The author examines the thorny issue of breach of statutory duty in light of the recent Supreme Court decision in Campbell v Gordon [2016] UKSC 38 where the court required to determine whether provisions in the Employers' Liability...
moreThe author examines the thorny issue of breach of statutory duty in light of the recent Supreme Court decision in Campbell v Gordon [2016] UKSC 38 where the court required to determine whether provisions in the Employers' Liability (Compulsory Insurance) Act 1969 provided the basis for an action for breach of statutory duty against a sole company director. Introduction Some statutes provide that breach of their provisions gives rise to an action for breach of statutory duty by someone who is damnified by the breach. The Animals (Scotland) Act 1987 and the Occupiers' Liability (Scotland) Act 1960 are notable examples. Other statutes (for example, the Health and Safety at Work etc. Act 1974, s.47) provide that no such action will arise in event of breach of their provisions. Difficulties arise, however, where a particular statute remains silent on the issue of whether civil liability results from a breach of its provisions. In such situations, the courts are faced with the task of determining Parliament's unstated intention, a task which has been likened to solving a "guesswork puzzle" (Island Records Ltd v Corkindale [1978] Ch. 122, per Lord Denning M.R. at pp.134-135). While certain presumptions exist to assist the courts, the judges' task is far from an easy one, as the recent case of Campbell v Gordon [2016] UKSC 38; [2016] 3 W.L.R. 294 demonstrates. Indeed, at the Supreme Court stage of the litigation, reference was made (by Lord Toulson at para.35) to Judge Richard Posner's statement to the effect that "[t]he judges face hieroglyphs without a Rosetta Stone." (Divergent Paths-The Academy and the Judiciary, Harvard University Press, 2016, p.172). In this article, the author tracks the judicial path of the litigation in Campbell having first set out the facts of the case, the relevant statutory framework and the existing authorities. The author concludes that the litigation in Campbell illustrates the difficulty of predicting how courts might respond to particular statutory provisions and suggests that reform of the law is overdue. Campbell v Gordon-the alleged facts The pursuer, an apprentice joiner, sustained injuries in June 2006 in the course of his employment with the first defenders, Peter Gordon Joiners Ltd. The company went into voluntary liquidation in December 2009 and there were no company funds available to meet the pursuer's claim. The employers' liability insurance taken out by the company excluded any legal liability arising out of the use of electrically powered woodworking machinery, which was the very context in which the pursuer's injuries had been sustained, the accident having involved an electrically powered circular saw. The claim against the company was therefore worthless. Accordingly, the pursuer also sued the second defender, Peter Gordon, who was the sole director of the company and responsible for its day to day operation. It was alleged that the company's failure to have in place appropriate insurance was a breach of its obligations under s.1(1) of the Employers' Liability (Compulsory Insurance) Act 1969 and that Mr. Gordon, who, as sole director, had arranged such insurance as there was, was liable under s.5 of that Act. The statutory framework Given that the task of the court in such cases is one of statutory construction, the key provisions of the 1969 Act require to be set out. Section 1 of the Act provides as follows: "1. Insurance against liability for employees. Except as otherwise provided by this Act, every employer carrying on any business in Great Britain shall insure, and maintain insurance, under one or more approved policies with an authorised insurer or insurers against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business …" Section 5 of the Act goes on to provide: "5. Penalty for failure to insure. An employer who on any day is not insured in accordance with this Act when required to be so shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale; and where an offence under this section committed by a corporation 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 corporation, he, as well as the corporation shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly." These provisions of the Act have already received considerable judicial attention, as will be discussed below. Existing authorities in England and Scotland The Employers' Liability (Compulsory Insurance) Act 1969 applies both in Scotland and in England and Wales. (It has no application in Northern Irelandsee s.7 of the Act). It should be said at the outset that there is no express provision in the 1969 Act creating civil liability on the part of an employer for the failure to insure. The Act is silent on the matter. Prior to the litigation in Campbell v Gordon, there had, however, been attempts to found an action for breach of statutory duty based upon the provisions of the Act. Interestingly, different results had ensued north and south of the border. In Richardson v Pitt-Stanley [1995] QB 123, the English Court of Appeal (by a majority) held that the 1969 Act did not give rise to civil liability on an employer's part and it would therefore be anomalous if civil liability was imposed on the employer's directors or other officers. A relevant factor underlying the court's decision was that breach of the Act would not occasion direct physical injury to the plaintiff but would involve him only in economic loss, namely an inability to recover damages from the relevant employer. Stuart-Smith LJ took the view that insurance was normally taken out to protect the insured (the employer) against the potentially disastrous consequences of a large claim and the Act should not be regarded as imposing a duty solely or principally for the protection of the employee. Stuart-Smith LJ also regarded the level of the fine capable of being imposed on the company and the delinquent director, as "to some extent a special penalty, a feature which militates against civil liability" (at p.133). While acknowledging that none of those reasons was determinative in itself, Stuart-Smith LJ took the view that cumulatively those