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01/04/2020

Supreme Court rules against vicarious liability in Barclays  and Morrisons cases

Subject: Employment law/ Vicarious liability

Source: British and Irish Legal Information Institute (BAILII)

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, in two recent cases the Supreme Court has declined to extend the scope of vicarious liability.

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.

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.

 

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