Vicarious Liability in the Supreme Court: Can we finally say it is no longer on the move?

By Prof Paula Giliker, Professor of Comparative Law (University of Bristol Law School)

In Various Claimants v Catholic Child Welfare Society (CCWS) [2012] UKSC 56, Lord Phillips famously stated that “The law of vicarious liability is on the move.”  This leading case also made it clear that two elements have to be shown before one person can be made vicariously liable for the torts committed by another:

1. a relationship between the two persons which makes it proper for the law to make the one pay for the fault of the other; and
2. a connection between that relationship and the tortfeasor’s wrongdoing.

Later cases such as Cox v Ministry of Justice [2016] UKSC 10 and Armes v Nottinghamshire CC [2017] UKSC 60  have shown that the relationship, while primarily that of employer and employee, can extend to relationships akin to employment, including the relationship between a priest and his bishop[1] and a local authority and the foster parents to whom it entrusts children in care.  The Supreme Court in Mohamud v Wm Morrison Supermarkets Plc [2016] UKSC 11 also broadened the “connection” test to impose vicarious liability for torts which were connected to the field of activities of the employee, and where there was a sufficient connection between the position in which the employee was employed and his wrongful conduct to make it right for the employer to be held liable.

Two comments may be made straightaway.  First, the UK Supreme Court has delivered four judgments on this topic in just five years – an extraordinary level of judicial activity.  Secondly, all of these cases extend vicarious liability beyond its previous position.

The question then is when would this stop?  Was vicarious liability to be eternally on the move?  This is the question the two judgments of the Supreme Court on 1 April 2020 decide.  The two cases discussed below deal with questions of liability at both stages of the vicarious liability test.  They therefore represent key decisions which lawyers (and law students) need to know.

(1) The relationship test

In Barclays Bank plc v Various Claimants [2020] UKSC 13, a doctor, who worked from home, undertook, as a minor part of his practice, health checks for existing or potential employees of Barclays Bank.  Barclays would arrange the appointment with Dr Bates (now deceased), giving him a form to fill in.  While not paid a retainer, he was paid a fee per examination.  Many of the potential employees were young women and it was alleged that he had sexually assaulted 126 claimants.  The question for the court was whether, while not a bank employee as such, he could be said to fit in the category of relationships “akin to employment” given that the principal benefit of the examination was to ensure fit entrants, able to give long service to Barclays Bank.

The case raised two fundamental questions.  First, how wide is the category of relationships “akin to employment”?  Secondly, given that vicarious liability does not apply to independent contractors, to what extent can there be said to be a clear distinction between employees/those akin to employees and workers classified as independent contractors?  The Court dealt with this by going back to basics. In so doing, it reiterated the classic distinction between work done for an employer as part of the business of that employer and work done by an independent contractor as part of the business of that contractor: [22-24].  Extending vicarious liability to relationships akin to employees, it asserted, did not erode this key distinction.   To determine whether someone was “akin to an employee”, therefore, the court should focus on the details of the relationship and, fundamentally, whether the tortfeasor was carrying out his own independent business. On the facts, the doctor was not, in the view of the Court, “anything close to an employee” ([28]) but equivalent to a window-cleaner hired to clean the bank’s windows or an auditor hired to audit its books. The Court also noted that Dr Bates was free to refuse an examination should he wish to do so: “He was in business on his own account as a medical practitioner with a portfolio of patients and clients. One of those clients was the Bank”: [28].

The message then is that the “akin to relationship” test should not be extended too far lest it endanger the separate category of independent contractors.  The focus should be on the details of the relationship (here characterised very differently to the Court of Appeal) and not on policy.  Echoes of the position of the Supreme Court in Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4 seem evident.

(2) The connection test

In Wm Morrison Supermarkets plc v Various Claimants [2020] UKSC 12, a different question arose.  Here, a senior auditor (Skelton), employed by Morrisons, had a grudge against his employer.  He used his home computer to place confidential data about Morrisons employees on the internet.  The employees whose data had been disclosed sued Morrisons.  The lower courts imposed vicarious liability on Morrisons despite the fact that Skelton’s motive in committing the wrongdoing was to harm his employer.  A sufficient connection was found between the tasks entrusted to Skelton and his wrongful conduct.  The justification for such a generous approach was stated to be the broad and evaluative approach encouraged by Lord Toulson in Mohamud.  The question for the Court this time was to clarify just how broadly the test in Mohamud should be interpreted.

