Morris v Ford Motor Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STAMP,LORD JUSTICE JAMES,THE MASTER OF THE ROLLS |
| Judgment Date | 27 March 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J0327-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 March 1973 |
[1973] EWCA Civ J0327-1
In The Supreme Court of Judicature
Court of Appeal
Appeal by Fourth Party, Frederick Roberts, from judgment in the Fourth Party proceedings by Mr. Justice Hollings on 21st April 1972.
The Master of the Rolls (Lord Denning)
Lord Justice Stamp and
Lord Justice James
Mr. MICHAEL OGDEN, Q.C., and Mr. STEPHEN DESCH (instructed by Messrs A.E. Wyeth & Co.) appeared on behalf of the Appellant Fourth Party, Frederick Roberts.
Mr. R. L. WARD, Q.C., and Mr. J. ROBERTS (instructed by Messrs. Weightmans of Liverpool) appeared on behalf of the Respondent Third Party Cameron Industrial Services Limited.
The Plaintiff and Defendants did not appear and were not represented.
THE MASTER OF ROLLS: On 26th January 1969, Mr. Eric Morris was working at the huge motor factory owned by the Ford Motor Company at Halewood in Lancashire. He was not employed by Fords but by a firm of cleaners - Cameron Industrial Services Limited., who had contracted to clean the factory. Whilst at his work, Morris was injured. It was all due to the negligence of one of Fords servants. This servant was one Kr. Frederick Roberts. He drove a fork-lift truck without keeping a proper lookout. In consequence Morris's leg was jammed against a wall, Morris was not very seriously injured. His damages were only £686.95. But his claim has given rise to an interesting, point. It arises in this way:
Morris issued a writ against Fords claiming damages for injuries caused by the negligence of Fords servant. Fords then served a third-party notice against the firm of cleaners claiming an indemnity. Fords said that, under the cleaning contract, the firm of cleaners had contracted to indemnify Fords against any liability to Morris, even though it was caused by the negligence of Fords own servants. The firm of cleaners then issued a fourth party notice against Roberts personally. He was the servant of Fords who was driving the fork-lift truck.
Now this firm of cleaners had obviously no claim on their own account against Roberts. Roberts be his negligence had done no damage to the property or person of the cleaners themselves. He had only done damage to their servant Morris. Roberts was, therefore, liable to Morris. So also were Fords liable to Morris because they were the employers of Roberts. Roberts and Fords were joint tortfeasors. Morris could, if he had wished, have sued them together and got judgment against both of them. As it was, he sued Fords only, he got damages against them. Thereupon Fords could themselves have sued their own servant Roberts on the ground that Roberts owed Fords a duty to drive the: truck carefully, and thathis negligence had involved Fords in liability to Morris. If Fords had sued Roberts, they would no doubt have got judgment against him for the full amount which they had had to pay to Morris. That is clear from the decision of the House of Lords in Lister v. The Romford Ice and Cold Storage Co. (1957) A.C. 555.
But, in point of fact, Ford's would never, for a moment, have dreamt of suing their own servant Roberts. If they did so, all the men would have come out on strike. The men would say, with great force: "This sum should be paid by the insurance company, and not by Roberts himself". To make him pay personally for an accident at the Works would be most unfair.
But, although Fords would not themselves sue their own servant Roberts, the firm of cleaners seek to sue him. The cleaners cannot, of course, sue Roberts in their own name. But they assert that they are entitled to use Fords name to sue Roberts. Using the lawyer's words, the cleaners say that they are entitled "to be subrogated" to the rights of Fords against Roberts. Using the layman's words, the cleaners say that they are entitled to "stand in the shoes of Fords" and to exercise against Roberta all the rights which Fords have against him.
If the cleaners are right in this contention - if they can thus force Roberts to pay the damages personally - it would imperil good industrial relations. When a man such as Roberts makes a mistake - like not keeping a good look-out - and someone is injured, no one expects the man himself to have to pay the damages, personally. It is rather like the driver of a car on the road. The damages are expected to be borne by the insurers. The Courts themselves recognise this every day. They would not find negligence so readily - or award sums of such increasing magnitude - except onthe footing that the damages are to be borne, not by the man himself, but by an insurance company. If the man himself is made to pay, he will feel much aggrieved. He will say to his employers: "Surely this liability is covered by insurance". He is employed to do his master's work, to drive his master's trucks, and to cope with situations presented to him by his master. The risks attendant on that work - including liability for negligence should be borne by the master. The master takes the benefit and should bear the burden. The wages are fixed on that basis. If the servant is to bear the risk, his wages ought to be increased to cover it.
