Keane C.J.
Geoghegan J.
Fennelly J.
122 & 152/98

THE SUPREME COURT

SAMUEL SHINKWIN

V.

QUIN-CON LIMITED AND NICHOLAS QUINLAN

JUDGMENT delivered on the 21st day of November, 2000 by FENNELLY J. (nem. diss.)

The present appeal concerns one principal issue namely, whether the second defendant was correctly held liable to the plaintiff for serious injuries he sustained in an accident at the factory premises where he was employed by the first defendant. The first defendant was uninsured, had no assets and did not defend the claim. Hence the plaintiffs wish to succeed against the second defendant, the effective sole shareholder and controller of the first defendant. The award was £304,000. The plaintiff lost several fingers in his right hand. Damages are not in issue on the appeal.

The plaintiff cross-appeals against the failure of the trial judge to find that he was employed by the second defendant, an issue which does not arise if he succeeds on the principal issue.[*2]

The plaintiff was twenty years of age at the date of the accident, the 3rd August 1993. The first defendant had a small factory making trophies near Clogheen, Co. Cork. He originally went to work for the defendants by way of work experience on a FÁS training programme. He began working on assembling trophies but graduated to working on woodworking machines. He was put to work on the machine which caused his injury about eight months before the accident. It was an electric circular saw with a jig which had to be moved or adjusted from time to time. The plaintiff moved the jig while the saw was in motion and while it was inadequately guarded. He had never been instructed to do otherwise. The jig shifted suddenly, as it was stiff. His right hand slipped and came in contact with the saw. He lost the index, middle and ring fingers and part of his thumb

The learned trial judge found in favour of the plaintiff as against the first defendant because the machine had no proper guard, or, if it did, the plaintiff was not instructed in its use. It was not seriously contested that, as found by the trial judge, the plaintiff received no training in the use of an admittedly dangerous machine and no warnings as to the dangers that were inherent in the work. In particular he was not warned to stop the circular saw before adjusting the jig.

As to the second defendant, the trial judge held:

“The Plaintiff regarded the second named Defendant as his boss. The second named Defendant was in my opinion, or did in my opinion, owe a duty of care to the Plaintiff as manager of the factory premises, and I am satisfied that he failed in that duty in that he failed to provide proper training for the Plaintiff.  He failed to warn the Plaintiff of the dangers inherent in the work that he was obliged to do. He failed to ensure that the guard was at all times properly adjusted over the saw and [*3] he failed to ensure that the saw was switched off at all times when the jig was being moved.”

Counsel for the second defendant says that the fact he is virtually the sole owner of the business is not relevant. It does not impose a duty of care. The duty to provide a safe system and a safe place of work is an obligation imposed directly in law on the first defendant as employer of the plaintiff. The decision, if allowed to stand, would open the door too wide and establish a new category or basis of liability for factory managers. A fellow employee is admittedly liable personally for any direct negligent act which causes injury in the work place. However, this case is different. The second defendant must be regarded merely in the guise of manager. The faults attributed to him are mere acts of omission. Persons in such positions do not attract personal liability. He relied on the judgment of Barron J in the High Court in Sweeney v Duggan  [1991] 2 I. R. and of this Court on appeal  [1997] 2  I. R. 531.

Counsel for the plaintiff relies on the principle established in Donoghue v Stevenson  [1932] A.C. 562 that everybody owes a duty to exercise reasonable care not to cause injury to any person who should be regarded as his neighbour, i.e. anybody to whom he is in such a relationship of proximity that it is reasonably foreseeable that that other person may suffer injury as a result of his negligent acts. The first defendant was not merely the sole effective shareholder of the plaintiff’s employer. He was also the effective and only manager. Counsel laid special emphasis on the complete control exercised by the second defendant over the factory which was the plaintiffs workplace and the plaintiff. He drew attention to the following passage from the judgment of Gannon J in Tulsk Co-operative Livestock Mart Limited v Ulster Bank Limited [unreported 13th May 1983] [*4] 

 “In every case in which a claim for damages is founded in negligence it is essential to examine the circumstances which bring the parties into relation with each other and in which the risks of reasonably foreseeable harm can be identified, and the extent to which each or either has control of the circumstances, with a view to determining what duty of care, if any, may exist, the nature and extent of the duty, and whether and to what extent there may have been a breach of duty of care....”

In order to resolve this argument, I would take two points at opposite ends of a spectrum. On the one hand, a person might be the sole effective and controlling shareholder in a business run by a company but have no involvement in its day to day operations. He would have control of the company but not of the manner in which it conducted its operations. It is clear that such a person would not, without more, be responsible to employees injured by the negligent acts of the company and, in particular, the failure of the company to ensure that there was a safe system of work in operation in its factories. That would disregard the separate legal character of the company, the principle of limited liability and the rule in Salomon v Salomon [1897] A.C. 22. Counsel for the plaintiff does not suggest otherwise.

On the other hand, any employee owes to his fellow employees a duty to exercise at least such care in the performance of his work that he does not cause direct injury to his fellow workers. An example, mentioned in the course of argument was the careless dropping of a hammer by one worker on the foot of another.

