Sweeney v Duggan

• Jurisdiction: Ireland
• Judge: Mr Justice Francis D Murphy
• Judgment Date: 14 February 1997
• Neutral Citation: 1997 WJSC-SC 2326
• Court: Supreme Court
• Docket Number: [S.C. No. 276 of 1991]
• Date: 14 February 1997

SWEENEY v. DUGGAN

Between:

DANIEL SWEENEY

Plaintiff/Appellant

and

DENNIS DUGGAN

Defendant/Respondent

1997 WJSC-SC 2326

Hamilton CJ

Barrington J

Murphy J

276/91

THE SUPREME COURT

1 Mr Justice Francis D Murphy delivered the 14th day of February 1997. [NEM DISS]

2 To explain the nature of the dispute between the parties to these proceedings it is necessary first to identify Kenmare Lime Works Limited (the Company) and analyse to some extent its structure and business operations.

3 The Company was incorporated in or about the year 1976 and had an issued share capital of £19,000 of which 18,999 shares were held at all relevant times by the above named Defendant/Respondent Dennis Duggan (Mr Duggan) and the remaining one issued ordinary share was held by his wife Mrs Eileen Duggan. It appears that Mr Duggan was the managing director of the Company and Mrs Duggan the secretary thereof.

4 The Company was the owner of a lime stone quarry at Kilpadder, County Kerry, which it operated, subject to some disruptions, until it was wound-up in a Creditors Voluntary Winding Up pursuant to resolution in that behalf passed in the month of August 1987 and by which Mr Eoin Clayton was appointed liquidator thereof.

5 The Liquidator gave evidence to the effect that the accounts of the Company showed a loss of approximately £10,000 for the year 1982 and a loss of £30,000 for the year 1983. The liquidator was satisfied that proper books and accounts were kept for the years up to 1984 but thereafter the books and records of the Company were destroyed by a fire which occurred in that year. The losses incurred by the Company were explained in part or in whole by the withdrawal of subsidies on lime with the consequent decrease in user of lime by farmers. As a result of the losses it was established, by the accounts for the year 1983, that the net assets of the Company were less than half of the Company's issued share capital.

6 The Mines and Quarries Act 1965imposes numerous and detailed provisions on the owner of a quarry to ensure the safety, health and physical welfare of persons employed in quarrying operations. Any breach of those provisions constitutes a criminal offence and is punishable accordingly. A statutory system is set up for the inspection of quarries by officers appointed for that purpose by the relevant minister. A particular provision - section 23 - requires that an individual be appointed to the statutory position of quarry manager. That manager has the statutory duty of supervising the operations in the quarry and ensuring the compliance with the provisions of the Act. The post of quarry manager of the Company was at all material times held by Mr Duggan.

7 The above named Daniel Sweeney (the Plaintiff) is about 65 years of age. He commenced working with the Company as a labourer or unskilled operative in the mid seventies. On the 18th of February 1984 whilst operating a drill in the Company's quarry he met with an accident as a result of which he suffered a significant injury to his leg. On the 24th of September 1984 he instituted proceedings against the Company claiming damages for those personal injuries which he alleged were caused by the negligence and breach of statutory duty of the Company. Those proceedings came on for hearing on the 15th October 1987 when the Plaintiff was awarded a sum of £20,866 damages against the Company. In the meantime the Plaintiff had returned to work with the Company in or about March 1985 and had continued working with the Company until it ultimately ceased operations in 1986. Whilst an employee of the Company had informed the Plaintiff immediately after the accident that the Company was insured against liability for accidents the Plaintiff was advised about the time he returned to work in March 1985 that no such insurance existed.

8 It was clear from the evidence given by the Liquidator that the Company will not be able to pay its creditors - even its preferential creditors - in full. It is anticipated that the Plaintiff may receive a dividend amounting to approximately £4,500 on his preferential claim of £20,866. In addition the Plaintiff has recovered or will recover a small but unspecified sum on foot of a policy of insurance which he himself had taken out at his own expense in respect of the injuries suffered by him

9 The present proceedings were commenced by the Plaintiff against Mr Duggan by plenary summons issued on the 1st day of March 1989. On behalf of the Plaintiff it was contended:- first that the Company as the employer of the Plaintiff had a duty - in all of the relevant circumstances - to procure employers liability insurance to meet any claim which the Plaintiff might have for damages for personal injuries or, failing that, to warn the Plaintiff that no such policy was in existence.

