In Campbell v Gordon [2016] UKSC 38 the appellant, Mr Campbell, was employed by a company as a joiner. Mr Gordon, the respondent, was the sole director of the company. Mr Campbell subsequently suffered an injury while working with a circular saw. Although the company had employers’ liability insurance, it excluded liability for claims arising from the use of electrical woodworking machinery, such that it did not cover Mr Campbell’s claim. The company’s failure to have appropriate insurance in place was in breach of s1(1) of the Employers’ Liability (Compulsory Insurance) Act 1969 (ELCIA).

The company went into liquidation in 2009 and Mr Campbell sought in these proceedings to hold Mr Gordon personally liable for the company’s failure to provide adequate insurance cover on the basis of s1 and s5 of ELCIA. Particular reference was made to the fact that s5 of ELCIA imposed criminal liability on a company which failed to properly insure in accordance with ELCIA, but also provided that, where the offence had been “committed with the consent or connivance of…any director…he, as well as the corporation shall be deemed to be guilty of that offence”. Mr Campbell sought to argue that the duty to insure could be said to fall on individual directors (rather than the company) and that civil liability could, therefore, attach to the director for the failure to insure.

The Supreme Court (Lady Hale and Lord Toulson dissenting) rejected these arguments, and held that ELCIA did not impose on a director a duty to insure, let alone any civil liability for failing to do so. Rather, the duty rested on the company; as Lord Carnwarth put it, “[T]he veil of incorporation is pierced for a limited purpose. It arises only where an offence is committed by the company, and then in defined circumstances imposes equivalent criminal liability on the director…on the basis, not that he is directly responsible, but that he is “deemed to be guilty” of the offence committed by the company”. He went on to add that the general rule, which applied in this case, was that where a statute imposed criminal liability, there was no civil liability for that offence. In this case, in his view, weight had to be given to the words of the statute, rather than to ideas of what the objectives of Parliament in enacting ELCIA might have been.


Posted by Sam Tacey