14 December 2005

Air conditioning case sets legal landmark

A DISPUTE over an air conditioning contract has set a legal precedent which means that employers could now be liable for the negligence or misbehaviour of another firm's staff.
The landmark case in the Court of Appeal has overturned 200 years of legal assumption that dual vicarious liability was not possible.

In the case of Viasystems v Thermal Transfer, S & P Darwell and CAT Metalwork Services, the court ruled that it was possible for two employers to be vicariously liable where an individual had been negligent while temporarily working for another company. Until now, the law had deemed it impossible for more than one employer to be vicariously liable.

The case dates back to 1998 when Thermal Transfer (Northern) Ltd was awarded the air conditioning contract by US PCB manufacturer Viasystems (Tyneside) Ltd for its factory in South Shields. Thermal Transfer subsequently subcontracted the ductwork to S&P Darwell Ltd who, in turn subcontracted the employment of suitable fitters and fitters' mates to Troy hall and Christopher Day who were trading as CAT Metalwork Services.
A Mr Megson and one Darren Strang were employed by CAT Metalwork, and both came under the supervision of a Mr Horsley, a self-employed fitter contracted to S&P Darwell.
The fitters were working in the roof space where access was by crawling boards using the roof purlins. Sent on an errand, Mr Strang attempted to return by crawling through sections of the ducting, causing the ducting to shift, fracturing an adjacent fire protection sprinkler system and flooding the building.
The third defendants, CAT Metalwork Services, were originally found guilty, prompting an appeal.

The appeal court ruled that both S&P Darwell and CAT Metalwork Services were jointly liable for the flooding caused to the factory by CAT's employee.
The judges found that both companies were entitled to exercise control over the actions of Strang and so were both vicariously liable for Strang's negligence. The court also found that the measure of control was equal, so the employers should each contribute half of the damages awarded.

Rod Pettigrew, head of legal and commercial affairs at the HVCA, warned contractors to be aware of this issue.
'If a contractor is taking in labour, where they have control over that labour, they could be taking on those liability responsibilities,' he said.
Alan Weir, secretary of the ductwork contractors' association ADCAS, agreed: 'This is a surprising decision and one that could have ramifications throughout the construction industry. It must affect the way in which contracts are drawn up in future.
'If the existing sub-contract structure is to be maintained, then the ruling underlines the need for a skilled and experienced work force,' he continued.
'If, on the other hand, the court's decision marks a trend to direct employment, just when is that trend to stop? When we have just a few giant contracting companies that do all the work and employ all the labour? The implications of such a situation would be enormous and likely, yet again, to increase contractor's costs and profits for the insurance companies.'
Ironically, the Viasystems Tyneside factory at the centre of the original case, was closed down by the receivers KPMG more than two years ago.

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