The second defendant, it seems, falls between these two stools. He is the effective sole shareholder and effective day to day manager. I would reduce the issue to this: did he involve himself so closely in the operation of the factory and, in particular, in [*5] the supervision of the plaintiff as to make himself personally liable for any of the acts of negligence which injured the plaintiff?

The evidence discloses that the plaintiff dealt personally with the second defendant from the beginning. It is true that the latter’s two sons were more physically active on the factory floor. The second defendant was often absent from the premises. Nonetheless, it was the second defendant who, about eight months before the accident approached the plaintiff about using all the machines. He was always in and out of the machine area if the shop was busy, saw the plaintiff using the machine and the difficulties he had in moving the jig. He worked with the plaintiff on the machine on at least one occasion. He repeatedly warned the employees, on his own evidence, that there was no insurance and was aware of a history of accidents that made it impossible to get insurance. He gave instructions about not playing football for the same reason. All of these factors, even though partially disputed by the plaintiff, demonstrate the intimate involvement of the second defendant in the management of the factory and supervision of the plaintiff, in particular, and his consciousness of the danger of accidents. It is in this context that his concession, in cross-examination, that he was in undisputed control of the factory becomes significant.

McCarthy J in Ward v McMaster [1988] 337 at page 349 declared his unwillingness to “dilute the words of Lord Wilberforce....”. We are here concerned only with the first stage of the two stage test adopted by Lord Wilberforce in the passage from Anns v Merton London Borough  [1987]728 at 752: [*6]

 “First, one has to ask whether, as between the alleged wrongdoer and the person who has suffered the damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter……” 

	The criterion of “control” which is proposed in this case is not an addition to the test for the existence of proximity. The open textured language of Lord Wilberforce leaves wide scope for argument as to the character of “proximity or neighbourhood”. Clearly it involves more than a mere test of foreseeability of damage. The assessment of the relevance of control as well as its nature and degree will depend on the circumstances. O’Dalaigh C.J. in Purtill v Athlone U.D.C. [1968] I.R. 205 at 213 noted that “the defendants employees were in charge and control of the detonators..” which caused injury to the plaintiff in that case. In my opinion some assessment of the element of control, in the sense of “control of the circumstances,” mentioned by Gannon J in the Tulsk case, is a useful guide to the decision as to the existence of a duty of care. A person cannot be held liable for matters which are outside his control. He will not be, as the defendant in Ward v McMaster was not, in control of the plaintiff’s independent actions and should be responsible in law only for matters which are within his own control.

In my view, the second defendant, on the particular facts of this case, placed himself in a relationship of proximity to the plaintiff. He had personally taken on a young and untrained person to work in a factory managed by him and personally put him to work upon a potentially dangerous machine over which he exercised control to the extent of giving some [*7] though completely inadequate instructions to the workers. He was bound to take appropriate steps to warn the plaintiff of such obvious dangers as failing to stop the circular saw from revolving while adjusting the jig or to ensure that it was guarded. In his supervision and instruction of the plaintiff, he failed to do these things and was consequently negligent.

I do not think the decision in Sweeney is relevant, despite its superficial resemblance to the present case. The plaintiff was also the victim of an accident at the hands of an uninsured corporate employer operating, in that case, a quarry. He obtained a judgment against the company but this was unsatisfied and he was left to prove in the liquidation. He tried to fix the defendant, Duggan, with liability in a separate action on the basis that he was the principal shareholder as well as the quarry manager. The principal basis of the claim, however, was that Duggan should have seen to it that the company was insured. His failure to do so caused damage to the plaintiff, but the claim sounded in economic loss. Insofar as the claim was made for damages for personal injury it was statute barred. It emerges clearly from the judgment of Murphy J on the appeal that the claim failed because the defendant, Duggan, could not be under a greater obligation to the plaintiff in respect of insurance than was the company, which was his employer. The plaintiff failed to establish that such a term should be implied into his contract of employment. Hence, his claim also failed against Duggan.

Here the plaintiff makes his claim directly in negligence against the second defendant, not as employer or as shareholder but as a person who had placed himself by his own actions in such a relationship to the plaintiff as to call upon himself the obligation to exercise care. [*8]

It is not necessary, on the facts of the present case to express an opinion on the issue raised in the argument as to the potential exposure generally of factory managers to personal liability. Counsel for the defendant points to the serious implications, inter alia, for insurance and industrial relations of such liability. It may, however, be relevant to observe that there has never been any doubt as to the right of the employer to be indemnified by an employee who, in the course of his employment, negligently causes injury to another. (See McCarthy J in Sinnott v Quinnsworth  [1984] ILRM 523 at 537). Counsel for the plaintiff was prepared, if necessary, to cross that bridge. In the event, I find it unnecessary to do so, because of the special facts of the case.

In the light of what I have said, it is unnecessary also to decide whether, as the plaintiff asks, the plaintiff was employed by the second defendant. I would dismiss the appeal.