Newton-Sealey v Armorgroup Services Ltd & Ors

Separate corporate personality prevents an employee from implying contracts with additional group companies merely because those companies exercised control or performed important operational functions. Where an employment contract exists with one group member, an additional contract requires necessity for the efficacy of the relationship. Control is relevant but not determinative.

Negligence is a separate route to liability. Other group companies may owe a direct duty of care where loss was reasonably foreseeable, there was sufficient proximity, and it was fair, just and reasonable to impose a duty. A duty may also arise from an assumption of responsibility or special relationship. Temporary-employment concepts are not required where ordinary negligence principles provide a sufficient basis.

The claimant was injured while providing security services in Iraq. His written employment contract was with ArmorGroup Services (Jersey) Ltd. He nevertheless claimed that ArmorGroup Services Ltd and ArmorGroup Services International Plc were liable in contract and negligence.

The two English companies applied for reverse summary judgment or strike out. They argued that the claimant had no real prospect of establishing either additional contractual relationships or duties of care. The central issues were whether contracts could be implied within the corporate group and whether the surrounding recruitment, operational and equipment arrangements disclosed a real prospect of a direct duty of care.

1. Contract. The claimant had no real prospect of establishing contracts of employment with ArmorGroup Services Ltd or ArmorGroup Services International Plc. The signed contract, release, variation letter and payslips identified the Jersey company as his employer. Internal arrangements, recruitment in London, group documentation and operational control did not establish the necessary intention to contract with the other companies.
2. Where an employee has a contract with one member of a corporate group, the totality of the arrangements must be examined. Control is an important factor, but it is not determinative. An additional contract must be necessary for the efficacy of the relationship, not merely consistent with an intention to contract. The claimant’s contractual obligation to obey authorised directions meant that operational control by other group members was consistent with his existing contract.
3. The contractual claims against both companies were therefore suitable for summary disposal. The position of the English operating company would not have altered the result. There was no realistic basis for a contract with the holding company.
4. Negligence. The negligence claims disclosed a real prospect of success. The court could apply the three-stage approach in Caparo Industries plc v Dickman [1990] 2 AC 605, or principles concerning voluntary assumption of responsibility. The relevant questions were foreseeability, proximity, and whether it was fair, just and reasonable to impose a duty, or whether a special relationship and responsibility existed.
5. The recruitment presentation, deployment arrangements, conduct of operations, procurement and supply of equipment, and subsequent representations about responsibility for security personnel could establish a special relationship with the group acting through the two companies. No separate temporary-employment doctrine was needed. Liability could arise directly under ordinary negligence principles.
6. There were no special rules governing equipment procurement. The question remained the totality of the relationship and the ordinary principles of negligence. The applications succeeded only in relation to the contractual claims; the negligence claims remained for trial.