Legal Watch:Personal Injury12th February 2015Issue: 051

Events

Plexus and Greenwoods hold a series of events which are open to interested clients. See below for those being held in the next few months:

The Major Bodily Injury Group (MBIG) | Spring Seminar | 28.04.15 | The Wellcome Collection, London

In This Issue:

• Employers’ liability

• Costs/controlling party

• From within Plexus Scotland

• Watch this space

Employers’ liabilityIn Graham v Commercial Bodyworks Ltd (EWCA) Civ 47 we have another example of the Court of Appeal rejecting an employer’s possible vicarious liability for injuries caused by one employee to another.

The defendant/respondent operated a bodywork repair shop. The claimant’s co-worker, another employee, used a cigarette lighter in his vicinity after sprinkling his overalls with an inflammable thinning agent. As a result, the overalls caughtfireandtheclaimantsustainedseriousinjuries.Accordingtotheir contracts of employment, employees were permitted to decant only the approximate amount of thinner required for the job being done and were then required to pour unused thinner into a waste tank. Smoking was not permitted anywhere in the workshop. There was evidence that the claimant and his co-worker had been “mucking around” and chasing each other just before the incident and the co-worker had been seen to spray something out of a container onto the back of the claimant’s overalls. There was no suggestion that the co-worker intended to cause serious harm to the claimant, who was his long-standing friend. The defendant described the incident as “horseplay”. The judge regarded that as a gross underestimate of the co-worker’s actions, which he categorised as a “serious assault”, and held that the defendant was not vicariously liable for the co-worker’s actions.

The claimant appealed submitting that the defendant had created the risk of injury to its employees by requiring them to work with an inherently dangerous substance, namely the thinning agent, so that the risk of injury from misuse of that substance was inherent in the nature of the business. Accordingly, the co-worker’s conduct was so closely connected with what he was employed to do that the defendant should be held vicariously liable.

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‘…the relevant inquiry was whether the co-worker’s conduct was “so connected” with acts which the defendant authorised that they might rightly be regarded as modes – albeit improper modes – of doing them.Dismissing the appeal, the Court of Appeal held that the relevant inquiry was whether the co-worker’s conduct was “so connected” with acts which the defendant authorised that they might rightly be regarded as modes – albeit improper modes – of doing them. Since Lister (2001), it was no longer the law that intentional acts were not usually to be regarded as connected with acts authorised by an employer. On the facts of the instant case, although the defendant did create a risk by requiring its employees to work with thinning agents, it could not be said that the creation of that risk was sufficiently closely connected with the co-worker’s highlyreckless act of splashing the thinner onto the claimant’s overalls and then using a cigarette lighter in his vicinity.

The UK authorities tended to resolve themselves into two groups, namely cases in which the use of reasonable force or the existence of friction was inherent in the nature of the employment; and cases such as those arising from intentional acts at the workplace, whether horseplay or more serious conduct, which did not usually give rise to vicarious liability. The instant case fell into the latter category. The most recent English authorities on pranks at work brought to the attention of the court pre-dated Lister. Greater reliance was placed at the trial on a series of Scottish cases. Accordingly, the fact that the defendant had vested discretion in the co-worker to use the thinners and that he was obliged to do

so carefully by reason of his contractual obligations did not carrythematteranyfurther.Thatwaslittledifferentfromanyemployer-employee relationship. The fact that the defendant couldbesaidtohavecreatedtheriskwasnotsufficienttoimpose liability. The real cause of the claimant’s injuries was the reckless conduct of the co-worker, which could not be said to have occurred in the course of his employment.

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Costs/controlling partyWe are beginning to see an increase in the number of cases in which a non-party is being joined into proceedings for the purposes of a costs order. That is what happened in Excelerate Technology Ltd v Cumberbatch and others (2015) EWHC 204 (QB).

Judgment had been handed down at an earlier trial and the instant hearing related to various costs orders sought by the successful claimant. Of particular relevance to this report was an application to join an individual as an additional defendant for the purpose of determining his liability for costs. The claimant relied primarily on the wide discretion affordedtothecourtunder S51 Senior Courts Act 1981.

