Hawley v Luminar Leisure Plc & Ors

For temporary deemed employment in vicarious liability, the paramount consideration is the nature and extent of the putative employer’s control over the worker, especially control over the method of work. The burden lies on the general employer and is heavy, but no additional requirement arises merely because the arrangement is customary or externally required. Contractual provisions allocating employment status, risk or insurance cannot override the factual transfer of control.

For public liability insurance covering accidental bodily injury, the question is ordinarily considered from the perspective of the assured, not the injured person or the employee who caused the injury. Deliberate misconduct by an employee may therefore cause injury falling within cover where, from the assured’s perspective, the injury was accidental within the policy definition.

The claimant suffered serious injuries when assaulted outside a nightclub by a door steward employed by ASE Security Services Ltd. ASE was already subject to default judgment. The remaining liability issues were whether Luminar Leisure Plc, the nightclub operator, was vicariously liable as the steward’s temporary deemed employer, and whether ASE’s public liability policy covered the resulting liability.

The claimant also sought declarations under Third Parties (Rights against Insurers) Act 1930, following ASE’s liquidation. The court therefore determined liability and insurance coverage, but not the amount of damages.

1. Temporary deemed employment. The court applied the control test in Mersey Docks Harbour Board v Coggins and Griffith (Liverpool) (1947) AC1, as restated in Denham v Midland Employers Mutual Assurance Ltd (1955) 2 QB 437 and Inter Link Express Parcels Ltd v Night Truckers Ltd (2001) EWCA Civ 360. The relevant question was who had the right to control how the work was done. Payment, dismissal, discipline and other employment incidents were subsidiary considerations. The burden on the general employer was heavy, but no further requirement arose merely because the arrangements were normal for the industry.
2. The contractual terms stating that the stewards were ASE employees and allocating risk and insurance to ASE were relevant between the parties, but could not override the factual position. Luminar exercised detailed control over both the services required and the manner in which they were performed. The club manager’s directions concerning staffing, positioning, admissions and troublesome customers prevailed. The stewards operated as part of the club’s team. They were therefore temporary deemed employees of Luminar for vicarious liability purposes.
3. Luminar was consequently vicariously liable for the steward’s assault and for the claimant’s injuries. ASE remained liable under the default judgment.
4. Insurance coverage. The phrase accidental bodily injury in the public liability policy had to be construed from the perspective of the assured. It was not limited to injury accidental from the victim’s perspective, nor was it determined by the perpetrator’s deliberate intention. The word accidental retained meaning because there was a range between deliberate wrongdoing by the assured and injury that was sudden, unforeseen, fortuitous and identifiable from the assured’s perspective.
5. The liability arising from the assault therefore fell within the policy’s public liability cover. The court also accepted that the cover could extend to accidental bodily injury caused by a criminal offence, provided the offence was not perpetrated by the assured. The claimant was entitled under section 1(1) of the Third Parties (Rights against Insurers) Act 1930 to the declarations sought against the insurer. The judgment was on liability only.

The judgment was a first-instance liability determination. ASE was subject to default judgment on 12 June 2003. A Master subsequently directed a preliminary issue concerning ASE’s contractual indemnity to Luminar and joined the third defendant. This court determined the remaining issues concerning temporary deemed employment, vicarious liability and insurance coverage.