Naylor (t/a Mainstreet) v Payling

On the 11^th December 1999, the respondent sustained severe head injuries in the course of being ejected from Main Street nightclub, Rotherham by a door attendant. The appellant owned and ran the club. The door attendant was employed by Mr Whitehead whom the appellant had engaged to provide security at the club. Mr Whitehead did not hold any public liability insurance policy covering the activities of his employees. At a hearing to determine liability only, it was accepted that the door attendant had acted negligently. The judge, HHJ Murphy, held that the door attendant was not the employee of the appellant, nor did the appellant owe any non-delegable duty to the respondent. He held, however, that in the circumstances of the case, the appellant owed a duty, in effect, to ensure that Mr Whitehead was insured, and that accordingly he was in breach of his duty of care to the respondent. The appellant now appeals to this court. He does not dispute that he did not make any enquiry as to Mr Whitehead’s insurance position. His case was that there was no legal obligation upon him to do so.

The Club was licensed pursuant to a public entertainment licence to hold 300 people. A condition of that licence was that the appellant employ doormen who were licensed pursuant to a scheme operated by the Rotherham Metropolitan Borough Council, and South Yorkshire Police, and run by a Committee of the Council known as the Pub and Club Watch Committee. The Committee set the criteria for the grant of licences. At the time the criteria were that the holder of the licence should be a person of good character and have received training on an approved course, involving a total of 21 hours attendance. Successful completion of the course entitled the trainee to a recognised National Vocational Qualification. The judge accepted, although he was not provided with any documentation to this effect, that all those employed by Mr Whitehead to work at the club had the necessary licence. He further accepted that the appellant had been using the services of Mr Whitehead since he first took over the club which was approximately eighteen months before the accident, and that he had no reason to doubt the competence of Mr Whitehead and his employees as a result of anything that had happened during that time.

The judge, having considered in some detail the judgments of this court in Gwilliam –v- West Hertfordshire Hospitals NHS Trust and Others [2003] QB 443, to which I will return, said:

“36.

…… The case in my view is authority for the proposition that someone in the position of the defendant in the present case is under a duty to take reasonable steps to ensure that he is hiring a competent contractor and that duty can in certain cases extend to checking insurance cover, but it need not necessarily extend, in every case, to that.

37.

In the present case, the security operatives were working in a potentially hazardous situation. The public would have every right to assume that they would not be exposed to the negligence of an uninsured operative. In my judgement, a defendant discharging his duties and responsibilities under common law, should reasonably have checked on the insurance position of those people to whom he delegated his duty of providing proper security in a night club.

38.

He, the defendant, would be under a duty to carry Public Liability Insurance himself. He should not in my judgment, be able in effect, although I accept not by design, to get round that by saying “Well, I never thought to ask.”

39.

I should say that I accept that Mr Whitehead and his men were licensed, even though they produced no proof to me of that, no documentation had been disclosed. I accept what Mr Whitehead and his men said. But in this particular case this was not enough, in my judgment, to make them competent or to discharge Mr Naylor’s duty. Mr Naylor should have checked. He did not. He was at fault and the claimant has lost out as a result. The claimant must be compensated for that loss and therefore I find in favour of the claimant on the issue of liability.”

Mr Sweeting, QC on behalf of the appellant submits that in this passage the judge in paragraph 36 correctly stated the legal position, but then failed to apply it. He submits that the judge, conflated two separate questions. The first was the question of whether or not the appellant had discharged the duty of care he undoubtedly owed to those in the nightclub by employing Mr Whitehead as an independent contractor. The answer to that question depended upon whether he had taken sufficient steps to satisfy himself of Mr Whitehead’s competence as an independent contractor. In determining that question, Mr Sweeting accepts that there may be circumstances in which it would be necessary for the employer to ask the independent contractor whether he was insured, as that might give some indication of the contractor’s competence. The second, and entirely separate question, was whether or not there was a free standing obligation upon the appellant to ensure that the independent contractor was insured. In paragraph 38, it would appear that the judge considered that there was such a free standing duty. But in paragraph 39 he appeared to use the answer to determine the first question. Mr Sweeting submits that if the judge’s decision was based on that freestanding obligation, he was wrong as a matter of law. No such duty existed in the circumstances of this case. If, on the other hand, the breach of duty found by the judge was based on a conclusion that it was necessary for the appellant to enquire as to whether or not Mr Whitehead had insurance cover in order to satisfy himself of Mr Whitehead’s competence, that was to impose too high a standard of care in view of the licensing system and the appellant’s opportunity to assess Mr Whitehead’s competence.

Mr Woolf on behalf of the respondent, submits that the judge was right. The important question to answer was the exact nature of the duty owed by the appellant. He submits that in circumstances such as those under consideration, the duty is not merely to ensure that the independent contractor was competent, but was suitable. He submits that that is a more appropriate concept, and entitled the judge to look to the expectations of the visitors to the appellant’s club. The judge was accordingly right to approach the matter on the basis that the public would expect not to be hurt by the negligence of an uninsured doorman. In other words, a suitable independent contractor for the purposes of the task required of Mr Whitehead was not merely a competent independent contractor but also one who was covered by insurance. He further submits that this is the necessary corollary of the judge’s conclusion, which he submits was correct, that the appellant himself was under a duty to carry public liability insurance.

