Personal Injury Case – Company Director sued directly for a workplace accident

The UK Supreme Court issued its judgment on 6th July 2016 in the Personal Injury case of Campbell v Gordon.

Company Director sued directly for a workplace accident

Brief Summary:

• An employee was badly injured in a workplace accident involving a circular saw.
• The injured person was a joiner employed by a limited company.
• The company had a policy of Employers Liability insurance.
• The policy excluded insurance cover for the use of “woodworking machinery” powered by electricity.
• The Court remarked that such an exclusion was surprising because the employee was employed as a joiner.
• It was not in dispute that the policy was inadequate, and therefore the Employer Company had breached the 1969 Act.
• The employee wanted to sue his employer (the Company) but it had gone into liquidation about 3 years after his accident.
• The employee could not sue the insurance company because of the policy exclusion so he sued the sole director of the company.
• The Court decided that the Director could not be sued by the employee because the legislation only allowed for a criminal penalty, not a civil claim.

The Law

Section 1(1) of the Employers’ Liability (Compulsory Insurance) Act 1969 obliges employers to have insurance “against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment…”.

In a UK Supreme Court judgment issued on 6th July 2016, the Court had to consider a policy of insurance that excluded cover for the type of work which caused injury sustained by an employee.

Section 5 of the 1969 act states that the penalty for breaking the law is a fine and that, where an offence is committed by a limited company – and it has been committed with the consent or connivance of, or facilitated by any neglect on the part of, any director, manager, secretary or other officer of the company, he, as well as the company is deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.”

Significantly, there is nothing in the 1969 Act specifically enabling an employee to make a civil claim against the director, manager, secretary or other officer of the company – even if they consented, connived etc in the offence.

It is generally settled law that, just because a statute creates an obligation and imposes a criminal penalty, that does not mean a right to sue is also created.

The employee argued that there are many examples in the law of rights of civil action being inferred without specific statutory wording and that the 1969 Act should be construed in this way.

The Court’s judgment was obtained by a narrow majority of 3:2. The leading judgment against the employee basically said that the statute imposed an obligation on the company to obtain insurance and that the company’s failure to do so could not lead to a civil claim against anyone other than the company. The director’s liability is limited to the criminal penalty which arises from criminal liability of the company.

The rationale behind the leading judgment appears to be that respect needs to be paid to the precise wording used by parliament rather than focusing on what parliament’s intentions could or should have been. The dissenting judgments both placed emphasis on what the overall intention of the 1969 Act would have been – namely the protection of employees from the risk of injury.

This article was written by Graham Laughton, a Director in Macleod & MacCallum’s Court department and a solicitor accredited by the Law Society of Scotland as a specialist in Personal Injury Law.

If you wish advice on any aspect of Employers’ liability or Personal Injury law, Graham can be contacted at graham.laughton@macandmac.co.uk

All information is correct at time of publication. Specific advice should be sought before relying on any information contained within this post.

Graham Laughton

Graham Laughton
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July 8, 2016