In Campbell (Appellant) v Gordon (Respondent) (Scotland) 
CSIH 11, the Supreme Court dismissed an appeal, upholding the
decision of Court of Session (Inner House) not to attribute civil
liability to the directors or officers of the company, where there
was no such liability under The Employers' Liability
(Compulsory Insurance) Act 1969 ('the Act').
An apprentice joiner (C) suffered an injury during the course of
his employment whilst using an electric circular saw, where his
employer, of which (G) was the sole Director, had failed to
adequately insure him in breach of his obligation under Section
1(1) the Act. G was responsible for the day to day operation of the
company and although his company had an employers' liability
insurance policy in place, the policy excluded claims arising from
the use of woodworking machinery powered by electricity; thereby
excluding any claim arising from C's accident. The company then
went into liquidation in 2009.
C appealed against the decision that G was not liable to C in
damages for personal injuries suffered in the accident, as he was
not covered under the inadequate insurance policy. The question
before the Court was whether civil liability attached to G as a
Director of the employing company for the failure to provide
The appeal was dismissed with a 3-2 split at Supreme Court
level, showing that this area of law is far from established, and
potentially subject to change over the coming years.
The argument centred around Section 5 of the Act, which the
Court decided did not impose a duty to insure on a director or
other officer as such, let alone any civil liability for failure to
do so. It was accepted that as a general rule, where a statute
imposes an obligation and imposes a criminal penalty for failure to
comply there is no civil liability.
The majority said that the formulation is an obligation created
by statute, binding in law on the person sought to be made liable
and that there is no suggestion in that or any other authority that
a person can be made indirectly liable for breach of an obligation
imposed by statute on someone else. He went on to say that the only
basis for looking through the corporate veil, is where it is
expressly or impliedly justified by the statute.
There were questions as to whether the directors and other
officers of the company should be liable, as a company only acts
through its officers. It was held that directors are not in general
liable for the tortious actions of the company as it does not
detail the liability of officers to third parties for its acts or
failures. The Judges also said the Court should pay due respect to
the language and structure used by Parliament, rather than to
preconceptions of what its objectives could or should have been, as
the wording was deliberately chosen and it intended to mean what it
Those dissenting were of the opinion that 'the legislation
was plainly intended for the protection of employees' and not
necessarily about the words in which the drafter used as to whether
directors of the company could be criminally liable. A further
comment was that 'the protection intended was that [employees]
should be compensated for their injuries, even if, for whatever
reason, the employer was unable to do so. Failure to insure means
that the employee is denied the very thing that the legislation is
intended to provide for him.' This argument to look beyond the
specific wording and look at the intention of the Act, which is to
provide protection for employees, shows the belief that it would be
acceptable to pierce the corporate veil so as to achieve the
What does this mean going forward?
The decision of this case is highly important, demonstrating
that at present, the Court is still careful not to pierce the veil
of corporation. There have been some civil cases where it appears
that the Courts have been willing to pierce the corporate veil.
That has not been the case as the Court has found the cases to be
unique on their facts.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In SSE Generation Limited v Hochtief Solutions AG and another decided on 21st December 2016, the Court of Session in Scotland considered a contractor's potential design liability under the NEC Form of Contract.
Case law concerning the Agency Worker Regulations remains limited. We recently advised a recruitment business involved in a dispute with a "temp" and a hirer regarding who was liable for an alleged breach of AWR Regulation 5.
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