It was such considerations as these which prompted the minister of Labour in 1957 to appoint an inter-departmental committee to study the implications of Lister v. Romford Ice Co. (1957) A.C. 555. The Committee made its report in 1959. It did not recommend legislation to reverse that decision because it felt that insurers would not abuse it. It said: "The decision in the Lister case shows that employers and their insurers have rights against employees which, if exploiteo unreasonably, would endanger good industrial relations. We think that employers and insurers, if only in their own interests, will not so exploit their rights".
In consequence of that Report, the members of the British Insurance Association adhered to this "gentleman's agreement":-
"Employers' Liability Insurers agree that they will not institute a claim against the employee of an insured employer in respect of the death of or injury to a fellow-employee unless the weight of evidence clearly indicates (i) collusion or (ii) wilful misconduct on the part of the employee against whom a claim is made".
According to that agreement, if Roberts, the driver of the fork lift truck, had injured one of Fords own employees, the injured employee would have his remedy against Fords, who would beindemnified by Fords insurers, but those insurers would not seek to recover the amount from Roberts, the driver.
The present case does not come within the "gentleman's agreement": because the injured man, Morris, was not an employee of Fords but was an employee of the firm of cleaners. So the cleaners claim to make Mr. Roberts, Fords driver, personally liable. Fords object to this. In their view it would produce serious industrial repercussions. But, despite Fords objection, the cleaners are determined to press their claim to be subrogated to the rights of Fords. The claim is based on the contract of indemnity, to which I will now turn.
THE CONTRACT OF INDEMNITY
Fords employed the firm of cleaners to clean the factory under a contract which contained a number of general clauses. These were applicable to an order given by the purchaser (Fords) to the contractor (the cleaners). These dealt with:
(i) working hours;
(ii) payment for daytime and over-time;
(iii) increased costs;
(iv) responsibility for materials, etc. on the site;
(v) labour and plant.
Then clause (vi) dealt with "insurance ant-third party risks". The material sub-clause is 6(b), which says:
"The contractor (the cleaners) shall indemnify the Purchaser (Fords) against all losses and claims of whatsoever nature for or in respect of injuries or damage to any person or property howsoever caused arising out of or in connection with the performance of the Order (for cleaning to be done) and also against all claims, demands, proceedings, damages, costs charges and expenses whatsoever in respect thereof or in relation thereto, and without prejudice to the generality of the foregoing the Contractor (the cleaners) shall be liable to indemnify the Purchaser (Fords) under this clause whether the loss or claim is occasioned by or arises from thenegligence or breach of statutory duty of the Purchaser (Fords), the Contractor (the cleaners) or any sub-Contractor or their respective servants or agents".
It is conceded that under that clause the cleaners are bound to indemnify Fords against their liability to Morris.
Then there is a note in bigger blacker type directed to the Contractor (the cleaners):
"N.B. You are advised to arrange, if necessary, for the extension of your employees' liability and third-party policies to include your contractual liability having regards particularly to clause 6(a) and (b)".
THE DOCTRAINE OF SUBROGATION
This is a contract which contains an indemnity. As such, it gives rise to a right in the indemnifier to be subrogated to the rights of the indemnified, but it is necessary to analyse this right. In particular, to see whether it gives the indemnifier a right to sue in the name of the indemnified.
Let me first distinguish it from a contract of surety ship. when a surety pays off the debt, he is entitled in his own name to sue the principal debtor for the amount, or to sue his co-sureties for contribution. He is entitled to any securities which may have been given for the debt by the principal debtor to the creditor. These rights do not depend upon contract, but upon the established principles of the Courts of equity. It was so stated by Sir Samuel Romilly in his argument in Craythorne v. Swinburne (1807) 14 Ves. Jun. at page 162, which was approved by...
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