Both counsel have referred us to the cases of Gwilliam to which I have already referred, and which provided the judge with the basis for the legal propositions at the end of his judgment, and Bottomley –v- Todmorden Cricket Club [2003] EWCA Civ 1575. In order to understand how the judge came to his conclusions, and the nature of the competing arguments before us, it is necessary to consider both the facts and the judgments in these cases in a little detail.

The claimant in Gwilliam had been injured when using a “splat-wall” on which participants bounced from a trampoline and adhered by Velcro to a wall. This had been hired by a hospital to form part of a fund raising fair. The organiser, having discovered that the hospital had no insurance for this equipment, arranged for the hire company to provide staff so as to take the benefit of that company’s public liability insurance policy, which it asserted that it had. Unhappily, the equipment was negligently set up as a result of the company’s negligence. And equally unhappily, it transpired that the company’s public liability insurance cover expired some four days before the accident to the claimant which was caused by the negligence. It is to be noted that there was evidence before the judge from the organiser that when organising fund raising events “You have to make sure that insurance is put in hand. This is basic”. And this was supported by expert evidence called by the claimant.

The judge dismissed the claimant’s claim on the grounds that there was no duty on the hospital to ensure that the insurance was in place, nor to warn visitors in the event that there was no insurance. The appeal was dismissed by this court, but for three different reasons. Lord Woolf CJ held that the hospital owed a duty to the claimant under the Occupiers Liability Act 1957, which required the hospital to take reasonable steps to ensure that the company, as an independent contractor, was competent, that that duty in the circumstances included a duty to find out whether it was insured but that the hospital had discharged that duty sufficiently by the assurance it had from the Company that it was insured, which was the whole purpose of the employment of the company’s staff. Waller LJ held that in the particular circumstances of that case there was a free standing duty to take reasonable steps to ensure that the company was insured, which duty had been met in all the circumstances. Sedley LJ considered that there was no obligation on the hospital to ensure that the company was insured, and that there was no basis on which it could be said that the company itself was otherwise incompetent.

Lord Woolf, having identified the duty as being a duty owed to the claimant as a visitor under the Occupier’s Liability Act, used Section 2(4) of the Act by way of analogy to determine the scope of the duty where an independent contractor had been employed. Section 2(4) provides:

“In determining whether the occupier of premises has discharged the common duty of care to a visitor, regard is to be had to all the circumstances, so that (for example)

…

(b)

Where damage is caused to a visitor by a danger due to the faulty execution of any work of construction maintenance or repair by an independent contractor employed by the occupier, the occupier is not to be treated without more as answerable for the danger if in all the circumstances he had acted reasonably in entrusting the work to an independent contractor and had taken such steps (if any) as he reasonably ought in order to satisfy himself that the contractor was competent and the work had been properly done”

Having set out the evidence, in particular the evidence of Mr Wynne and the claimant’s expert, he said at paragraph 15:

“While Mr Wynne may have been primarily concerned to protect the hospital by taking the action which he did to ensure that insurance was in place, the purpose of the insurance was to meet any claim of the sort which in fact was made by the claimant against the hospital. Mr Wynne realised as did Mr Petherick , that if you are engaging a small firm like Club Entertainments to provide an entertainment such as the “Splat-Wall”, it is important that the operators of the equipment should be insured. The fact of insurance would go to their competence. If the firm did not hold themselves out as being insured this would reflect both on their ability to meet any claim and in addition suggest that they were unlikely to be a reputable firm which could properly be entrusted with the responsibility to supply and operate the “Splat-Wall”. If the firm carried insurance this enhanced their standing. It also provided protection for those who would be using their equipment. In these circumstances, on the facts of this case (and these issues are facts specific), in the absence of any other credentials, it seems to me that, in order to discharge the common duty of care, Mr Wynne was under an obligation to inquire into the insurance position of Club Entertainments so as to confirm the firm’s suitability to be entrusted with the supply and operation of the “Splat-Wall”. The firm had been selected from the phone book and Mr Wynne had no information of their reliability other than what he was told by Mr Cane. To inquire as to whether the firm was insured was one simple method of checking the firm’s suitability. Certainly there is no authority to which we were referred or which I have been able to ascertain that indicates a contrary conclusion.”

Later at paragraph 19 he said:

“The case was one where the hospital, as organisers of the fair, was under an obligation to take reasonable care in relation to the provision of the entertainment. The hospital could fulfil that duty by employing an independent contractor who they had taken reasonable steps to ensure was competent. If there had been no enquiry as to the insurance position, the hospital would not have taken the required reasonable steps. However, as I have just indicated, on the findings of the judge, the hospital had discharged this duty.”

Waller LJ, having accepted that the general position is that there is no liability for the negligence of independent contractors provided that they are chosen with good care, save where there are certain special circumstances, such as extra hazardous activities, and other situations where the employer is under a non-delegable duty, continued as follows:

“37.

