Success for Alexander Macpherson in Court of Appeal: ABC v Huntercombe
8th Sep 2026
Judgment was handed down today by the Court of Appeal in ABC v Huntercombe [2026] EWCA Civ 1161, 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 and Deborah Pyzer of Bevan Brittan) represented the successful Respondent, Active Young People (“AYP”).
Factual background
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 here).
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.
HHJ Bird (sitting as a judge of the High Court) decided the issue of whether liability for pre-transfer events transferred to AYP at a preliminary issue trial of April 2025. The judge held that the TUPE Regulations did not have the effect of transferring liability to AYP ([2025] EWHC 1000 (KB)). ABC secured permission to appeal from Singh LJ and the appeal was heard by the Court of Appeal (Bean LJ, Coulson LJ, Sir Launcelot Henderson) on 22 July 2026.
The legal issue
The appeal turned on regulation 4 of the TUPE Regulations, which provides that when a relevant TUPE transfer of an employment contract occurs “all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee”.
It has long been established that this regulation serves to transfer a liability in tort which a transferor employer has to a transferring employee. In Bernadone v Pall Mall Services Group [2001] ICR 197 the Court of Appeal held that a liability owed by an employer to an employee in tort was a liability which arose “in connection with” an employment contract. As a result the new transferee employer was liable to the employee instead of the former employer.
However, ABC argued that the regulation applied to public liabilities which an employer owed to non-employee third parties as well. ABC contended that the liability which Huntercombe had to her (a non-employee) was also a liability arising “in connection with” an employment contract. This was because the individual assaults and instances of restraint which she had undergone were carried out by Huntercombe’s employees. Huntercombe was only liable for these events because of the doctrine of vicarious liability, a doctrine which explicitly required a close connection between the act in question and the contract of employment. ABC accordingly submitted the natural and ordinary meaning of the words of the regulation would result in liability transferring and that the court should give effect to this meaning.
While there was no binding authority on the point, in a previous county court decision of HHJ Harrison (Doane v Wimbledon FC [2007] WL UK 2) the court had found that the regulation did have the meaning which ABC contended for. The judge in Doane had held that this met the stated purpose of the TUPE Regulations to protect employee rights, because an employee would be able to look to his current employer for an indemnity in relation to any third party tort claims and thus would benefit from liability having been transferred. ABC argued that Doane was correctly decided.
The judgment
The court dismissed ABC’s appeal, with Coulson LJ giving the leading judgment.
Crucially, Coulson LJ determined that when interpreting regulations intended to implement a European Directive the correct starting-point for the process of construction is to focus on the purpose of the Directive rather than the words of the regulations (see Schulte v Deutsche Bausparkasse Badenia AG [2003] All ER (EC) 420; Swift v Robertson [2014] UK SC 50). Once that purpose is identified, the court must strive to give it effect and is not constrained by the conventional rules of construction or by the literal words used in the regulation under consideration. The primary purpose of the Acquired Rights Directive in this case was the safeguarding of employee rights in the event of a change of employer.
Coulson LJ identified that the phrase “in connection with” is potentially very wide but also noted ABC’s concession that some limit had to be placed on the type and nature of connection required. He concluded that liability to third parties did not transfer as ABC had contended because:
- While the purpose of the directive is the safeguarding of employee rights, the vicariously liable employee in this case had no relevant right which would be protected by transfer. The mere fact that an employer is liable as well as an employee does not protect the employee from liability. An employee has no right to look to his employer to indemnify him against a claim, and instead an employer is in principle entitled to an indemnity from the tortfeasor employee (see Lister v Romford Ice [1957] AC 555).
- The vicarious liability of an employer is thus a legal construct which may serve to assist a third party claimant, but which has no substantive effect on the employee in question. That employee is in the same position whether sued by a claimant directly or obliged to indemnify an employer for sums already paid out. The central flaw of the judgment given in Doane was that it nowhere grappled with the fact that the negligent employee did not have any relevant right in respect of the transferor’s vicarious liability. Therefore no liability in relation to such a right could be transferred.
- On authority, the protean phrase “in connection with” had to be interpreted in the light of the purpose of the Directive. What constituted a relevant connection for the purpose of the regulation depended on whether there was a relevant right on the part of the employee under his employment contract. Here there was not.
- Furthermore, regulation 4 fell to be construed in the context of the Regulations as a whole. Regulation 11 sets out detailed provisions as to the information on existing and potential claims by employees which a transferor is obliged to provide to a transferee. By contrast there is nothing in the regulations addressing claims made by third parties. If Parliament had intended that liabilities for such third party claims was to transfer, then it would have implemented similar provisions relating to the passing of information in third party claims, so as to protect the transferee.
- The other provisions of the TUPE regulations deal with specific issues relating to employee rights, addressing such topics as collective bargaining, trade union recognition, dismissal from employment and pensions. The entire focus of the regulations is on employees’ enforceable rights, rather than the rights of third parties.
- More generally, it was counter-intuitive to conclude that the regulations would enable a third party to pursue a transferee in relation to events about which the transferee knew nothing and in relation to which the transferee had no involvement or control. There was no clear wording in the regulation authorising this departure from ordinary principle and no policy grounds which could justify such an arbitrary outcome.
- It was also notable that in the more than 40 years since the introduction of the TUPE Regulations no authority (other than Doane) had ever suggested that they had the effect which ABC contended for. If ABC’s position was correct, one would have expected the courts to have reached this outcome previously.
Discussion
The Court of Appeal’s decision is of massive importance to all those concerned with the sale or restructuring of a business which involve a TUPE transfer. In general, a transferee company will not carry insurance in relation to potential liabilities to third parties which arise because of events prior to the date of transfer. Public liability insurance is not mandatory, and so the transfer of such insurance rights would not satisfactorily address the problem. On ABC’s construction such a transferee would be opening itself up to potential liabilities of an unknown extent whenever the employment of a group of employees transfers. Coulson LJ is surely right when he held that it would be very surprising if the TUPE Regulations had had this effect for over 40 years without this position ever having been established previously. The prospect of transferees being open to an entire raft of unexpected liabilities that they had not planned for has receded.
ABC’s proposed interpretation would also have problematised the investigation and pursuit of historic liability claims. A claimant would presumably have had to find out whether a tortfeasor employee had transferred to a new employer before being able to identify the correct employer to sue. Defendant EL insurers would have been able to escape liability entirely by pointing to such a transfer. This is not how EL claims are currently pursued and defended, and nor has it been over the decades since TUPE was introduced.
The judgment is also instructive on the fluid and non-conventional process to construing regulations which are derived from European Directives. Despite Brexit, these are principles which will be important for many years to come.
