Scottish Court of Session Decisions

I last heard submissions in this case at a procedure roll hearing in December 1998 after which I issued an opinion dated 11 December 1998. Thereafter, the first defenders amended their pleadings, but the third party insisted on its preliminary pleas and the case reappeared on procedure roll before me on 7 January 2000. I refer, however, to the earlier Opinion for its presentation of the contractual documents and the terms of the contracts between the first defenders and the third party, and the third party and Ridgevine Limited. I adhere to the view which I expressed in that Opinion for the reasons I then gave, that the first defenders' averments of personal bar directed against the third party were irrelevant, and thus the first defenders' averments thereanent will have to be excluded from probation and their second plea will have to be repelled. I will deal with this in more detail at the end of this Opinion. I also refer to the earlier Opinion for the factual background against which the action was raised and the circumstances in which it was brought before me. Essentially, the question is whether the first defenders have relevantly averred that Clause 10.1 of the contract between themselves and the third party applies in the circumstances condescended upon. That Clause provides as follows:

In that context the consultant is the third party and the company are the first defenders. The first defenders do not now aver that the pursuer was an agent of the third party, nor do they now aver that his employment with Ridgevine Limited was transferred pro hac vice to the third party. In that connection Mr Clark who appeared for the first defenders conceded at the hearing on 7 January that the two sentences beginning with the words "Esto" on page 12 of the Closed Record should be deleted. So the question comes to be whether the first defenders have made sufficiently relevant averments that the pursuer was a "servant" or "invitee" of the third party to allow them to be admitted to probation.

In determining this question I was invited by the parties to consider and apply the terms of the four contractual documents (Nos 14/1 to 14/3 and No 32 of process), as well, of course, as their respective averments. The first defenders' averments with regard to the pursuer being a servant are to be found in the Closed Record between pages 10C to E and 11D to 12C. In the main these averments are intended to reflect such terms of the contract between the parties as the pleader has chosen to found on. That being so, it is essentially a question of law whether the contracts establish a relationship of employer and employee between the third party and the pursuer. (See McMeechan v The Secretary of State for Employment (1995) IRLR 461 per Mummery, J. at p. 463, para. 14).

It is averred that the pursuer was an employee of a company called Ridgevine Limited and that he was also the main shareholder and director. But, as Mr Francis pointed out, his role within the company may leave his status as an employee unaffected. (See Lee v Lee's Air Farming Limited) 1961 AC 12). As I recorded in my previous Opinion, the pursuer came to be employed on The Gryphon A, an offshore installation, in terms of what is described as a sub-contract agreement dated 15 and 16 October 1993 entered into between the third party and Ridgevine Limited, but which throughout is clearly referable to the pursuer as an individual. His remuneration, to be paid by the third party, is described as "Fees". The expenses of travel and accommodation are to be met by the third party. The letter of engagement then says:

The penultimate paragraph makes clear that Ridgevine are to be responsible for "all claims, NHI contributions and income tax in respect of all personnel supplied" under the contract.

It is clear to me that it is the terms of this agreement which determine whether the pursuer for the purposes of the agreement became an employee of the third party. He was, of course, not a party to the Manpower Services Agreement between the first defenders and the third party dated 14 June 1993 but effective from 25 May 1993. I note also that the Call-Off Order (No 14/3 of process) is not referred to in terms or incorporated into the sub-contract agreement between Ridgevine and the third party. Nor are there any averments that it was in some other way incorporated. This is of some importance because in the Call-Off Order it is provided that the pursuer will work under the directions of the first defenders' lead discipline technician. The attached job description sets out the duties of the pursuer on board The Gryphon A. However, I suppose it might be inferred that if the pursuer was to conform with the first defenders' disciplinary procedures, he would have to conform to the directions of their lead discipline technician. Otherwise, what does "discipline" mean in the context. Unfortunately, I was not favoured with any submissions along these lines.

So what are the factors that would tend to indicate that in the performance of his contractual duties aboard The Gryphon A the pursuer was an employee of the third party? If some degree of control is essential to the relationship of employer and employee - "a contract of service implies an obligation to serve, and it comprises some degree of control by the master", per Stable, J. in Chadwick v Pioneer Private Telephone Company Limited 1941 1AER 522 at 523 - as Mr Francis correctly submitted that it did, where and when was the control to be exercised by the third party over the pursuer? I agree with Mr Francis that, if there is any indication at all, it is that the first defenders have control of what the pursuer did on the offshore installation, although even they did not have control over the way he carried out the work. In Ready Mixed Concrete (South East) Limited v The Minister of Pensions and National Insurance 1968 2 QB 497, McKenna, J, said at p. 515:

There are no indications from the terms of the contracts that the third party had the power to exercise such extensive control.