….. There appears to be no authority in which it is suggested that there might be liability for failing to select an independent contractor who is not of sufficient financial standing either by virtue of his own resources or by virtue of being covered by insurance. I should indeed emphasis that as it seems to me the duty sought to be imposed by the claimant in this case cannot actually be limited to a duty to see that there is public liability insurance; it must in fact be a duty to see that the independent contractor is in a position to meet a claim.

38.

…. [L]ogically there is no reason why, even though the activity is not so hazardous as to impose liability on the employer without more, it may be hazardous enough and in the circumstances such as to impose the slightly lesser duty in relation to the quality of the independent contractor in the sense of the ability of that independent contractor to meet a claim. One factor in considering whether a duty should be imposed must be how difficult it is to comply with that duty. As already indicated, to make a contract that insurance should be in place is all that would be needed, and that is not a difficult or onerous duty to perform. In my view, unless authority dictates that no such duty should be imposed, I would be in favour of imposing that duty.

39.

There are two routes by which the imposition of duty can be supported. There is the route preferred by Lord Woolf CJ by a more direct use of the 1957 Act, or by a route which I suggest provides the same answer. I simply pose the question whether, looking at the circumstances of this particular case, it is just and reasonable to impose such a duty, applying the concept of the 1957 Act by analogy. The particular circumstances of this case are that the hospital was seeking to raise funds. It brought on to its land activities which involved risk to members of the public, and in relation to which common sense, including that of the person organising the fair dictated that public liability insurance should be in place. It is true that Mr Wynne was concerned to protect the position of the hospital but, in recognising the position of the hospital he was clearly also recognising that members of the public needed the protection of public liability insurance.

40.

If one goes back to the wording of section 2(4)(b) of the 1957 Act it can be seen that there are two obligations on the employer of an independent contractor, one is “To act reasonably in entrusting the work to an independent contractor” and the other is to take steps to satisfy himself about the competence etc. If a hospital reasonably wishes to have a somewhat hazardous activity on its land in order to raise money, but wishes to entrust the operation of that activity to an independent contractor, has the hospital acted “reasonably” in the selection of that independent contractor if it has not checked the viability and/or insurance position so far as that independent contractor is concerned? In my view, the language of that section of the 1957 Act allows for consideration of the viability of the independent contractor. It might be said that the section only related to work of “construction, maintenance or repair” but I would suggest that the concepts identified by the section also reflect the position at common law and that, thus, if someone like the hospital seeks to use an independent contractor for carrying out the sort of activities that are the subject of this case, it may be held not to have acted reasonably if it does not check the viability of that independent contractor.

…….

42.

…. This is a case where members of the public have been invited by the hospital to take part in activities which are inherently risky, which the hospital has chosen to have organised by an independent contractor. It seems to me that whether or not the 1957 Act brings about liability as suggested by Lord Woolf CJ, it is also fair, just and reasonable to impose a duty upon a hospital to choose an independent contractor who can meet any potential liability that may occur.”

Sedley LJ considered the liability of the hospital was indeed a liability based on the Occupiers Liability Act. But he considered that the answers to the question was determined by the ambit of that duty of care. As he said at paragraph 54:

“For my part, I would regard the critical question in this part of the case as being neither the existence of a duty of care nor the breach of it buts its ambit; specifically, whether the undoubted duty of the hospital to enable its visitors to be reasonably safe at the fair included a duty to take reasonable steps to check that its outside contractors had public liability insurance.”

He concluded that the ambit of the duty of care did not extend to requiring the contractor to have insurance. The duty extended simply to the safety of the visitor: it did not involve an extension of that duty to an obligation to insure which, he conceded to be a perfectly defensible proposition of legal and public policy but was one which carried with it the potential for economic and social impacts which the court was not equipped to evaluate.

Bottomley was also a case which involved what might be called a one-off event. The cricket club booked a two man stunt team called Chaos Encounter to give a pyrotechnic display to precede a conventional fireworks display at its annual fund raising event. The team invited Mr Bottomley to help them carry out their show. Whilst he was setting up a gunpowder charge in a mortar tube, it ignited and exploded in his face causing severe burns. Unhappily Chaos Encounters had no public liability insurance. The judge at first instance, when considering whether the club’s duty was limited to the exercise of reasonable care in the choice of a reasonably competent independent contractor, found that it had failed to exercise such care. He considered that despite a superficial appearance of competence and experience, Chaos Encounters were inexperienced and largely ignorant of basic safety requirements of the discharge of pyrotechnic. Proper checks would have revealed this, and would have revealed that Chaos Encounters had no public liability insurance. It was said that this was relevant to the issue of competence because insurers would wish to reduce the risk of meeting liability claims and were likely to ask questions to throw light on the extent of the risk that was to be covered and to have conditions in the policy which reduced the risks of claims being made. Furthermore, if an organisation was unable to procure insurance there might be a good reason for that which could itself be relevant to the competence of the organisation. He referred to the passage in paragraph 15 of the judgment of Lord Woolf in Gwilliam to which I have already referred.

