A fatal trench collapse on a construction site in Banstead, Surrey has resulted in more than £1 million in criminal fines, alongside a suspended prison sentence for a contracts manager.
The case is a serious reminder for groundworks contractors, demolition contractors, civil engineering firms, principal contractors and construction business owners across Essex, Kent and London. A major site incident does not create one financial problem. It creates several, and insurance only responds to some of them.
The court proceedings followed the death of Gheorghita Arsene, who was fatally crushed when a deep trench collapsed at a Surrey construction site in June 2020. His death was tragic, and the HSE has described it as preventable. The case also raises important questions about employers’ liability insurance, criminal fines, the Employers’ Liability Tracing Office and what happens when a contractor later goes into liquidation.
What happened at the Banstead site?
Gheorghita Arsene was working at a construction site in Banstead, Surrey, where a damaged pipe was being replaced at the bottom of a deep excavation.
The trench had no suitable supports in place, and excavated soil had been piled close to its edge. The trench walls collapsed, burying Mr Arsene under approximately two tonnes of soil. Despite rescue attempts, he sadly died at the scene.
Following a three-month trial at the Old Bailey, Appledorn Developments Limited and T Vaughan Limited were found guilty of offences under the Health and Safety at Work etc. Act 1974. Contracts manager Anthony O’Connor admitted the same charge of failing to discharge his duties.
Judge Judy Khan fined:
- Appledorn Developments Limited: £500,000
- T Vaughan Limited: £650,000, plus £40,000 in costs, with six years allowed for payment
The now-defunct Appledorn was criticised for failing to provide a safe system of work and for being motivated by a desire to complete the work quickly and cheaply. T Vaughan had systems in place, but the court found that they had not been sufficiently implemented.
Mr O’Connor received a sentence of 10 months’ custody, suspended for 18 months, and was ordered to complete 150 hours of unpaid work. The judge found that he had “actual foresight” of the risk of harm.
The HSE’s account of the prosecution makes the central point plainly: basic precautions were not in place despite the well-known risks associated with excavation work.
The three financial consequences of a serious incident
From an insurance perspective, the most important lesson is that a fatal incident usually develops along three separate tracks.
1. The criminal fine is paid by the business
Criminal fines cannot be insured. That is settled UK insurance law and public policy.
The reason is straightforward. A fine is intended to punish and deter criminal conduct. If a company could simply pass the fine to its insurer, the deterrent effect would be undermined. Therefore, the £500,000 and £650,000 fines in this case sit with the businesses themselves, regardless of any employers’ liability, public liability or construction policy they may have held.
This is worth stating clearly because businesses sometimes assume that a broad Construction Contractor Insurance package will respond to every cost following an accident. It will not cover the criminal penalty itself.
The same principle applies to a director or manager. A policy may, depending on its wording, provide defence costs for certain regulatory or health and safety proceedings, but it will not lawfully pay a criminal fine imposed on an individual.
2. The civil compensation claim is separate
The criminal prosecution is not the same as the civil claim brought by Mr Arsene’s family.
The two processes involve different legal tests, different procedures and different financial outcomes. The criminal court decides whether an offence has been committed and imposes a sentence. A civil claim considers compensation for the death and related losses, and may be settled or contested independently of the criminal proceedings.
This is where employers’ liability insurance is designed to respond.
Under the Employers’ Liability (Compulsory Insurance) Act 1969, most UK employers must hold employers’ liability cover. The statutory minimum is £5 million, while many policies provide £10 million or more. The cover is intended to fund compensation claims and associated legal costs where an employee is injured, becomes ill or dies because of their work.
That does not mean every claim is automatically paid. Liability, causation, policy terms, limits and exclusions still matter. But employers’ liability insurance exists specifically for this type of civil exposure.
3. The underwriting and reputational record remains
The third consequence is less immediate but can affect the business for years.
HSE enforcement actions and convictions are public record. Insurers already consider claims experience, health and safety procedures, subcontractor controls and enforcement history when assessing construction risks. Clients awarding tenders may also ask about prosecutions, improvement notices and serious incidents.
For T Vaughan, which continues to trade and has been given six years to pay its fine, the conviction will form part of the firm’s future risk profile. It may influence renewal terms, premiums, excesses, available limits and the number of insurers willing to offer terms.
It may also affect tender decisions. A conviction does not automatically make a contractor uninsurable, but it does mean that future insurers and clients are likely to ask more questions.
What happens if the contractor goes into liquidation?
Appledorn Developments went into liquidation in 2023, three years before the trial concluded. Ordinarily, pursuing compensation against a company that no longer has assets or is no longer trading can be difficult.
This is where the Employers’ Liability Tracing Office, or ELTO, becomes important.
Established in 2011, ELTO maintains records of more than 40 million employers’ liability policies spanning more than a century. Its purpose is to help claimants and their legal representatives identify the insurer that covered an employer during the relevant period.
The employer may have changed its name, merged, ceased trading or entered liquidation. Provided valid employers’ liability cover was in place at the time of the incident, a claimant may still be able to pursue the relevant insurer through the civil claims process, subject to the law, policy terms and available limits.
