McDermid v Nash Dredging & Reclamation Co Ltd

An employer’s duty to take reasonable care to provide a safe system of work covers both the design of the system and its operation. The duty is personal or non-delegable: delegation to a competent servant or independent third party does not relieve the employer from liability if the duty remains unperformed.

A delegate’s conduct amounts to non-performance where it abandons a central safety requirement, rather than involving merely casual negligence during an otherwise safe operation. For statutory limitation of maritime liability, a person “interested in” a ship must have a legal or equitable interest in it.

An employee suffered serious injury while unmooring a tug during dredging operations in Sweden. His employer had placed him under the operational control of the tug’s master, who was employed by the employer’s parent company. The master put the engines astern before the employee had given the prescribed signal that the mooring ropes were safely aboard.

Staughton J held the employer vicariously liable but permitted limitation of liability under the Merchant Shipping Acts. The Court of Appeal, reported at [1986] Q.B. 965, held that the master remained the parent company’s servant. It nevertheless found the employer personally liable for failure to provide and operate a safe system of work and denied limitation.

The issues before the House were whether the employer was liable despite the master’s separate employment and whether it qualified for statutory limitation of liability.

1. Appeal dismissed unanimously. Lord Hailsham and Lord Brandon delivered substantive speeches. Lord Bridge, Lord Mackay and Lord Ackner agreed with both speeches. The employer was personally liable for the employee’s injuries and could not limit that liability under the applicable Merchant Shipping Acts.
2. Per Lord Brandon, an employer must exercise reasonable care to ensure that an employee’s system of work is safe. The provision of a safe system has two aspects: devising the system and operating it. The duty is personal or non-delegable in the special sense that delegation to a person reasonably believed competent, whether or not that person is the employer’s servant, provides no defence if the duty is not performed.
3. Per Lord Brandon, the employer delegated both the devising and the operation of the unmooring system to the tug’s master. Assuming that the prescribed two-knock signal constituted a safe system, the master failed to operate it when he moved the tug before receiving the signal. His negligence was central, not casual: it abandoned the safety system and substituted a manifestly unsafe operation. The employer was therefore personally, rather than vicariously, liable.
4. Lord Hailsham reached the same conclusion. Whether the arrangement was described as no system, an unsafe system, or a system which was not used at the crucial stage, the employer’s delegated non-delegable duty had not been performed. The master’s premature use of the engines was central to that failure and could not be treated as collateral negligence by an independent contractor’s employee.
5. Per Lord Brandon, the master remained the servant of the parent company. The trial judge had therefore erred in treating him as the employer’s servant. The employer consequently could not obtain limitation under section 3(2)(a) of the Merchant Shipping (Liability of Shipowners and Others) Act 1958.
6. Per Lord Brandon, “any person interested in” a ship in section 3(1) of the 1958 Act means a person possessing a legal or equitable interest in it. The parent company held the entire legal and equitable interest in the tug. The employer therefore fell within none of the statutory categories entitled to limitation.

1. House of Lords: The employer’s appeal was dismissed unanimously. The order of the Court of Appeal was affirmed, with costs.
2. Court of Appeal: In [1986] Q.B. 965, the employee’s appeal against limitation was allowed and the employer’s cross-appeal on liability was dismissed. The matter was remitted to Staughton J for assessment of full damages.
3. High Court: Staughton J held the employer liable on the basis that the tug’s master was to be treated as its servant, but rejected liability for failure to provide a safe system of work. He limited liability to £43,893 and entered judgment for £59,169.02 including interest. Following remittal, he assessed full damages at £178,450.05 including interest.