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Simon Anderson considers the doctrine of vicarious liability following the recent Supreme Court decisions in the Morrisons and Barclays group litigation

Introduction

The doctrine of vicarious liability seeks to impose strict liability on an innocent party where the wronged individual has no redress against the tortfeasor. It is an area of law in which there have been no fewer than eight decisions of the House of Lords and the Supreme Court so far this century.

In chronological order they are Lister v Hesley Hall [2002] 1 AC 2015, Dubai Aluminium Co Ltd v Salaam [2003] 2 AC, Majrowski v Guy’s and St Thomas’s NHS Trust [2006] UKHL 34, Various Claimants v Catholic Welfare Society [2012] UKSC 56 (generally known as the Christian Brothers case), Cox v Ministry of Justice [2016] UKSC 10, Mohamud v Wm Morrison Supermarkets [2016] UKSC 11, Wm Morrison Supermarkets v Various Claimants [2020] UKSC 12 and Barclays Bank v Various Claimants [2020] UKSC 13. Equally as remarkable is the fact that there have been no dissenting judgments.

The topic under discussion is the present state and future direction of the law on vicarious liability, having regard to the two most recent decisions of the Supreme Court in the Morrisons and Barclays group litigation.

The Policy Background

In her speech to the PIBA annual conference in March 2019 Baroness Hale rhetorically asked ‘Is there any other field in which pragmatism has been more dominant than principle – or, to put it another way, policy has more obviously prevailed over doctrine – in recent years?’

It was in the Christian Brothers case that Lord Phillips identified five policy reasons for why an employer is liable when the employee commits a tort in the course of his employment.

(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.

The policy reasons making it fair, just and reasonable to impose vicarious liability should not be confused with the criteria for doing so. Although as Lord Hobhouse acknowledged in Lister ‘One cannot, however, consider the one without the other and the two sometimes overlap’. Let us therefore consider the criteria.

The Two Stage Enquiry

Two elements have to be shown before one person can be made vicariously liable for the torts committed by another. The first is a relationship between the two persons which makes it proper for the law to make the one pay for the fault of the other. Historically, and leaving aside relationships such as agency and partnership, that was limited to the relationship between employer and employee, but that has now been broadened. That is the subject matter of the Christian Brothers, Cox and Barclays cases.

The second is the connection between that relationship and the tortfeasor’s wrongdoing. Historically, the tort had to be committed in the course or within the scope of the tortfeasor’s employment, but that too has now been broadened. That is the subject matter of the Lister, Dubai Aluminium, Christian Brothers and two Morrison’s cases.

The First Stage

The established test is to ask: is the tortfeasor carrying on business on his own account, or does there exist a relationship akin to employment with the defendant?

The Christian Brothers case considered the acts of lay catholic brothers who were not employed by the school at which they taught but were instead part of a separate institute. The issue was whether the relationship between the individual brothers who taught at the school and the institute was such as to give rise to vicarious liability on its part for acts of sexual abuse that they had committed in school.

It was held that where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is akin to that between an employer and an employee.

Whilst Lord Phillips identified the five policy reasons underpinning this principle, in giving his reasons he undertook what might be described as a balance sheet approach identifying those factors that pointed towards and against the finding of a relationship akin to employment. Significantly, he did not refer to these policies when articulating the Supreme Court’s decision.

He explained that the relationship between the teaching brothers and the institute had many of the elements, and all the essential elements, of the relationship between employer and employees.

(i) The institute was subdivided into a hierarchical structure and conducted its activities as if it were a corporate body.

(ii) The teaching activity of the brothers was undertaken because the provincial directed the brothers to undertake it.

(iii) The teaching activity undertaken by the brothers was in furtherance of the objective, or mission, of the institute.

(iv) The manner in which the brother teachers were obliged to conduct themselves as teachers was dictated by the institute’s rules.