Brooke LJ gave the leading judgment in this court. At paragraph 40 he said:

“… There was also ample evidence to justify his conclusion that if the club had taken reasonable care to enquire into CE’s credentials it would have found that they were largely unaware of the basic safety requirements needed for an event of this kind, and they would not have permitted the event to take place if they had ….”

And then at paragraph 48 he said:

“On the facts of the present case the club ought to have taken reasonable care in its selection of a suitable contractor to conduct this dangerous pyrotechnics display on its land, and it failed to do so. The fact that CE performed their services for no fee makes no difference. The club allowed this dangerous event to take place on its land with no public liability insurance and no written safety plan because it neglected to take the ordinary precaution which both Mr Beeley & Mr Wallis spoke … If the club had taken those precautions either the event would not have taken place at all, or Mr Read or Mr Hindle would have been obliged to show the club their safety plan, which would have required them to pay proper attention to Mr Bottomley’s safety….”

In a concurring judgment, Waller LJ simply noted that the question of whether there was any free standing obligation in relation to insurance was not the subject of argument in that case.

It seems to me that Mr Sweeting was right to say that the judge in the present case accurately stated the effect of Gwilliam in paragraph 36 of his judgment, which I have set out in paragraph 3 above. That is a completely orthodox statement of the principle to be applied in cases such as this. Once the judge had determined that this was not the type of case in which the appellant owed a non-delegable duty, the basic principle is that his obligation is limited to ensuring that the independent contractor who he has employed is competent. This is clearly the basis of Lord Woolf’s reasoning as he expressly said in paragraph 19 in his judgment in Gwilliam, which I have set out in paragraph 11 above. Waller LJ did not, it seems to me, dissent from the proposition of law which was the basis of Lord Woolf’s judgment; he concluded, however that there was an alternative route to the imposition of the duty which he believed to exist, which was by way of a self contained duty to ensure that the independent contractor was insured on the facts of that case. He was clearly influenced by the fact that the evidence was, overwhelmingly, that public liability insurance should be in place for the activities in question. But he was alone in considering that that was an appropriate duty to impose; and Sedley LJ expressed cogent reasons for rejecting such a free standing duty.

The judgment of Brooke LJ in Bottomley makes it clear that he, like Lord Woolf, was approaching the issue in what might be called the orthodox way. The failure to check the insurance position was one respect in which the cricket club had failed to take reasonable steps to ensure that Chaos Encounters were competent.

As I have said Mr Woolf seeks to substitute the concept of competence, with the concept of suitability. There is an element of tautology inherent in the submission in so far as it is based on linguistics, as the extract from the Oxford English Dictionary which he produced to us suggests that the words “competent” and “suitable” are interchangeable. But, as I understand his submission, by the use of the concept of suitability, the court would be entitled to look not merely at the ability or capacity of the independent contractor to carry out the work properly and safely, but to other attributes of an independent contractor which might be considered appropriate for the particular task in hand. It is at that point, he submits, that the judge was entitled to have regard to the expectations of the public, as he said in paragraph 37 of his judgment. And the judge was further entitled to conclude that the public, as the judge said, “would have every right to assume that they would not be exposed to the negligence of an uninsured operative.”

In my view, this argument, ingenious and attractively presented though it was, goes too far. First, if the passages in Lord Woolf’s judgment that I have referred to are read as a whole, it is clear that Lord Woolf was not suggesting that the concept of suitability to which he referred added anything to the orthodox concept of competence. Second, and more important, the argument fails to recognise the basis of the obligation on the appellant. The duty of care with which we are concerned was the duty to take reasonable steps to ensure the safety of the visitors to the club. He owed no duty to them to be insured, or even to have sufficient assets to meet any liability that might arise. The judge asserted in paragraph 38 of the judgment that the appellant had a duty to carry public liability insurance. But Mr Woolf has been unable to identify any statutory or other duty which could support that statement.

The context therefore in which the question as to whether he had met the obligation that he owed to his visitors by employing an independent contractor is one relating to the ability of that independent contractor to ensure the safety of the appellant’s visitors. Whatever expectations the members of the public visiting the club might therefore have as to insurance the appellant was under no obligation to be insured , or as I have said, to be capable of meeting any liabilities which arise. I cannot therefore see how he can, in some way, have a greater liability in regard to insurance merely because he employs an independent contractor. For that is the effect of Mr Woolf’s argument, which he recognised. He sought to avoid that by the mere assertion that there was the duty to carry the public liability insurance to which the judge referred and as to which I have already said he was unable to provide any authority. I can see no way in which such a duty could be imposed in the absence of a statutory requirement, or, in this situation, a condition attached to the grant of a licence, which might be sufficient to give rise to the duty for which he contends.

