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Supreme Court hands down two long awaited decisions on vicarious liability

The Supreme Court has handed down two long awaited decisions: WM Morrison Supermarkets plc v Various Claimants and Barclays Bank plc v Various Claimants. Both Judgments deal with issues arising out of the concept of 'vicarious liability'. The Supreme Court has sought to narrow the circumstances in which vicarious liability applies and to clarify misunderstandings arising out of earlier judicial decisions.

WM Morrison Supermarkets plc (Appellant) v Various Claimants (Respondents) - UKSC 2018/0213

This appeal concerned the circumstances in which an employer is vicariously liable for wrongs committed by its employees.

The facts

In November 2013, an employee of Morrison supermarkets (the Appellant), Andrew Skelton, downloaded payroll data onto a personal USB stick and took it home. In January 2014 he uploaded the data onto a file-sharing website and sent it to newspapers. He was motivated by a grudge against the Appellant. He was arrested, convicted and sentenced to 8 years' imprisonment.

Over 5,500 employees, whose personal data had been disclosed, issued a claim against the Appellant claiming damages for breach of the DPA and/or for the misuse of private information and/or breach of confidence either by the Appellant directly, or by Skelton, in respect of whose acts the appellant was alleged to be vicariously liable.

The issues

Whether the disclosure of data by the Appellant's employee occurred in the course of his employment, for which the Appellant should be held vicariously liable.

Whether the Data Protection Act 1988 ('the DPA') excludes the application of vicarious liability to a breach of that Act, or for misuse of private information or breach of confidence

The Supreme Court decision

The Supreme Court unanimously allowed the appeal and found that the Appellant should not be held vicariously liable for the actions of its rogue employee, Skelton.

The Court concluded that the Court of Appeal had "misunderstood the principles governing vicarious liability". Primarily, Lord Reed found that Skelton's wrongful disclosure of the data was not 'closely connected' with the task that he had been entrusted with by the Appellant (i.e. he was given the task of collating and transmitting payroll data) that it could fairly and properly be regarded as made by Skelton while acting in the ordinary course of his employment or part of his 'field of activities'. It was "abundantly clear" that Skelton was not engaged in furthering his employer's business when he committed the wrongdoing, but rather was pursuing a personal vendetta and seeking vengeance. The Court described it as being "highly material" whether Skelton was acting on his employer's business or for purely personal reasons.

The Supreme Court also observed that the mere fact his employment gave him the opportunity to commit the wrongful act was not sufficient to warrant the imposition of vicarious liability.

Although, the Court had found that no vicarious liability could arise it proceeded to consider the second issue before the Court for the sake of completeness. After hearing full arguments on the issue, Lord Reed noted that he found the Appellant's argument that the DPA excluded the imposition of vicarious liability for either statutory or common law wrongs to be "unpersuasive" and held that imposing vicarious statutory liability was "not inconsistent" concluding it makes no difference that an employee's liability may arise under statute.

Forbes comment

This judgment will no doubt come as a relief to employers and defendants. If the Supreme Court had found that Morrison's was vicariously liable for the acts of a rogue employee, it would have exposed organisations to serious financial consequences. Lord Reed's reasoning helps to clarify the circumstances in which an employer can be found vicariously liable for the conduct of its employees. It also addresses the misunderstandings which have arisen since the decision in Mohamud v WM Morrison Supermarkets plc [2016] which should help to stem the tide of such cases.

Barclays Bank plc (Appellant) v Various Claimants (Respondents) - UKSC 2018/0164

This appeal considered whether Barclays Bank PLC should be held vicariously liable for the actions of a now deceased doctor who was an independent contractor and not an employee of the bank.

The facts

One hundred and twenty-six claimants brought a group claim against Barclays Bank for sexual abuse perpetrated during the course of mandatory pre-employment medical examinations. The claimants were job applicants and existing employees of the bank. As part of the application process they were required to attend a medical assessment with a doctor nominated by the bank. The assessments took place at a consulting room in the doctor's home between 1968 and 1984. The claimants alleged that the doctor sexually assaulted them.

The Court at first instance and the Court of Appeal both found that Barclays Bank PLC were vicariously liable for the sexual assaults. These decisions appeared to widen the application of vicariously liability and the Claimants relied upon decisions such as the Christian Brothers and Armes v Nottinghamshire. Barclays Bank PLC appealed the decision.

The Claimants contended that the criteria proposed by Lord Phillips in the Christian Brothers case should be applied in all cases to determine whether it is fair, just and reasonable to hold one vicariously liable for the actions of another who is not their employee.

The Supreme Court Decision

The Supreme Court unanimously agreed that that whilst one can be held vicariously liable for actions of another who isn't their employee, there is a clear distinction between those circumstances akin to employment and those circumstances where there is an independent contractor. The Supreme Court unanimously allowed Barclays Bank PLC's appeal and held that they were not vicariously liable for the actions of the doctor.

Lady Hale considered that the criteria set out by Lord Phillips in the Christian Brothers case may be helpful to identify a relationship which is analogous to employment. However, Lady Hale notes that the key is understanding the details of the relationship. Lady Hale refers to the doctor in this instance being "in business on his own account, as a medical practitioner, with a portfolio of patients and clients". Indeed, she even goes as far as to give examples of other independent contractors such as those hired to clean the windows and auditors hired to audit the books.

The Supreme Court Decision emphasises that recent authorities, including the Christian Brothers case, does not alter the principle that a contractual relationship with an independent contractor does not give rise to vicarious liability.

Forbes Comment

We still have the situation where relationships akin to employment can result in vicarious liability claims being brought, but to widen that further to include potential contractor relationships would have been far-reaching. The Supreme Court has taken a common-sense approach to this.

Both decisions handed down by the Supreme Court will be welcomed by employers and insurers as they bring further clarity to the concept of vicarious liability and limit the circumstances in which it can apply.

Sources: www.supremecourt.uk/cases/docs/uksc-2018-0213-press-summary.pdf

www.supremecourt.uk/cases/docs/uksc-2018-0213-judgment.pdf

www.supremecourt.uk/cases/docs/uksc-2018-0164-judgment.pdf

For more information contact Amy Jackson in our Insurance department via email or phone on 01254 222 423. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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