Even if one accepts that control cannot be regarded as the sole determining factor - see Market Investigations Limited v The Ministry of Social Security (1968) 3 AER 732 per Cooke, J. at p.738 - what other indications are there that a contract of service exists between the third party and the pursuer? So far as the pleadings are concerned, the first defenders aver that the third party was "responsible for payment for the pursuer's service, for provision of equipment and for travelling expenses". In fact, the first party paid "Fees" to Ridgevine for the provision of the services supplied by the pursuer. These I may say were different from the amounts agreed for the pursuer's services in the contract between the first defenders and the third party. The other two aspects of provision, namely equipment and travelling expenses, are not by themselves indicative of a contract of service.

The first defenders also aver (at p. 12A) that in order to satisfy their obligations under the contract with the first defenders the third party required to maintain a substantial element of control over the actions of persons supplied under the contract. There is no specification of this and no reference is made to any term of the contracts. They then go on to aver (at p. 12B) that there was considerable mutuality of obligation between the pursuer and the third party. These averments were described by Mr Francis as "open textured". For my part I do not understand what they mean other than the normal terms of a bilateral contract. Finally, the first defenders aver (at p. 12C) that the third party was obliged under its contract to make good any defect in the pursuer's work. Once again, that in itself does not indicate whether the nature of the contract between the third party and the pursuer was a contract of service, rather than a contract for services to be provided by Ridgevine Limited through the pursuer. If the third party had to provide such remedial work, that was a matter to be determined by the terms of the contract between the third party and the first defenders.

Mr Clark said that the first full sentence on p. 12 of the Closed Record was in itself sufficient to meet the arguments that there were no averments that the third party had control over the pursuer in the way an employer would have over an employee. He referred to Ferguson v John Dawson & Partners (Contractors) Limited 1976 1 WLR 1213 and Narich Pty Limited v The Commissioners of Pay-Roll Tax 1984 ICR 286. Both these cases were concerned with attempts by the parties to the contract of engagement to declare that the plaintiff was a self-employed independent contractor. The Court held in each case that when the realities of the engagement were considered, the plaintiff was an employee who was subject to the direct control of the employer in a number of different ways. In this case the first defenders and the third party relied in effect upon the terms of the contracts of engagement. They do not aver how these contracts were in fact performed. The first defenders do, of course, aver that in order to satisfy its obligations under the contract with the first defenders, the third party required to maintain a substantial control over the actions of persons supplied under the contract. But, as I have already said, I find difficulty in giving content to these averments. They are certainly lacking in specification and they are not tied in by reference to any particular provision of the two contracts. I tend to agree with Mr Francis who said that if the pursuer declined to perform his contractual obligations aboard The Gryphon A, that failure would not result in an action for specific implement; but rather that there would be consequential actions for breach of contract between the first defenders and the third party, and between the third party and Ridgevine Limited. In short, there are in my opinion insufficient relevant averments that the pursuer was in the employment of the third party to justify the proof before answer on them which Mr Clark sought.

That, however is not in my opinion an end of the matter. The pursuer may be "an invitee" of the third party. To some extent I considered this in my earlier Opinion. Mr Francis did not adhere to the submission on this subject which he made in December 1998. He did however maintain that the word indicated that the person was concerned in some way with property. When one looks at Clause 12.5, Mr Francis said, an invitee could be someone who goes on to the rig invited by the consultant (the third party) to carry out work there in performance of the contract between the third party and the first defenders. It might be a safety consultant, for example, performing services on the rig in terms of Clauses 1 and 3. Interestingly, in Clause 12.5 there is no mention of servants or agents. I think the absence of these words lends weight to Mr Clark's submission that the word "invitee" was intended to identify a catch-all category. I do not think that it can in the context have been intended to be applied according to the traditional legal meaning. In short, it means someone who is invited by the third party. And if that is the proper meaning, the averments are sufficient to include the pursuer.

I may say that I considered carefully Mr Clark's submission that if the pleadings were apt to indicate that the pursuer was an invitee, I should allow a proof before answer on all the averments, including those concerned with employment. I did not however think that that submission was correct. If there were no relevant averments that the pursuer was an employee of the third party, that case could not be admitted to probation since it stood or fell by itself.

In these circumstances I will refuse to admit to probation all the averments which are directed towards establishing the personal bar case and breach of contract case founded on an alleged breach of Clause 9.1 for the reasons I gave in my earlier Opinion; together with all the averments relating to establishing that the pursuer was an employee of the third party. These are from the last sentence on page 10E down to and including the sentence ending "than their employee" at page 11D; and from the sentence "In order to satisfy...." at page 12A down to and including the words "pro hac vice" on page 12D. In Answer 7 on page 38 I will not admit to probation the last sentence on that page which ends at the top of page 39; and also the averments from "or Clause 10.3" on page 39, line 4 down to and including the words "are liable" on line 12 of the same page. Consequentially, the first defenders' second and fifth pleas-in-law must be repelled. I will delete the words "relieved of et separatim" in the first defenders' seventh plea. To the above extent only, I will give effect to the third party's first and fifth pleas-in-law. Since the third party's seventh plea is in my opinion not supported by any relevant averments; is in any event misconceived; and now has no application in light of what has been excised from the pleadings, I will repel it.