In these circumstances, the judge was wrong to approach the matter as he appears to have done by imposing a duty on the appellant to ensure Mr Whitehead was insured. The question nonetheless arises as to whether, in the circumstances, the appellant was under an obligation to check Mr Whitehead’s insurance position as a necessary or at least a prudent means of assessing Mr Whitehead’s competence in the sense to which I have already referred. There are, it seems to me, clear distinctions between this case and both Gwilliam and Bottomley. As will have been apparent from the facts of both those cases, the contractor in each case was carrying out what was essentially a one off operation, although it is right to say that Chaos Encounters had performed once before for the Cricket Club. But the hospital certainly had no experience of the contractor in that case; it had obtained the name from the Yellow Pages. And the experience of the Cricket Club was limited.

In those circumstances, I can see the force of the argument that a check on the insurance position might have had a bearing on the assessment of whether or not the contractor was competent. But in the present case, the position was very different. Mr Whitehead, on the evidence accepted by the judge, had provided employees who were licensed, and therefore approved by the local Pub and Club Watch Committee. And he had had a significant period of time in which to assess the competence of Mr Whitehead and his employees. No evidence was called to suggest the it should have caused the appellant to doubt their competence. In these circumstances, I do not consider that it was open to the judge to conclude that that was, as he put it, “not enough …. to make them competent.” I would accordingly allow this appeal.

I gratefully adopt the facts as set out in the judgment of Latham LJ.

The judge, who was invited only to determine the issue of liability, found in favour of the claimant, Mr Payling. The primary basis upon which he appears to have arrived at that conclusion was that Mr Naylor had a duty to satisfy himself that his independent contractor, Mr Whitehead, had public liability insurance cover. Given that Mr Naylor had not even inquired of Mr Whitehead whether he had insurance cover, and that Mr Whitehead did not in fact have such cover, the judge’s conclusion that Mr Naylor was in breach of duty was therefore inevitable.

Two questions arise. The first is the nature of the duty owed by Mr Naylor, as the owner and operator of the club employing Mr Whitehead as an independent contractor, to Mr Payling as a visitor to the club. The second question is whether that duty was breached. I shall deal with those two questions in turn.

At paragraph 21, the judge expressed the duty on Mr Naylor in the form of this question:

“Did [the employer, Mr Naylor] act reasonably in entrusting the work to an independent contractor [Mr Whitehead] and had he taken such steps, if any, as he reasonably ought to have taken in order to satisfy himself that the contractor was competent?”

However, it seems to me that the primary basis upon which the judge rested his decision was rather different. In what appears to me to be the kernel of his reasoning, in paragraph 37 of his judgment, he said this:

“In the present case, the security operatives were working in a potentially hazardous situation. The public would have every right to assume that they would not be exposed to the negligence of an uninsured operative. In my judgment, a defendant discharging his duties and responsibilities under common law, should reasonably have checked on the insurance position of those people to whom he delegated his duty of providing proper security in a night club. … He, the defendant, would be under a duty to carry Public Liability Insurance himself. He should not, in my judgment, be able in effect, although I accept by design, to get round that by saying ‘Well, I never thought to ask’.”

In other words, the judge concluded that Mr Naylor was under a duty to take reasonable steps to satisfy himself that Mr Whitehead had insurance cover, so that members of the public, who attended the club and were injured through the negligence of the door supervisors, would be able to recover damages from Mr Whitehead through the medium of his insurers.

The principles governing the liability of an employer for the negligence of his independent contractor are set out in Clerk & Lindsell on Torts (18^th Edition) at paragraphs 5-48 to 5-51 and Charlesworth and Percy on Negligence (8^th Edition) at paragraphs 2-301 to 2-318. An employer will not be liable for the negligence of his independent contractor, unless it can be shown that (a) he negligently selected an incompetent contractor, or was in some way responsible for the negligent way in which the independent contractor carried out the task, or (b) the task involved was unlawful, extra-hazardous, or carried out on the highway, or (c) the duty in respect of which the employer is alleged to be negligent was statutory in origin, or on some other basis non-delegable in nature.

In the present case, although the judge made reference to the fact that the functioning of a nightclub could be regarded as hazardous, he did not find, and it has not been argued, that this was a case where the employer could not escape liability on the ground that the risk concerned could be classified as extra-hazardous. Accordingly, at least on the face of it, the proper question was that which the judge asked in paragraph 21 of his judgment, not that which he considered at paragraph 37.

Save in the absence of special circumstances, in my view the law does not cast a free standing duty on an employer to satisfy himself that his independent contractor has insurance cover or would otherwise be good for a claim. Of course, an employer may, by checking that the independent contractor has such cover, thereby fulfil his duty to satisfy himself in a sufficient and convenient way that the independent contractor is suitable for the task for which he is to be engaged. However, it is important to distinguish between checking on the independent contractor’s insurance cover for that purpose, and doing so for the purpose described by the judge in paragraph 37 of his judgment.

