Can businesses be liable for contractors’ actions? High court offers fresh guidance

Can businesses be liable for contractors’ actions? High court offers fresh guidance

Facts of the case

On 5 August 2018 Mr Burger was restrained by two door supervisors outside a pub operated by Wetherspoons with such force that he suffered a dislocated hip, requiring emergency surgery and a three-night hospital stay. The door supervisors were employees of Risk Solutions who were engaged by Wetherspoons to provide door security at the pub, pursuant to a security services agreement (“the Agreement”).

A claim for personal injury commenced in April 2021 and was served on Wetherspoons and Risk Solutions. The latter failed to acknowledge service or file a defence. Judgment in default was entered against Risk Solutions in August 2021. That judgment was not enforced and proceedings continued against Wetherspoons.

The claimant was awarded damages of £71,308.67, including compensation for future private medical treatment at trial.

Wetherspoons sought to appeal the court’s findings on vicarious liability and the award for private medical treatment.

Private medical treatment

The appeal against the award for damages for private medical treatment raised a discrete issue. Section 2(4) of the Law Reform (Personal Injuries) Act 1948 provides that in a claim of this nature “there shall be disregarded, in determining whether any expenses are reasonable, the possibility of avoiding those expenses or part of them by taking advantage of facilities available under the National Health Service"

Courts do consider whether a claimant is likely on balance to use NHS facilities, primarily if the required care is unavailable privately. That does not detract from the claimant’s entitlement to opt for private treatment, which has been recognised as a right, unqualified by considerations of reasonableness in the context of mitigation of loss.

The evidence at the trial included the claimant, in his evidence, mentioned being placed on an accelerated NHS list for hip replacement in the past but did not explicitly state his future intentions of obtaining private, instead of NHS, treatment. However, the claimant's schedule of loss claimed the cost of two privately funded future hip replacements.

Wetherspoons contended that the procedure was available on the NHS, that there was no particular benefit from private treatment, that NHS waiting lists were not prohibitively long, and that, in those circumstances, there was no sustainable claim for private treatment.

During cross-examination, the claimant responded affirmatively when asked if he was "going to go back on the NHS list to get [his] hip done". Wetherspoons relied heavily on this exchange, submitting that it demonstrated that the claimant was more likely than not to obtain treatment on the NHS.

At the original trial the court considered this part of the cross-examination but concluded that the question posed, and the answer given, did not definitively establish the claimant's intention to only use the NHS. The court reasoned that the claimant's answer might have been influenced by his circumstances at the time, lacking the means to fund private treatment.

On appeal, the High Court held that the original court properly considered the inherent probabilities, determining it was more likely than not that if the claimant were provided with the means, by an award of damages, he would choose to fund his treatment privately. Based on this assessment of the evidence, the court found on the balance of probabilities that the claimant was likely to undergo the procedures privately and was therefore entitled to recover the associated costs.

The High Court confirmed that whilst the burden was on the claimant to prove his prospective loss on the balance of probabilities, the claimant discharged that burden in the manner identified by the court at the original trial. The cross-examination did not amount to sufficient evidence to rebut the case advanced in the claimant’s schedule of loss and accordingly, there was no error in the original court’s decision. The finding that the claimant was likely to use private treatment if funded by damages was a finding of fact reached after a proper evaluation of the available material.

For those reasons that ground of appeal was dismissed.

Comment

Essentially, the cost of private treatment will be recoverable if the claimant can satisfy the court that the treatment will take place on a private basis. Whilst there is no duty on the claimant to use the NHS, there remains a requirement for the claimant to establish, in evidence rather than solely in a schedule, that private treatment will be used.

Vicarious Liability

The terms of the agreement between Wetherspoons and Risk Solutions stated that Risk Solutions would be responsible for the direction, management and control of their door supervisors. It was expressly agreed that Wetherspoons would not be responsible for the direction, instruction, management, or control of the operatives of Risk Solutions. Risk Solutions acknowledged and agreed that the control of their staff was their sole responsibility.

Risk Solutions was required to have employer's liability insurance. The agreement stipulated that insurance was in place for the actions of the door supervisors.

Wetherspoons could specify what uniform Risk Solutions staff should wear. Door supervisors were required to wear the “uniform or badge provided by [Risk Solutions], in particular wearing at all times a visible badge or other marking identifying him as the employee of [Risk Solutions]”. The Agreement specified a uniform of “black tailored trousers, black shoes (no trainers), shirt with collar (no polo shirts). A waistcoat, formal jacket or crombie coat is optional”.

At the original trial the court considered the stage one and two tests for vicarious liability and was satisfied that the actions of the door supervisors were sufficiently connected with the duties they were employed to perform so as to make their employer vicariously liable, thereby satisfying stage one.

The court also considered that the relationship between Wetherspoons and the door supervisors was akin to employment and that their actions had been carried out in the course of that employment, thereby satisfying stage two. Wetherspoons were therefore found vicariously liable for the actions of the door supervisors.

The High Court agreed with the original decision that the stage two test was satisfied given that the activities of the door supervisors were sufficiently closely connected to the activities authorised by Wetherspoons to give rise to vicarious liability. The court found that their actions, though excessive and appalling, were directly linked to their function as doormen. The use of force, even if grossly disproportionate and deliberate, occurred in the context of exercising or purporting to exercise the authority entrusted to them to manage access and maintain order.

However, the court found that the stage one test for vicarious liability had been applied incorrectly. The court stated that the starting point must be the contractual relationship between Wetherspoons and Risk Solutions, which was for the provision of security services by an independent third party. The factors relied upon at trial, while indicative of some interaction and control between Wetherspoons and the door staff, was entirely consistent with a business engaging a specialist independent contractor to perform services on its premises for pragmatic commercial reasons.

Many businesses engaging independent security firms could be expected to specify requirements regarding attire and hours of work and might reserve the right to request the removal or replacement of specific personnel for good reason, as was the case here. The fact that security is integral to the operation of a pub or that the security staff must co-operate with other staff does not transform the relationship with an external security provider into one akin to employment; it simply explains why the service is required and how it is to be provided.

The contract between Wetherspoons and Risk Solutions was a contract for services, not of service. The agreement explicitly stated that Risk Solutions retained control over its employees, and there was no evidence that Wetherspoons had direct control over their actions.

The appeal was therefore allowed on the issue of vicarious liability.

Comment

One notable comment from the High Court was that “considerable caution needs to be exercised in elevating factors which are inherent in providing a particular service or identified by the parties as necessary, into features which justify the imposition of vicarious liability for the employees of a separate business.”

The High Court referred to the case of Hawley v Luminar Leisure Ltd, on which the claimant relied to support his contention that Wetherspoons was vicariously liable for the actions of the door supervisors. In this case, vicarious liability was imposed on a nightclub operator for the actions of a doorman employed by a security firm. At first glance, the circumstances between the two cases appears very similar and the temptation is therefore to apply the same conclusion. However, the degree to which the door supervisors on duty in that case were subordinated to the active management of the nightclub’s senior management was considerably greater than the position in the present case. 

Careful consideration needs to be given to the nature of the relationship between a defendant and contractor and the amount of control retained by the contractor over the actions of its employees when considering whether such a relationship is likely to give rise to vicarious liability.