The relationship between the brothers and the institute differed from that of the relationship between employer and employee in that: (i) The brothers were bound to the institute not by contract, but by their vows. (ii) Far from the institute paying the brothers, they in fact entered into deeds under which they were obliged to transfer all their earnings to the institute. Neither of these differences were thought to be material. Indeed, they rendered the relationship between the brothers and the institute closer than that of an employer and its employees. Accordingly, the ‘relationship akin to employment’ test was satisfied.

In Cox v The Ministry of Justice [2016] UKSC 10 the claimant, who was working as the catering manager in a prison, was moving supplies when a bag of rice was dropped spilling its contents on the floor. She instructed the prisoners to stop work until the rice was cleared. Ignoring her instruction, one prisoner attempted to get past and dropped a heavy bag of rice on her back. She brought proceedings against the Ministry of Justice claiming damages for personal injury on the basis that it was vicariously liable for the negligence of the prisoner.

In handing down the unanimous decision of the Supreme Court Lord Reed referred to the five factors identified by Lord Phillips in the Christian Brothers case. However, he refined them down to three key reasons for imposing liability. First, the tort will have been committed as a result of activity being taken by the employee on behalf of the employer. Second, the employee’s activity is likely to be part of the business activity of the employer. Third, by employing the employee to carry on the activity the employer will have created the risk of his wrongdoing.

Lord Reed then went onto apply these three reasons to the facts of the case and concluded, first, that the prisoners working in the prison kitchens were integrated into the operation of the prison; second, that the activities assigned to them by the prison service formed an integral part of the activity of the prison by providing meals for prisoners; third, they were placed by the prison service in a position where there was a risk that they may commit a variety of negligent acts within the field of activities assigned to them.

What Lord Reed failed to do was to apply the test set out by Lord Phillips in the Christian Brothers case and specifically ask whether there was a relationship akin to employment. He appeared to make a decision based not on legal principle, but on policy. In doing so he prepared the ground for the remarkable extension of the law made both at first instance and in the Court of Appeal in the Barclays litigation for he had in effect transmuted policy into law.

The facts of Barclays Bank v Various Claimants [2020] UKSC 13 can be simply summarised. Between 1968 and 1984 it sent 126 female claimants to the home of a Dr Bates for the purposes of determining whether or not they were medically fit for work. He was not employed by the bank and was paid a single fee per report. The medical pro forma was provided by the bank, although in every other respect Dr Bates acted with complete autonomy.

Both Mrs Justice Nicola Davies and the Court of Appeal disregarded the fact that Dr Bates was on any conceivable view an independent contractor. They instead found for the claimants by applying the policy considerations identified by Lord Phillips in the Christian Brothers case.

In giving the unanimous decision of the Supreme Court Lady Hale explained ‘The question… is, as it has always been, whether the tortfeasor is carrying on business on his own account or whether he is in a relationship akin to employment with the defendant. In doubtful cases, the five “incidents” identified by Lord Phillips may be helpful in identifying a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability. Although they were enunciated in the context of non-commercial enterprises, they may be relevant in deciding whether workers who may be technically self-employed or agency workers are effectively part and parcel of the employer’s business. But the key, as it was in Christian Brothers, Cox and Armes, will usually lie in understanding the details of the relationship. Where it is clear that the tortfeasor is carrying on his own independent business it is not necessary to consider the five incidents.’

As far as the Supreme Court was concerned Dr Bates worked for the bank in much the same way as the company hired to clean its windows or hired to audit its books. He was in business for himself as a medical practitioner with a portfolio of patients and clients, one of which was the bank. In other words, there was no relationship akin to employment.

At the end of her speech Lady Hale sounded a word of caution to those who may wish to align employment law with the law of vicarious liability. Although it may be useful in identifying those who may truly be said to be independent contractors, it would be going too far down the road of tidiness to align the complex and developing law of employment status as set out in Pimlico Plumbers Ltd v Smith [2018] UKSC 29 with the ‘relationship akin to employment’ test.

