  So, it was very encouraging to find that it was rated overall at just over four stars out of five and 90% of the audience found it to be the correct length.  All agreed that they had gained new knowledge applicable to their work and a four-and-a-half stars out of five rating was given to attending future AGS webinars and recommending these Webinars to others.  Very helpful suggestions for the improvement of future Webinars and for future Webinar topics were also provided and have already received attention from AGS’s Executive.

The Critical Links in Ground Engineering webinar recording is now available for view on the AGS website by clicking HERE. This webinar is three hours long and is available at the reduced AGS member rate of £72, or the non-member rate of £108. All prices include VAT.

We’d like to extend our thanks to our brilliant line-up of presenters who made this event possible; Jonathan Gammon, Phil Child, Paul Burton, Dr Andrew Ridley and Julian Lovell. Thank you also to our five webinar sponsors; Geotechnical Observations, Geosense, Measurand, RST Instruments and Senceive.

Article

SiLC perspective on publication of Environment Agency guidance Land Contamination Risk Management (LCRM)

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By Dr. Tom Henman, Deputy Chair, Professional & Technical Panel, SiLC PTP

After a delay due to Covid-19, Land Contamination Risk Management (LCRM) was finally published by the Environment Agency in October 2020. LCRM replaces CLR11 Model Procedures for the Management of Land Contamination as guidance and the framework for all who are involved in or responsible for managing risks from land contamination in England.

The overall approach to risk management and remediation in LCRM is the same as the withdrawn Model Procedures for the Management of Contaminated Land (CLR11). However, two key elements are prominent in LCRM –which are particularly relevant to SiLC – relating to competence and the National Quality Mark Scheme for Land Contamination Management (NQMS).

LCRM makes prominent reference to the NQMS, which is a voluntary scheme set up by the National Brownfield Forum, and designed to improve confidence in the quality of land contamination reports. Suitably Qualified Persons (SQPs) who sign-off NQMS reports are accredited through the SiLC examination process and the SiLC Professional and Technical Panel is a strong advocate of the NQMS.

As well as highlighting the value of applying the NQMS to reports, LCRM also stresses the importance of identifying any uncertainties and limitations of data and any possible consequences. This is a mandatory requirement for sign-off of reports registered under the NQMS.

LCRM also states the expectation that those undertaking land contamination assessment and remediation will be competent at all stages. This means having the appropriate knowledge, skills, experience and qualifications in each specific area of LCRM and the type of contamination being dealt with. For planning related assessments, LCRM also refers to the National Planning Policy Framework definition of a competent person, i.e. ‘with a recognised relevant qualification, sufficient experience in dealing with the type(s) of pollution or land instability, and membership of a relevant professional organisation’. The SiLC Register was developed precisely with these considerations in mind, so this emphasis on competence is welcomed. Both SiLC and SQPs registered under the NQMS are referenced specifically in LCRM as appropriate qualifications to demonstrate competence.

Overall, SiLC welcomes the new guidance and its emphasis on high quality assessments by competent professionals as well as the application of the NQMS. For more information about the SiLC Register, please visit www.silc.org.uk.

Notes on SiLC:

The Specialist in Land Condition (SiLC) Register scheme was designed to support the recommendations of the Urban Task Force in 1999 and to recognise the skills of those working in the broader land condition sector.

A registered SiLC is a senior practitioner who has a broad awareness, knowledge and understanding of land condition issues, providing impartial and professional advice in their field of expertise. Entry to SiLC is gained through examination, which is held bi-annually. The SiLC Register brings together professionals from a broad range of backgrounds who advise on land condition matters.

The SiLC Register is run and administered by a Professional and Technical Panel (PTP), which comprises representatives from the supporting professional bodies and senior professionals. The PTP develops and implements the registration process and is the ruling committee for individual registrations.

Article Loss Prevention

Professional Indemnity Insurance Update

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Tags: Featured PI Insurance Premiums

As we commence a New Year, the availability and cost of Professional Indemnity (PI) insurance remains a key concern for many practices.  It is likely that many will have experienced the consequence of market contraction throughout 2020 and unfortunately, with insurance capacity continuing to decline, 2021 is unlikely to offer any respite.

It is therefore more important than ever to understand what is driving insurers’ current thinking and what firms can do to protect their position.

