Reid v Rush & Tompkins Group PLC

An employer’s ordinary duty of care to an employee protects physical safety and well-being. It does not extend to protecting the employee from pure economic loss caused by a third party for whom the employer is not responsible.

Where the employment relationship is governed by contract, the court cannot enlarge the parties’ express or implied contractual obligations by imposing an equivalent wider duty in tort. Neither a duty to provide personal accident insurance nor a duty to warn an overseas employee to obtain such insurance could be implied merely from the employer’s knowledge of an unusual risk of uncompensated injury.

The plaintiff was severely injured while driving his employer’s vehicle during work in Ethiopia. An unidentified lorry driver was solely responsible, and the plaintiff could obtain no compensation from that driver. He alleged that his employer should have insured him against such a loss or warned him to obtain personal accident insurance because Ethiopia lacked compulsory third-party motor insurance and an equivalent of the Motor Insurers’ Bureau scheme.

Master Creightmore struck out the statement of claim for disclosing no reasonable cause of action. Sir Douglas Frank QC, sitting as a deputy High Court judge, dismissed the plaintiff’s appeal. The plaintiff appealed to the Court of Appeal. The central issue was whether the alleged duties arose through an implied contractual term, an assumption of responsibility, or the employer’s general duty of care.

1. Appeal dismissed unanimously. Ralph Gibson LJ gave the principal judgment. Neill and May LJJ agreed that no relevant term could be implied into the contract of employment and that the contractual relationship could not be enlarged by imposing the alleged duty in tort.

2. No term requiring the employer to provide personal accident insurance could be implied by necessity, by the parties’ presumed agreement, or by law. The detailed written provisions concerning retirement benefits and medical treatment made it impossible to suppose that the parties regarded such insurance as an obvious additional obligation. Any general policy requiring employers to insure overseas employees would need legislative intervention.

3. A term requiring an employer to investigate foreign legal and social arrangements, warn an employee about the risk of uncompensated injury, and recommend particular insurance could not be implied by law into the relevant class of employment contracts. The duration and nature of overseas work, the range of possible third-party wrongs, and the differences between foreign compensation systems would require qualifications more appropriately established by legislation.

4. The ordinary duty of an employer concerns an employee’s physical safety and well-being. It may require reasonable precautions and warnings about unavoidable risks to health or safety. It had not extended to economic loss caused by a third party for whom the employer was not responsible. Where the parties’ relationship was inherently contractual, the court could not impose in tort a duty absent from the contract’s express or implied terms.

5. The facts pleaded disclosed no separate assumption of responsibility within Hedley Byrne. Neither party had referred to the special risk or to insurance, and the employer had undertaken no separate act capable of generating reliance outside the employment contract.

6. Ralph Gibson LJ considered that pure economic loss might, in rare cases, be recoverable without an actual voluntary assumption of responsibility where sufficiently close and direct relations existed. That conclusion was unnecessary to the disposition. Neill LJ expressed no view, while May LJ expressly reserved his position.

1. Court of Appeal: Dismissed the plaintiff’s appeal unanimously and upheld the striking out of the action. Leave to appeal to the House of Lords was refused.
2. High Court, Queen’s Bench Division: Sir Douglas Frank QC, sitting as a deputy High Court judge, dismissed the plaintiff’s appeal and held that the pleaded case plainly disclosed no sustainable duty.
3. Master: Master Creightmore struck out the statement of claim and dismissed the action for disclosing no reasonable cause of action.