How to protect your farm business from liability claims

Increasing regulation, inspection and risk on farms can open businesses and individuals up to unlimited liabilities. Suzie Horne asked lawyer Gary Gallen of Rradar how farmers can protect themselves.

What are the most common areas of liability affecting farmers?

Environment and waste issues, health and safety (including vehicle claims), employment issues, then contract disputes, property and tax.

The Single Payment Scheme and other CAP payments, renewable energy projects and planning also commonly give rise to the need for advice.

See also: Oil under your farm? What to do if the drillers come knocking

The stakes have been getting higher since a change in March this year which means there is no upper limit on fines that magistrates can impose for some offences which in the past would have carried a maximum £5,000 fine.

What can farmers do to reduce their exposure to liability?

First, those running farm businesses need to have a business response plan for any emergency or incident so that individuals and businesses do not inadvertently put themselves at a disadvantage.

This would, for example, ensure any employee would know how to respond to an official coming on to the farm if the responsible person was not immediately available.

Who can come on to the farm at no notice?

The police (the only authority to have powers to force an entry), Defra, Health and Safety Executive (HSE), Environment Agency (powers to force an entry in an emergency), HM Revenue & Customs, the Driver and Vehicle Standards Agency, the competition authorities and Department for Business Innovation and Skills investigations department.

Farming needs to have a healthy relationship with the authorities – they are there not only to regulate but also to consult, advise and provide guidance.

There is often a fear of authority and at the same time a willingness to help, especially if there has been a serious accident or incident within what will often be a small working team where the members know each other very well.

This can lead to very emotional first accounts.

You should always allow these authorities entry and do not take a questioning or unco-operative stance.

Simply ask the reason for the visit. If you refuse entry, this can be an obstruction of process and could open you up to prosecution.

However the authorities also need to be forthcoming about their reason for the visit. If it is routine, they should say so – if it is because of a report, or an incident or accident, or suspicion, they should also say so.

© FLPA/Rex

Do I have to answer their questions?

That depends – only the HSE has the power to ask a question and compel an answer.

It does not, however, have the power to compel a statement.

You should ask what powers any authority is using and why they are using those powers.

Do not hesitate to write down their response.

All authorities are required by law to read a caution to anyone who they want to question if they suspect that the person has, or may have, breached the law.

You have a right to silence under caution and that caution should also clearly offer a chance to get independent legal advice.

It is also reasonable for you to ask them to wait until your legal adviser arrives or has spoken with you on the phone.

What can I discuss with my legal adviser?

Anything – and it is very important to understand that anything you do discuss with the legal adviser has legal privilege, so cannot be called into court as evidence.

So, if any report or expert witness work is needed, even from, say, your accountant, it should be requested through the lawyer so that it also has legal privilege.

This makes it vital to get legal advice early.

What if they come for a routine inspection and find something?

The HSE, for example, can carry out a routine inspection and, if it finds a material breach of the law, will raise a fee for the intervention.

If a breach is found, your legal adviser will be able to recommend whether you should accept the fee or not, and agree a timeframe for any next step with the authority.

If you are to be interviewed under caution, a lawyer can get access to information about the offence under investigation and the evidence held by the authority, which can help prepare for the interview.

When a person is on their own, they may not gain access to that information and this could prejudice their defence.

A lawyer gets advance notice and can often delay the interview to get time to properly respond.

Is there anything about farming  that complicates or intensifies liability issues?

Friendships and family relationships can cause problems when trying to determine liability.

People may try to cover for others in an effort to protect them.

Vested interests may obstruct the natural course of a liability investigation – potential witnesses may close ranks if they feel that any of them is under threat.

Regulators/investigators may suspect that they are being obstructed or lied to in order to protect either an individual or the long-term viability of a business.

Is farming open to fraud as much as any other business?

There are a great many areas in which fraud may rear its ugly head in the agricultural sector.

We have advised in food fraud cases (for example the horsemeat scandal), fake chemicals, fake pharmaceuticals, CAP wrongful claims, agricultural subsidies (false claims on various schemes), livestock irregularity, grant payments/funds misappropriated, deliberate infection of disease, failure to keep proper records, illegal movements, incorrect meat labelling, plant health issues and incorrect grading of eggs.

Consider farm cover

Insurance is available for the management liability of directors and officers of companies and other businesses but the extent of cover varies.

Hull-based Rradar is the legal adviser contracted to advise policyholders of Rural Protect on a 24-hour basis. This is a new insurance product from HB Underwriting, backed by AXA and offered through brokers.

It covers investigation and prosecution by regulatory bodies such as the Health and Safety Executive and Environment Agency. It claims to differ from competing policies in that it does not carry a clause stipulating cases must have a 51% chance of success for cover to be given.

It covers the PR costs of incidents and professional fees such as those of barristers, forensic accountants, expert witnesses and environmental consultants, as well as employment law advice.

Those with responsibility for businesses can face liability claims, whether they are a company director, sole trader or partner. These can put not only the business assets at risk of a claim but also often personal assets.

In a partnership, each partner is jointly liable with all the other partners for all of the debts and obligations of the partnership, which were incurred during the period of membership.

Each partner is also jointly and severally liable for any losses or damages arising from wrongful acts or omissions of any of the partners, carried out in the course of the partnership business or with the authority of the partners.