Reid v Rush & Tompkins Group

Court of Appeal

Citations: [1990] 1 WLR 212; [1989] 3 All ER 228; [1989] 2 Lloyd’s Rep 167; [1990] RTR 144; [1990] ICR 61; [1989] IRLR 265; [1990] CLY 1903.

Facts

The defendant employed the claimant as a quarry foreman in Ethiopia. The employment contract provided a medical and pension expenses scheme. The defendant was also obliged to pay for any medical treatment the claimant needed.

The claimant was injured in a car accident. The accident was the fault of the other driver’s negligence. However, their identity was unknown and they could not be traced. At the time, there was no legal requirement in Ethiopia for individuals to have third-party motor insurance. There was also no State compensation scheme for accidents involving uninsured or untraced drivers. As such, the claimant was unable to obtain compensation.

The claimant sued the defendant for breach of contract and negligence. They argued that:

• There was an implied term in the contract of employment requiring the defendant to obtain relevant indemnity insurance. Alternatively, the term required the defendant to advise the claimant of the legal situation in Ethiopia so that he could arrange his own cover. The defendant was in breach of this implied term.
• The defendant was under a common law duty to protect the claimant’s economic wellbeing. They had been negligent in this respect by failing to advise the claimant that they would likely want insurance.

Issue(s)

1. Did the contract contain the implied term the claimant contended for?
2. Was the defendant under a contractual or common law duty to safeguard the claimant’s economic wellbeing?

Decision

The Court of Appeal held in favour of the defendant.

• It was not possible to imply as a matter of law the term contended for by the claimant. The incorporation of such a term could only work fairly if subject to exceptions and limitations. These could only really be achieved by legislation.
• It was also not appropriate to imply the term as a matter of fact. It was particularly relevant in this regard that there were already express terms in the contract dealing with economic welfare – particularly those requiring the defendant to pay the claimant’s medical expenses. If the parties had intended the defendant to be under a contractual duty to obtain insurance or advise the claimant on economic matters, they no doubt would have included this as an express term.
• Finally, the court would not hold the defendant under a tortious duty to safeguard the claimant’s economic welfare. In this context there was no reason to impose duties on employers beyond those contained in the express or implied terms of the contract.

This Case is Authority For…

The courts will not imply a term in law, where, for reasons of social policy or complexity, the matter is better dealt with by Parliament.

Employers are under a duty to safeguard employees from the risk of physical injury. This may extend to a duty to warn employees of unavoidable risks. However, this duty does not inherently extend to a duty to safeguard or warn in relation to economic risks and harm.

Other

The court explained that no duty of care to safeguard against economic loss in tort arises out of a voluntary assumption of responsibility if the only reason the defendant assumed responsibility for the claimant was because the parties made a contract.

May LJ and Neil LJ thought that the law was unclear as to whether a duty to safeguard against economic loss can arise where there was no voluntary assumption of responsibility. Gibson LJ, by contrast, thought that it should be possible in rare cases to impose such a duty without a voluntary assumption of responsibility. The present facts were not such a rare case in his opinion, however.