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Vicarious liability

 

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Introduction

Tests to determine vicarious liability

Vicarious liability cases

 

Introduction

 

‘Vicarious’ liability is the legal liability a person (the principal) has for the tortious acts or wrong doing of another person (agent) for whom the principal ought to be responsible. The principle has been developed by the courts as part of the common law of the three UK jurisdictions and developed from the law of agency.

According to the principle of vicarious liability, a principal will be liable for the wrongful acts of his agent if the acts were committed in the course of the agent’s duties, such as a negligent act or omission. In the case of a partnership, all the partners are liable for the wrongful act or omission of one partner if committed in the course of the partnership’s business. In the case of an employer, he will be liable for the wrongful act of his employee if committed in the course of his employment.

To determine whether a principal/employer is vicariously liable for the wrongdoing of his agent/employee, the courts have developed a to stage test:

* Stage 1: What is the relationship between the employer and the wrongdoer?;

* Stage 2: Is there a sufficiently close connection between the relationship and the wrong?

In the recent twenty years or so been a trend to expand the scope of both stages of the test. “The law of vicarious liability is on the move”: so stated Lord Phillips of Worth Matravers in the Christian Brothers case (Various Claimants v Catholic Child Welfare Society [2012] UKSC 56).

However, two recent Supreme Court judgments appear to have halted this trend:

Barclays Bank plc (Appellant) v Various Claimants (Respondents);

W M Morrison Supermarkets plc (Appellant) v Various Claimants (Respondents) [2020] UKSC 12

Tests to determine vicarious liability

Test for determining whether a person is vicariously liable for another’s wrongdoing

The test which has evolved for determining vicarious liability may be sated as follows:

*  Stage 1: What is the relationship between the employer and the wrongdoer?;

*  Stage 2: Is there a sufficiently close connection between the relationship and the wrong?

Stage 1

The first stage in the new two-stage test is to determine whether the relationship that existed between the employer and the wrongdoer is such as to make it fair, just and reasonable to give rise to vicarious liability.

What relationships make a principal liable for his agent’s acts/omissions?

 

For the principal to be liable, the agent must be sufficiently closely connected to the principal from the point of view of the third party who has suffered loss or damage.

Principal and agent

The relationship will usually be clear in the case of a principal who has ‘held out’ a person as his agent with authority to act on his behalf.

Partnership

A similar position arises in the case of a partnership.

In House of Lords in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, Lord Nicholls of Birkenhead said:

it is a fact of life, and therefore to be expected by those who carry on businesses, that sometimes their agents may exceed the bounds of their authority or even defy express instructions. It is fair to allocate risk of losses thus arising to the businesses rather than leave those wronged with the sole remedy, of doubtful value, against the individual employee who committed the wrong. To this end, the law has given the concept of ‘ordinary course of employment’ an extended scope.

 

If, then, authority is not the touchstone, what is? … Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firm’s business or the employee’s employment. Lord Millett said as much in Lister v Hesley Hall Ltd..’

Employee

The most common cases arise in the employer-employee relationship. For the employer to be liable, the employee’s wrongful act or omission must have been made in the ordinary course of their employment (see below).

Contractor

Traditionally, a principal will only be liable for the agent’s wrongful acts or omissions if the agent was in a relationship akin to employment. The principal will not be liable if the agent is an independent contractor.

Characteristics of a relationship akin to employment

The employer-employee is the paradigm of such a relationship; but a relationship that is akin to employment may also attract such liability. Five characteristics were identified by Lord Phillips in the case of Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 (aka the Christian Brothers case):

(i) The employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability;

(ii) The tort (wrong) will have been committed as a result of activity being taken by the employee on behalf of the employer;

(iii) The employee's activity is likely to be part of the business activity of the employer;

(iv) The employer, by employing the employee to carry on the activity, will have created the risk of the tort committed by the employee;

(v) The employee will, to a greater or lesser degree, have been under the control of the employer.

While the above characteristics are clear enough, their application to the particular facts is not always so.

