Hawley v. Luminar Leisure
Following the recent Viasystems decision, it is possible for two employers to be jointly vicariously liable for the actions of the same employee. But the circumstances of this case were very different. The judge at first instance had found that there had effectively been a transfer of control and responsibility from the original employer to the temporary deemed employer and this finding was upheld by the Court of Appeal.
A further issue concerned whether a public liability cover for "accidental bodily injury" covered a deliberate act of violence on the part of the insured's employee. In this case, the court held that it did.
DMC Category Rating: Developed
This case note is based on an Article in the February 2006 Edition of the ‘(Re)insurance Bulletin’, published by the Insurance/Reinsurance teams at the international firm of lawyers, DLA Piper Rudnick Gray Cary. DLA Piper is an International Contributor to this website
On 18 August 2000, during an incident outside the club, Mr Warren punched a customer, Mr Hawley, so hard that Mr Hawley suffered permanent and serious brain damage. Mr Warren was convicted of causing grievous bodily harm.
Mr Hawley sued Luminar and ASE on the basis they were vicariously liable for Mr Warren's act. He claimed that they both had negligently failed to train or supervise Mr Warren properly or to check he was properly registered with the local authority and had failed to carry out a proper investigation into whether he was a suitable person to be employed as a doorman.
By this time, however, ASE had gone into liquidation. Consequently, it failed to serve a defence and judgment in default was entered against it in June 2003.
Although ASE had no assets, it did have the benefit of a public liability policy. In addition to pursuing his claim against Luminar, Mr Hawley sought a declaration that he could recover against ASE's public liability insurers under the Third Parties (Rights Against Insurers) Act 1930.
At first instance, the judge held that, although ASE was strictly speaking Mr Warren's employer, Luminar had sufficient control over the way he carried out his job to be vicariously liable.
A further issue was whether the incident fell within the definition of accidental bodily injury in ASE's public liability insurance, since Mr Warren's action was deliberate. The judge found it did, and granted Mr Hawley a declaration that insurers were liable to indemnify ASE for any liability it was found to have towards Mr Hawley, such amount to be paid to Mr Hawley under the 1930 Act.
On its contribution claim, Luminar argued that ASE had breached its warranty that its employees were suitable people to act as doormen and had failed to check Mr Warren's credentials. This negligence was an effective cause of the damage suffered, therefore ASE should be liable to make a contribution under the Civil Liability (Contribution) Act 1978. The judge, however, assessed ASE's contribution at nil.
Insurers argued that the default judgment against ASE should be set aside as it was inconsistent with the finding of a nil contribution. But the point was raised at the last minute and the judge refused. Both Luminar and ASE's insurers appealed
Luminar now argued that, following the decision in Viasystems (Tyneside) Ltd v Thermal Transfers (Northern) Ltd  EWCA Civ 1151, the court should, at the very least, find it and ASE jointly vicariously liable for Mr Warren.
In Viasystems, a fitter's mate employed by a sub-sub-contractor, but supervised by the sub-contractor, caused extensive damage when he crawled through some sections of ducting. The central question was which of the two employers was entitled and, in theory, obliged, to control the employee's negligent act so as to prevent it. On the facts of that case, both employers were held responsible.
These circumstances were very different. Although under the terms of the agreement, Mr Warren was the employee of ASE, it was clear that doormen were subject to Luminar's Code of Conduct. This was a contract for the provision of labour only; no particularly specialised skills were involved. Although ASE had undertaken to provide door staff who knew how to behave, the evidence showed that the doormen received their instructions from Luminar's club manager. There had effectively been a transfer of control and responsibility from ASE to Luminar.
The answer to the question "who was entitled and in theory obliged to control Mr Warren's act so as to prevent it?" was Luminar. Luminar was, therefore, vicariously responsible for the actions of Mr Warren.
The Court of Appeal also upheld the judge's finding of a nil contribution from ASE. Under the Civil Liability (Contribution) Act 1978, any person liable in respect of any damage suffered by another may recover contribution "from any other person liable in respect of the same damage". The amount of recoverable contribution is such as "may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage in question".
ASE's failure to check Mr Warren's credentials was far removed from the incident itself. Mr Warren had worked at the club for two years under Luminar's direction, during which time nothing occurred to alert ASE to any propensity to violence. There was nothing ASE could have done on that night to control his behaviour.
The Court of Appeal also refused to overturn the judge's decision not to lift the default judgment against ASE. The finding of a nil contribution under the 1978 Act was as between ASE and Luminar and had no impact on the default judgment entered for Mr Hawley against ASE. The application to set aside had been made far too late and the trial had proceeded on the basis there was no issue as to ASE's liability. Even if the result was somewhat bizarre, it was neither appropriate nor in the interests of justice to reopen the issue now.
Accidental bodily injury
It is a basic rule of insurance law that, in the absence of express terms, a contract of insurance does not cover the insured against a deliberate or wilful act. Could Hr Hawley's injuries be described as accidental when Mr Warren's punch was a deliberate act? The judge decided the question had to be judged from the perspective of the insured, ASE, rather than Mr Warren or Mr Hawley. As far as ASE was concerned, the injury was indeed accidental.
The Court of Appeal agreed. The question of accident or fortuity is generally viewed from the perspective of the insured. Although one would not normally describe what had happened here as accidental, it had to be viewed in context.
The purpose of the policy was to protect ASE against liability, including vicarious liability, arising from the actions or inactions of its security guards. An extension to the policy covered ASE for liability for assault and battery committed by any of its employees in the context of an unlawful physical restraint. This supported the view that it was not the intention of the policy to exclude liability for bodily injury to third parties inflicted by an ASE employee even if the injury was inflicted intentionally. Insurers were, therefore, liable to indemnify ASE for any damages it was held liable to be paid to Mr Hawley.
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