In allowing Morrisons’ appeal, Lord Reed significantly started his judgment by welcoming the opportunity to address “the misunderstandings” which had arisen since Mohamud. He crucially stated that Lord Toulson’s leading judgment was not intended to effect a change in the law. It must be read as a whole, he warned, and phrases should not be taken out of context ([17]).  Again, the Court went back to basics – Lister v Hesley Hall Ltd [2001] UKHL 22, but also the House of Lords decision in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48 which set out the “close connection” test for determining whether the tort was in the course of employment.  Lord Toulson, it was stated, was not suggesting any departure from the approach adopted in Lister and Dubai Aluminium.  This we might take with a pinch of salt.  Lord Nicholls in Dubai required that the wrongful conduct must be so closely connected with the authorised acts of the employee that they could be fairly and properly regarded as done in the course of employment: [23].  Lord Toulson in Mohamud sought to find a sufficient connection between the “field of activities” of the employee and the tort.  Is it convincing to argue that Lord Toulson was merely expressing Lord Nicholls’ view in the “simplest terms”? This was certainly not the view of the lower courts which regarded Lord Toulson as liberalising the close connection test.  This view, declared the Court, was simply a misunderstanding.  At no point should Lord Toulson be seen as suggesting that all that was involved was a temporal or causal connection between the employment and the wrongdoing.  It was not a test based on loose ideas of social justice.

The “clarification” of Mohamud perhaps needs to be regarded in more instrumental terms.  Mohamud had been used as a springboard for an extension of vicarious liability in cases where it is difficult to find a close connection between the tort and the job of the tortfeasor.[2]  By interpreting Mohamud in the light of Dubai Aluminium, the Court was able to find that Skelton’s disclosure of data was not part of his field of activities – a mere causal connection between his post and the tort would not suffice.  Skelton’s disclosure of the data was not, said the Court, so closely connected with acts he was authorised to do that his wrongful disclosure might fairly and properly be regarded as done in the ordinary course of his employment. We can note the change of wording here – this comes from the test in Dubai Aluminium, not Mohamud.  Importantly, the Supreme Court also held that, despite certain comments in Mohamud, the personal motivation of Skelton was relevant.  Here Skelton had not been engaged in furthering his employer’s business but was pursuing a personal vendetta.  This, and the absence of any previous case in which an employer had been held vicariously liable for wrongdoing which was designed specifically to harm the employer, helped convince the Court that no liability should be found.

Again, the clear message here is that the principled approach of Lister and Dubai should be preferred to any “misguided” broader reading of Mohamud.

(3) Where does this leave policy?

In CCWS, [35] Lord Phillips had listed “a number of policy reasons” usually making it fair, just and reasonable to impose vicarious liability upon an employer for the torts committed by an employee in the course of his employment.  These 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.”

Undoubtedly these policy rationales have been influential since 2012 and facilitated an expansion in the application of vicarious liability.  However, in the 2020 cases, the UK Supreme Court sought to assert principle above policy.  In Morrisons, for example, Lord Reed remarked that:

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 … Following that approach, cases can be decided on a basis which is principled and consistent. [24] (emphasis added).

The mere fact that the five factors listed by Lord Phillips were all present in the case was “nothing to the point” ([31]). Equally, in Barclays Bank, policy concerns were regarded as a fall-back if all else fails, not a starting point for the relationship test.  Only where the resolution of the relationship test is unclear should the Court refer to the policy arguments raised by Lord Phillips in CCWS to see if the relationship was sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability: [27].

Conclusion

Will these decisions halt or at least slow down the runaway train of vicarious liability?  My hope is that they will do exactly that.  By returning to precedent, incremental development and earlier cases focusing on relationships factually analogous to employment and torts closely connected to the job of the tortfeasor, the Supreme Court provides a valuable antidote to the rash of cases applying extremely generous interpretations of the doctrine of vicarious liability imposing disproportionate burdens on employers.  The message seems clear – vicarious liability should no longer be on the move.  Hopefully the lower courts will heed this message.

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[1] E v English Province of Our Lady of Charity [2012] EWCA Civ 938.

[2] Consider Levitt v Euro Building [2019] EWHC 2926 (QB): sufficient connection found where tortfeasor hit a fellow worker on the head with a scaffolding pole during an argument on a building site.