Cox v Ministry of Justice [2016] [2016] UKSC 10 concerned injury caused by Mr Inder, a prisoner who was a kitchen assistant n a prison. The prisoner negligently caused injury to Mrs Cox the catering manager, who was employed by the Prison Service. Was the Ministry of Justice, of which the Prison Service is an Executive Agency, vicariously liable to the catering manager? The county court judge held it was not liable, but the decision was reversed on appeal.

In the case of Kafagi v JBW Group Ltd [2018] EWCA Civ 1157, Singh LJ stated that the development from employment to ‘something akin to employment’ had not undermined the conventional distinction between a contract of employment and a contract for services. The defendant company had a contract with a local authority to collect their council tax debts. It sub-contracted the work to a registered bailiff, the alleged wrongdoer, who ran his own business and could pick and choose what work to do, had his own insurance and could work for other clients. Their relationship was not ‘akin to employment’.

Lauren Grubb v Natalie Shannon [2018] SC GLA 13 (Glasgow Sheriff’s Court 23 February 2018) was a recent interesting Scottish case. Ms Shannon carried on a hairdressing and beauty therapy salon at premises she leased. She had an arrangement with Roseanne Higgins to provide beauty therapy treatments in the salon. Ms Higgins was an independent contractor, paid ‘rent’ for her use of the salon, provided her own materials and was paid direct by clients that was not used by Ms Shannon. However, Ms Shannon’s business benefited from Ms Higgins’ services and the latter benefitted from the salon’s marketing and reception arrangements.

Ms Higgins negligently injured a client while treating her. Ms Shannon was held by the judge to be vicariously liable for the injury because although Ms Higgins was genuinely an independent contractor, the relationship applying all the characterisitics in the Stage 1 test was ruled to be sufficiently close to render Ms Shannon vicariously liable

In Various Claimants v Barclays Bank plc [2020] UKSC 13, an independent medical practitioner was instructed by Barclays to carry out medical examinations on staff and prospective employees. The practitioner committed a number of sexual assaults on female employees or candidates. Both the judge at first instance and the Court of Appeal found that the relationship applying Stage 1 of the test was close enough to establish vicarious liability on the bank. The decision appears to have been influenced by the impossibility of the claimants to recover any damages from the estate of the deceased medical practitioner, while the bank could be expected to be able to fund such damages. However this was ultimately rejected by the Supreme Court.

Stage 2

The Stage 2: test for determining vicarious liability is to ask: is there a sufficiently close connection between the relationship and the wrong?

In the case of the master-servant and in modern times the employer-employee relationship, the question was put in terms of whether the employee who committed the wrongdoing had done so in the course of employment, in which case the employer would be liable, or totally outside the scope of his employment in which case the employer was not liable.

The classic old case is Joel v Morison [1834] EWHC KB J39 (Court of Exchequer 3 July 1830). Mr Joel was struck down by a horse and cart, whose driver was Mr Morison's agent. Joel was crossing a street in the City of London, but the driver's job was simply to travel between Burton Crescent Mews and Finchley. The driver had detoured to visit a friend when the accident occurred. Morison argued that he was not liable for Joel's injuries because the agent had strayed off his path. The judge ruled that the driver had been on a ‘frolic of his own’ and the master was not laible for the injuries. In this famous old case, the language of ‘master’ and ‘servant’ was that of the time

The recent Supreme Court judgment in W M Morrison Supermarkets plc (Appellant) v Various Claimants (Respondents) [2020] UKSC 12 again shows how the vicarious liability test (in this case Stage 2) is simple to express but subject to very different interpretations by judges. A senior auditor in Morrisons’ internal audit team was provided access to the payroll data for all 126,000 employees. Because he bore a grudge against Morrisons, he secretly copied the data and uploaded data relating to 98,998 of the employees to a file sharing website and later anonymously sent CDs containing the data to three national newspapers.  Despite attempts to hide his actions, He was detected and ultimately convicted of a number of offences and sentenced to eight years’ imprisonment. The first instance judge and the Court of Appeal ruled that those actions were committed in the course of his employment, holding that Morrisons had provided him with the data in order for him to carry out the task assigned to him. The Supreme Court rejected that view and held there was no vicarious liability.