I do not consider that this view is called into question by the recent decision of this court in Gwilliam -v- West Hertfordshire Hospitals NHS Trust [2003] QB 443, to which the judge referred. In that case, the only investigation made by the defendant as to the independent contractor’s suitability was to ask him whether he had insurance cover. In those circumstances, it is scarcely surprising that the arguments concentrated on the effect of that request and of the effect of the independent contractor not having such cover. As I read the judgment, Lord Woolf CJ decided the appeal on the basis that, by raising that request and receiving a satisfactory answer, the defendant had complied with its duty to satisfy itself that the independent contractor was competent: see in particular the last sentence of paragraph 14, the penultimate sentence of paragraph 15, and the whole of paragraph 19 of his judgment. Lord Woolf did not, in my view, consider that the defendant had a free standing duty to satisfy itself that the independent contractor had insurance cover for the benefit of any member of the public who might be harmed through the negligence of that contractor. At least in that connection, Sedley LJ took the same view: see the last sentence of paragraph 54 and paragraph 59 of his judgment.

Waller LJ decided the appeal on the basis that the defendant had a duty to ensure that the contractor was insured so as to be able to meet claims from members of the public who were harmed by his negligence. However, he emphasised that he was not seeking to lay down a principle of general application to a case where an employer is being sued in respect of a negligent act on the part of his independent contractor: see paragraph 43 of his judgment. Indeed, in the preceding paragraph, he went out of his way to emphasise “the special factual circumstances” of that case, a point which was also made by Lord Woolf at paragraph 15, where he described the issue as “fact specific”.

Gwilliam is a difficult case on any view. Although all three members of the court agreed in the result, Sedley LJ disagreed with Lord Woolf and Waller LJ on the main issues to be resolved (namely the existence of the duty, and whether it was breached), and, as I have indicated, it appears to me that Lord Woolf and Waller LJ differed as to the origin of the defendant’s duty. In those circumstances, it could be dangerous to draw any conclusion of general application from that case. It would be particularly dangerous, indeed wrong, to draw the conclusion that, at least in the absence of special circumstances, there is a free standing duty on an employer to satisfy himself that his independent contractor is insured.

I rest my view that there should not, save in special circumstances, be a duty on an employer to check that his independent contractor has insurance cover on a number of factors. First, the law as I understand it to be, and as summarised above, is clear and simple. There are two types of case. The first is where the employer will not be liable for the torts of his contractors, provided that reasonable care is taken in selecting him for the relevant task, and that the employer is not responsible for the tort, eg by requiring the task to be carried out in a negligent way, or in some other way contributing directly to the negligent act. The second type of case is the well established category of exceptions where the employer cannot avoid liability, for instance where the liability is non-delegable or where the task is unlawful, extra hazardous, or carried out on a public highway. To invent a third and intermediate category, where the task is hazardous but not extra hazardous, and where the employer can delegate but only if he satisfies himself that the independent contractor is insured or otherwise good for a claim, seems to me to be unnecessary and to introduce an undesirable degree of rigidity into the field. In the normal type of case, the more hazardous the task for which the contractor is employed, the greater the care one would expect of the employer when selecting the contractor.

Secondly, as I have already said, it appears to me that such an intermediate category is unwarranted by authority. As Sedley LJ pointed out in paragraph 52 of Gwilliam, there are authoritative recent statements which establish that the law in the field of negligence develops on an incremental or case by case basis, rather than by seeking to apply or construct general restitutionary or compensatory principles: see at paragraph 52.

Thirdly, save in a case where the employer is himself under an obligation to have insurance cover, it seems somewhat illogical that he should be under an obligation to satisfy himself that his independent contractor has insurance cover. As was suggested by Waller LJ in the course of argument in this case, there is obvious attraction in the notion that an employer, under an obligation to have insurance cover himself, should be under a duty to satisfy himself that any independent contractor to whom he delegates some or all of his duties, should himself be similarly covered. Indeed, it may well be that the judge in this case was under the impression that Mr Naylor was legally obliged to have insurance cover: see the first sentence of paragraph 38 of his judgment. If he was under that impression, then it is common ground that he was mistaken.

It is true that in this case Mr Naylor in fact had insurance cover. However, in my judgment, that provides no support for the proposition that he should therefore have satisfied himself that Mr Whitehead had insurance cover. Save where he is required to do so (eg by statute in the case of motor vehicle drivers, or by professional requirement, as in the case of solicitors and barristers) the primary, and indeed in many cases, the sole, reason a person obtains insurance cover is for his own benefit, and not for the benefit of the public. Accordingly, the fact that an employer has taken out insurance cover cannot, at least on its own, begin to justify the argument that he should therefore satisfy himself that his independent contract has insurance cover. Indeed, if it were otherwise, it could logically lead to the ridiculous conclusion that, in an otherwise identical factual situation, an employer who had taken out insurance himself would be negligent for not having checked whether his independent contractor had insurance cover, whereas an employer who had not taken out such cover would not be so negligent.

