Wednesday, 6 July 2016

UK: Supreme Court holds director had no civil liability for failure to obtain adequate insurance

The Supreme Court delivered its opinion today in Campbell v Gordon (Scotland) [2016] UKSC 38. The case concerned a company that failed to have in place appropriate insurance under section 1(1) of the Employer's Liability (Compulsory Insurance) Act 1969. A claim for damages was made against the company's sole director (the company had gone into liquidation in 2009) by an employee injured at work in respect of an injury not covered by the company's insurance policy. In certain cases, under section 5 of the 1969 Act, a director or officer of a company will be criminally liable for the company's failure to obtain insurance.

The Lord Ordinary - sitting in the Court of Session (Outer House) - found the director personally liable to pay damages: see [2013] CSOH 181. On appeal the Court of Session (Inner House) by a 2:1 majority held that civil liability was not imposed: see [2015] CSIH 11.

Opinion was also divided in the Supreme Court: by a majority of 3:2 the justices held that the director was not subject to civil liability. A summary is available here (pdf). A summary was also delivered this morning in person by Lord Carnwath: see the video recording below.

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