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Hawley v Lumiar Leisure Plc & Two Others High Court 10 January 2005

21 January 2005
The issues

Vicarious Liability – Liability of Night Club Owner – Actions of Bouncers Employed Directly by a Security Service Company – Third Parties (Rights Against Insurers) Act – Temporary Employment

The facts

Luminar owned some 300 entertainment venues under different brands. One brand was “Chicago Rock Caf»” and one such club was in Southend on Sea. The Second Defendant, ASE Security Services Limited provided security services included door supervisors to the Chicago Rock Caf» in Southend. On 18th August 2000 the Claimant visited the club together with a number of friends including a Mr Playfair. The club closed at 1 am and at about 1.30 am CCTV footage showed a “melee” involving a number of customers at the club who had just left. Three door stewards had gone out to try and calm the situation down. At one point the Claimant was seen on the footage being approached and engaged in a conversation with one of the door stewards. He is seen to raise his hand and walk back in a gesture indicating he did not wish to have any trouble with the steward. At that point however another steward came on to the scene and punched the Claimant very hard on the right jaw causing him to fall to the ground and knock his head against the pavement. As a result he suffered fractures of the skull, nose and jaw and suffered severe brain injury. It was common ground that the second steward, Mr Warren was an employee of ASE. He was prosecuted for assault and convicted of inflicting grievous bodily harm and sentenced to two years imprisonment and suspended for two years. The Claimant brought an action against Luminar and ASE alleging that each of them was liable for Mr Warren’s acts.

ASE was put into voluntary winding up in May 2002 and did not file a Defence when proceedings were commenced as a result of which a default Judgment was entered against them. Luminar issued a Part 20 Notice of Contribution/Indemnity against ASE and a subsequent order was made that if the Claimant could prove that he was struck in the face by Mr Warren and that Mr Warren was acting in the course of his employment when he struck the Claimant, then ASE was liable to indemnify Luminar pursuant to the contract between them. In the end neither issue was in contention and therefore ASE were liable under that Order to Luminar. At directions stage the Master had given leave to Faraday Underwriting Limited the nominated underwriter of ASE, to be joined as the Third Defendant. It reserved its right to deny that it was liable to indemnify the Second Defendant in respect of any liability it might have. In February 2004 an amended Particulars of Claim was served in which the Claimant alleged that Luminar was a temporary deemed employer of Mr Warren for the purposes of vicarious liability in tort.

The amendment also sought in the light of the voluntary winding up of ASE to claim that the Claimant stood in Luminar’s shoes pursuant to Section 1 (1) of The Third Parties (Rights Against Insurers) Act 1930 so as to take advantage of the insurance policy between ASE and Faraday. Finally the amended pleading sought a declaration that the Third Defendant would be liable pursuant to the 1930 Act to pay any damages and costs that the Claimant was awarded against the Second Defendant. Luminar argued in turn that Mr Warren was neither an employee nor a temporary deemed employee of Luminar at the material time and therefore denied any vicarious or any other liability in respect of the acts of Mr Warren. The Third Defendant denied that it was liable to ASE for damages arising from “accidental bodily injury” within the meaning of its policy with ASE alleging that the liability arose from an intentional assault and as such would not fall within the ambit of the cover. Moreover it took the point that ASE was not entitled to an indemnity since it was caused by and arose from a deliberate, wrongful and criminal act.

The matter came before the Judge on liability only and Luminar abandoned its argument that Mr Warren was not acting in the course of his employment when he assaulted the Claimant and the Claimant abandoned its argument that Luminar was liable on the basis of direct negligence. The Third Defendant abandoned its argument that ASE was not entitled to an indemnity because the liability arose from a deliberate wrongful and criminal act. The remaining issues were therefore:-

1. Was Mr Warren a temporary deemed employer of Luminar such as to fix them with vicarious liability.
2. Was the liability attaching to ASE to be regarded as a liability for accidental bodily injury within the meaning of its policy.

The decision

1. Vicarious Liability/Temporary Employment

The issue to decide was that of when vicarious liability might attach to a Defendant in respect of the conduct of a person who is not in conventional terms employed by him but by another. The leading authority was Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool glossed by Lord Justice Denning in Denham v Midland Employers Mutual Assurance Limited. In that case Lord Justice Denning had described the real basis of liability as being whether a temporary employer had the right to control the manner in which a labourer did his work so as to be able to tell him the right way or the wrong way to do it and that if he did, then he should be liable. In Interlink Express Parcels Limited v Knight Truckers Limited the Court of Appeal had reminded itself that the burden on the general employer to show that there was a temporary employment by someone else was a heavy one and could only be discharged in quite exceptional circumstances. The burden of proof rests on the general or permanent employer to shift the prima facia responsibility for the negligence of its employees.

In this case the contract obliged ASE to maintain insurance both employer and public liability; and an indemnity by ASE to Luminar against all liabilities arising from the provision of its services or any of the acts, omissions or defaults of its stewards. The contract clearly intended that as between the parties ASE was to bear all the risks attached to the employment. However if as a matter of fact the degree of control exercised by Luminar was such as to fall within the description giving rise to a temporary deemed employment then those contractual provisions could not operate to override the effect of that paramount factor.

Having regard to the contractual documentation, regulatory documentation and the evidence of witnesses as to what happened in practice, it was plain that Luminar sought to exercise detailed control not only of what the door stewards were to do but how they were to do it. It was the manager of the club to whom door staff looked and “to whose wishes they deferred”. In effect the only freedom that ASE had was to nominate who should work on a particular night and who should replace someone who did not turn up. The control that Luminar had over ASE’s employees was such as to make them temporary deemed employees of Luminar for the purposes of vicariously liable and that followed therefore that Luminar was vicariously liable for the conduct of Mr Warren and to the Claimant.

2. Was the Claimant entitled to a declaration that the Third Defendant was liable to indemnify ASE and to pay the Claimant any sum he was awarded against ASE?

ASE and the underwriters had entered into an agreement whereby the underwriters would indemnify ASE against legal liability for damages and reasonable costs and expenses arising from accident bodily injury to any person. The contract was described as “combined liability insurance for the security industry”. Accidental was described as defined in the agreement as “sudden, unforeseen, fortuitous and identifiable” and bodily injury as “bodily injury, death, illness or disease”. The issue arose as to from whose perspective the bodily injury had to be seen as accidental. If it was from the perspective of the Claimant then it was common ground that the bodily injury would be accidental. However, as from the perspective of Mr Warren, it was argued that it was not accidental but deliberate.

The insurance was a public liability insurance and not an accident insurance or an employer’s liability insurance. The focus of the policy was not that of the victim but that of the assured and its liability. It was argued for Faraday that the insurance policy was deliberately drawn so as to apply only to accidental bodily injury. If the perspective were to be that of the assured rather than that of the perpetrator the word accidental would be otiose because since the assured could not be entitled to an indemnity for its own deliberate acts the word accidental added nothing. This was not the case however. There was a false antitheses between accidental and deliberate. In fact there was a range of possible circumstances which lay between the deliberate and the accidental as defined in this policy and it therefore followed that the use of the word accidental was not otiose if viewed from the perspective of the assured.

The natural way of construing an insurance contact was to construe it from the point of view of the insured.

Such liability as ASE had under the default Judgment did fall within the cover provided under the policy; and the Claimant was entitled to the benefit of that indemnity.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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