Vicarious Liability

Article

03 October, 2018

There has been a recent spate of decisions concerning the issue of vicarious liability. Over the years, the concept of vicarious liability (which refers to a situation where an employer can be held strictly liable for the acts or omissions of its employees) has evolved and extended its reach for reasons of public policy. We look at two of the most recent decisions in closer detail.

Barclays Bank Plc v Various Claimants (2018) [2018] EWCA Civ 1670

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.

At first instance, the judge found for the claimants after applying the two stage test:

  1. Was the relationship one of employment or akin to employment?
  2. Was the tort sufficiently closely connected with the employment or quasi employment?

On Appeal, the Court of Appeal concluded that the judge at first instance had adopted the correct approach when determining that a bank was vicariously liable for sexual assaults committed by the doctor. In the Judgment the Court was keen to stress that the law of vicarious liability had developed in recent times and it was no longer sufficient to simply ask whether or not the perpetrator was an independent contractor. The Judge pointed to a recent change in employment structures, whereby businesses use independent contractors to perform tasks central to the business. Such businesses often place high levels of control over the actions of those contractors and as such there will be instances where vicarious liability will be established.

The Court of Appeal confirmed that the judge was right to conclude that the activity was being taken on behalf of the bank. The medical assessments were for the bank's benefit and an integral part of its business activity. The doctor was working under the banks control in respect of the nature of the medical assessments and the completion of reports. The medical examinations were sufficiently closely connected with the relationship between the doctor and the bank; they were the purpose of that relationship. The tort was sufficiently closely connected with the banks quasi employment of the doctor and it was fair and just to find the bank vicariously liable.

Forbes comment

Whilst the bank sought to argue that the doctor was a self-employed independent contractor the Court of Appeal was keen to stress that the concept of vicarious liability should reflect the realities of modern day business relationships. The degree of influence and control exercised by the bank over the arrangements was crucial and ultimately led to the finding. Businesses who accept the benefit and create the risk of a tort, must also accept the burden, especially if they have the financial means to provide recompense to the victim.

This decision has significant ramifications for employers who now potentially run the risk of being held responsible for tortious acts committed by people not formally employed by their organisation. This area of law is by no means clear cut, and each case will need to be considered on its facts.

Rod James-Bowen & Ors v Commissioner of Police of the Metropolis (2018)[2018] UKSC 40

The Supreme Court held that the Commissioner of Police owed no duty to protect the economic and reputational interests of police officers when conducting litigation as a result of being allegedly vicariously liable for their actions.

A suspect alleged that he had been seriously assaulted during the course of his arrest and he brought proceedings against the Commissioner on the basis of vicariously liability for the officers' actions. The Commissioner settled the claim during the trial, with an admission of liability and an apology for "gratuitous violence" by the officers.

The officers were subsequently acquitted of assault occasioning actual bodily harm. They brought claims against the Commissioner alleging breach of contract, negligence and misfeasance in public office. They sought compensation for reputational, economic and psychiatric damage. The Commissioner successfully applied for the claims to be struck out. However, the Court of Appeal allowed the officers' appeals on the issue of the Commissioner's duty of care to safeguard their economic and reputational interests and its extension to the conduct of litigation by the Commissioner.

The Supreme Court found that it had not been referred to any authority which held that an employer owed a duty of care to its employees to conduct litigation in a manner which protected them from economic or reputational harm.

The proposed duty would conflict fundamentally with the (quasi) employer's own interests in defending litigation brought against him. The employer would bear the costs and liability of such litigation and therefore must "be able to make his own investigation into the claim to assess its strength based on the conduct of his employee and the prospects of a successful defence".

If the Court was to impose such a duty, then it would create the potential for a serious conflict of interest. The interests of an employer sued on the basis of vicarious liability for the tortious conduct of their employees differed fundamentally from the employees' interests. The stark differences between the interests strongly suggested that it would not be fair, just or reasonable to impose on the employer a duty of care to defend legal proceedings so as to protect the employee's economic or reputational interests

The Supreme Court also found that parties involved in a dispute should be able to conduct litigation without fear of satellite litigation. Practically, the imposition of such a duty would also be inconsistent with legal policy which encourages the settlement of civil claims. Employers may be afraid to settle claims which would result in delays and the disruption of civil proceedings.

Forbes comment

This is an important judgment for all employers (and quasi-employers) who are required to defend civil claims brought against them as a result of being held vicariously liable for the actions of their employees or quasi employees. This decision confirms that employers are free to run and settle claims at their own discretion without fear of repercussion.

However, whilst the Court did not impose a duty of care on employers, employers should still be mindful of the effect the conduct of the litigation may have on employees caught up in the litigation.

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