TURMOIL and confusion were rife at the firm in charge of the maintenance of an arts centre where an outbreak of legionnaire's disease left seven people dead and 172 infected, a court heard.

In the summer of 2002, the deadly bacteria that causes legionnaire's disease was spraying from ventilation ducts from cooling towers at Forum 28 in Barrow, Preston Crown Court was told.

Barrow Borough Council, which owned Forum 28, and Gillian Beckingham, of Grange-over-Sands, head of the council's design services department, both deny seven counts of manslaughter, in the first trial of its kind in British legal history.

The maintenance firm employed by the council for Forum 28 was Interserve Facilities Management and the company's commercial manager Stephen Maddock negotiated with Mrs Beckingham over the contract for Forum 28's management.

Mr Maddock told the court he never put together a written contract for the work and, by the time he realised no contract had been drawn up, in April 2002, he was "in effect" too embarrassed to approach the council to say so.

He told prosecuting barrister Alistair Webster QC that at the time of negotiation, his firm was "in turmoil" with one office closing and staff leaving as the business reorganised.

Under cross-examination, he said the forms he produced would not tell the engineers what work to do and he said a new computer system at the firm "wouldn't work, basically".

Mr Maddock told the court he had a £500,000 annual target for new contracts but he denied that had made him "desperate" for new business.

He also told the court he had inspected Forum 28, repeating what he had said in statements to the police, but was asked by Mrs Beckingham's defence barrister Peter Birkett QC what lay outside the door to the cooling towers.

"The tank room," he said. But Mr Birkett replied: "It's an outside car park."

Andrew McDonald, an Interserve engineer who did the maintenance of Forum 28, agreed with the council's defence barrister Mark Turner QC that the working atmosphere at Interserve was "rife for confusion". Mr McDonald told the court he visited Forum 28 in January 2002 and saw "major problems" with the general condition of the air system.

"It was so outdated, it was dangerous," he said, adding he told Mrs Beckingham that parts of it needed replacing and would cost around £125,000.

The trial continues.