Gwilliam v West Hertfordshire Hospital NHS Trust [2002] EWCA Civ 1041 (24 July 2002)

Mrs Gwilliam, aged 63, was injured using a 'splat-wall' at a hospital charity fair due to negligent setup by an independent contractor. The contractor's insurance had lapsed. The Court of Appeal considered whether the hospital owed a duty to check the contractor's insurance and whether that duty was breached.

Facts

On 5 July 1997, the claimant Mrs Gwilliam, then aged 63, attended a fundraising summer fair at Mount Vernon Hospital. She was injured while using a ‘splat-wall’ apparatus, which allowed participants to bounce from a trampoline and adhere to a wall via Velcro. The equipment had been negligently assembled by the second defendant, Mr Cane, trading as Club Entertainments, an independent contractor hired by the hospital.

The hospital’s fundraising manager, Mr Andrew Wynne, had organised the fair. He selected Club Entertainments from the telephone directory. Recognising that insurance was essential for such activities, Mr Wynne arranged for Club Entertainments to provide staff to operate the equipment for an additional £100, on the basis that the hospital would benefit from Club Entertainments’ public liability insurance. However, Mr Wynne did not ask to see the insurance policy. Unknown to him, the insurance had expired four days before the fair and Mr Cane had neglected to renew it.

The claimant settled her claim against Club Entertainments for £5,000, as the company was uninsured. She then pursued the hospital for the difference between her full damages (approximately £60,000) and the settlement sum.

Issues

Primary Issues

1. Did the hospital owe a duty of care to the claimant under the Occupiers’ Liability Act 1957 to ensure she would be reasonably safe while using the entertainments at the fair?

2. If such a duty existed, did the scope of that duty include taking reasonable steps to check that the independent contractor had public liability insurance?

3. If the duty included checking insurance, was the hospital in breach of that duty?

Judgment

The Duty Issue

The Court of Appeal held that the trial judge had erred in his starting point. The correct approach was to consider section 2 of the Occupiers’ Liability Act 1957, under which the hospital, as occupier, owed the claimant the common duty of care to take such care as was reasonable to ensure she would be reasonably safe when using the premises.

Lord Woolf CJ held that the hospital could discharge this duty by employing an appropriate, competent independent contractor, but must take reasonable steps to satisfy itself of the contractor’s competence. In circumstances where a small, unknown firm was selected from the telephone directory to provide hazardous equipment, checking the insurance position was one simple method of confirming the firm’s suitability and reliability.

Waller LJ agreed that, given the hazardous nature of the activity and the circumstances, it was fair, just and reasonable to impose a duty on the hospital to choose an independent contractor who could properly meet potential liabilities. The nature of the activities, while not extra-hazardous, were nonetheless hazardous enough to warrant checking the contractor’s viability and insurance position.

Sedley LJ dissented on the duty issue, expressing concern that recognising such a duty represented a significant extension of the law with unpredictable consequences for occupiers generally.

Breach of Duty

Lord Woolf CJ and Waller LJ found that Mr Wynne had made enquiries about insurance and had made a contract in May 1997 for insurance to be in place for the July fair. The Court held that requiring the hospital to go further and inspect the actual policy would be unreasonable, particularly as policies could be unenforceable for reasons not apparent on their face.

Sedley LJ, in dissent on this point, considered that merely obtaining telephone reassurance was insufficient. He held that asking for a copy of the certificate to be sent or faxed would have been a simple step that would have revealed the insurance was about to expire.

Implications

The case establishes that occupiers who engage independent contractors to provide activities that may foreseeably cause injury to visitors may have a duty to take reasonable steps to verify the contractor’s competence, which may include checking their insurance position. However, this duty does not extend to inspecting the actual insurance policy or verifying its terms.

The decision recognises that the existence of insurance can be relevant to assessing a contractor’s competence and reliability, particularly where the contractor is unknown and selected without other credentials.

The case also highlights the importance of Alternative Dispute Resolution in cases where costs may become disproportionate to the amounts in dispute. Lord Woolf CJ urged the parties to resolve remaining issues through ADR.

Verdict: Appeal dismissed. The hospital owed a duty of care to the claimant under the Occupiers' Liability Act 1957, which included a duty to take reasonable steps to check the independent contractor's competence, including the insurance position. However, the hospital had discharged this duty by making enquiries about insurance and contracting for insurance to be in place, and was not required to inspect the actual policy.

Source: Gwilliam v West Hertfordshire Hospital NHS Trust [2002] EWCA Civ 1041 (24 July 2002)