The Second Stage

The second stage involves answering two questions. The first question is what functions or ‘fields of activities’ have been entrusted to the wrongdoer? In other words, it is necessary to identify the acts that the individual was authorised to do. The second question is whether there is sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the defendant to be held liable under the principles of social justice identified in earlier authorities?

The wellspring of the modern English law on vicarious liability is Lister v Hesley Hall Ltd [2001] UKHL 22. Not only is this our dropping off point for the purposes of understanding the modern law but it is submitted that judgments of the lower courts that pre-date it should be treated with caution unless approved in either this or subsequent decisions of the Supreme Court.

In Lister the House of Lords gave prominence to the decisions of the Canadian Supreme Court in the cases of Bazley v Curry 174 DLR (4th ed) 45 and Jacobi v Griffiths 174 DLR (4th) 71.

In Bazley Madam Justice McLachlin stated: ‘The fundamental question is whether the wrongful act is sufficiently related to conduct authorised by the employer to justify the imposition of vicarious liability. Vicarious liability is generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom, even if unrelated to the employer’s desires.’

In Lister v Hesley Hall Ltd [2001] UKHL 22 a school warden was responsible for the day to day running of a boarding house and for maintaining discipline. He lived there with his wife and on most they were the only members of staff on the premises. He supervised the boys when they were not at school and the boarding house was intended to be a home for the boys, rather than simply an extension of the school environment. Unbeknown to the school, the warden systematically sexually abused the appellants at the boarding house.

The House of Lords said that the correct approach is to concentrate on the relative closeness of the connection between the nature of the employment and the particular tort.

It held that the school was responsible for the care and welfare of the boys and had assumed a relationship to them, which imposed specific duties in tort. It entrusted that responsibility and the performance of those duties to the warden. He was employed to discharge the school’s responsibility to the boys. He did not merely take advantage of the opportunity which employment at a residential school gave him. He abused the special position in which the school had placed him to enable it to discharge its own responsibilities. There was, accordingly, a very close connection between the torts of the warden and his employment.

Lister explicitly overruled the judgment of the Court of Appeal in Trotman v North Yorkshire County Council [1999] LGR 584 in which a vulnerable Claimant was sexually abused by his deputy headmaster while on a school trip abroad. The Court of Appeal had held that sexual assaults were far removed from an unauthorised mode of performing a teacher’s duties – such behaviour amounted to an independent act of self-gratification.

It was said by Lord Steyn that it is ‘no answer to say that the employee was guilty of intentional wrongdoing, or that his act was not merely tortious but criminal, or that he was acting exclusively for his own benefit, or that he was acting contrary to express instructions, or that his conduct was the very negation of his employer’s duty’.

Similarly, in the Christian Brothers case Lord Phillips said that abusing the boys in their care was diametrically opposed to the institutes objectives but, paradoxically, that very fact was one of the factors that provided the necessary close connection between the abuse and the relationship between the brothers and the institute. They were trusted to care for their charges and abused that trust.

In Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48 the House of Lords applied Lister and stressed the importance of considering the closeness of the connection between an employee’s duties and his wrongdoing. Once a sufficient connection is established, it is immaterial whether the wrongdoing in question was unauthorised or expressly forbidden by the employer or civilly or criminally illegal. It was emphasised that an employer ought to be liable for a tort which can fairly be regarded as a reasonably incidental risk to the type of business he carries on.

In Mohamud v Wm Morrison Supermarkets [2016] UKSC 11 the claimant entered a petrol kiosk to ask whether he could print some documents from a USB stick. Mr Khan, who was behind the kiosk desk, was employed to see that petrol pumps and the kiosk were kept in good order and to serve customers. He refused the claimant’s request in a rude manner, at which point the claimant protested. Mr Khan responded using foul, racist and threatening language and ordered the claimant to leave. The claimant returned to his car followed by Mr Khan. Before he could drive off, Mr Khan opened the passenger door, told him never to return and punched him on the left temple. The claimant, who had not done anything which could be considered aggressive or abusive, was then set upon by Mr Khan and suffered serious injuries.