Understanding the insurance market cycle

Like many other financial institutions, insurers are bound by capital solvency requirements.
This means that they need to maintain a certain ratio of assets to liabilities to ensure they can meet their obligation to pay claims.  The amount of business an insurer can write is dependent upon the amount of capital they hold in reserve.  When the supply of capital reduces, insurers will take on less business and when it is readily available, they will be able to write more.  That fluctuation in the availability of capital is a key driver of the insurance market cycle, and in turn, the availability and cost of insurance.

Reports suggest that there has been an ‘over supply’ of capital in recent years.  This, coupled with ever increasing commercial pressures, has contributed to a relaxation of underwriting discipline.  In other words, the level of competition within the PI sector has led to behaviours such as the under-pricing of risk, taking on too much exposure and making insufficient allowance for claims.

As the effects of that manifest, the return on investment reduces and capital begins to withdraw from the market; many insurers are not able to take on the same volume of business and some (as we are now seeing) may withdraw from certain market segments (e.g. professions or types of work) or entire classes of insurance.

As a result, problems can arise with the availability and cost of insurance and the breadth of cover provided.

Particular PI insurance challenges for Consultants in the Built Environment

As a specialist class of insurance with long-tail liabilities, PI insurance has traditionally been more susceptible to significant changes than the wider insurance market. Allied to that, is the perceived evolution in risk profile of the construction / built environment sector.

Although the PI market looked very different in early 2017, the cracks were already beginning to show. Even at that point, there was an acknowledged growing risk versus reward imbalance, with construction professionals being asked to do more, for less, under increasingly onerous contracts.

Unaware or unconcerned with the implications, certain insurers continued to focus on growth in (or retention of) market share rather than long-term viability.  Those behaviours were impacting the market, and it was only a matter of time before the effects of that would take hold and capital would begin to exit.

Even before anyone had heard of COVID-19, it seemed inevitable that conditions within the PI insurance market were set to change.  The impact of the combination of events over the last few years: the failure of major contractors; the tragedy of Grenfell and subsequent questions concerning the quality of our buildings; the regulation of construction and the resultant potential legacy risk for insurers.

The availability of insurance capacity will be one of the biggest challenges as we move through the year ahead. It is inevitable that the market will continue to contract and with that we are likely to see a much harder line taken by those Insurers that continue to offer capital within the PI sector for those professions active in the built environment. Insureds should be prepared for:

Further premium increases: By how much is very difficult to say, as this will be heavily dependent upon how low your insurers have been prepared to cede to market pressures in the past. Those insurers that have focused purely on market share at any price will be the ones that are in the greatest need of corrective action to their book of business. Some insurers simply felt that correction was commercially impossible and have exited the market altogether Those that remain can be a lot more selective about which risks they will take on. In some cases, insurers may not offer renewal terms to those exposed to higher risk areas of work or to those practices with poor claims performance.

Higher excess levels: Those practices that are currently paying an excess of less than 1% of their fee income should expect to see higher excesses being imposed. For some areas of high-risk work, insurers may insist that the excess is also applied to defence costs.

Narrowing of coverage: Any one claim coverage has long been a feature of the UK PI market, although AGS members will be aware that any one claim coverage was removed some 20 years ago in relation to pollution and asbestos, with most insurers restricting coverage to aggregate limits only.  In the current marketplace, aggregation of all elements of coverage is being introduced as a way to deal with exposure to other high-risk areas of work. Unfortunately, for the geotechnical sector they are generally viewed as working in the part of the project cycle with the most severe risks and therefore when a hard market sets in, they are often amongst the first to be hit with the most severe coverage restrictions.

What can Insureds do to protect their position?

There is no doubt that the year ahead will be a challenging one commercially. Whilst it is not possible to control what is happening within the Insurance market, there are some steps that insureds can take to help navigate the difficult road ahead.

Early engagement with your broker is vital to ensure you have time to deal with issues that may arise throughout the renewal process. In 2021, time will be a required asset not a luxury. If your insurer has chosen to withdraw from the geotechnical sector or is only prepared to offer aggregated coverage, the earlier you know about this the more time you have to explore alternative solutions. Even small practices should engage with their broker at least 2 months in advance to ensure there is sufficient time to navigate problems that could well arise. Much larger practices should be engaging 6-months ahead of renewal date.

