Naylor (t/a Mainstreet) v Payling

An employer who engages an independent contractor must ordinarily take reasonable steps to select a competent contractor, but has no free-standing duty to ensure that the contractor is insured or financially able to meet a negligence claim. Insurance may be relevant evidence when assessing competence. A directly relevant licensing scheme may ordinarily provide sufficient assurance, absent exceptional circumstances. A separate insurance duty may arise in special circumstances, including a statutory or accepted obligation on the employer to insure.

A nightclub visitor suffered severe head injuries when negligently ejected by a door attendant employed by an independent security contractor. The county court held that the attendant was not the nightclub owner’s employee and that no non-delegable duty arose, but found the owner liable for failing to check that the contractor had public liability insurance.

The owner appealed. The central issues were whether the judge had imposed an impermissible free-standing insurance duty and whether accreditation under a local council and police licensing scheme, together with eighteen months’ satisfactory experience, discharged the duty to select a competent contractor.

1. Appeal allowed; claim dismissed. The owner was not liable merely because he had failed to check whether the independent contractor carried public liability insurance or could meet a claim.
2. An employer is ordinarily not liable for the negligence of an independent contractor where reasonable care was taken in selecting a competent contractor and the employer did not otherwise contribute to the negligence. Exceptions include unlawful or extra-hazardous work, work on the highway, and statutory or otherwise non-delegable duties. The operation of the nightclub was not found or argued to fall within such an exception.
3. The owner nevertheless owed a duty to take reasonable steps to satisfy himself that the contractor was competent to provide door supervisors. That duty was distinct from any obligation to ensure insurance. Insurance could be checked as a convenient means of assessing competence, but its absence did not itself establish breach.
4. Gwilliam v West Hertfordshire Hospitals NHS Trust and Others [2003] QB 443 did not establish a general insurance duty. Lord Woolf CJ treated insurance as one possible means of assessing competence. Waller LJ’s alternative view depended on the special facts of that case, while Sedley LJ rejected a free-standing insurance obligation. Bottomley v Todmorden Cricket Club [2003] EWCA Civ 1575 likewise treated insurance as relevant to assessing competence in its particular factual setting.
5. Accreditation under a scheme operated by the local council and police authority, combined with at least eighteen months’ satisfactory experience, was sufficient in this case. Exceptional facts would have been required before further inquiries could properly be demanded. None existed.
6. A free-standing insurance duty might arise in special circumstances, including a statutory or other obligation on the employer to insure, or an accepted need to insure for public protection. That qualification did not apply here.

Order: appeal allowed with costs not to be enforced without leave; claim dismissed; detailed assessment of the claimant’s community legal services funding certificate; leave to appeal refused.

• Court of Appeal (Civil Division) [2004] EWCA Civ 560: appeal allowed and claim dismissed.
• Sheffield County Court: HHJ Murphy QC held that the door attendant was not the owner’s employee and that no non-delegable duty arose, but found the owner liable for failing to check the contractor’s insurance.