United Kingdom House of Lords Decisions

Associated Octel Ltd. R v. [1996] UKHL 1; [1996] ICR 972; [1996] 4 All ER 846; [1996] 1 WLR 1543; [1997] Crim LR 355; [1997] IRLR 123 (14th November, 1996)

LORD MACKAY OF CLASHFERN L.C.

My Lords,

I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. For the reasons he gives I would dismiss this appeal.

LORD GOFF OF CHIEVELEY

My Lords,

I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Hoffmann. For the reasons he gives I too would dismiss this appeal.

LORD JAUNCEY OF TULLICHETTLE

My Lords,

I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Hoffmann. For the reasons he gives I too would dismiss this appeal.

LORD MUSTILL

My Lords,

I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Hoffmann. For the reasons he gives I too would dismiss this appeal.

LORD HOFFMANN

My Lords,

The appellants, Associated Octel Co. Ltd. ("Octel"), operate a large chemical plant at Ellesmere Port. On 25 June 1990 there was an accident at the chlorine works. The plant was shut down for its annual maintenance and a small firm of specialist contractors called Resin Glass Products Ltd ("RGP") were engaged in repairing the lining of a tank. Mr. Cuthbert, an employee of RGP, was working in the tank by the light of an electric light bulb attached to a lead. After grinding the damaged area of the lining, he had to clean it down with acetone before applying a fibreglass matting patch with resin. He had his supply of acetone in an old paint bucket which he had found in a refuse bin. While he was applying the acetone with a brush, the light bulb broke. Some of the liquid had probably dripped onto it. Acetone is volatile and gives off highly inflammable vapour. As Mr. Cuthbert was using an open bucket, there was a good deal of vapour in the tank. The broken bulb caused a flash fire in which Mr. Cuthbert was badly burned.

Octel was prosecuted for breach of sections 3(1) and 33(1)(a) of the Health and Safety at Work etc. Act 1974. Section 3(1) reads as follows:

 "It shall be the duty of every employer to conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, that persons not in his employment who may be affected thereby are not thereby exposed to risks to their health or safety."

Section 33(1) states that it is an offence for an employer not to discharge a duty to which he is subject by virtue of section 3.

In voluntary particulars of the indictment, the Crown said that the conduct of Octel's undertaking upon which they relied was the manner and method by which works of maintenance and repair were carried out. The failure of duty was a failure to control the works so as to ensure that persons not in Octel's employment--Mr. Cuthbert was, of course, employed by RGP and not by Octel--were not exposed to risks to their health and safety.

At the trial, the prosecution led evidence of the way in which the work had been arranged. Octel had been using RGP for a number of years. Its eight employees spent virtually all their time on the site. Like all other such contractors on Octel's site, they operated under what was called a "permit to work" system. This meant that for every job they had to fill in a form saying what they were going to do and obtain authorisation from Octel's engineers, who would consider what safety precautions were needed. Authorisation would be accompanied by a "safety certificate" imposing conditions under which the work was to be done. The whole plant was designated by the Health and Safety Executive as a "major hazard site" and the "permit to work" system was part of a statement of safety procedures which Octel was obliged to draw up and submit to the Executive. In addition, Octel needed to maintain control over the activities of contractors to discharge its statutory duty to its own employees under section 2(1) of the Act. This states that:

 "It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees."

The duty includes an obligation to take such steps as are reasonably practicable to safeguard employees from being injured by the activities of contractors and their employees. For example, in Reg. v. Swan Hunter Shipbuilders Ltd. [1982] 1 All E.R. 264 the defendants did not warn a contractor's workmen of the risk of fire from an oxygen-enriched atmosphere. As a result, one of them accidentally started a fire in which eight employees died. The employers were convicted under section 2(1).

In the present case the Crown adduced evidence by way of advance rebuttal of a defence that prevention of the accident had not been "reasonably practicable." It showed that the permit to work system had been operated in a perfunctory manner. The RGP specification said that grinding would take place and so Octel supplied Mr. Cuthbert with protective clothing and a face mask. But nothing was said about the use of acetone. Octel did not supply a special air lamp (which could have been specified on the standard form) or a closed container for the acetone or forced air extraction for the tank.

At the close of the prosecution's case, Mr. Walker Q.C. submitted on behalf of Octel that there was no case to answer. He said that on the evidence the injury to Mr. Cuthbert was not caused by the way in which Octel had conducted its undertaking within the meaning of section 3(1). RGP were independent contractors and the cleaning of the tank was part of the conduct of their undertaking. Control was essential to liability under section 3(1) and Octel had no right to control the way in which its independent contractors did their work.

His Honour Judge Prosser rejected the submission. He said that Octel's undertaking was the chemical business which it conducted on the site. The conduct of the undertaking included having the tank repaired, whether by employees or contractors. After this ruling, Octel closed its case without calling evidence. By section 40, the burden is upon the employer to prove that it was not reasonably practicable to take the precautions which would have avoided the risk. In summing up, the judge directed the jury that Octel conducted its undertaking by having the tank repaired by RGP. He drew attention to the fact that this had been done in a way which caused risk to Mr. Cuthbert--a risk which had materialised--and that Octel had called no evidence in support of a defence that it had not been reasonably practicable to ask whether he would be using inflammable substances or to take appropriate precautions. Not surprisingly, the jury convicted. The judge fined Octel £25,000.