Vicarious liability cases

Cox v Ministry of Justice [2016] [2016] UKSC 10

The case concerned injury caused by Mr Inder, a prisoner who was a kitchen assistant in a prison. The prisoner negligently caused injury to Mrs Cox, the catering manager, who was employed by the Prison Service. Was the Ministry of Justice, of which the Prison Service is an Executive Agency, vicariously liable to the catering manager?

Mrs Cox brought her claim in the county court. The judge focused on the question whether the relationship between the prison service and Mr Inder was akin to that between an employer and an employee. He concluded that it was not. Although he accepted that there were some respects in which the prison service's relationship with Mr Inder resembled employment, he considered that there was a crucial difference. Employment was a voluntary relationship, in which each party acted for its own advantage.

Mrs Cox appealed to the Court of Appeal which upheld her appeal. The Ministry of Justice then appealed to the Supreme Court which dismissed the appeal. The lead justice, Lord Reed, stated:

“.. a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by a defender and for the defender’s benefit (rather than as activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defender by assigning those activities to the wrongdoer.”

Lauren Grubb v Natalie Shannon [2018] SC GLA 13

Sheriffdom of Glasgow And Strathkelvin att Glasgow 23 February 2018

Lauren Shannon carried on a hairdressing and beauty therapy salon at premises she leased under the trading name “Blush Hair and Beauty”. Ms Shannon had an arrangement with Roseanne Higgins to provide beauty therapy treatments from the upper room in the salon that was not used by Ms Shannon.

Factors which tended to show that Ms Higgins was an independent contractor and not in any sense an employee of Ms Shannon included:

*  Ms Shannon paid Ms Higgins a fixed rate £20 for each day Ms Higgins chose to work at the salon. Ms Higgins was responsible for paying her own tax and National Insurance contributions.

*  Ms Higgins was entitled to retain all income earned by her from customers to whom she had provided any beauty therapy treatment at the salon.

*  Ms Shannon provided no equipment or materials to Ms Higgins and the latter brought to the salon, and used, her materials and equipment for all beauty therapy treatments provided by her at the salon.

*  There was no common till within the premises and all payments by customers were made in cash to Ms Higgins.

Ms Shannon had arrangements with two other ladies to provide beauty therapy and hairdressing services on a similar basis, Ms Higgins and all three ladies regarded themselves as self-employed independent contractors, each carrying on business on their own account.

On the other hand, the close connection between Ms Shannon’s business and the services provided by Ms Higgins were shown by:

*  they agreed a uniform price list for beauty therapy treatments provided from the salon; any variations and special offers were agred in advance.

*  there were no signs or notices, inside or outside the salon, readily observable by and comprehensible to prospective customers that Ms Higgins was carrying on a business on her own account, distinct from and independent of the defender’s business.

* there were also no signs or notices on the salon’s Facebook account or elsewhere notifying prospective customers of the same thing.

*  at the relevant time, it was not the practice of Ms Higgins to notify prospective customers at the salon that, in providing beauty therapy treatments at the salon, she was carrying on a business on her own account, distinct from and independent of the defender’s business.

*  Ms Shannon was entitled to terminate the arrangements between her and Ms Higgins (and the two other ladies) at any time, without notice and without cause.

*  the salon had done some marketing and promotion which featured Ms Higgins and another of the self-employed ladies as part of the business.

*  sometimes customers would make a prior appointment to receive a beauty

treatment at the salon by telephone or text direct to Ms Shannon or Ms Higgins; sometimes customers would enter the salon with no prior appointment; sometimes customers would request a treatment from a specific named beauty therapist; sometimes no such specific request was made, and the treatment would be provided to the customer by whichever beauty therapist was available within the salon.#

The pursuer (claimant) in the case, Lauren Grubb, had made no prior appointment to attend the salon; she had never visited the salon before; and she had no prior connection with the salon or any of the persons who worked within it. The salon had been recommended to Ms Grubb by her sister who had previously received a couple of beauty treatments from different therapists within the salon. She received an HD eyebrow tint from Ms Higgins. Ms Higgins made no enquiries or skin test about whether Ms Grubb might have an allergy. Ms Grubb suffered a severe allergy as a result of the treatment, causing pain and suffering and loss of wages.

