Richardson v Pitt-Stanley
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,SIR JOHN MEGAW |
| Judgment Date | 29 July 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J0729-6 |
| Docket Number | 93/0376/E |
| Court | Court of Appeal (Civil Division) |
| Date | 29 July 1994 |
[1994] EWCA Civ J0729-6
(Mr. Crowther QC)
Before: Lord Justice Russell Lord Justice Stuart-Smith Sir John Megaw
93/0376/E
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
MR A M HAYCROFT (Instructed by Messrs. Hook & Partners, Essex) appeared on behalf of the Appellant
MR J 1 FOY (Instructed by Messrs. Robin Thompson & Partnersn, Essex) appeared on behalf of the Respondent
( )
Friday, 29 July 1994
The question raised in this appeal is easily defined but more difficult to resolve. Surprisingly there is no reported decision on the point in this court or elsewhere.
On 1st July 1989 the plaintiff suffered a serious mutilating injury to his hand in an accident that occurred during the course of his employment by Bridge Metals Basildon Ltd., in their factory at Basildon. It seems that there was a clear breach of Section 14(1) of the Factories Act 1961 which resulted in the injury. In due course the plaintiff obtained judgment against the company with damages to be assessed. Thereafter the company went into liquidation, there being no assets to satisfy any judgment. Furthermore it emerged that the company had not taken out any insurance cover in respect of their liability to their employees injured as was the plaintiff.
By a Writ issued on 18th June 1992, endorsed with a Statement of Claim the plaintiff commenced proceedings against five defendants. The first four were directors of the limited company and the fifth was the company secretary. There was an entirely separate allegation made against the first defendant in his capacity as manager of the company but that does not arise for discussion in this judgment.
Paragraph 7,8,9,10 and 11 of the Statement of Claim asserted that all five defendants had committed an offence under Section 5 of the Employers Liability (Compulsory Insurance) Act 1969 and that consequently the plaintiff had suffered "loss in an amount equal to the sum which he would have recovered inclusive of damages, interest and costs against the said company had it been properly insured".
Master Hodson struck out paragraph 7,9,10 and 11 of the Statement of Claim as disclosing no reasonable cause of action. The plaintiff appealed and on 9th February 1993 Mr William Crowther QC (sitting as a Deputy Judge of the Queens Bench Division) allowed the appeal and reinstated the Statement of Claim as originally drafted. It is from that Order that the defendants appeal to this Court, the fundamental question being whether the Employer's Liability (Compulsory Insurance) Act 1969 creates civil as well as criminal liability on the part of the defendants. If it does then plainly the plaintiff is a legitimate party to the proceedings.
Section 1 of the Act reads, so far as material, as follows:
"(1)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….
(2)Regulations may provide that the amount for which an employer is required by this Act to insure and maintain insurance shall, either generally or in such cases or classes of cases as may be prescribed by the regulations, be limited in such manner as may be so prescribed".
By the Employers Liability (Compulsory Insurance) General Regulations 1971 the amount for which an employer is required by the Act to insure and maintain insurance is two million pounds in respect of claims relating to any one or more of his employees arising out of any one occurrence.
Section 2 gives a broad definition of the term "employee" and plainly includes the plaintiff. Section 3 exempts from the requirements of the Act certain local authorities and other corporate bodies not relevant in this appeal. Section 4 deals with Certificates of Insurance and requirements as to their production and display. Section 5 is the crucial section and reads:-
"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."
The fine, therefore, is £1,000 for each day that an offence is committed.
The ratio of the judgment of the Learned Judge was that this case is on all fours with Monk v Warbey (1935) 1 QB75 and that consequently civil liability attaches to the employers who are in breach of Section 1 of the Act. Having referred to Section 5 the Judge continued:
"So the mechanism of the Act is that where —to use a shorthand term —the requisite mens rea has been established on behalf of the director then he is equated to the corporation in so far as guilt of the offence, and the penalty, is concerned."
Having considered what he described as the "social purpose" of the Act the Judge continued:
"So it seems to me that the social reasons and the policy reasons for saying that there is a cause of action for breach of Section 5 against the directors are very strong. As I have said the argument for the defendants is that there is no duty imposed in terms…..so it seems to me that in reality Section 5 is creating a duty on the directors and other officers of the company not to consent or connive. Once one reaches that conclusion as a matter of construction then, as I have said, it is common ground that Monk v Warby must apply and that there must be a cause of action on behalf of the plaintiff against directors who are guilty under Section 5".
These observations of the Learned Judge encapsulated the submissions made by Mr Foy on behalf of the respondent plaintiff in this Court. He emphasised that the merits were all one way and that if the appeal were to be allowed the plaintiff would be left grievously injured through no fault of his own despite the fact that the statute was designed to protect him and despite the fact that it created obligations on the part of the employers and directors which, had they been complied with, would have resulted in the plaintiff being properly compensated. Whilst I have much sympathy for the plaintiff I do not consider that this approach is the right one. The task of the Court is to ascertain as best it can the intention of Parliament in passing the legislation by a proper construction of the Statute.
As to the intention of Parliament we were referred, with the consent of both Counsel, to the report of proceedings in both Houses as recorded in Hansard. I have to say that I have derived little assistance from the reports save that, inter alia, it was emphasised in both Houses that the Act would remedy, if its provisions were complied with, not only the injustice of the uncompensated workman but also the small employer who might be bankrupted by a claim unless insured against it. But in the House of Lords, Lord Pargiter in the Committee stage of the Bill did observe:
"May I say at the outset that there is nothing in this Bill, so far as I am concerned, or the sponsor in another place is concerned, to alter the Common Law regarding liability in the relationship between an employer and an employee".
This brings me to consider the relationship between an employer and his employee. Duties are owed by the employer both at Common Law and by Statute whereby the employee is protected against the negligence or breach of statutory duty of the employer. If such a duty is breached and it causes personal injury to the employee he has the right to claim damages against the employer. The breach of Statutory Duty owed to the employee may also involve the employer in criminal proceedings, for example under the Factory Acts, but the converse does not apply unless it can be shown that the particular Statute creating the criminal offence, either by virtue of its express provisions or by necessary implication, creates civil liability.
In the instant case there is no express provision in the 1969 Statute creating civil liability on the part of the employers. Nor is there any such express provision relating to directors. Indeed it would be anomalous if the directors were to bear civil liability whilst the company of which they were directors was subject to no such liability.
Mr Haycroft on behalf of the defendants relied upon the judgment of Sir Nicolas Browne-Wilkinson V.C. (as he then was) sitting in the Court of Appeal in Rickless and Others v. United Artists Corporation and Others (1988) QB 40 at Page 50. That case involved consideration of Section 2 of the Dramatic and Musical Performers Protection Act 1958 which created a criminal offence if, in general terms, a film was produced without the consent in writing of the performers. The Vice Chancellor gave some guidance of wide application. He said:-
"The Section, on its face, only creates a criminal offence. However in certain circumstances such a statutory provision can confer private rights of action enforceable under the civil law. Whether any particular statute does give rise to such...
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