10 And, secondly, that Mr Duggan had a duty to ensure that the Company obtained and maintained such a policy of insurance or the alternative obligation to warn the Plaintiff that this course had not been adopted.

11 It was asserted on behalf of the Plaintiff that the obligations aforesaid in so far as they fell upon the Company derived primarily (and perhaps exclusively) from the contractual relationship between the employer and the employee. It was contended that the particular obligation to insure the Company against liability (or in default to warn the Plaintiff) was an implied term of the employment contract.

12 In the amended written submissions to this Court the Plaintiff contended that such a term should be implied having regard to a variety of matters which included the following:-

13 (I) The Company's business, quarrying, was said to be exceptionally dangerous.

14 (II) At the time of the accident, the Company's finances were precarious.

15 (III) The Plaintiff had insured himself to a "small extent" against loss covered by injuries sustained in the course of his employment.

16 Whilst there may be room for argument as to the degree of danger involved in the business carried on by the Company or the extent of its financial difficulties in or around the time of the accident there is no doubt that evidence was adduced before the learned trial Judge to the effect that the accident rate in quarries is approximately eight times the rate on building sites generally and furthermore there was evidence of substantial losses incurred by the Company in the years immediately prior to the accident albeit due to no fault of the Company or its management. Moreover it was asserted that the Plaintiff was a man of modest means and education who was not represented by a trade union in any negotiations he had with the Company or Mr Duggan. The question is whether in these circumstances, and accepting that each of the factors aforesaid existed and assuming that they existed to the highest degree for which the Plaintiff might contend, a term such as that for which the Plaintiff argues would be implied in the contract of employment.

17 There are at least two situations where the Courts will, independently of statutory requirement, imply a term which has not been expressly agreed by the parties to a contract. The first of these situations was identified in the well-known Moorcock case ( 1889 14 P.D. 64) where a term not expressly agreed upon by the parties was inferred on the basis of the presumed intention of the parties. The basis for such a presumption was explained by MacKinnon L.J. in Shirlaw and Southern Foundries 1939 2 K.B. 206 at 227 in an expression, equally memorable, in the following terms:-

"Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if while the parties were making their bargain an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common, "Oh, of course.""

18 In addition there are a variety of cases in which a contractual term has been implied on the basis, not of the intention of the parties to the contract but deriving from the nature of the contract itself. Indeed in analysing the different types of case in which a term will be implied Lord Wilberforce in Liverpool City Council v Irwin 1977 A.C. 239 preferred to describe the different categories which he identified as no more than shades on a continuous spectrum.

19 The relevance of the presumed intention of the parties differs in different cases. This is dramatically illustrated in the Irwin case. In that case the court was asked to infer a term in a contract between the Liverpool County Council and its tenants to the effect that the Council would maintain and repair the lifts and chutes in an apartment block. Roskill L.J. speculated as to what the reaction of the Liverpool County Council would have been if one of the tenants has said:- "I suppose that the Council will be under a legal liability to us to keep the chutes and lifts in working order and the staircases properly lighted" and he concluded that the answer in all probability would have been - "Certainly not". Whilst Lord Roskill's assumption aforesaid was accepted in the House of Lords, they concluded that irrespective of the presumed intention of the parties a term must be implied from the very nature of the fact that the tenants had to gain access to their apartments by and through the common areas of a fifteen storey tower block that some party would have to keep them in repair. The question then was whether this obligation would fall on the tenants collectively or individually or else on the Council. As Lord Salmon said as page 262:-

"Unless the law in circumstances such as these imposes an obligation upon the Council at least to use reasonable care to keep the lifts working properly and the staircase lit the whole transaction becomes inefficacious, futile and absurd. I cannot go...