Lord Toulson set out the law in the following terms: The first question is what functions or ‘field of activities’ have been entrusted by the employer to the employee, or, in everyday language, what was the nature of his job. As has been emphasised in several cases, this question must be addressed broadly. Secondly, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice.

The Supreme Court in Mohamud held that it was Mr Khan’s job to attend to customers and to respond to their inquiries. His conduct was inexcusable but within the field of activities assigned to him. It was not right to regard him as having metaphorically taken off his uniform the moment he stepped from behind the counter. He was following up on what he had said to the claimant. It was a seamless episode. This was not something personal between them; it was an order to keep away from his employer’s premises, which he reinforced by violence. In giving such an order he was purporting to act about his employer’s business. It was a gross abuse of his position, but it was in connection with the business in which he was entrusted.

Lord Toulson believed that this was not something personal between Mr Khan and the claimant, he added that Mr Khan’s ‘motive was irrelevant’. This was subsequently and mistakenly understood to have been stated as a point of principle.

In Wm Morrison Supermarkets v Various Claimants [2020] UKSC 12 a member of the senior audit team, Mr Skeleton, legitimately possessed the name, address, gender, date of birth, phone numbers, national insurance numbers, bank sorting code, bank account number and salary of 9,263 members of staff. He had been authorised to provide the data to KPMG. He had not been granted permission to post it on a publicly accessible file sharing website. In doing so he used the name and date of birth of a fellow employee to create a false email account and thereby frame him for the crime.

In finding Morrisons to be vicariously liable Langstaff J was influenced by Lord Toulson’s remark that the motive of the employee was beside the point. However, in the final paragraph of his judgment he gave permission to appeal for the reason that the wrongful acts of Mr Skelton were intended to cause harm to the defendant’s business, and thereby potentially rendered the court an accessory in furthering his criminal aims.

In giving the unanimous decision of the Supreme Court and overturning the previous judgments of Langstaff J and the Court of appeal, Lord Reed identified four errors. First, the public disclosure of data was in no way part of Mr Skelton’s field of activities. Second, the five policy factors in the Christian Brothers case were only relevant to the question of whether there was a relationship akin to employment. Third, a temporal link between transmitting the data to KPMG and posting it on the internet did not satisfy the close connection test. Fourth, the fact that he was motivated by a personal vendetta was highly material. He later suggested that the mere fact that Mr Skelton’s employment provided him with the opportunity was insufficient. He had clearly departed from the scope of his employment.

Lord Reed cited with approval the famous statement of principle in Joel v Morison (1834) 6 C & P 501 in which Parke B said that if an employee ‘was going on a frolic of his own, without being at all on his mater’s business, the master will not be liable.’ He also identified a similar passage in Dubai Aluminium in which Lord Nicholls said ‘The matter stands differently when the employee is engaged only in furthering his own interests as distinct from those of his employer.’

Examples of Non-Liability

In Wm Morrison Supermarkets v Various Claimants Lord Reed provided two helpful examples of non-liability.

In Attorney General of the British Virgin Islands v Harwell [2004] UKPC 12 a police officer left his post and went into a bar where his partner worked as a waitress and, in a fit of jealous rage at finding her there with another man, fired a number of shots at both of them with his service revolver. A bystander was injured and claimed damages from the Government. The contention that it was vicariously liable was rejected on the ground that the officer had deliberately abandoned his duties and his post and embarked on a vendetta of his own. Hence his wrongful use of the gun was not something done in the course of his employment.

In Warren v Henlys Ltd [1948] 2 All ER 935 a customer at a petrol station had an angry confrontation with the attendant, who wrongly suspected him of trying to make off without payment. The customer became enraged and, after paying for the petrol, he saw a passing police car and drove off after it. He complained to the police officer and persuaded him to visit the petrol station. The officer listened to both men and said that it was not a police matter. The customer said that he would report the attendant to his employer and the attendant punched the customer in the face, knocking him to the ground.

