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NEGLIGENCE (page 1)

The law:

among other cases see - Marc Rich & Co AG and Others v Bishop Rock Marine Co Ltd and Others (The Nicholas H) speeches 06 July 1995, House of Lords, The Times Law Reports July 7 1995 - that gives the common law definition of what constitutes the tort of negligence.
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Definition:

negligence may occur as a result of either an act or an omission -

(1) where there is reasonable foreseeability of loss or damage to a party caused
by the act or omission of another;

(2) where there is a close and direct relationship between the parties (legal
proximity); and

(3) where it is fair, just and reasonable to impose a duty of care (the public policy
criterion) upon the party that has caused reasonably foreseeable loss or damage to
the other party.

Employers' liability for the negligence of their employees:
the common law rule is that an employer is vicariously liable for an act of negligence by one of its employees acting in the course of her or his employment: Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd (1947) AC 1, HL.

Therefore, a party that has suffered loss or damage and therefore needs to make a claim against such an employer will need to identify that employer. But problems can arise when the employee who has caused loss or damage negligently has more than one employer. This may occur where an employer provides an employee to work temporarily for another employer. This happened in Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd (1947) wherein their Lordships held that the employee's 'general employer,' instead of the hirer, was the employer for vicarious liability purposes.

The reasons their Lordships gave for their decision in that case were that: (1) the Mersey Docks and Harbour Board was the employer because (2) it alone paid the employee and had the power to dismiss him even though (3) the hire contract expressly stated that for the duration of the hire contract the employee would be the servant of the hirer (4) but, although the hirer controlled and directed the work to be done by the employee (loading cargo into the hold of a ship), (5) the hirer did not have the power to instruct the employee in how to carry out his work (picking up and moving pieces of cargo) thus, (6) when another worker was injured by the negligent way in which the employee operated his crane, the employee's 'general employer' was held to be vicariously liable.

Note: a hirer can only be a nominal employer if the contract of employment is not transferred.

Until recently, where it was alleged that an employee had been negligent, the rule was that either the employee's 'general employer' or the 'hirer' was vicariously liable, but not both: Esso Petroleum Co Ltd v Hall Russell & Co Ltd (1988) 3 WLR 730, 758. However, a case heard by the Court of Appeal has now changed what was previously a long-standing assumption that liability for an employee's negligence can arise only against one employer: Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd and ors (2005) EWCA Civ 1151.

The facts: briefly, there was a contract to install air conditioning in a factory. The main contractor (the first defendant) sub-contracted the work (to the second defendant) that then further sub-contracted the work to a company (the third defendant) that provided fitters and fitters' mates on a labour-only basis. It was one of these employees, a fitter's mate, working under the supervision of the fitter and the second defendant, who negligently caused a flood that damaged the factory.

The factory owner brought a claim for damages in the High Court whereupon the judge had to determine whether it was the second defendant (that was the hirer of the company that provided the contract-labour) or the third defendant (that was the fitter's mate's general employer) that was vicariously liable for the fitter's mate's negligence. The judge held that the fitter's mate had remained under the immediate control of his fitter who was an employee of the third defendant. Accordingly, as the fitter's mate's employment had not 'transferred' to the second defendant, this meant that the third defendant alone was vicariously liable. The third defendant subsequently appealed to the Court of Appeal.

Court of Appeal: the Court acknowledged that the High Court judge's decision was based on the long-standing assumption that either the hirer or the general employer is vicariously liable for an employee's negligence, not both. But, after reviewing the relevant case law, the Court of Appeal concluded that the assumption that dual vicarious liability is impermissible rests on a weak foundation and that it was technically unsupported by binding authority and, further, has never properly been argued against.

Rather than concentrating on the question of whether there had been a transfer of employment (i.e. a nominal and therefore legally fictitious transfer), the Court said that the core question was: '... who was entitled, and perhaps in theory obliged, to give orders as to how the work should or should not be done?'

The view of May LJ was that in some cases the sensible answer to this core question will be 'two "employers,"' a view that was endorsed by Rix LJ. In the instant case, the fitter employed by the third defendant as well as the supervisor employed by the second defendant had been entitled to prevent the fitter's mate's foolish act of negligence, thus both employers should be vicariously liable for the fitter's mate's negligence. The judgement was that the second and third defendants should each contribute 50 per cent of the total liability.

