Can A Company Be Held Vicariously Liable For An Action Of Its Independent Contractor? A Review Of The Supreme Court’s Decision In Total Exploration & Production (Nig.) Ltd v. Okwu & Ors LPELR-62623(SC)

Introduction:

It is common practice for Nigerian companies to engage independent contractors to execute certain aspects of their operations. However, a major issue that usually arises in this sort of relationship is: to what extent would the employer be liable for the actions of its independent contractors?

The Supreme Court addressed this question directly in Total Exploration & Production (Nig.) Ltd v. Okwu & Ors (2024) LPELR-62623(SC), where the Respondents sought to hold a company liable for the unlawful actions of soldiers who had been deployed to the company’s independent contractor.

Summary of the Facts of Total Exploration & Production (Nig.) Ltd v. Okwu & Ors:

The 1st to 6th Respondents (“the Respondents”) commenced a lawsuit for the enforcement of their fundamental rights against Total Exploration & Production (“Total E & P”), one of Total’s independent contractors, an employee of the independent contractor and a military officer (“7th to 10th Respondents”). The Respondents alleged that the military officers assigned to Total E&P’s independent contractors had assaulted them and unlawfully detained their vehicle. Therefore, they sought damages of N250,000,000.00 (Two hundred and fifty million naira) against the 7th to 10th Respondents and Total E & P jointly and severally.

No specific allegation was made against Total E&P beyond the fact that the military officers were assigned to its independent contractor. Nonetheless, the High Court of Rivers State awarded the sum of N250,000,000.00 (Two hundred and fifty million naira) against Total E&P and the 7th to 10th Respondents jointly and severally.

Being dissatisfied with the judgment of the trial court, Total E & P appealed to the Court of Appeal, arguing that the trial court relied on extraneous matters in holding it vicariously liable for the acts of the 7th – 10th Respondents. The Court of Appeal dismissed the appeal and held that Total E & P was vicariously liable for its independent contractor’s action since the 1st Respondent’s vehicle was detained at Total E & P’s Obagi Base Camp premises and Total E & P did not deny its relationship with its independent contractor.

Summary of the Supreme Court’s Decision

Total E & P appealed to the Supreme Court, arguing that there was no evidence before the Court to establish the existence of a principal-agent relationship between it and its independent contractor. It further argued that the lower Courts wrongly held it vicariously liable for the actions of its independent contractor without any valid evidence justifying the position.

The Supreme Court agreed with Total E & P’s position and held that both the trial Court and the Court of Appeal had erred in finding Total E & P vicariously liable for the actions of its independent contractor because Total E & P had deposed to a counter-affidavit stating that it was not involved in the incident where the 1st to 6th Respondent’s fundamental rights were breached by the 7th to 10th Respondents. Abiru, JSC at Pages 63-64 Paragraphs D-A, held as follows:

“In applying the doctrine of vicarious liability, the law draws a distinction between an employee and an independent contractor. The general is that an employer of an independent contractor is not liable for the acts of the contractor in the course of the job for which he is engaged. The law considers that since the employer cannot control the way in which the contractor does the work, it is the contractor alone who is in a position to guard against risk incidental to the work and thus answerable for any damage caused to third parties by his actions.”

The Supreme Court further upheld Total E & P’s appeal because the 1st – 6th Respondents were unable to adduce any evidence in support of their contention that a principal-agent relationship existed between Total E & P and its registered contractor. Abiru, JSC at Page 65 Paragraphs B-E, held as follows:

“Now, what the above statements of law translate to is that the mere assertion that someone is a registered contractor of an employer does not, and cannot, automatically lead to the conclusion that there exists between that employer and the registered contractor a principal/agent relationship of such a nature that renders the employer vicariously liable for the actions of the registered contractor. The default mode is that the employer is not liable for the actions of the contractor and the party making the assertion must go further to adduce facts and circumstances why the employer must be so held vicariously liable for the acts of the contractor.”

The Supreme Court accordingly allowed Total E & P’s appeal and set aside the award of damages against it.

Key Takeaways from the Supreme Court’s Decision

1. The mere fact that an employer has engaged a company as its independent contractor does not make the employer vicariously liable for the independent contractor’s actions. Vicarious liability requires the claimant to establish the existence of a principal-agent relationship.
2. A claimant cannot succeed in a vicarious liability claim simply by asserting that a principal-agent relationship exists. Concrete facts and circumstances demonstrating the employer’s control over the contractor’s operations must be placed before the Court. For potential litigants, this also means carefully identifying the party directly responsible for the breach, rather than casting a wider net to include other third parties who have no direct relationship to the breach.
3. The default position under Nigerian law is that an employer is not liable for its independent contractor’s actions. The burden of displacing this default rests squarely on the Claimant, who must adduce the facts and evidence necessary to justify a departure from the default position.
4. Parties engaging the services of independent contractors should ensure that their contracts clearly delineate each party’s responsibilities and liabilities.

CONCLUSION:

This decision reinforces the fact that engaging the services of an independent contractor does not make a company an insurer of that contractor’s conduct. Therefore, a Claimant who wishes to hold an employer vicariously liable for its contractor’s

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