ELTO does not pay compensation itself. It helps identify the insurer. The claim must still be established through the normal legal process.
This is why accurate insurance records matter from the first day of trading. Contractors should retain employers’ liability certificates and schedules for at least 40 years as a sensible long-term record, particularly because occupational disease and some injury claims can arise many years after the employment period.
Keep records of:
- The exact legal name of the insured business
- Previous trading names and company names
- Subsidiaries and associated companies
- Employers’ reference numbers and PAYE details
- Policy numbers, insurers and renewal dates
- Changes following incorporation, restructuring or acquisition
The name on the policy should match the entity actually employing the workers. A trading name alone is not always enough.
Why excavation risk is closely watched by insurers
Construction remains the UK industry with the highest number of fatal workplace injuries. HSE’s latest figures record 25 construction worker deaths in 2025/26, with a fatal injury rate around 4.8 times the all-industry average.
Across all industries, 18 fatalities in the same period involved people being trapped by something collapsing or overturning. That category includes trench and excavation failures. It is smaller than the category covering falls from height, but it remains a recurring cause of serious injury and death.
For groundworks and demolition firms, trenching is not an occasional risk that can be dealt with through a generic method statement. Ground conditions change, water enters excavations, plant creates vibration and spoil placed too close to an edge can increase pressure on the trench sides.
Underwriters looking at Construction Contractor Insurance will want to understand how the risk is controlled in practice, not only whether the paperwork exists.
Practical steps for groundworks and demolition contractors
At a minimum, contractors should review whether they have:
- Competent temporary works design and supervision
- Suitable trench support, battering or benching
- Edge protection and properly controlled access
- Daily excavation inspections, with findings recorded
- Permit-to-work arrangements for higher-risk excavations
- Exclusion zones around trench edges and operating plant
- Ground condition surveys and checks for buried services
- Controls for water ingress, vibration and nearby structures
- Adequate supervision when work is under time or cost pressure
- Clear responsibilities between principal contractors and subcontractors
Directors, contracts managers and site supervisors also need to understand that individual liability is real. The sentence given to Mr O’Connor demonstrates that safety duties are not limited to the corporate entity.
From an insurance perspective, employers’ liability should be reviewed alongside public liability, contract works and plant cover. General Contractor Liability Insurance is often used as a broad description, but the individual sections of the policy matter. Public liability may respond to injury or damage suffered by members of the public or other third parties, while contract works and plant cover address different property and equipment exposures.
Directors and managers should also ask whether D&O or management liability insurance can assist with defence costs in regulatory proceedings. This depends heavily on the wording. Defence costs may be covered in some circumstances, but fines remain uninsurable and exclusions may apply where conduct is deliberate, dishonest or reckless.
At renewal, disclose enforcement notices, prosecutions and serious incidents accurately. Trying to minimise or omit a known prosecution can create a separate coverage problem and will usually make the underwriting conversation more difficult.
For contractors looking for Business Insurance Essex, Business Insurance London or cover across Kent, the practical objective is not simply to find the cheapest premium. It is to make sure the policy reflects the work actually being carried out, the limits are adequate and the historic records can be traced if a claim arises years later.
The practical conclusion
The Banstead case should not be treated as just another headline about a large fine.
It demonstrates that one serious site incident can create an uninsured criminal penalty, a potentially substantial civil compensation claim and a long-lasting underwriting and reputational record. Employers’ liability insurance cannot prevent unsafe work and cannot pay a criminal fine, but it can provide the financial protection intended for compensation claims involving employees.
For businesses that later cease trading, ELTO may be critical in helping a bereaved family trace the insurer that stood behind the employer’s policy. That makes accurate policy records, correct insured names and proper disclosure more than an administrative task.
The first priority remains preventing the incident. The second is making sure that, if the worst happens, the business, its people and those affected are not left without the right protection.
General information only. This article is not legal, health and safety or insurance advice. Contractors should obtain advice based on their own activities, policy wording and circumstances.
Frequently asked questions
Can criminal health and safety fines be covered by insurance?
No. Criminal fines cannot generally be insured in the UK because doing so would undermine their deterrent purpose. A business must pay the fine itself.
What does employers’ liability insurance cover?
Employers’ liability insurance is designed to cover compensation claims and legal costs where an employee is injured, becomes ill or dies because of their work, subject to the policy wording, limits and exclusions.
What happens to an employers’ liability claim if the company has gone into liquidation?
A claimant may be able to identify the historic insurer through ELTO and pursue the civil claim against the relevant insurer, subject to the applicable legal process and policy terms.
How much employers’ liability insurance must a UK contractor have?
The statutory minimum is generally £5 million. Many employers’ liability policies provide £10 million, but contractors should review their contractual requirements, workforce, activities and potential claim values when selecting limits.
Can D&O insurance pay a health and safety fine?
No policy should be assumed to cover a criminal fine. Some D&O or management liability policies may provide defence costs for certain proceedings, but this depends on the wording and exclusions, particularly where deliberate or reckless conduct is alleged.