Lister v Romford Ice and Cold Storage Co Ltd [1956] UKHL 6

A lorry driver negligently injured his father while reversing in a yard during employment. The employer, held vicariously liable, sought indemnity from the driver. The House of Lords held that employees owe an implied contractual duty of care to employers and rejected implied terms protecting drivers from personal liability through employer insurance.

Facts

Martin Alfred Lister was employed as a lorry driver by Romford Ice & Cold Storage Company Limited. In January 1949, while driving in the course of his employment, he negligently reversed his lorry and injured his father, who was working as his mate. The father successfully sued the employer for damages on the basis of vicarious liability, recovering £1,600 plus costs. The employer’s insurers then brought proceedings in the employer’s name against the driver, seeking to recover the damages paid.

Employment Background

The driver had been employed by the company since age seventeen, apart from wartime service, and had been driving lorries for approximately ten years before the accident occurred.

Issues

The case raised several significant legal questions:

Primary Issues

• Whether an employee owes an implied contractual duty to exercise reasonable care in performing employment duties
• Whether an employer can recover damages from an employee for breach of such duty when the employer has been held vicariously liable to a third party
• Whether implied terms should be read into the contract of employment protecting the driver from personal liability, particularly given statutory requirements for motor insurance

Judgment

The House of Lords dismissed the appeal by a majority of 4-1, with Lord Radcliffe and Lord Somervell of Harrow dissenting.

Implied Duty of Care

The majority held that it was an implied term of the contract of employment that the driver would perform his duties with proper care. Viscount Simonds relied upon the proposition stated in Harmer v Cornelius:

When a skilled labourer, artizan, or artist is employed, there is on his part an implied warranty that he is of skill reasonably competent to the task he undertakes—Spondes peritiam artis.

Viscount Simonds emphasised there was no valid reason for distinguishing between possessing skill and exercising it, stating that skill embraces care.

Rejection of Implied Terms Protecting the Driver

The driver pleaded various implied terms including that the employer would indemnify him against all claims, that he would receive the benefit of insurance, and that he should not be required to drive without insurance providing him with indemnity. The majority rejected all these contentions.

Viscount Simonds found the plea in paragraph 4 of the Defence unacceptable, being all-embracing in scope regardless of the degree of negligence or criminality. He stated that he could neither accept such a general implication nor supply qualifications to make it less unacceptable.

Lord Morton of Henryton observed that such implied terms could not logically be limited to motor vehicles on public highways, as the accident occurred in a yard, and must extend to crane drivers and many other situations.

Lord Tucker noted that the implied terms pleaded were open to serious objection, with paragraph 4 being far wider than anything reasonably required and effectively giving the servant a licence to be as negligent as he liked.

Dissenting Opinions

Lord Radcliffe and Lord Somervell of Harrow would have allowed the appeal. Lord Radcliffe reasoned that since the employer was obliged to provide insurance covering third party risks, it was inconsistent with that arrangement for the employer to then recover damages from the driver. Lord Somervell considered that no driver would undertake the work if told his resources might be liable for damage caused by negligent acts.

Implications

This decision established several important principles in employment law:

Contractual Duty of Care

The case confirmed that employees owe an implied contractual duty of care to their employers in performing their duties. A breach of this duty causing loss to the employer through vicarious liability to third parties gives rise to a cause of action in contract.

Subrogation Rights

The judgment preserved insurers’ rights of subrogation, allowing them to recover from negligent employees in the employer’s name after indemnifying the employer for third party claims.

Insurance and Employment

The majority rejected arguments that the Road Traffic Act 1930 or general principles of insurance should imply terms protecting employees from personal liability. The fact that an employer carries insurance was held irrelevant to determining the employer’s rights against the servant.

Broader Significance

The decision highlighted the potentially harsh position of employees who could face personal liability for negligent acts committed in the course of employment, even where the employer was insured. This prompted subsequent discussions about reform of the law in this area.

Verdict: Appeal dismissed. The employer was entitled to recover damages from the employee for breach of the implied contractual duty to exercise reasonable care in performing his employment duties. The employee's pleaded implied terms regarding indemnity and insurance protection were rejected.

Source: Lister v Romford Ice and Cold Storage Co Ltd [1956] UKHL 6