Fourthly, it appears to me that to impose an obligation on an employer to ensure that his independent contractor is insured might, to use the words of Waller LJ at paragraph 38 of Gwilliam, “be said to drive a coach and horses through the fundamental position of there being no vicarious liability for the activities of an independent contractor save in the exceptional cases, such as extra hazardous activities”. At first sight, of course, there is a clear difference between the employer not being able to avoid liability and the employer only being able to avoid liability provided he is satisfied that the independent contractor is insured. However, the effect of concluding that the employer has to satisfy himself that the independent contractor is insured almost amounts to holding that, unless the employer makes sure that the independent contractor is good for the money, either through insurance or on some other basis, he, the employer, will be liable for any acts of negligence on the part of the independent contractor. In any case where the employer is being sued for the negligence of the independent contractor, it will be the independent contractor who is primarily liable; accordingly, if the employer is to be liable at all in practice, it would only be if the independent contractor is not good for the claim, either on his own or through and insurer.

It therefore follows that, absent special circumstances, there could be no liability on an employer merely because he fails to satisfy himself that his independent contractor is insured or otherwise able to meet a claim for negligence. Special circumstances could, in my view, include cases where the employer is himself under a duty (whether statutory or not) to insure himself, or where the employer accepts that, in the particular circumstances, he should insure himself for the protection of the public (as the defendant appears to have accepted in Gwilliam). I do not suggest that any such case would always amount to sufficient special circumstances or, indeed, that other cases could not amount to special circumstances. In the present case, however, I am satisfied that there were no special circumstances.

Accordingly, I consider that the principal basis upon which the judge decided this case was wrong, because he took the view that Mr Naylor was obliged to take reasonable steps to satisfy himself that Mr Whitehead would, through the medium of his insurance cover, be able to meet claims from members of the public, such as Mr Payling’s claim. It therefore follows that the primary basis of the judge’s decision cannot stand.

However, that is not the end of the appeal. As Mr Derek Sweeting QC, who appears with Mr Steven Ford, for Mr Naylor, rightly accepts, it is clear that his client was under a duty to take reasonable steps to satisfy himself that Mr Whitehead was a competent person to whom to delegate the provision of door supervisors at the club. In that connection, Mr Sweeting takes his stand on the fact that Mr Naylor satisfied his duty by checking that Mr Whitehead, and the door supervisors whom he employed, were all accredited under the scheme operated by the local council and the local police authority, as was indeed the case.

The judge appears to have concluded that this was insufficient to satisfy Mr Naylor’s duty. He considered, as I read his judgment, that Mr Naylor should have inquired as to Mr Whitehead’s insurance cover. He was impressed by the fact that, had Mr Whitehead been asked about his insurance cover, he would not merely have said that he had no such cover, but he would have been ignorant on the whole topic. At paragraph 26 of his judgment the judge said this:

“What, I ask, would be the reaction of a right-thinking member of the public, who asked whether a provider of security staff was competent if he knew nothing about public, or employers’ liability insurance? This is the situation here as far as Mr Whitehead is concerned.”

Where a scheme is operated by a local council and a local police authority for accrediting individuals to carry out the very task which is to be performed by the independent contractor, it appears to me that it would require exceptional circumstances before a judge could properly hold that an employer was negligent in selecting that contractor, if he had satisfied himself that the contractor and all those working for him were properly accredited under the scheme. All the more so where, as here, the scheme is not merely informal: the public entertainment licence under which the club operated required the engagement only of door supervisors accredited under the scheme.

I accept that it would be wrong to suggest that the function of the court is merely to frank whatever scheme public bodies, such as a council and the police authority, have set up. However, the court should be very slow to conclude that, where such a scheme is operated to license persons to perform a certain type of task, it is not enough for a businessman to check that an independent contractor is so licensed before employing him for such a task. The steps which a reasonable prospective employer must take to satisfy himself of the competence of his independent contractor must inevitably depend in part on practical considerations. As Waller LJ pointed out in Gwilliam, it is not appropriate to impose on a prospective employer “a difficult or onerous duty” (paragraph 38) and the nature of the duty must be such that is “fair, just and reasonable” (paragraph 42).

The local council and the local police authority are, at least on the face of it, in a better position than the court to assess the practicalities, particularly in a case such as this, involving the running of a nightclub. Although a judge will frequently be called upon to determine the reasonableness or otherwise of a particular course of action in the context of factual circumstances with which he is unfamiliar, that does not mean that the court should be keen to step in and set its own standards in circumstances where the bodies statutorily charged with local government and enforcing law and order have already done so.

Of course, it would be wrong to suggest that there could be no circumstances in which an employer in the position of Mr Naylor could be liable in negligence for having selected door supervisors simply be satisfying himself that they were all accredited under the scheme. It might, for instance, have become notorious that the scheme was ineffective and discredited. Or Mr Naylor may have had experience of a particular door supervisor who, though still accredited under the scheme, had shown himself to be wholly unsatisfactory and unreliable. As was emphasised in Gwilliam, each case must turn on its own facts. Having said that, it seems to me that, in the absence of any such special facts in the present case, it is very hard to discern any justification for concluding that Mr Naylor had to go any further than he did in order to satisfy himself that Mr Whitehead and his employees were suitable people to be delegated the role of door supervisors at the club. Not only were they all accredited under the scheme, but Mr Naylor had employed Mr Whitehead and his employees as door supervisors for at least the previous eighteen months, and there was no suggestion that they had performed in any way unsatisfactorily in the past.