The judge, Sheriff Reid, found that Ms Higgins had been negligent and had caused the injury to Ms Grubb. He also found that Ms Higgins was self-employed. However, he also found that she carried out activities assigned to her by Ms Shannon as an integral part of Ms Shannon’s business, for Ms Shannon’s benefit and subject to Ms Shannon’s control and not as part of a recognisably independent business of her own.

The Sheriff held that Ms Higgins’ negligence was a risk created by Ms Shannon in assigning those activities to Ms Higgins; the relationship was akin to that of employment and it was fair, just and reasonable to impose vicarious liability upon Ms Shannon.

Various Claimants v Barclays Bank plc [2020] UKSC 13

Supreme Court; heard 19/11/2019

126 claimants sued Barclays Bank (the Bank) in the High Court on the basis that it was vicariously liable for the sexual assaults allegedly committed between 1968 and 1984 by the late Dr Gordon Bates.

Dr Bates was a medical practitioner who carried out medical examinations of employees or prospective employees of the Bank. That work was found to be a minor part of his practice. Dr Bates was not paid a retainer which might have obliged him to accept a certain number of referrals from the Bank. He was paid a fee for each report. He was free to refuse an offered examination should he have wished to do so.

Dr Bates died in 2009 and his estate (worth over half a million pounds) had been distributed. He could not be sued by the claimants but neither could the Bank claim contribution from him should any of the actions have succeeded.

To determine whether the Bank should be held vicariously liable for the wrongdoing of Dr Bates, the High Court judge applied the two stage test explained by Lord Phillips in the Christian Brothers case (Various Claimants v Catholic Child Welfare Society [2012] UKSC 56):

Stage 1: Was type of relationship between the employer and the wrongdoer of the type which makes it fair, reasonable and just to impose vicarious liability on the employer?

Applying the five criteria set out by Lord Phillips, the judge found:

(i) the Bank was more likely to have the means to compensate the victims and could be expected to have insured against that liability. Dr Bates had died years before, his estate had long since been distributed, his medical defence insurers would not indemnify for alleged sexual assaults and the Claimants' only legal recourse was to sue the Bank.

(ii) the sexual assaults were committed as a result of activity being taken by Dr Bates on behalf of the Bank. An applicant's employment was conditional upon the Bank being satisfied as a result of the medical examination and that the applicant was medically suitable for service.

(iii)  Dr Bates’ activities in carrying out medical examinations were for the benefit of the Bank and were an integral part of the business activity of the Bank.

(iv)  the Bank had created the risk of the wrongoing because the Bank directed the claimant employees or prospective employees when and where to go, and the claimants had no choice in the conditions of examination. The Bank had directed the doctor to perform a physical examination which included a chest measurement. The claimants, many of whom were 15 or 16, saw the doctor alone in his room when, as part of the medical examination, they were asked to remove clothing.

(v)  the doctor was to a greater or lesser degree under the control of the Bank.

Stage 2: Is there a sufficiently close connection between the relationship and the wrong?

The judge ruled that the alleged sexual abuse was inextricably interwoven with the carrying out by the doctor of his duties pursuant to his engagement by the Bank. In the circumstances the tort (i.e. the sexual assaults) were so closely connected with that employment or engagement as to satisfy the second stage.

On the above reasoning, the judge held that Barclays was vicariously liable for any assaults proved. The Court of Appeal agreed with the judge below and dismissed Barclays’ appeal.

