It is well established in common (or Judge-made) law that an employer can be liable for the negligent acts of their employees. But there has always been an assumption that only one employer can be liable.

In Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd and ors (2005, IRLR 983; IDS 792), the Court of Appeal has said that two employers can be equally liable.

 

What were the basic facts?

In July 1998, Viasystems engaged Thermal Transfer to install air conditioning in their factory. They, in turn, subcontracted the ducting work to S&P Darwell, who contracted with CAT Metalwork Services to provide fitters and fitters' mates.

One of the fitters was Mr Megson, and his mate was Darren Strang. They worked under the supervision of Mr Horsley who was contracted to S&P Darwell. Both Mr Megson and Darren Strang were employed by CAT Metalwork Services.

Viasystems brought a claim for damages in the High Court after Mr Strang negligently caused a serious flood. But who was liable? The Judge decided that, as Mr Strang was under the control of Mr Megson, then his employer was vicariously liable for his negligence.

Appealing against that decision, CAT Metalwork Services argued that, as S&P Darwell were responsible for supervising Darren Strang, they were vicariously liable for his negligence.

 

What was the core question?

The Court of Appeal started by identifying the relevant negligent act - Darren Strang foolishly crawling through a duct and breaking a sprinkler system that caused a flood. But who was entitled, or even obliged, to stop him from doing that? That, said the court, was the core question.

And it said that "the only sensible answer to that question in this case is that both Mr Megson and Mr Horsley were entitled, and in theory obliged, to stop Darren's foolishness." In other words, both employers were vicariously liable.

But that conclusion (of dual liability) meant challenging a centuries-old legal assumption that only one employer can be liable when an employee who has been "lent" to another employer has been negligent.

 

Was the contract transferred?

Underpinning that assumption was the 19th century idea that, to find the temporary employer vicariously liable, there had to have been a transfer of employment. In other words, that the "servant" of the general employer had become the "servant" of the temporary employer.

But according to the Judge in Denham v Midland Employers' Mutual Assurance Limited (1955, 2 QB 437), this concept was just a device to establish the liability of one employer or the other. However, it did "not affect the contract of service itself. No contract of service could be transferred without the servant's consent."

The Court of Appeal therefore decided that, applying the principles in Denham, the employee did not have to be employed by the temporary employer to establish negligence.

Relying on the leading case of Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Ltd (1947, AC 1),the Judge said that the key issue was to concentrate on the relevant negligent act and then ask who should have prevented it.

He concluded that "there will be some cases in which the sensible answer would be each of two 'employers'. The present is such a case. In my judgment, dual vicarious liability should be a legal possibility, and I would hold that it is."

But in which other circumstances will dual liability apply? According to another Judge, it will be when an employee is so much a part of the business or organisation of both employers that it would be fair to make both employers answer for his or her negligence.

In this case, the court decided that each defendant should contribute 50 per cent of the total liability as they were each equally responsible - a likely outcome in any judgement of dual liability.