Tag: vicarious liability

Two new cases on vicarious liability from the UK Supreme Court on Wednesday, 1 April.

 

Two Supreme Court decisions this week which seem to mark a retreat in the process of expanding the scope of vicarious liability seen since 2012 in the “Christian Brothers” case.

  1. Barclays Bank plc (Appellant) v Various Claimants (Respondents)

[2020] UKSC 13

 

Claims were made against Barclays in respect of claims of sexual assault  by Dr Bates during unchaperoned medical examinations in a consulting room in his home. Barclays required job applicants to pass a pre-employment medical examination as part of its recruitment and employment procedures. Dr Bates was a self-employed medical practitioner whose work included conducting medical assessments and examinations of prospective Barclays employees.

The Supreme Court has reversed the finding of the first instance judge, upheld by the Court of Appeal, that Barclays was vicariously liable for Dr Bates’ alleged assaults.

There are two requirements for a finding of vicarious liability. First, there must be a relationship between the two persons which makes it proper for the law to make one pay for the fault of the other. Second, there must be a sufficient connection between that relationship and the wrongdoing of the person who committed the tort. The case concerned the first element. A person can be held vicariously liable for the acts of someone who is not their employee, provided the relationship between them is sufficiently akin or analogous to employment. However, the classic distinction between employment (and relationships that are akin or analogous to employment) on the one hand, and the relationship with an independent contractor on the other hand, remains.

In in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 (the “Christian Brothers “case) Lord Phillips referred to five factors that may help to identify a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability. However, where it is clear that the person who committed the tort is carrying on his own independent business, it is not necessary to consider the five incidents

The key question is whether the person who committed the tort is carrying on business on his own account, or whether he is in a relationship akin to employment with the defendant. This was not the case here. Dr Bates was not at any time an employee or anything close to an employee of Barclays, but was in business on his own account as a medical practitioner, with a portfolio of patients and clients. He did work for Barclays, which made the arrangements for the medical examinations and chose the questions to which it wanted answers, but much the same would be true of window cleaners or auditors. Dr Bates was not paid a retainer, which might have obliged him to accept a certain number of referrals from Barclays. He was paid a fee for each report and was free to refuse to conduct an offered examination. He would have carried his own medical liability insurance

 

  1. WM Morrison Supermarkets plc (Appellant) v Various Claimants (Respondents) [2020] UKSC 12

 

This case involved the second limb of the vicarious liability test, the need for a sufficient connection between that relationship and the wrongdoing of the person who committed the tort. The claim involved a disgruntled employee, one Skelton, had received a verbal warning after disciplinary proceedings for minor misconduct and bore a grievance against his employer thereafter. In November 2013, he undertook the task of transmitting payroll data for the Supermarket’s entire workforce to its external auditors, as he had done the previous year. In doing this he made and kept a personal copy of the data which he then uploaded in a file to a publicly accessible filesharing website, as well as distributing the file anonymously to three UK newspapers, purporting to be a concerned member of the public who had found it online. Some of the affected employees then sued the Supermarket for breach of statutory duty under the Data Protection Act 1998, misuse of private information, and breach of confidence, both personally and on the basis of vicarious liability for its employee’s acts.

At first instance, and in the Court of Appeal, it was held that the Supermarket was vicariously liable as Skelton had acted in the course of his employment. The Supreme Court overturned the decision.

What had to be established was first, what functions or “field of activities” the employer had entrusted to the employee, and then whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable.

In this case, the online disclosure of the data was not part of Skelton’s “field of activities”, as it was not an act which he was authorised to do. The satisfaction of the factors referred to by Lord Phillips in the Christian Brothers case was only relevant to the first question, the relationship between wrongdoer and defendant was sufficiently akin to employment for vicarious liability to subsist, and not with whether  the employee’s wrongdoing was so closely connected with their employment that vicarious liability ought to be imposed. What was highly material was whether Skelton was acting on his employer’s business or for purely personal reasons.

Skelton’s case bears many similarities with Mohamud [2016] AC 677, where a customer at a petrol station had an angry confrontation with the petrol station attendant, who wrongly suspected him of trying to make off without payment. The customer was enraged at how the attendant had spoken to him and after paying he flagged down a passing police car and complained about the attendant’s conduct. The customer and the police returned to the petrol station where the officer listened to both men and indicated that he did not think that it was a police matter. The customer said that he would report the attendant to his employer and as the officer was on the point of leaving, the attendant punched the customer in the face. The Supreme Court found that the petrol station was vicariously liable for the assault by its attendant.

In the instant case, Lord commented on the fact that the function of the attendant in Mohamud was to deal with his employer’s customers and the assault was the culmination of a sequence of events which began when the attendant was acting for the benefit of his employer. In contrast, Skelton was not engaged in furthering his employer’s business when he committed the wrongdoing in question, but, rather, was pursuing a personal vendetta against them. Although authorised to transmit the payroll data to the auditors, his wrongful disclosure of the data was not so closely connected with that task that it could fairly and properly be regarded as made by Skelton while acting in the ordinary course of his employment. The fact that his employment gave him the opportunity to commit the wrongful act was not sufficient to warrant the imposition of vicarious liability. An employer would not normally be vicariously liable where the employee was not engaged in furthering his employer’s business, but rather was pursuing a personal vendetta.

 

Independent Contractors Facing Unlimited Liability!

JD Irving Ltd v. Siemens Canada Ltd (The SPM 125) 2016 FC 287 (Federal Court of Canada)

 The shipowners, JDI, engaged a firm of marine consultants to prepare stability calculations in respect of the loading of a cargo of large industrial equipment on and off the barge SPM125. During the loading process, the cargo was damaged and the owner of the cargo brought an action against the carrier claiming damages (CAD$45,000,000). The cargo owner also brought an action against the firm of marine consultants and the naval architect (who was the principal of that firm and had carried out the calculations) for the same amount.

The question that arose in this case was whether the firm of consultants had a right to limit their liability under the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the Protocol of 1996, which has been incorporated into Canadian law by Part 3 of the Marine Liability Act.

Article 1(4) of the Convention stipulates:

If any claims set out in Article 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Convention.

There is no firm judicial reasoning on this point and differing opinions have been expressed in text books. The Court has subscribed to the view that Article 1(4) would afford limitation to a person if the shipowner or salvor has vicarious liability for the actions of that person. This would be the case when the negligence of a master or crew member gives rise to a claim by a third party against the owner or salvor. The crew or master in that case would accordingly have a right to limit their liability under the Convention. However, the relationship between an employer and an independent contractor would not usually give rise to a claim for vicarious liability and on that basis, such contractors are not afforded a right to limit their liability under Article 1(4) of the Convention. Applying this reasoning, it was held that the marine consultants in the present case could not enjoy the right of limitation.

The decision is a significant one as it adopts a new yardstick in determining whose actions a shipowner and/or salvor is responsible for in the context of the application of Article 1(4) of the Limitation Convention 1976 as amended by 1996 Protocol. The relevant party is able to limit its liability if the shipowner and/or salvor has vicarious liability for the actions of that party. Apart from marine consultants, classification societies, freight forwarders and logistics experts are likely to fall under this category. The judgment is not binding on English courts but obviously its reasoning needs to be considered carefully when the issue does arise, in addition, it sends a strong warning to the liability insurers of independent contractors as lack of the prospect of limitation would mean a huge increase in the exposure that they might face!