Supreme Court

Campbell v Peter Gordon Joiners Ltd and another

[2016] UKSC 38; [2016] WLR (D) 376

2016 July 6

Baroness Hale of Richmond DPSC, Lord Mance, Lord Reed, Lord Carnwath, Lord Toulson JJSC

Tort — Cause of action — Whether arising from breach of statutory obligation — Employer’s obligation to insure against liability for injury to employees — Statute creating criminal offence for employer’s breach of obligation — Breach of obligation committed by corporate employer with knowledge or connivance of director — Director “deemed …guilty of …offence by statute in those circumstances — Employee injured when working for company without liability insurance — Company going into liquidation — Employee claiming sole director having connived in company’s failure to insure — Whether imposition of deemed criminal liability indicating Parliamentary intention to impose qualified duty on director to ensure company’s insurance in place — Whether employee having civil right of action against director for breach of duty — Employers’ Liability (Compulsory Insurance) Act 1969 (c 57), ss 1(1), 5

Facts

The pursuer was injured when using an electric saw in the course of his employment with a company controlled by a sole director. Although the company had employers’ liability insurance, the policy excluded claims arising from the use of woodworking machinery powered by electricity and so the company had been in breach of its obligation to insure against injuries sustained by employees in the course of their employment under section 1(1) of the Employers’ Liability (Compulsory Insurance) Act 1969 and additionally the director was, by section 5, “deemed to be guilty of that offence” if it was proved that he had consented to or facilitated by neglect the company’s offence under section 1(1). The company having been put into voluntary liquidation, the pursuer claimed damages for his injuries from the director as having been in breach of a statutory duty to effect the necessary insurance on behalf of the company. On the director’s motion for the dismissal of the claim against him, the Lord Ordinary held that a person in breach of a statutory obligation imposed for the benefit or protection of a particular class of person could be personally liable for the breach of statutory duty, that the 1969 Act imposed an obligation to insure for the benefit of employees, and that the effect of section 5 was that the obligation, and therefore civil liability for any breach thereof, fell on the director as well as the company. He therefore allowed the case to proceed to proof. On the director’s appeal an Extra Division of the Inner House of the Court of Session, by a majority, held that the 1969 Act did not reveal a legislative intent to impose civil liability upon directors and others who were subject to criminal penalties under section 5, and so dismissed the claim against the director. The pursuer appealed to the Supreme Court.

Held

Held, appeal dismissed (Baroness Hale of Richmond DPSC and Lord Toulson JSC dissenting). The general rule was that a person did not have a civil right of action in respect of another’s failure to comply with a statutory obligation where the statute imposed a criminal penalty for that failure to comply. Although, by way of exception to that rule, civil liability could arise where the statutory obligation had been imposed for the benefit of employees as a class, it was necessary to show that the obligation created by the statute had been placed on the person sought to be made liable. The exception did not permit a person to be made indirectly liable for breach of an obligation placed on someone else. The obligation under section 1 of the 1969 Act, albeit imposed for the benefit of employees, was placed on the employer and not, where the employer was a company, on the directors or other officers through whom it acted. It followed that the claim against the director could not stand (paras 7, 12, 13–14).

Appellate History

Decision of an Extra Division of the Inner House of the Court of Session [2015] CSIH 11; 2015 SLT 134 affirmed.

Appearances

Andrew Smith QC (of the Scots and English Bars) and Craig M Murray (of the Scots Bar) (instructed by Lefevre Litigation, Edinburgh) for the pursuer.

Roddy Dunlop QC and Richard Pugh (both of the Scots Bar) (instructed by Harper MacLeod, Edinburgh) for the director.

Reported by: Colin Beresford, Barrister

© 2016. The Incorporated Council of Law Reporting for England and Wales.