The grounds for the application were:

• The individual had complete control over the manner in which the second defendant conducted its defence

• Thatdefencewasinextricablyboundupwiththefirstdefendant’s defence

• The defences of both defendants have been nothing but a tissue of lies

• The principal reason for the legal costs being incurred was the advance of a false defence

• The individual was the person responsible for the second defendant’s failure to give proper disclosure

• Hestoodtobenefitfromthesuccessfuldefenceoftheclaim in the sense that the compensation judgment would be executed on the second defendant’s assets and he was a 97% shareholder

• It is probable that his monies and the second defendant’s monies were one and the same thing in the sense that he was able to determine what sums have been paid out to him (about which there had been no disclosure)

‘…it would only be just, fair and reasonable that the individual should be joined to the proceedings for the purposes of costs’The deputy High Court judge noted that in his judgment at the conclusion of the trial he had found most, if not all of these claims, to be justified. In the circumstances, hefound that it would only be just, fair and reasonable that the individual should be joined to the proceedings for the purposes of costs.

The judge allowed an increase in the claimant’s costs budget and then moved on to consider whether costs should be awarded on the indemnity basis. The general proposition is that indemnity costs are appropriate where the facts of the case and/or the conduct of the parties were such as to take the situation ‘out of the norm’ i.e. ‘exceptional’. Having reviewed the defendants’ conduct, including that of the individual, the judge found that their conduct both before and during the proceedings had been reprehensible and ‘exceptional’, and he awarded indemnity costs to the successful claimants.

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From within Plexus ScotlandDirector not liable for lack of employers’ liability insuranceIn Campbell v Peter Gordon Joiners Ltd, a company failed to put in place valid employers’ liability insurance.The Inner House of the Court of Session (Court of Appeal equivalent) has ruled that the pursuer, apprentice joiner William Campbell, who raised an action for damages after being injured at work, will be able to pursue his claim against his insolvent former employer but not against the company’s sole director. No civil liability attached to the director for any breach of the Employers’ Liability (Compulsory Insurance) Act 1969, as the obligation created by the act was imposed on the employer and not, where the employer was a corporation, on the directors. By a 2-1 majority the court allowedanappeal against adecisionof the judgeat firstinstance, which held that the director should be held liable for his failure to obtain insurance against the risk of workers sustaining injury in the course of their employment.

Dissenting, Lord Drummond Young held that the Ss1 and 5 of the 1969 Act did impose civil liability upon any director who had consented to a company’s failure to insure, or who has connived in or facilitated any such failure to insure.

But the two other judges held that it could not be said that it was Parliament’s intention to impose civil liability on a director in the event of a corporate employer’s failure to insure – to do so would be to “pierce the corporate veil” to an “intolerable extent”, it was argued.

Lord Malcolm took the view that S1 of the1969 act imposes a duty upon employers to insure, not upon others. S5 backs this up with criminal sanctions that are enforceable against both employers and any recalcitrant directors or officers.There is no mention of any intention or non-intention to makeemployersand/orofficersliableindamagestoanyoneharmed by an absence of insurance.

For further details please contact:

Julie FisherT: 0844 245 4804E:julie.fisher@plexuslaw.co.uk

The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. This document speaks as of its date and does not reflect any changes in law or practice after that date. Plexus Law and Greenwoods Solicitors are trading names of Parabis Law LLP, a Limited Liability Partnership incorporated in England & Wales. Reg No: OC315763. Registered office: 12 Dingwall Road, Croydon, CR0 2NA. Parabis Law LLP is authorised and regulated by the SRA.

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Watch this spaceRecovery in Wales of medical costs for asbestos-related diseases In earlier editions of this periodical we have monitored the proposals in Wales to make provision for the recovery from defendants of NHS costs incurred in treating the victims of asbestos-related diseases. (There is now a similar move in Scotland). However, the UK Supreme Court has ruled (by a majority) that the National Assembly for Wales lacks legislative competence to pass the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill. Part of the reasoning forthisdecisionwasthattherewasnojustificationfortheretrospective imposition of exposure on insurers, which they could legitimately have expected not to fall on them.