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Unlocking Liability: Difficult Defendants

On 2nd October 2014, Daniel Lawson and Sarah Fraser Butlin delivered an evening seminar on “Unlocking Liability: Difficult Defendants”. The main points of the paper, which can be found in full at Seminar-02-10-14-handout-final.doc are summarised below.

The first part of the seminar discusses the challenges for practitioners in dealing with claims against public and private healthcare providers. It explains potential avenues to establishing liability arising from new structures within the NHS, and in particular:

  •          the potential liability of Clinical Commissioning Groups in respect of the services they commission;
  •          individual liability of practitioners such as doctors, nurses, midwives, chiropractors, opticians and others, who are now required to have appropriate insurance cover for practising;
  •          potential liability for negligence in out of hours care, which is no longer primarily provided by doctors.

Daniel and Sarah go on to consider, in this context, recent developments in the law of vicarious liability. There has been a move away from the requirement for an employment relationship to establish vicarious liability, with recent cases focusing instead on whether there is a relationship “akin to employment”, or with the same incidents as employment. The second part of the test is whether there is a “strong causative link” between the relationship between the defendant and tortfeasor and the relevant acts or omissions. This question is most often controversial where the act relied upon by the claimant is outrageous or illegal. The Supreme Court is set to consider this issue, in the context of an attack on a customer carried out by an employee working in a petrol station kiosk, in Mohamud v Morrisons Supermarkets Plc, where the claimant has been represented by Adam Ohringer of Cloisters.

The seminar also examines the scope of the non-delegable duty of care, in particular in relation to hospital treatment. A hospital will owe a non-delegable duty of care to any patient who is treated in it by any person who is engaged to perform functions on its behalf. However, this does not extend beyond cases where the hospital is actually carrying out the treatment; for example, the MoD did not owe a non-delegable duty to a wife and child of a British Army soldier when they were treated negligently by a German obstetrician and a German hospital (A (A child v Ministry of Defence). The general scope of the non-delegable duty was considered by Lord Sumption in the recent case of Woodland v Swimming Teachers Association, and paragraph 23 of that judgment contains a useful summary of the applicable principles.

The second part of the seminar focuses on insolvent defendants and rights against insurers. Daniel and Sarah first set out the potential alternatives to suing an insolvent defendant, which should be explored by practitioners in such cases. These include:

  •          considering whether the “corporate veil” can be pierced;
  •          direct liability of a company director to a third party;
  •          involvement of a holding company;
  •          considering whether liability may have transferred to a successor employer following a transfer of undertaking.

Next, consideration should be given to the particular legal state of the company, i.e. whether it is in compulsory or voluntary liquidation, or administration, or has been dissolved or struck off the register. Daniel and Sarah examine the different procedures to be followed in dealing with each of these situations.

Finally, the seminar deals with the rights laid down by the Third Parties (Rights Against Insurers) Act 1930 and the way in which the procedures will change once the 2010 Act of the same name comes into force. There is as yet no indication as to when this will occur. The main difference between the two regimes is that the third party may bring proceedings to enforce the rights against the insurer without first having established the insured’s liability; thus the need to restore a defunct company to the register in order to establish liability, which is still necessary in order to invoke the provisions of the 1930 Act, will be done away with. The insurer will, however, retain the right to rely upon all its contractual defences against the insured as against the third party, although some of the more technical requirements will be relaxed.

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