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Michael Kent KC reviews the Supreme Court judgments of Barclays Bank Plc & WM Morrison Supermarkets Plc

On 1 April 2020 the Supreme Court handed down two important judgments which provide clarification and delineation of the outer limits of the doctrine of vicarious liability for the torts of another: Barclays Bank plc v Various Claimants [2020] UKSC 13 and WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12. They will be welcomed by liability insurers.

In the Barclays case the Supreme Court set aside the first instance judgment, which had been upheld by the Court of Appeal, holding the appellant bank liable for sexual assaults over a number of years by a general practitioner during pre-employment medical examinations of prospective new employees carried out by him for the bank in his own consulting room for which, on each occasion, he was paid a separate fee.

The decision of the Court of Appeal had caused some consternation as the boundaries of this doctrine of vicarious liability seemed to have extended well beyond the paradigm examples of those employed by the defendant who commit torts in the course of their employment or those whose relationship with the defendant was so close as to put them in a position “akin to employment”. The limited extension to the doctrine of vicarious liability (beyond the straightforward employer/employee cases) had been discussed in a number of recent cases at Supreme Court level including Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 (generally known as The Christian Brothers case), Cox v Ministry of Justice [2016] UKSC 10 and Mohamud v WM Morrison Supermarkets Plc [2016] UKSC 11. However in all those cases the tortfeasor was either an employee or someone who to all intents and purposes was acting under the direction and control of the defendant as if he were an employee. In contrast the abusive general practitioner in the Barclays case was examining the prospective employees as part of his recognisably independent profession as a medical practitioner and he would more conventionally have been put in the category of “independent contractor”. Lady Hale who gave the sole judgment, said these recent authorities “do not erode 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”  and reaffirmed the statement of Lord Bridge in D & F Estates Ltd v Church Comrs [1989] AC 177 at 208:  “It is trite law that the employer of an independent contractor is, in general, not liable for the negligence or other torts committed by the contractor in the course of the execution of the work”.

The Court of Appeal had in effect blurred this distinction by focusing on the specific instructions which the bank had given to the GP as to the nature of the examination to be carried out by him contained in a pro forma report headed “Barclays Confidential Medical Report”. On that approach there was considerable uncertainty as to how far someone who engages an independent contractor may, because of the extent to which he gives detailed instructions as to what was required to be done, thereby inadvertently find himself liable for the contractor’s torts.

The Supreme Court made clear that that is not a risk which those who engage independent contractors or their liability insurers run. Further, Lady Hale gave guidance on the circumstances in which someone might or might or might not be properly categorised as an independent contractor. In most cases the position would be clear.  Though the factors which, in the employment protection context, satisfied the definition of “worker” in section 230(3) of the Employment Rights Act 1996 might be helpful in deciding whether the person in question is a true independent contractor or not, the question whether someone is vicariously liable for another’s torts is not to be aligned with the statutory concept of “worker” which had a different purpose.

In doubtful cases resort should still be had to the five criteria identified by Lord Phillips in the Christian Bros case as justifying the imposition of vicarious liability in an employer/employee case which, if present, might justify a finding in other cases that the relationship was one “akin to employment”. Those were:

“(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 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.”

In the other case handed down on 1 April, WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12, the Supreme Court through Lord Reed who gave the sole judgment, considered the second stage of the test for vicarious liability, namely whether the acts or omissions constituting the tort of the employee or other person in a role akin to employment, were closely or sufficiently connected to that role to make it fair, just and reasonable that vicarious liability should attach.

The case was concerned with the unauthorised and malicious uploading of personal data in breach of the Data Protection Act to a publicly accessible filesharing website. The employee obtained the data in the course of his employment but had no right to disseminate it and did so in pursuance of a grievance he had with the defendant. The claimants sought damages from the appellant for breach of statutory duty under the DPA and for breach of privacy and confidence. The judge and the Court of Appeal held that, notwithstanding the flagrant and unauthorised use made by the employee of the personal data which he held for other reasons, the appellants were liable. The Supreme Court reversed this decision. In doing so they took the  ‘opportunity to address the misunderstandings which have arisen since its decision in the case of Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11; [2016] AC 677.

The argument, which Lord Reed regarded as erroneous, was that ‘the test of vicarious liability should be broadened so as to turn, in the case of a tort committed by an employee, on whether a reasonable observer would have considered the employee to be acting in the capacity of a representative of the employer at the time of committing the tort.’

This wider approach was rejected in favour of the narrower principle enunciated by Lord Nicholls in Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 where explained “close connection” test first appeared, namely that “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 Reed’s conclusion was that the test “… has to be applied with regard to the circumstances of the case before the court and the assistance provided by previous court decisions. The words “fairly and properly” are not, therefore, intended as an invitation to judges to decide cases according to their personal sense of justice, but require them to consider how the guidance derived from decided cases furnishes a solution to the case before the court. Judges should therefore identify from the decided cases the factors or principles which point towards or away from vicarious liability in the case before the court, and which explain why it should or should not be imposed. Following that approach, cases can be decided on a basis which is principled and consistent.”

Thus unless what wrongdoer did was within the field of activities entrusted to him by the employer, liability would not be imposed on the latter. The employee would be, to use the old expression, “on a frolic of his own”. The error below had been to arrive at the conclusion that the employer was liable simply on the basis that there was a close temporal connection between what he was authorised to do in collecting the data and his unauthorised uploading of it such that it formed part of a seamless whole. The Supreme Court made clear that in cases such as Mohamad the finding was not simply based upon the close temporal link but on the basis that, when the tort was committed, the wrongdoer was still performing (even though quite improperly) his assigned field of his activity as a petrol station attendant.

Michael Kent KC

2nd April 2020

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