Octel's main ground of appeal to the Court of Appeal was that the judge had been wrong to reject its submission of no case to answer. The Court of Appeal rejected this argument and so would I. It is based on what seems to me a confusion between two quite different concepts: an employer's vicarious liability for the tortious act of another and a duty imposed upon the employer himself. Vicarious liability depends (with some exceptions) on the nature of the contractual relationship between the employer and the tortfeasor. There is liability if the tortfeasor was acting within the scope of his duties under a contract of employment. Otherwise, generally speaking, the employer is not vicariously liable. But section 3 is not concerned with vicarious liability. It imposes a duty upon the employer himself. That duty is defined by reference to a certain kind of activity, namely, the conduct by the employer of his undertaking. It is indifferent to the nature of the contractual relationships by which the employer chooses to conduct it.

What, then, amounts to the conduct by the employer of his undertaking? Mr. Walker said that it meant carrying on activities over which the employer had control. In Austin Rover Group Ltd. v. Her Majesty's Inspector of Factories [1990] 1 A.C. 619, 634, Lord Jauncey of Tullichettle said:

  "Sections 2 and 3 impose duties in relation to safety on a single person, whether an individual or a corporation, who is in a position to exercise complete control over the matters to which the duties extend. An employer can control the conditions of work of his employees and the manner in which he conducts his undertaking."

Mr. Walker says that the absence of a right to control the way in which the work is done is traditionally the badge of an employer's relationship with an independent contractor. So, as RGP were independent contractors, it must follow that Octel were not in a position to exercise that complete control which is the basis of liability under section 3.

This again seems to me a confusion of thought. Lord Jauncey was stating what is, if I may respectfully say so, the self-evident proposition that a person conducting his own undertaking is free to decide how he will do so. Section 3 requires the employer to do so in a way which, subject to reasonable practicability, does not create risks to people's health and safety. If, therefore, the employer engages an independent contractor to do work which forms part of the conduct of the employer's undertaking, he must stipulate for whatever conditions are needed to avoid those risks and are reasonably practicable. He cannot, having omitted to do so, say that he was not in a position to exercise any control. This is precisely why Octel insisted that its contractors adhere to the "permit to work" system.

The concept of control as one of the tests for vicarious liability serves an altogether different purpose. An employer is free to engage either employees or independent contractors. If he engages employees, he will be vicariously liable for torts committed in the course of their employment. If he engages independent contractors, he will not. The law takes the contractual relationship as given and in some cases the control test helps to decide the category to which it belongs. But for the purposes of section 3, the category is not decisive.

The question, as it seems to me, is simply whether the activity in question can be described as part of the employer's undertaking. In most cases, the answer will be obvious. Octel's undertaking was running a chemical plant at Ellesmere Port. Anything which constituted running the plant was part of the conduct of its undertaking. But there will also be ancillary activities such as obtaining supplies, making deliveries, cleaning, maintenance and repairs which may give rise to more difficulty. In Reg. v. Mara [1987] 1 W.L.R. 87 Parker L.J. said, at pp. 90-91, this about the cleaning of a factory:

 "A factory, for example, may shut down on Saturdays and Sundays for manufacturing purposes, but the employer may have the premises cleaned by a contractor over the weekend. If the contractor's employees are exposed to risks to health or safety because machinery is left insecure, or vats containing noxious substances are left unfenced, it is, in our judgment, clear that the factory owner is in breach of his duty under section 3(1). The way in which he conducts his undertaking is to close his factory for manufacturing purposes over the weekend and to have it cleaned during the shut down period. It would clearly be reasonably practicable to secure machinery and noxious vats, and on the plain wording of the section he would be in breach of his duty if he failed to do so."

I entirely agree and I draw attention to the language used by the learned judge. It is part of the conduct of the undertaking, not merely to clean the factory, but also to "have the factory cleaned" by contractors. The employer must take reasonably practical steps to avoid risk to the contractors' servants which arise, not merely from the physical state of the premises (there are separate provisions for safety of premises in section 4) but also from the inadequacy of the arrangements which the employer makes with the contractors for how they will do the work.
 

Likewise in the present case I think that it was part of the conduct of Octel's undertaking at Ellesmere Port to have the chlorine tank repaired. But I would not accept the extreme position of Mr. Carlisle Q.C. for the Crown, who submitted that "works of cleaning, repair and maintenance which are necessary for the conduct of the employer's business" attract the duty under section 3(1). That would suggest that any repairs, cleaning or maintenance, wherever and by whomsoever they may be done, form part of the conduct by the employer of his undertaking. The cleaning of the office curtains at the dry cleaners; the repair of the sales manager's car in the garage, maintenance work on machinery returned to the manufacturer's factory: all would in principle impose upon the employer a duty under section 3(1) to ensure that they did not create risks to the health and safety of workers and others at the drycleaners, garage and factory respectively. Mr. Carlisle said that the employer could always rely on the defence that it was not reasonably practicable to take steps to prevent risks arising from what other people did on their own premises. But I do not think that such a defence needs to be invoked. In the context of the Act, such activities cannot fairly be described as the conduct by the employer of his undertaking. If he has a repair shop as a part of his plant, that is an ancillary part of his undertaking. Likewise, as in this case, if he has independent contractors to do cleaning or repairs on his own premises, as an activity integrated with the general conduct of his business. But not in the case of activities carried on by another person entirely separately from his own.

