## Facts

- The Mersey Docks and Harbour Board (D1) supplied crane drivers to a stevedore company (D2).
- A crane driver, employed and paid by D1 but working under a contract that classified him as D2’s employee, injured a third party (C) by negligent crane operation.
- D1 retained the power to dismiss the driver and owned the crane.
- The injured party sought damages from both D1 and D2, prompting the courts to assess which party was vicariously liable for the crane driver’s negligence.
- The case required an analysis of the employment relationship, specifically the allocation of control and responsibility.

## Issues

1. Which party—Mersey Docks (D1) or the stevedore company (D2)—was vicariously liable for the negligent actions of the crane driver?
2. What determines an employment relationship for the purposes of vicarious liability in the context of loaned employees?
3. Can contractual provisions between employers displace the legal definition of an employer for liability to third parties?
4. How do broader considerations, such as control and coordination, affect the allocation of vicarious liability in complex working arrangements?
5. What are the statutory limits on the Crown’s prerogative concerning liability and immunity from statutory law?

## Decision

- The House of Lords held that D1 remained vicariously liable for the crane driver’s negligence.
- The court established that the test hinges on who controls the manner in which the work is performed, not simply who assigns the task.
- D1 did not relinquish responsibility, as it retained control over the crane and the method of the driver’s performance.
- Contractual agreements between the parties concerning the driver’s employment status did not override legal considerations of liability to third parties.
- In contrasting cases (such as Viasystems v Thermal Transfer), courts have recognized the possibility of dual vicarious liability where both employers exercise sufficient control.

## Legal Principles

- The “control test” is central for determining vicarious liability: liability depends on who has the authority to direct how the work is performed.
- The burden is on the general (original) employer to show that full control, both in task and method, has shifted to the temporary employer.
- Contracts between employers do not define an employee’s legal status for third-party liability.
- Dual vicarious liability can arise where more than one party effectively controls the worker’s method of performance.
- Statutory limitations on the Crown’s prerogative apply unless there is express provision or necessary implication in the statute, and immunity does not extend to entities operating for profit.

## Conclusion

The case established the control test as the primary means to determine vicarious liability for loaned employees, emphasizing actual control over work method. It clarified that contractual terms do not determine liability to third parties and highlighted subsequent developments that allow for dual liability in complex employment arrangements. The principles also outline statutory limits on Crown prerogative, particularly regarding immunity and revenue-generating entities.


Mersey Docks and Harbour Board v Coggins [1947] AC 1