For reasons which I hope are clear from what has already been said, I do not consider that my conclusion that Mr Naylor was not in breach of duty in this case is called into question by the decision or reasoning in Gwilliam. So far as Lord Woolf’s judgment is concerned, all he was saying was that one way in which the employer in that case could have satisfied himself as to the competence of the contractor was by checking as to whether he had insurance cover. It would not be right to read his judgment as suggesting that that was the only way in which the employer in that case could have satisfied himself of the competence of the contractor. Although Lord Woolf said in paragraph 19 that “if there had been no inquiries as to the insurance position, the hospital would not have taken the required reasonable steps”, that was simply because the hospital had taken no other steps, and, therefore, on the facts of the case, its liability to the claimant stood or fell on the inquiry as to the insurance position. It is true that Waller LJ considered that there was a specific obligation on the hospital to satisfy itself that the contractor had insurance cover, but I do not consider that that assists Mr Payling. First, as is clear from his judgment, it was a conclusion reached by reference to the very particular facts of that case, which may well have fallen within the special circumstances described above. Secondly, Waller LJ was in the minority in his reasoning in that connection.

Indeed, I would suggest that, if anything, the facts of Gwilliam, insofar as they take this case any further, assist Mr Naylor rather than Mr Payling. In Gwilliam, the defendant escaped liability simply by having asked the contractor whether he was insured and received a positive answer: in fact, the insurance had lapsed by the date on which the contractor performed his task, as the defendant would have appreciated if it had asked to see the insurance document. If such a check was sufficient to satisfy the defendant’s duty in that case, it is a little difficult to see why Mr Naylor should be treated as having been negligent in the present case, given that he checked that the contractor and his employees were all licensed under a directly relevant scheme operated by the local council and the police authority.

Finally, I should say that I am unpersuaded by an argument which appears to have weighed with the judge, namely that, had Mr Naylor asked Mr Whitehead about his insurance cover, he would have discovered that Mr Whitehead did not know about insurance. The argument is circular, because it effectively assumes a duty on Mr Naylor to inquire of Mr Whitehead as to his insurance cover. For the reasons I have given, I do not consider that one gets to that point, because, having satisfied himself that all the door supervisors concerned were licensed under the scheme, Mr Naylor had to go no further. Further, the mere fact that Mr Whitehead was unaware of the availability of, or even, perhaps, the prudence of obtaining, insurance cover does not, at least without more, cast doubt on his competence as a door supervisor or an employer of door supervisors, although I accept that, taken together with other relevant facts (if there were any) it might be of some weight.

Accordingly, I agree with Latham LJ that, despite Mr Eliot Woolf’s attractive submissions to the contrary, the judge reached the wrong conclusion, and that this appeal should be allowed.

The judgments in Gwilliam including my own, have come under considerable scrutiny, and I would in agreeing that this appeal should be allowedjust explain why the circumstances of this case do not give rise to what has been termed a “free standing duty” to check insurance or an ability to meet a claim, whereas the circumstances in Gwilliam in my view did.

I accept that the Lord Chief Justice and I reached the result we did by different routes in Gwilliam. But it is fair to say that I am not altogether convinced that the Lord Chief Justice was simply using the checking of insurance as an orthodox method of checking the independent contractor’s “competence”. He was (I think) also in the circumstances of that case concerned with a duty to check on the ability to meet a claim [see paragraph 15 of his judgment]. Indeed it has to be said that the whole basis of the claimant’s action against the hospital was that the failure to check insurance had lead to non-recovery of the claim, and it was that breach of duty with which the case was concerned.

But more relevantly what influenced me to hold that there was a duty in Gwilliam were the following factors. The hospital wished to carry out an activity which was hazardous with a clear risk of injury. It would have been in a position to meet any claim if it had carried out the activity through its employees and the evidence was that it actually recognised that it would not in fact have done so without public liability insurance. It was not onerous to check whether the independent contractor carried insurance. The hospital would thus not be acting reasonably in arranging for an independent contractor to carry out the hazardous activity, unless they checked that visitors would be as protected as if the hospital had carried out the activity directly.

The critical factors which are absent in the instant case are the following. First the job of acting as a bouncer does not in my view fall within the type of hazardous activity which was under consideration in Gwilliam orfor that matter in Bottomley.

Second if there is to be a free standing duty, it can only arise where the employer would be under a duty to insure himself or at the least has actually recognised the need for insurance in relation to the particular activity or is of such standing that he can meet a potential claim arising from the hazardous activity without insurance. In the instant case the judge said in paragraph 38 “He, the Defendant, would be under a duty to carry Public Liability Insurance himself. He should not in my judgment be able in effect, although I accept not by design, to get around that by saying, “Well, I never thought to ask”. This reflects closely the factor which I suggest is necessary to give rise to the free standing duty. But the difficulty is that Mr Woolf was unable to point to any statutory obligation on the Defendant to carry public liability insurance nor any evidence of a clear recognition of a duty to carry insurance. in relation to the particular activity of a bouncer.

One of course has great sympathy for the claimant in this case, but I too would allow the appeal.