Insurers are requesting far more information than ever before – be prepared to answer additional questions about your Business, particularly around activities of work that will be deemed by the insurers as ‘higher-risk’. AGS members are more likely to be exposed to higher-risk activities by the very nature of the work they undertake (contaminated land, asbestos, basements, tunnels, railways to name but a few).

With the implementation of lockdown and most practices working from home, businesses have had to rapidly adapt their working practices. Insurers will want to understand how risk management procedures continue to be implemented in this changed environment. How do you go about the Q+A process, who signs off on work undertaken by more junior staff etc.? Many insurers now have a question set around COVID-19 and how the business is dealing with the new challenges this presents.

Insurers will want to understand your contractual risk management procedures: do you use them; are you successful in managing liability by way of financial caps and exclusions? do you use industry standard documents?

For those who have been unfortunate enough to be involved in a claim, prepare to be under more scrutiny. A post claim review may be required by insurers but even where it isn’t, drawing up a ‘lessons learned’ document can be a highly effective way to show that you have actively taken steps to avoid running into the same issues.

Work closely with your broker to help to identify particular risks that your business presents to the market and construct a narrative around why those risks have been identified, and how they have been understood and mitigated. Do not underestimate the value of a well conceived and constructed narrative or indeed a general overview of the way in which your business operates. If you can tell a good story about how you run your business, you need to make sure that your insurer hears it from a source that they respect.

At the end of the day, PI costs are going up. The more that you understand insurers’ concerns and, more importantly, how effectively your submission addresses those concerns, the better.

Griffiths & Armour Professional Risks are specialist professional indemnity brokers and risk managers. We advise a number of professional bodies across the construction industry, including ACE, and our specialist Scheme includes many AGS members.

Griffiths & Armour are not immune to changes within the PI market but our long-term approach to sustainable placement and trusted status in the insurance community mean that we remain capable of securing ‘Any One Claim’ cover notwithstanding the general market move to ‘Aggregate’ limits in your sector.

If you have concerns regarding your existing PI arrangements, we would be more than happy to discuss these with you.  Don’t wait until renewal is upon you, do get in touch early and let’s make sure we have sufficient time to help you achieve the best possible outcome.

Sarah McNeill
Associate Director

Griffiths & Armour Professional Risks

0151 600 2071
smcneill@griffithsandarmour.com

www.griffithsandarmour.com

Griffiths & Armour is authorised and regulated by the Financial Conduct Authority

Article

Q&A with David Hutchinson

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Tags: Featured

Name:  David Hutchinson
Job Title:  Route Asset Manager (Geotechnics) – Now retired
Company:  Network Rail Infrastructure Limited

During my geotechnical career I have worked for a variety of organisations in consulting, contracting and asset management in the UK, Canada, Republic of Ireland, United Arab Emirates and Hong Kong.  For the last 14 years of my career, up to 2017 when I retired, I worked in Network Rail, firstly for Network Rail (CTRL) as the Civil Engineering Asset Manager for the High Speed 1 railway, and then as Network Rail’s Geotechnical and Drainage Route Asset Manager for the London North Eastern and East Midlands Routes, based in York.

What or who inspired you to join the geotechnical industry?
In the second year of a general engineering degree I attended a short course on Soil Mechanics given by Professor Andrew Schofield which inspired me to undertake half of my final year studying Soil Mechanics and Geotechnical Engineering under Andrew, Dr Peter Wroth and others.  I then joined Soil Mechanics Limited, who encouraged their graduates to attain a second degree.  Imperial College was the choice for many, but I wanted to go further afield, and so studied at the University of Alberta under Professor Morgenstern, who like Andrew Schofield and Peter Wroth was a Rankine lecturer of the early 1980’s. The enthusiasm of geotechnical practitioners and academics for their subject has kept me in this industry for my whole career.

What does a typical day entail?  
There hasn’t really been a “typical day”.  But while working for the railway my phone was with me 24/7.  (Night time calls from railway control heralding some disaster or other were not unusual – guaranteed to dramatically increase the heart rate!)  First thing in the morning I always checked the weather forecast to see what challenges nature was going to throw at me that day, and then checked my emails to see what challenges I was going to get from my colleagues!  Although retired I still check the weather forecast and emails every morning, but at night always leave my mobile phone out of earshot!

