Esso Petroleum Co Ltd v Scottish Ministers & Others [2016] CSOH 15

Generally, the employer of an independent contractor is not liable for injury caused to a third party by the fault of the contractor. However, this is not an absolute rule and one exception is where the work being undertaken is for the benefit of a landowner and is determined to be ‘inherently hazardous’.

Inherent Hazard

The basic proposition is that where the work being undertaken by the contractor is for the benefit of the landowner and is ‘inherently hazardous’ in nature, the landowner cannot free himself of liability simply by instructing a contractor to do the job. This doctrine originates in English law and has caused considerable difficulty with judicial interpretation south of the border, culminating in the Biffa Waste case in 2009 in which the Court of Appeal severely restricted its application.

The inherent difficulty of the doctrine was expressed succinctly by Professor Attiyah in 1967 when he wrote: “the truth of the matter is that damage or injury can be caused by the execution of practically any work, if it is done without due care, and conversely, that practically anything can be done without causing injury if sufficient care is taken in doing it”.

The extent to which this rule is incorporated into Scots law is unclear. Leading textbooks have cited liberally from English precedent, but there has been a lack of Scots authority on the point. It is this question which fell to be considered by Lord Tyre in Esso Petroleum v Scottish Ministers.

Facts

The case arose out of the construction of the M74 completion in Glasgow from 2008 to 2011. A section of this road was to be laid across an old industrial chemical facility adjacent to Esso’s land. Ground investigations revealed that the land was liberally contaminated with a variety of nasty substances, and preventative works would have to be undertaken to avoid contaminating neighbouring land during and after construction. The design and construction of the preventative works was sub-contracted to various specialist companies and, cutting a long story short, the sub-contractors failed; Esso’s land was contaminated but the preventative works were not as ‘preventative’ as intended and Esso sued in negligence and nuisance. The sub-contractors were all named as defenders, as was Scottish Transport which, through Glasgow City Council, had appointed them.

Esso, seeking to recover £2.8m in damages, argued that Glasgow City Council was liable for the conduct of the third party sub-contractor it had appointed to carry out the work, because the nature of that work was inherently hazardous.

Held

Lord Tyre, in finding for Esso, pointed out that his job sitting as a judge at first instance is to: “apply the law of Scotland as it is rather than as I consider it may be” and, in a thoughtful and well-reasoned opinion set about determining what that law on delictual responsibility is, through a review of the history of the inherent hazard exception, the extent of its incorporation into Scots law and its relationship with the law of nuisance. Indeed, the latter included a comparison of the law in England & Wales to Scotland which differs in requiring fault as a prerequisite for liability.

Lord Tyre concluded that the inherent hazard exception is recognised at least to the following extent:

  1. Liability for the negligence or nuisance of an independent contractor is capable of applying generally to operations carried out on a person’s land which cause or are likely to cause damage or injury on a neighbouring property.
  2. Such liability only arises where:
    1. The operation will, or is likely to, cause damage to the neighbour’s land no matter how much care is taken; or
    2. It is necessary to take steps specifically to prevent damage to the neighbour’s property and those steps aren’t taken either by the owner or on their instruction.
  3. The owner does not escape liability for such an inherently hazardous operation simply by giving instructions, however detailed, to the contractor. The true meaning of the exception is that the employer remains liable regardless of whether he carries out the operation himself or instructs another to do it.
  4. The reasonableness of the steps taken to avoid damage is to be assessed without the benefit of hindsight.

It’s important to note that this rule only applies to prevent the owner of the property from evading liability. If a main contractor sub-contracts elements of a job, that contractor is not liable for the negligent actions of the sub-contractors simply because the sub-contracted work was inherently hazardous. The justification for liability remaining with the owner is that they are the ultimate beneficiary of the hazardous work.

Comment

Whilst only a first instance decision, this judgment does a good job of clarifying a potentially contentious point. The position in Scots law now seems, at least at first glance, tolerably clear: landowners cannot divest themselves of responsibility for work on their land which is inherently hazardous. Contrast this to England where the Biffa Waste case restricted the landowner’s liability to activities which are “exceptionally dangerous whatever precautions are taken”.

However, as the difficulties experienced by the expert witnesses in Esso Petroleum showed, the practical application of this rule remains a thorny proposition. None of these experts could venture an opinion on what “inherently hazardous” actually meant, because the term itself is a legal construct that is simply not used in industry or, as one expert described the phrase as “baffling”. So, whilst the clarification of the legal position is welcome, the practical application of the rule to any particular set of facts is unlikely to become much easier to predict as a result.