Law Report

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Hospital has duty of car over contractor’s insurance

COURT OF APPEAL - Published August 7, 2002

Gwilliam v West Hertfordshire Hospitals NHS Trust and Others

Before Lord Woolf, Lord Chief Justice, Lord Justice Waller and Lord Justice Sedley

Judgment July 24,2002

A hospital owed a duty to a member of the public visiting a fund-raising fair in its grounds to take reasonable steps to ensure that any independent contractor who supplied and set up potentially hazardous equipment at the fair had public liability insurance.

The Court of Appeal so held by a majority in a reserved judgment dismissing an appeal by the claimant, Ethel Gwilliam, against the decision of Judge Roger Connor at Watford County Court on July 17, 2001 that the first defendant, West Hertfordshire Hospitals NHS Trust, owed her no duty in respect of which damages could be recovered after she was injured in the grounds of Mount Vernon Hospital when using a “splat-wall”, on which participants bounced from a trampoline and adhered by Velcro to a wall.

It had been hired from and negligently set up by the second defendant, Adrian Cane. No appeal was brought against the judge’s dismissal of the claim against the third defendant, Stephen Fenwick.

Section 2 of the Occupiers’ Liability Act 1957 provides’. “(4) … (b) where damage is caused to a visitor by a danger due to the faulty execution of any work of construction, maintenance of 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..”

Mr Laurence Marsh for the claimant; Mr Richard Furniss for the hospital.

THE LORD CHIEF JUSTICE said the fair was being held in the grounds of the hospital to raise money for the hospital. The hospital fund-raising manager, Mr Andrew Wynne, had organised the “splat-wall”, which was provided by the second defendant, who traded as Club Entertainments.

A splat-wall was a category of entertainment which should have been obvious to the hospital could create danger for those using it if its installation and use was not carefully supervised.

Mr Wynne made an arrangement with Club Entertainments whereby the hospital paid an extra £100 and Club Entertainments provided the staff for the splat-wall. The hospital was then to have the benefit of Club Entertainments’ public liability insurance.

The injury to the claimant was caused by the negligence of Club Entertainments. Club Entertainments agreed to pay £5,000 to the claimant, which sum was accepted because Club Entertainments’ insurance had expired.

The claimant contended she was entitled to recover from the hospital the difference between the sum which she would have recovered from the second defendant, if it had been insured, and the sum at which she settled her claim.

The judge took as his starting point the fact that the only reason there was no insurance was that it had expired four days earlier and the second defendant had not appreciated that.

He then proceeded to consider the legal position on the ground that it related to pure economic loss. He applied the test laid down in Caparo Industries plc v Dickman (1990) 2 AC 605, 617-618) and came to the conclusion no duty was owed to the claimant by the hospital.

In his Lordship’s judgment, that was the wrong starting point. The correct starting point was section 2 of the 1957 Act.

Because of the position relating to insurance, the hospital had paid £100 so that the staff operating the splat-wall were the employees of Club Entertainments, but that did not affect the fact that the hospital remained the occupier of the grounds where the fair was taking place and, as such, owed the common duty of care under section 2(1) to the claimant.

That duty was defined by section 2(2) as a duty to take such care as, in all the circumstances, was reasonable to see that the claimant would be reasonably safe in using the premises to which she had been invited. Her permission to be present extended to the use of the entertainments, such as the splat-wall, provided at the fair.

Club Entertainments was an independent contractor. However, that, as was made clear by section 2(4), did not mean that the hospital did not continue to owe a duty to the claimant. Section 2(4) was concerned not with the question as to whether there was a duty but whether the duty had been discharged.

Furthermore, section 2(4)(b) was only an example of the circumstances which could indicate that the duty had been discharged and it would not be directly applied to the present situation, it was only capable of having an application by analogy.

The hospital undoubtedly remained under a duty to the claimant and the judge’s conclusion that no duty was owed was incorrect.

The next critical issue was whether the hospital discharged that duty. His Lordship had no doubt that the hospital could fulfil its duty if it employed an appropriate, competent, independent contractor.

In deciding whether the contractor was competent the hospital had to take into account the nature of the task that the contractor was required to perform. That involved being satisfied that Club Entertainments was sufficiently experienced and reliable to be entrusted with ensuring that members of the public would be reasonably safe using the splat-wall.

The fact of insurance would go to the firm’s competence. If the firm did not hold itself out as being insured that would reflect both on its ability to meet any claim and, in addition, suggest that it was unlikely to be a reputable firm which could properly be entrusted with the responsibility of supplying and operating the splat-wall.

In those circumstances, on the facts, and those issued were fact specific, in the absence of any other credentials, 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.

Mr Wynne did inquire as to the insurance position although he did not ask to see the policy. However, as the judge found, Mr Wynne had no reason to believe that the insurance was not in force. That conclusion was one which his Lordship was prepared to accept.

If the position was to be otherwise it would involve finding that the hospital would not only be required to inquire into the insurance position, they would be required to check the terms of the insurance policy. That would be an unreasonable requirement.

In the result, therefore, the judge came to the right decision, not because there was no duty but because the duty had been fulfilled.

LORD JUSTICE WALLER said that members of the public had been invited by the hospital to take part in activities which were inherently risky, which the hospital had chosen to have organised by an independent contractor.

Whether or not the 1957 Act brought about direct liability, it was fair, just and reasonable to impose a duty on the hospital to choose an independent contractor who could properly meet any potential liability which might occur.

The only duty was to act reasonably. Mr Wynne checked whether there was insurance and indeed made a contract for the insurance to be in place. To impose a duty that went further than that would be unreasonable.

Lord Justice Sedley, dissenting said there was no duty and the appeal should be dismissed.

Solicitors: Collins, Watford . Beachcroft Wansbroughs.