Managing your public liability during construction

Any construction process always carries with it the potential risk of injury to or death of a third party. Accordingly, it is vital that all employers and contractors are aware of how they could be held vicariously liable for injury or death arising from the actions of their employees or subcontractors. In this article we will briefly explain the nature of vicarious liability as well as how such liability can be managed and mitigated.

The concept of vicarious liability in the construction process was addressed in the case of Langley Fox v De Valence where one Mrs De Valence instituted legal action against Langley Fox, the main contractor on a construction site, for damages arising from an injury she sustained when her head struck a wooden beam suspended across the sidewalk on which she was walking.

Langley Fox’s scope of work included the installation of a ceiling under an overhead canopy which extended over the sidewalk at the entrance to the building where the works was being performed. Langley Fox appointed a subcontractor to install the ceiling and it was during the installation by the subcontractor, that Mrs De Valence sustained the injury. The subcontractor erected a wooden beam underneath the canopy, but failed to place warning signs in the surrounding area of the beam or cordon the area off.

Langley Fox was found to have been negligent, notwithstanding the fact that it was the subcontractor who had erected the beam. The court found that Langley Fox should reasonably have foreseen the risk of danger to pedestrians in consequence of the work carried out by the subcontractor since an obstruction of the nature of a wooden beam on a busy city sidewalk would necessarily have created a likely danger for pedestrians using the sidewalk. In light of the fact that the danger was reasonably foreseeable the court considered whether Langley Fox should have taken steps to guard against that danger and the court found that Langley Fox made an error to leave such a situation in the hands of its subcontractor and had a duty to take adequate steps to protect the public against the impending danger.

In order to determine whether an employer and in this instance the main contractor could be held liable for the acts of an employee or subcontractor, the court established a test based on three broad questions:

  1. Would a reasonable man have foreseen the risk of danger in consequence of the work he employed the contractor to perform? If so,
  2. Would a reasonable man have taken steps to guard against the danger? And, if so,
  3. Were such steps duly taken in the case in question?

Accordingly, using the above three questions, an employer may be held liable for the consequences of a subcontractor where such contractor fails to take the necessary steps to prevent harm to the public and actual harm is caused. There are other factors which our courts may also take into consideration, such as the nature of the danger, the context in which the danger could arise, the degree of expertise available to the employer and subcontractor respectively and the means available to the employer to avoid the probable danger.

Appropriate public liability insurance is a vital requirement for any main contractor involved in construction projects. However, to further limit the effects of vicarious liability, it is essential that employers and their subcontractors conclude appropriate agreements which determine who is responsible to carry the risk of injury or death to a third party. These agreements usually take on the form of a subcontractor or service agreement and contracting parties should ensure that the following aspects are dealt with in such agreements:

  1. The agreement must be clear that the subcontracted works are provided independently from the main contractor / employer.
  2. The agreement must clearly state that there is no requirement of supervision or control by the main contractor / employer over the subcontractor.
  3. The duration of the agreement must be for a fixed or determinable period.
  4. The subcontractor must contractually accept responsibility for the negligent acts of its employees.
  5. The agreement must include a proper indemnity clause.
  6. The agreement can provide for the taking out of public liability insurance.
  7. The agreement can provide for specific health and safety requirements.

These are just some of the most important aspects that should be considered for inclusion in subcontractor agreements. With the substantial impact that injury or death to third party could hold, it is imperative that contractors mitigate their risk exposure through appropriate insurance strategies and clear subcontracting arrangements that allocate risk appropriately.

May 20, 2013
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