Employers and vicarious liability - the brakes go on

At the beginning of April 2020, the Supreme Court published two significant judgments in favour of Morrisons supermarket and Barclays Bank in relation to vicarious liability – where a party is accountable for the actions of another who is acting under their control.

Recent decisions of the Supreme Court, and lower courts, have led some to believe that the scope of vicarious liability has taken on the gathering speed of a runaway train, with increasing numbers of circumstances where businesses are held liable. Now, it seems, the train has stopped.

The Morrisons and Barclays decisions not only mark an apparent halt to the expansion of vicarious liability, but also provide clear guidance on what the law should be.

The clarification will be welcome news to businesses concerned about for who, and for what, they might be responsible.

Background

The principle of vicarious liability has existed for a long time, perhaps as far back as Roman law. The basis for its existence has not changed, but in recent years it has been necessary to adapt its application to reflect changes in the way we work.

The Supreme Court decisions in The Catholic Child Welfare Society & Ors v Various claimants & Ors[2012] UKSC 56 (Christian Brothers Case), Cox v Ministry of Justice [2016] UKSC 10 , Armes v Nottinghamshire Council [2017] UKSC 60 and Mohamud v WM Morrison Supermarkets PLC [2016] UKSC 11 appeared to provide a new way of interpreting this longstanding but, perhaps, no longer fit for purpose, doctrine.

Following those decisions and subsequent ones in the lower courts, it seemed that the range of people and acts for which an employer could be liable, was ever increasing.

The two well-worn phrases of vicarious liability; and ones with which we are almost all familiar, are "independent contractor" and "frolic of his own". These delineate the two strands of vicarious liability; the relationship and the activity.

With the Mohamud and Barclays decisions it seemed that those phrases were redundant and that the parameters they provided, gone.

However, the Morrisons and Barclays judgments issued by the Supreme Court in April 2020 tell us that those terms remain relevant.

Various claimants v. Morrison Supermarkets PLC

The issue here is whether the wrongdoer's acts were sufficiently closely connected to the employment to give rise to the employer's liability; i.e. the activity strand.

Morrisons' employee, Andrew Skelton, took personal information relating to fellow employees and sought to make it public. His intention was to harm Morrisons. He was aggrieved at an earlier disciplinary procedure and sought to take revenge on the organisation and one of the individuals involved in the disciplinary process. He had been given the information in order to facilitate an audit of Morrisons.

Traditionally this act would have been considered a "frolic of his own"; Skelton was not asked to publish the information and had not been negligent in doing so – he acted entirely of his own will.

However, relying on the Mohamud case, the Court of Appeal concluded that Skelton's actions formed a "seamless sequence" or "unbroken chain" of events with his employment duties.

In the Morrisons appeal, Lord Reed, President of the Supreme Court, sought to remedy what he categorised as "misunderstandings" which arose following the Mohamud judgment. He asserted that Lord Toulson's judgment in Mohamud did not change the law.

Indeed, the new principles apparently extracted from his judgment, depart from the very precedents he was expressly following.

Lord Reed confirmed that the wrongful act must be within the scope of the employee's duties. As set out in Lister v Hesley Hall Ltd [2001] UKHL 22; the fact that employment provides the opportunity to commit the act is not sufficient.

Lord Toulson's expressions, "seamless sequence" and "unbroken chain" of events relate to the capacity in which the wrongdoer in Mohamud was acting. In Mohamud, the wrongdoer was acting in his employer's business, i.e. serving a customer, when the assault took place.

Skelton was doing something entirely outwith the scope of his employment. Lord Toulson's reference to motive was directed only at the fact that the wrongdoer in Mohamud became enraged while carrying out his employment duties and that can be distinguished from the present case where Skelton's grievance caused him to commit an entirely new act.

Although there was a close temporal and causative link between Morrisons' provision of the data to Skelton and his subsequent disclosure of that, Lord Reed found that those factors were not sufficient to impose vicarious liability. He noted that there had been confusion between the activity, and relationship strands.

While questions about creation of the risk will be relevant to relationship – they are not relevant to activity. Lord Reed commented that this confusion has led to the perception that policy is driving the definition of relevant activity rather than legal principle.

Instead, the question for the court was whether Skelton's actions were "so closely connected with acts he was authorised to do [that they could be regarded as done] in the ordinary course of his employment"To come within the scope of the employment it is necessary that the actions were intended (however misguidedly) to be furthering the employer's business.

Here the answer was that Skelton's acts were not within the scope of his employment; Mr Skelton could not possibly have been considered as furthering his employer's business and so vicarious liability did not arise.

Various claimants v. Barclays Bank

Dr Bates had been accused of sexually assaulting Barclays' employees undergoing medical examinations. The issue in this case was whether Dr Bates, the wrongdoer, was in a relationship akin to employment with Barclays.

Although the relationship in fact bore all the hallmarks of Dr Bates being an independent contractor; the Court of Appeal found that it satisfied the principles set out by Lord Phillips in Christian Brothers and found Barclays liable for Dr Bates' actions.

The Court of Appeal judgment caused alarm and appeared to sound the death knell for the long-held belief that someone cannot be vicariously liable for the actions of an independent contractor. It seemed to extend the concept "relationship akin to employment" far beyond our traditional understanding of the term.

In the Supreme Court, Lady Hale clarified the test to be applied to relationships when determining vicarious liability.

She stated that Lord Phillips in Christian Brothers and then Lord Reed (who agreed with Lady Hale's judgement) in Cox and Armes were not seeking to remove the distinction between relationships of, or akin to, employment on the one hand and those of independent contractors on the other.

Instead, Lord Phillips' criteria, as refined by Lord Reed, are for difficult cases; where there is no obvious answer. Where it is clear that the wrongdoer is carrying out his own business; there can be no relationship akin to employment and therefore there is no need to apply the principles.

In this case, Dr Bates was evidently an independent contractor, and so Barclays is not vicariously liable for his actions.

Clarity achieved

These two decisions are immensely helpful. The last few years have seen the law of vicarious liability in a state of flux. There has been anxiety about the limits, if any, to this liability.

We now have clarity. The terms "frolic of their own" and "independent contractor", which previously seemed long gone and irrelevant, are now back, and apparently - should have never been away.