Alexander Macpherson successful in important High Court case about the TUPE Regulations
2nd Jun 2025
Judgment has been handed down by HHJ Bird (sitting as a judge of the High Court) in ABC v Huntercombe (No 12) & Others ([2025] EWHC 1000 (KB)), an important case as to the effect of the TUPE Regulations on the transfer of liabilities in tort to third party non-employees.
A copy of the judgment can be found here. Alexander Macpherson (instructed by David Weir of DAC Beachcroft) represented the successful Second Defendant, Active Young People Limited (“AYP”).
The judgment
The index claim is the first of a group of claims brought by dozens of patients who were minors when they were detained at hospitals operated by the Huntercombe Group, including Taplow Manor hospital in Maidenhead. Allegations have been made by the claimants of unjustified physical restraint and forced feeding, various kinds of physical and verbal abuse, and negligent clinical decision-making as to their treatment at different times. The claims have attracted considerable media attention (see The Independent).
The hospitals operated by the Huntercombe Group were transferred to AYP in March 2021 under the terms of a transfer agreement, with existing members of staff being transferred to AYP under the TUPE Regulations. Under the terms of the transfer agreement, Huntercombe agreed to indemnify AYP in relation to any liabilities relating to the period prior to the transfer agreement. It was this period which is relevant to the majority of claims brought by former patients.
Initially, the claimants intimated their claims for the pre-transfer period against Huntercombe only. However, the Huntercombe Group subsequently indicated that it was undergoing restructuring and might cease to trade with considerable indebtedness, and that there was likely to be no effective public liability insurance cover in place in relation to the claims. As a result, the Claimant amended her Particulars of Claim in order to allege that AYP was liable to her for all torts carried out in the pre-transfer period by clinicians and other members of staff whose employment subsequently transferred from Huntercombe to AYP under the TUPE Regulations.
It is well-established (as a result of the decision of the Court of Appeal in Bernadone v Pall Mall Services Group [2001] ICR 197) that transferees are liable for any EL claims brought by transferring employees in relation to the period prior to transfer. However, the Claimant’s pleaded case was that a transferee would also be liable for public liability claims brought by third party non-employees in relation to the pre-transfer period, so long as the tort in question was carried out by an employee whose employment had transferred. AYP denied liability for all torts committed in the pre-transfer period, on the basis that the TUPE Regulations did not have the effect which the Claimant contended for. This issue was set down to be determined at a preliminary issue trial.
Notably, Huntercombe did not adopt the arguments of the Claimant at trial, instead maintaining a neutral position as to the issues raised.
In his reserved judgment, HHJ Bird agreed with the position adopted by AYP, holding that the TUPE Regulations did not serve to impose on a transferee liability for the torts of transferring employees. In particular:
- The judge adopted the guidance set out by the Supreme Court in Swift Trading v Robertson [2014] UKSC 50 on the interpretation of domestic legislation intended to implement an EU directive. In particular, courts are obliged to interpret such legislation in light of the wording and purpose of the directive and are not constrained by conventional rules of construction.
- The key phrase to be interpreted was whether a liability to a third party resulting from vicarious liability for an employee’s tort is a liability arising “in connection with” an employment contract. The judge noted the Claimant’s concession that something more than a mere ‘but for’ connection was required.
- The judge also noted that (i) the liability alleged to be transferred was owed to a claimant non-employee, (ii) the purpose of the directive was the safeguarding of employee rights after a transfer of employment, and (iii) vicarious liability is a form of no-fault secondary liability based on policy justifications.
- There were no authorities at High Court level or above which supported the Claimant’s interpretation. The only case where it had been held that vicarious liability of a transferor to a non-employee would be transferred under TUPE was the County Court decision in Doane v Wimbledon FC (HHJ Robinson). However, the judge held that Doane was wrongly decided because (i) the judge placed too heavy an emphasis on the literal words of the regulation, (ii) he also failed to consider if his construction of the regulation safeguarded any relevant rights of the employee, and (iii) the rights said to have been transferred in Doane were of an entirely different character to those transferred in Bernadone and were not fundamental to the employment relationship.
- The judge concluded that the connection between the rights or liabilities to be transferred and the employment contract must be a direct one, or alternatively it must be a vested (or contingent) right against a third party which arises purely as a result of such a direct liability. In this respect, the judge adopted the analysis set out in Sean Pong Tyres v Moore [2024] EAT 1, a decision of the Employment Appeal Tribunal.
- Drawing the threads together, the judge noted that the liability of the transferor here was not owed to an employee, and was a secondary no-fault liability arising under the doctrine of vicarious liability only. Such a liability did not have the kind of “direct” or “fundamental” connection with an employment contract which would be required for liabilities to pass.
Discussion
In his judgment HHJ Bird has re-stated what had been understood to be the orthodox position ever since the first iteration of the TUPE Regulations in 1981. In the more than 40 years since then, it has never successfully been argued at High Court level that the regulation which transfers liability arising “in connection with” an employment contract has the effect of transferring an employer’s vicarious liability for the torts of an employee.
It is notable, however, that the judge in his judgment refrained from making any express reference to the novelty of the Claimant’s arguments or to some of the extraordinary consequences which would arise if her interpretation had been upheld, some of which were canvassed in submissions before the judge. In particular:
- Extinguishing a tort victim’s right to recover damages from a tortfeasor and then substituting an innocent transferee is a drastic consequence which raises some fairly obvious concerns about distributive justice and the appropriate allocation of risk. One can see the policy logic that lies behind the determination that, when an employer decides to take over an existing undertaking with an existing workforce, it would be desirable that it assumes all the responsibilities of the former employer in relation to that workforce, so that for those employees who consent to the transfer, their rights are seamlessly transferred. But it is very hard to understand what policy would be served by transferring liabilities owed to third parties in tort.
- Furthermore, this fundamental change in the rights of the tort victim could take place without the victim’s consent or knowledge. The effect of the transfer of liability may be to cause severe injustice if the new defendant to the claim turns out to be less financially secure than the original defendant. The Claimant’s construction thus went far beyond the safeguarding of employee rights and would instead have drastically affected the rights of third parties which do not relate in any substantive way to an employment relationship.
- An example which was raised before the judge in oral argument was a large oil multinational company which employs a maintenance team to service an oil well. Owing to the human error of one of the maintenance employees, a valve is incorrectly fitted resulting in the risk of an oil spill occurring. Following the negligent work, the oil company decides to divest itself of its maintenance team and their employment is transferred to a small local business. When the oil spill subsequently ensues, under the Claimant’s construction it would be the small local business which would be liable for the spill rather than the oil company.
- It is hard to discern what policy objective would be achieved by transferring a huge liability from an actual tortfeasor to an innocent party solely as a result of the incidental and unrelated transfer of one particular employee. Why should the tortfeasor be insulated from the claims resulting from the oil spill simply because of the happy chance of an employee being transferred to a new undertaking after the negligent act? This would be an unfair disruption to the rights of the transferor and transferee, with an unjustified windfall for one and an unprincipled imposition of liability for the other. It would also be unfair to those third party claimants who would find that they had no solvent defendant to sue through no fault of their own.
Instead, the judge focused narrowly on the strength of the connection between the liability in question and the employment contract as being the determinative factor in deciding whether the liability transferred.
The Claimant has indicated that it will seek permission to appeal the judgment. Should such permission be granted, then it is anticipated that the Court of Appeal will wish to grapple with some of the practical implications of the Claimant’s suggested interpretation of the regulations. A successful appeal would result in a drastic change to the current understanding as to where the tortious liabilities of employers lie and it would have massive consequences for employers taking on any workforce under the TUPE Regulations.