By the time that the assault happened the customer’s business with the petrol station had ended, the petrol had been paid for and the customer had left the premises. When he returned with the police officer it was for the purpose of making a personal complaint about the attendant. The attendant reacted violently to being told that the customer was going to report him to his employer, but there was no basis for holding the employer vicariously liable for that behaviour. At the time of the incident the relationship between them had changed from that of customer and representative of the petrol company, to that of a person making a complaint to the police and the subject of the complaint. The assault was an act of personal vengeance in relation to a personal matter affecting his personal interests.

Examples of Liability

Having provided two examples of non-liability, Lord Reed expressed approval for the judgment of the Court of Appeal in Bellman v Northampton Recruitment Ltd [2018] EWCA Civ 2214.

The claimant in that case was an employee of a company run by its managing director. The managing director arranged for the company to pay for a staff Christmas party, and for accommodation and drinks for the staff at a hotel near the venue where the party was being held. At the hotel, the conversation turned to matters of work. The managing director became annoyed after being questioned about the appointment of a new employee. He summoned the employees who were at the hotel and began to lecture them on how he owned the company, that he was in charge and would do what he wanted to do, that the decisions were his to take and that he paid their wages. The claimant challenged a statement made by the managing director about the new appointment. The managing director responded by telling him that he made the decisions in the company and assaulting him causing a serious head injury.

The Court of Appeal held that there was a sufficiently close connection between the managing director’s authorised activities and his commission of the assault to justify the imposition of vicarious liability. His remit included the maintenance of his authority over the staff. At the time when he committed the assault, he was purporting to act as managing director, and was asserting his authority in front of members of staff, over a subordinate employee who had challenged his managerial decision-making.

It is a matter of regret that in neither of the Morrisons appeals did the Supreme Court considered whether the Court of Appeal judgment in Graham v Commercial Bodyworks Ltd [2015] EWCA Civ 47 was correct.

Mr Graham was badly burned when a colleague, who had been one of his best friends and who had obtained the job with the defendant employer for him, sprayed or threw thinners over him and applied a cigarette lighter. Immediately prior to this event the two men had been seen larking around daubing putty over each other. The thinners were provided for their use by the employer during the course of their work as vehicle repair technicians. The cigarette lighter, however, belonged to another colleague and had been borrowed by the assailant immediately before the incident.

The employer was found not to be vicariously liable. The employee’s conduct in putting the substance on the overalls was not sufficiently closely connected with his work. The fact that the employee was employed to work with the inflammable substance and was obliged to do so carefully could not be said to have created a risk sufficient to establish vicarious liability.

In light of the decision in Mohamud it is doubtful whether Graham still stands as correct. On the one hand the employer expressly forbade the use of use of any potential sources of ignition in the workshop, therefore the assailant was on a frolic of his own when he went to fetch a lighter. On the other hand, the safe handling of flammable substances was inherent in his work, and the fact that he disobeyed his training only serves to reinforce this point. The incident happened on the employer’s premises, in its time, using its materials for an unauthorised purpose. It created the risk of ‘workshop horseplay’ and it could hardly complain of unfairness if it had been fixed with vicarious liability.

Conclusion

‘The law of vicarious liability is on the move.’ So stated Lord Phillips in the Christian Brothers case. In Cox Lord Reed suggested that it had yet to come to a stop. Contrast these remarks with Lord Toulson’s observation in Mohamud that there was ‘no need for the law governing the circumstances in which an employer should be held vicariously liable for a tort committed by his employer to be on the move. There had been no changes in societal conditions which require such a development.’

Perhaps the final word on the subject should be given to Lord Nicholls, who in Dubai Aluminium said that a lack of precision is inevitable, given the infinite range of circumstances where the issue arises. The crucial feature or features, either producing or negating vicarious liability, vary widely from one case or type of case to the next. Essentially the court makes an evaluative judgment in each case, having regard to all the circumstances and, importantly, having regard also to the assistance provided by previous court decisions.

Simon Anderson