The rising costs of covering solicitors

In Viasystems (Tyneside) v Thermal Transfer (Northern) and others (2005), the Court of Appeal made the landmark decision that there could be dual vicarious liability, overturning a long standing assumption dating back to 1826.

The case arose from a flood at a factory. The claimant had engaged D1 to install a new air conditioning system. D1 had sub-contracted the ducting work to D2, who had in turn contracted with D3 to provide fitters and fitters' mates on a labour-only basis.

The Court found little justification for the continuing assumption against dual vicarious liability and held both D2 and D3 liable, as both could give orders to the employee and thus exercise control.

The Court did, however, emphasise that the circumstances in which there is a finding of dual control would very much depend on the facts.

The issue was considered again a few months later, in Hawley v Luminar Leisure and others (2006), where a bouncer, who was an employee of a security company, D1 but engaged by the operators of the nightclub, D2, punched a customer who was left brain damaged.

In Hawley, the Court of Appeal found that only D2 had effective control of the doormen, restating that control is at the heart of the test to be applied when determining who is the employer.

The concept of dual vicarious liability was considered but Viasystems was distinguished on the basis that the negligent fitters answered to both defendants.

The implication of these recent decisions should not be underplayed. As far as exposure to risk is concerned, the possibility of other parties being involved as potential employers will need to be closely scrutinised, particularly in a complex contractual situation, such as occurs on construction sites.

In practical terms, if an insured is likely to be loaning employees to another party, contracts should be used to limit exposure to this new risk by way of contractual indemnities and to ensure that other potential employers have the appropriate insurance.

Overall, whilst the principles of determining who is the employer have not changed and control remains key, there is now scope, in the appropriate case, for there to be more than one employer.