On appeal to the Supreme Court, the lead justice, Lady Hale, noted that Dr Bates was not paid a retainer which might have obliged him to accept a certain number of referrals from the Bank, he was paid a fee for each report and was free to refuse an offered examination should he wish to do so. He was in business on his own account as a medical practitioner with a portfolio of patients and clients, one of his clients being the Bank. The court allowed the appeal and held that the Bank was not vicariously liable for any wrongdoing of Dr Bates in the course of the medical examinations he carried out for the Bank.

Joel v Morison [1834] EWHC KB J39

Court of Exchequer 3 July 1834

In this famous old case, the language of ‘master’ and ‘servant’ was that of the time.

 

Mr Joel was struck down by a horse and cart, whose driver was Mr Morison's agent. Joel was crossing a street in the City of London, but the driver's job was simply to travel between Burton Crescent Mews and Finchley. The driver had detoured to visit a friend when the accident occurred. Morison argued that he was not liable for Joel's injuries because the agent had strayed off his path.

The judge, Parke B, found that the driver of the cart was guilty of negligence. “There is no doubt also that the master, if that person was driving the cart on his master's business, iss responsible. If the servants, being on their master's business, took a detour to call upon a friend, the master will be responsible. If you think the servants lent the cart to a person who was driving without the defendant's knowledge, he will not be responsible. Or, if you think that the young man who was driving took the cart surreptitiously, and was not at the time employed on his master's business, the defendant will not be liable. The master is only liable where the servant is acting in the course of his employment. If he was going out of his way, against his master's implied commands, when driving on his master's business, he will make his master liable; but if he was going on a frolic of his own, without being at all on his master's business, the master will not be liable. As to the damages, the master is not guilty of any offence, he is only responsible in law, therefore the amount should be reasonable.”

W M Morrison Supermarkets plc (Appellant) v Various Claimants (Respondents) [2020] UKSC 12

Supreme Court; heard 06-07/11/2019

Andrew Skelton was a senior auditor in Morrisons’ internal audit team. In July 2013 he was subject to disciplinary proceedings for minor misconduct and was given a verbal warning. Following those proceedings, he harboured an irrational grudge against Morrisons. In 2013, Morrisons provided Mr Skelton access to the payroll data for all 126,000 employees including the name, address, gender, date of birth, phone numbers, national insurance number, bank sorting code, bank account number and salary of each member of staff.

Motivated by his grudge against Morrisons, Mr Skelton secretly copied the data to his own computer and uploaded the data relating to 98,998 of the employees to a file sharing website and later anonymously sent CDs containing the data to three national newspapers. Despite attempts to hide his actions, He was detected and ultimately convicted of a number of offences and sentenced to eight years’ imprisonment.

Certain of the employees brought a group claim in the High Court against Morrisons for its alleged breach of the statutory duty in the Data Protection Act 1998 (a data controller must comply with the data protection principles in relation to all personal data with respect to which he is the data controller(, misuse of private information, and breach of confidence. The claims were also brought on the basis that Morrisons was vicariously liable for Mr Skelton’s conduct.

The High Court judge rejected the contention that Morrisons was under a primary liability in any of the respects alleged, but held that it was vicariously liable for Mr Skelton’s breach of statutory duty under the DPA, his misuse of private information, and his breach of his duty of confidence: He also rejected Morrisons’ argument that Mr Skelton’s wrongful conduct was not happened thereafter was “a seamless and continuous sequence of events … an unbroken chain”.

The Court of Appeal upheld the decision. However, the Supreme Court has now reversed the judgements of the lower courts, The court ruled that it was abundantly clear that Mr Skelton was not engaged in furthering his employer’s business when he committed the wrongdoing in question. On the contrary, he was pursuing a personal vendetta, seeking vengeance for the disciplinary proceedings. His wrongful conduct was not so closely connected with acts which he was authorised to do that, for the purposes of Morrisons’ liability to third parties, it can fairly and properly be regarded as done by him while acting in the ordinary course of his employment.

 

[Original case report provided by BAILII is acknowledged with thanks. Contains public sector information licensed under the Open Government Licence v3.0. Legaleze is solely responsible for the article or summary.]

 

[Page created: 26/04/2020]

 

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