Defective Equipment Claims | Risk info | Large | Business | Zurich Insurance

Defective Equipment Claims

Soldering

It is now over two years since S69 of the Enterprise and Regulatory Reform Act (ERR) came into force, effectively removing civil liability in employer's liability cases for breach of statutory duty.

As discussed in Eric Woolley's article on page six, it remains difficult to assess the real impact of this, and in particular the courts have yet to grapple with the distinction between reasonableness and reasonable practicability - in this context, an issue that is sure to exercise our brightest legal minds in the months and years to come.

However, one area in which section 69 was initially viewed as changing the law radically was in relation to defective equipment claims. Previously, an employer who provided and employee with work equipment that turned out to be defective and which consequently caused injury to that employee, was 'gang to rights', regardless of whether there was any culpable fault on their part.

Here, the impact of the use of the word "shall" was seen throughout the Provision and Use of Work Equipment Regulations 1998 (PUWER), and the strict liability that this created was confirmed in Stark v Post Office (2000).

Then, of course, section 69 ERR arrives and removes civil liability for a breach of PUWER, meaning that a claimant has to prove negligence on the part of the employer in order to succeed in a claim where injury has been caused by defective equipment. Or do they?

It should be noted that section 69 only removes civil liability for breaches of statutory duties arising from Regulations made under the Health and Safety at Work Act 1974. Hence, civil liability remains when arising from a different source - for example the Animals Act 1971. In the context of defective equipment claims it seems that, post-ERR, the long neglected Employer's Liability (Defective Equipment) Act 1969 suddenly has a new lease of life.

Section 1 of the 1969 Act provides:

"Where after the commencement of this Act

(a) an employee suffers personal injury in the course of his employment in consequence of a defect in equipment provided by his employer for the purposes of the employer's business; and

(b) the defect is attributable wholly or partly to the fault of a third party (whether identified or not),



the injury shall be deemed to be also attributable to negligence on the part of the employer (whether or not he is liable in respect of the injury apart from this subsection), but without prejudice to the law relating to contributory negligence and to any remedy by way of contribution or in contract or otherwise which is available to the employer in respect of the injury."

The upshot appears to be that even if the employee cannot prove negligence against the employer, they are still fixed with liability if the defect with the equipment is attributable to the fault of a third party, who need not even be identifiable. In practice, it is difficult to envisage a scenario whereby a defect in work equipment cannot be attributed to the fault of somebody, bearing in mind the fact that under the 1969 Act the part at fault need not be identified.

Consequently, i.e. the outcome in defective equipment claims, whilst achieved via a rather different route, will more often than not be the same, i.e. primary liability rests with the employer. It follows, though, that the option remains for the employer to pursue an indemnity or contribution from the culpable third party, if they can be identified. A recent case handled by Keoghs illustrates the distinction between the old and the new law.

The claimant worked in a tyre bay, fitting tyres onto his employer's fleet of HGVs. One day he was inflating a newly purchased remould tyre when it exploded, the force throwing him backwards onto a concrete floor and causing a significant head injury.

The case predated ERR and therefore the old law applied - the tyre was work equipment and therefore the employer was strictly liable under Regulation 5 of PUWER. Liability was therefore conceded, but a claim for indemnity was launched against the manufacturers of the tyre, primarily on the basis of a breach of section 14 of the Sale of Goods Act 1979.

Interestingly, the expert evidence confirmed that the tyre had internal structural damage, only identifiable via x-ray or shearography; techniques not required to be used by either the employer or the manufacturer of the remould. Consequently, it could not be said that either had acted negligently. The experts agreed that the tyre had sustained impact damage in its previous life that was not detectable upon visual inspection or during the course of the remould manufacture process.

Ultimately the claimant's claim was settles, and shortly before the trial of the contribution claim against the manufacturers they agreed to reimburse 85% of the claimant's damages and costs.

Whilst they attempted to muddy the waters with allegations of negligence on the part of the employers, they eventually accepted the significant risk that we would succeed in securing a full indemnity. Had the accident occurred post-ERR, the claim would have taken a rather different course.

Liability would not have been admitted on the basis of a breach of PUWER, but the claimant may well have been able to establish liability against the employer on the basis that the defect with the tyre arose from the fault of a third party, albeit not the manufacturer.

Under the wording of the 1969 Act, even though no fault lay with the manufacturer, negligence may still have been imputed to the employer on the basis of fault of an unidentified third party (or parties), ie those who had caused the earlier impact damage.

The court may well have concluded that such damage was likely to have arisen as a consequence of negligent driving, for example hitting a kerb at speed. Of course, in these circumstances the employer would still have been able to benefit from the argument against the manufacturer under the Sale of Goods Act 1979.

Hypothetically, though, if the negligent driver who had caused the damage could be identified, both the employer and manufacturer might have had grounds for pursuing them for an indemnity, although this would give rise to interesting legal arguments with regard to foreseeability and remoteness of damage.

In practical terms, the continued existence of the 1969 Act means that, provided claimant solicitors cotton on, (which they inevitably will), in the majority of defective equipment cases, employers will still be found liable.

It will be interesting to see, however, if any cases arise in which an employer is able to avoid liability due to an inability on the employee's part to prove, to the required standard, fault on the part of a third party, or in which a culpable third party is able to avoid liability on the basis that the injury or loss was not foreseeable consequence of their negligence.

It will also be interesting to see whether the courts impose the burden of proving negligence on the part of the third party upon the employee, or whether they deem that the defect with the equipment creates a rebuttable presumption of fault on somebody's part, with the burden of rebuttal resting with the employer. Some fertile ground for test cases perhaps?


Julian Dexter
Partner

Telephone: 0247 665 8252
Email: jdexter@keoghs.co.uk