It seems to me wrong to try to find some formula such as that of Mr. Carlisle to take the place of the simple words of the statute. Whether the activity which has caused the risk amounts to part of the conduct by the employer of his undertaking must in each case be a question of fact. The place where the activity takes place will in the normal case be very important; possibly decisive. But one cannot lay down rigid rules. A difficult borderline case was RMC Roadstone Products Ltd. v. Jester [1994] 4 All E.R. 1037. The employers engaged contractors to repair a building. The employers were going to buy new asbestos sheets for the purpose but the contractors offered to remove some from an adjacent disused factory. The employers obtained the permission of the owner. Their projects manager inspected the site with the contractors and warned them to be careful. They offered to supply the contractors with equipment. One of the contractors fell through a skylight on the roof of the disused building and was killed. The employers were charged under section 3(1) and the justices convicted. They said that it was not necessary for the employers to control the site on which the work was done. They were in a position to give specific instructions to the contractors as to how it should be carried on. They therefore owed a duty under section 3(1)

The Divisional Court set aside the conviction. Smith J. said, at p. 1047:

  "I am unable to accept that the mere capacity or opportunity to exercise control over an activity is enough to bring that activity within the ambit of the employer's conduct of his undertaking. Before he can say that an activity is within his conduct of his undertaking, the employer must, in my judgment, either exercise some actual control over it or be under a duty to do so. If the principal chooses to leave the independent contractor to do the work in the way he thinks fit, I consider that the work is not within the ambit of the principal's conduct of his undertaking. It is wholly the contractor's undertaking."

I am afraid that I cannot accept this reasoning, which seems to me to involve a circularity. The employer is under a duty under section 3(1) to exercise control over an activity if it forms part of the conduct of his undertaking. The existence of such a duty cannot therefore be the test for deciding whether the activity is part of the undertaking or not. Likewise, the question of whether an employer may leave an independent contractor to do the work as he thinks fit depends upon whether having the work done forms part of the employer's conduct of his undertaking. If it does, he owes a duty under section 3(1) to ensure that it is done without risk--subject, of course, to reasonable practicability, which may limit the extent to which the employer can supervise the activities of a specialist independent contractor. Although the case was very much on the borderline, I think that there was evidence upon which the justices were entitled to find in the particular circumstances of the case that having the asbestos sheets removed was part of the employers' undertaking. The facts were a matter for them and their decision should not have been disturbed.

As the question of whether having the tank repaired was part of the conduct of Octel's undertaking was also one of fact, it should properly have been left to the jury. Even if, as I think, the only rational answer was yes, it should still have been left to the jury: Director of Public Prosecutions v. Stonehouse [1978] A.C. 55. The judge did not do so. The effect of the summing up was to direct the jury to find on this point for the prosecution. This was understandable because the case was conducted on the basis that the sole issue was whether the fact that RGP were independent contractors took the work outside the scope of Octel's undertaking. Having correctly ruled that it did not, the judge assumed that the matter was no longer in issue. But in my view there remained a question of fact which it was strictly speaking for the jury to decide.

The question then is whether this House should as in Director of Public Prosecutions v. Stonehouse apply the proviso to section 2(1) of the Criminal Appeal Act 1968 and dismiss the appeal. The test for whether the proviso may be applied was laid down by this House in Stirland v. Director of Public Prosecutions [1944] A.C. 315, 321. The House must be satisfied that "a reasonable jury, after being properly directed, would, on the evidence properly admissible, without doubt convict." In written submissions after the argument in the House, the appellants submitted that this test was not satisfied. They said that they elected to call no evidence after the judge had wrongly ruled in favour of the Crown's submission on the law. If the judge had construed the statute correctly, they would have been able to adduce evidence to show that they had no control over how the tank was repaired and that it was therefore not part of their undertaking.

If the appellants were right about the law, I think that there would be much force in this submission. But if, as I think, the question of fact which should have been left the jury is simply whether having the tank repaired was part of the conduct of Octel's chemical undertaking at Ellesmere Port, I cannot imagine what evidence could have been called by the appellants which would have led a properly instructed jury to return a negative answer. The tank was part of Octel's plant. The work formed part of a maintenance programme planned by Octel. The men who did the work, although employed by an independent contractor, were almost permanently integrated into Octel's larger operations. They worked under the permit to work system. Octel provided their safety equipment and lighting. None of these facts was disputed. In these circumstances, a properly instructed jury would undoubtedly have convicted. I would therefore apply the proviso, dismiss the appeal and affirm the conviction.