Are there any projects which you’re particularly proud of? 
Over the years I have worked on many projects, and I’m proud of them all.  But I’m particularly proud of the people I have worked with, from the drillers in my earliest days supervising ground investigations, through my resident site staff on Landslip Preventive Measures works in Hong Kong, to the team working with me in York.  I like my HK Government given Chinese name 夏,智信 which sounds like my surname and translates as “Mr Summer, wise and trustworthy”!  But my proudest moment was when my line manager in York, in front of my peers, held up my staff as an example of a high performing team!  My advice is to always surround yourself with able and enthusiastic people!

What are the most challenging aspects of your role?  
The challenges at Network Rail were mostly administrative, particularly new initiatives and reorganisations.  I had 8 different line managers during my last 7 years of full-time work!  But the geotechnical task remained the same, and being a small specialist discipline, we were usually left to get on with the job.  It’s very satisfying when things are going smoothly, but there are periods of intense pressure when the railway is closed by a landslip, particularly if a train is derailed.  Route Asset Managers are Key Safety Posts having ultimate responsibility for the actions and consequences of the work of their team regarding passenger and public safety.  However, managing such incidents is the most “exciting” part of the job – leading the recovery by rapidly assessing the problem and the time needed to fix it, organising the response, communicating with the parties affected, and completing the work quickly and safely within the timescales you have given.  My rule was always under promise and over deliver (extending promised completion dates does not go down well!).

What AGS Working Groups are you a member of, and what are your current focusses?
I have been a member of the Loss Prevention Working Group since 2003.  Being in the LPWG and employed by a client organisation is rather unusual, as one of the group’s aims is to minimise our members’ business risks when dealing with their clients!   I became interested in the law in the 1980s while investigating geotechnical failures for cases of litigation in the High Court.  In Hong Kong I had the opportunity to study for a law degree, and on return to the UK a former colleague and chair of the AGS suggested I join the LPWG.  In 2007 (actually while standing in a WW1 German trench on Vimy Ridge!) I received a call asking if I would like to become LPWG chair, a post I held until 2014.  I joined the Business Practice Working Group in 2019.

Since 2003 I have helped to produce AGS documents such as Loss Prevention Alerts, Client Guides and Guidance generally, over a range of topics.  Currently I am updating our Guide to Training Paths for Geoprofessionals, and producing a Client’s Guide to the Selection of Geotechnical Advisers.  I review the downloads of AGS documents from the website to help spot trends and determine which topics are of most interest to our members, and I am updating our archives by collecting copies of published AGS documents which are no longer available for downloading.

What do you enjoy most about being an AGS member? 
I enjoy making a contribution to an industry which has given me the opportunity to work and live in a number of interesting places and to meet so many interesting people.  I want to help clients better understand the issues facing geotechnical practitioners, and to help clients better manage their infrastructure, in particular in the transport sector where I am continuing my membership of the Geotechnical Asset Owners Forum as the AGS representative.

What does your company find beneficial about being an AGS Member?
One of Network Rail’s aims is to create professional and mutually beneficial relationships with its suppliers.  In 2013 NR became the first AGS Client Affiliate Member.  The activities of the AGS and the documents it publishes help NR geotechnical staff broaden their knowledge and experience of the current issues in the industry.

Why do you feel the AGS is important to the industry?
The country must maintain its ability to deliver new infrastructure quickly, efficiently, cost effectively and without damaging existing infrastructure or endangering lives.  The infrastructure must then be maintained to high standards.  The AGS helps to maintain high standards and integrity of ground engineering and geoenvironmental practice, disseminating up to date practical knowledge including industry relevant health and safety guidance, minimising business risks and presenting a coherent industry voice.  It provides a forum for dialogue within the industry, and informs clients and other professionals how to engage with and what to expect from their geotechnical and geoenviromental advisers.  It also helps to explain to clients the risks associated with different engineering solutions and that lowest price for geotechnical and geoenvironmental work does not necessarily give the best investment and long term value for their project.

What changes would you like to be implemented in the industry?
The industry needs to be attractive to a diverse workforce, as described in a recent AGS webinar, to help reduce future shortages of skilled people.  It must continue to strive for more widespread use of ground information in the AGS data format.  Use of remote sensing, readings from large numbers of sensors on or in the ground and digital data from ground investigations will lead to the use of novel analytical techniques including machine learning and artificial intelligence.  People with the relevant data management and computing skills will be needed to carry out this work, in addition to those with civil engineering, geology and geoscience backgrounds.  A wider discussion is required on how the industry can reduce its carbon usage.