Note: some years ago, Turner P. was of the opinion that in a suitable case there is no reason why both employers should not be liable and gave as an example the case of: Ferguson Construction Co Ltd v Hargreaves (1973) 1 N.Z.L.R. 634, 643.

Note: what happens in these kinds of cases is that a service contract is agreed in which goods and the services of one or more employees are hired out to another employer. It seems sensible that any employee hired out as part of the contract remains the employee of the employer rather than being deemed to be the albeit temporary employee of the hirer. If a person hired a car and driver from a hire car company for a week or a month, would the driver become the temporary employee of the hirer? The House of Lords, in Mersey Docks and Harbour Board (1947) held that, in certain limited circumstances, the 'hirer' of an individual's services rather than her or his 'general employer' will be classed as the employer for vicarious liability purposes.

Note: in commercial contracts there is usually an express term that will state which employer is to be held responsible for the negligence caused by a 'borrowed' employee. But the employer who runs the risk of liability should be adequately insured. See, for example: Arthur White (Contractors) Ltd v Tarmac Civil Engineering Ltd (1967) 1 WLR 1508, HL, wherein the hirer was held to be liable for damages caused by the negligence of the general employer's crane-driver employee. This was because the two employers had contractually agreed their respective liabilities. But a contractual agreement of this type is not an exclusion of legal liability: Thompson v T. Lohan (1987) 1 WLR 649.

A different example of an employer's vicarious liability:
a case that illustrates that the tort of negligence can arise in the employment context as a result of a voluntary assumption of responsibility and a failure to act (an omission) is: Lennon v Commissioner of Police of the Metropolis, Court of Appeal, (2004) IRLR 385.

What happened in this case is that a civilian personnel officer, who was employed by the Metropolitan police service, voluntarily assumed responsibility for handling the transfer arrangements for police officer Lennon (L) when he successfully applied to transfer to a different police service in another part of the UK. Part of the transfer arrangements involved transferring his monthly housing allowance. L asked the personnel officer whether it was all right for him to take time off work before he transferred to the new police service and whether doing so would affect his monthly housing allowance. She assured him that his allowance would not be affected as he was merely transferring to another police service. The personnel officer failed to advise him to make a formal request for unpaid leave (which would have preserved his continuity of service) and she failed to advise him of the consequences of a break in the continuity of his service with the Metropolitan police service that he was leaving and the police service to which he was being transferred.

As a result, L permanently lost his monthly housing allowance of £134.61. He was prevented from bringing a claim for breach of contract for his loss because, as a police officer and therefore an office holder, he was not employed under a contract of employment. So he brought a claim for negligence against the Commissioner in the County Court stating that the Commissioner owed him a duty of care in tort. His claim was based on the contention that the Metropolitan police service had assumed responsibility for handling all his transfer arrangements. He submitted that the duty had been breached when he was not warned that the break in continuous service would result in him losing his entitlement to housing allowance and that the Commissioner was liable for the economic (financial) loss he had suffered as a result of the breach.

The judgment of the County Court was that: (1) there was a sufficiently proximate relationship between L and the Commissioner; (2) there had been a voluntary assumption of responsibility for the transfer made in the knowledge that L would rely on the answers and advice he was given; (3) the Commissioner owed L a duty of care to arrange and organise the transfer and that duty included giving advice and to ensure that L did not lose his allowance when he transferred to the other police service; (4) the Commissioner's staff, who had taken responsibility for L's transfer, had specialist knowledge of such transfers but had failed to advise L that the arrangements would result in a break in continuity of service and the loss of his housing allowance; (5) he was entitled to be compensated for his losses so the Court awarded him damages of almost £44,000.

On appeal to the Court of Appeal, the Commissioner contented that the County Court's decision created a new category of duty. But the CA rejected this contention. In its opinion, the case fell within the principles laid down by the House of Lords in Hedley Byrne and Co Ltd v Heller and Partners Ltd (1964) AC 465, House of Lords - the leading case on misrepresentation in English law. The HL said that the judgment of the CA was correct in that it was now well-established from a long line of cases that liability in tort for pure economic loss can arise from the negligent carrying out of a task undertaken in the performance of an express voluntary assumption of responsibility on which the claimant has relied.

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