Description
This is an Outer House case in which William Campbell sued his employer (Peter Gordon Joiners Limited), the sole director of his employer (Peter Gordon) and the liquidator of his employer after suffering injury in an accident involving a circular saw whilst at work. The employers' liability insurance which had been taken out by the company excluded any legal liability arising out of the use of electrically powered woodworking machinery such as the circular saw which had caused the injury.
Mr Campbell argued that Peter Gordon Joiners Limited (the Company) had breached section 1 of the Employers Liability (Compulsory Insurance) Act 1969, and that Mr Gordon, who was sole director of the company and had arranged the insurance, was liable under s5 of the 1969 Act. Section 1 obliges employers to maintain insurance for bodily injury to employees in the course of there employment and s5, in addition to dealing with the penalty for failing to comply with the Act, also provides for the liability of a director of the company where an offence under the Act is committed with the director's consent, connivance or neglect.
There was no dispute that Mr Campbell's arguments were sufficient to instruct a relevant case as to the guilt and punishment of Mr Gordon alongside the company under the 1969 Act. However, that was not enough to make Mr Gordon civilly liable in damages to Mr Campbell. In order to do so Mr Campbell would have to show that s5 gives rise to civil liability on the part of Mr Gordon as director of the company. Mr Gordon argued that the section did not and that the case should be dismissed as irrelevant.
It was not disputed that the question as to whether a statutory duty gives rise to a civil right of action is to be answered by considering the whole Act and the circumstances in which it was enacted. Lord Glennie noted that where an Act creates an obligation and enforces performance thereof in a specified manner, it may generally be taken that performance cannot be enforced in any other manner. However an exception to that rule occurs where the particular obligation or prohibition imposed by the statute was imposed for the benefit or protection of a particular class of individuals. In such cases the statute may be taken to have created "a correlative right in those persons who may be injured by its contravention" (In contrast where the statute is intended to establish a regulatory system for the benefit of the public at large, that may point against there being a correlative right).
Lord Glennie took the view that the 1969 Act was clearly imposed for the benefit of the employees and not primarily concerned with establishing a regulatory system. The obvious purpose of the duty on the company is to protect the employees rather than to protect the company from itself which in itself is strongly indicative that the statutory obligation is civilly actionable at the suit of an employee (despite the hefty criminal sanction imposed on the company under s5).
Lord Glennie noted that the position of the director or other officer was different to that of the company observing that directors are not mentioned in section 1 of the Act; their liability to criminal sanctions being imposed by section 5. It could therefore, he observed, be argued that the Act does not place any obligation on director to procure that the employer has in force the relevant insurance. However Lord Glennie then went on:
“To my mind this would be too narrow a reading of the Act. It is clear from section 5 that if the company's failure to effect and maintain the relevant insurance is committed through their "fault", to use a compendious expression, they are to be regarded as being guilty of the same failure as the company, that is to say the failure to effect and maintain the relevant insurance. That means that they were under a duty (albeit a qualified duty) to ensure that the relevant insurance was in place. That duty is imposed for the benefit of the employees of the company. In those circumstances they stand in the same position as the corporate employer, and there is no reason to consider that breach of that duty should not give rise to civil liability.”
Lord Glennie noted the case of Richardson v Pitt-Stanley in which the Court of Appeal in England came to the conclusion that the Act did not give rise to civil liability on the part of the employer or of a director/other officer. However, Lord Glennie was unpersuaded by the reasoning in the judgement and, as it is not binding in Scotland, found that it should not be followed.
Lord Glennie held that Mr Campbell had pled a relevant case and allowed a proof.
