D1 contracted D2 to set up a trampoline at a charity fundraiser. D2 had told D1 that it had public liability insurance, when in fact it did not. P was injured because the trampoline was set up badly and settled with D2 for a lesser amount than he would have received had D2 had public liability insurance. P claimed D1 had a duty of care to those attending to ensure that D2 had the liability insurance and therefore sued D1 for the amount it would have received had there been insurance, minus the amount it received in the settlement. CA denied the claim.
Lord Woolf CJ (majority approach): This activity was “inherently risky” (extra-hazardous) and D1 had a duty to take reasonable care to ensure suitability of the contractor i.e. liable for D2’s negligence. However, upon being (falsely) told by D2 that the insurance existed, it would be unfair to expect D1 to actually check the document and D1 had fulfilled its duty. Majority say there is a duty to enquire into the insurance status of the IC.
Sedley LJ (minority approach): There is no duty to inquire as to the insurance of the IC- not fair, just and reasonable” to impose such a duty. Also if there is a duty to ensure safety of the participants, ensuring that there is adequate insurance could not possibly be a part of this.
Sedley LJ seems right: there is no precedent of a duty to check that there is insurance cover and if there is a duty of care owed by D1 it must be to ensure that the contractor has suitable safety standards, NOT to ensure that there will be compensation should those standards be breached.