Piercing the Corporate Veil in the Statutory Context: Campbell v Peter Gordon Joiners Ltd.
| Author | |
| Published date | 01 January 2017 |
| Pages | 103-109 |
| Date | 01 January 2017 |
| DOI | 10.3366/elr.2017.0393 |
The Supreme Court in
C, the appellant, was employed as an apprentice joiner of the company, the first respondent. The second respondent, G, was the sole director and principal controller of the company, responsible for its day-to-day operation. C suffered an injury whilst working with an electric circular saw on 28 June 2006. The company did have employers' liability insurance, but the policy, surprisingly, excluded claims arising from the use of ‘woodworking machinery’ powered by electricity. The policy therefore did not cover C's work accident. By virtue of the company's failure to carry the appropriate insurance policy, it was in breach of its obligations under the Employers' Liability (Compulsory Insurance) Act 1969.
In 2009, the company was wound up. Since the company was insolvent and did not have insurance against liability for C's particular injury, C also sued G on the basis of,
The issue before the Supreme Court was whether the 1969 Act, which sets out a criminal penalty, also implicitly imposes civil liability on company directors if they consent or connive at, or are negligent in respect of, a company's failure to hold adequate insurance for the benefit of company employees. Put differently, the issue was whether the 1969 Act implies a legislative intention to impose civil liability on directors who are subject to criminal penalties under the legislation. Lord Carnwath gave the majority judgment, with which Lords Mance and Reed agreed.
It was pointed out that section 1 of the 1969 Act stipulates that every employer carrying on business in Great Britain must insure, and maintain insurance, under an approved policy with an authorised insurance provider against liability for employee bodily injury or disease that arises out of, and in the course of, employment in that business in Great Britain. Section 4 of the 1969 Act also puts the onus on employers to display insurance certificates so that employees are aware of the relevant information, as well as a requirement to produce, on demand, the certificates for inspectors authorised by the Secretary of State. Section 5 of the 1969 Act lays down that uninsured employers will be guilty of a criminal offence and be liable on summary conviction to a fine. It further orders that when a relevant offence is committed by a company, there is a criminal penalty imposed on any director bearing responsibility for failure to properly insure, which is linked to the criminal liability borne by a company.
Counsel for C relied on established case-law governing civil liability
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