Lecture handout - Vicarious Liability PDF

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lecture on vicarious liability including notes and cases...

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LECTURES 9 & 10: Vicarious Liability BASIC READING *H&R, chap 20 AND *L&O, chap 15 (NOTE: Both chapters are indicated as essential reading) * Barclays Bank v Various Claimants [2020] UKSC 13 * Cox v Ministry of Justice [2016] UK SC 10 * Lister v Hesley Hall [2001] UKHL 22 *Mohamud v Wm Morrison Supermarkets Plc [2016] UKSC 11 *Various Claimants v Catholic Child Welfare Society [2012] UKSC 56Britain of the Institute of Brothers of the Christian Schools [2020] EWHC 1914 *WM Morrison Supermarkets Plc v Various Claimants [2020] UKSC 12JXJ v The Province of Great Please take note of the case law listed throughout the lecture handout

FURTHER READING Bell, ‘The Basis of Vicarious Liability’ (2013) 72 CLJ 17 Giliker, ‘Lister Revisited: Vicarious Liability, Distributive Justice and the Course of Employment’ (2010) 126 LQR 521 Lord Hope, ‘Tailoring the Law on Vicarious Liability’ (2013) 129 LQR 514 Tofaris, ‘Vicarious Liability and Non-delegable Duty for Child Abuse in Foster Care: A Step Too Far?’ Williams, ‘Vicarious Liability of the Roman Catholic Church for Sexual Abuse by a Priest’ (2010) 26 PN 113 Kidner, ‘Vicarious Liability: For whom Should the “Employer” be Liable?’ (1995) 15 LS 47

THIS HANDOUT IS RELEVANT TO THE TWO LECTURES ALLOCATED TO VICARIOUS LIABILITY OUTLINE OF LECTURES 1. 2. 3.

4.

Basic principles of vicarious liability Justifying vicarious liability Establishing vicarious liability: a) Relationship Requirement: Employer-employee relationship or a relationship ‘akin to employment’ b) A tortious act c) Connection requirement: ‘In the course of employment’ Theoretical underpinnings of vicarious liability

1. Basic principles of vicarious liability Vicarious liability = secondary liability. Liability is imposed on someone who is blameless. In this respect, vicarious liability is a mechanism which allows you to sue someone other than the tortfeasor (ie, the person who committed the tort). This is usually their employer BUT it

can arise in other situations such as in partnerships/agency (Dubai Aluminium v Sanlaam [2003]).

2. Justifying vicarious liability There is no single universally accepted and applicable argument for justifying vicarious liability, but the most accepted justifications are: • The ‘benefit and burden’ principle: the employer’s business obtains the benefit arising from the employee’s work so it should also bear the costs of damages resulting from the enterprise. • The employer is in the best position to know, or to find out, the nature and cost of accidents associated with the business and to take insurance against these risks. • The employer has a responsibility for ensuring that its employees are effectively trained to carry out their work safely. • The principle of vicarious liability means that the employer is more likely to be careful in selecting employees and to provide incentives to encourage them to take care. • The effect of the employer bearing the cost of liability insurance is to spread the loss, as the extra cost can be passed on to the public in the form of higher prices. • The employer is better able to pay compensation and is also more likely to have liability insurance: the ‘deep-pocket’ argument.

3. Establishing vicarious liability The following three requirements establish vicarious liability: a) There must be an employment relationship between the defendant and tortfeasor OR a relationship akin to an employment relationship between the defendant and tortfeasor b) The tortfeasor must have committed a tort. c) There must be a connection between that relationship and the tortfeasor’s tort: With employment relationships the connection between the employment relationship is that the employee committed the tort in the course of his employment. Think of these as three different hurdles that must be overcome in order to establish vicarious liability!

a) HURDLE ONE: Is there a relevant relationship between the defendant and the tortfeasor? Employee-employer relationship Vicarious liability usually requires that the tortfeasor be an employee of the defendant. By contrast, it is a foundational principle of this area of the law that vicarious liability will never arise where the tortfeasor is an independent contractor. How to establish an employment relationship? Ready Mixed Concrete v Ministry of Pensions and National Insurance [1968]: contract of service = A agrees that, in consideration of some form of remuneration, he will provide his own work and skill in the performance of some service for B.

BUT: look at the actual relationship rather than its form… the parties’ own characterisation of the relationship is not determinative Market Investigations Ltd v Social Security [1969] p 184-185: ‘no exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases’. (Cooke J The courts have taken a variety of factors into account: • • •

control: Stephenson Jordan & Harrison Ltd v McDonall & Evans [1952] integration: JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust [2012] However, the courts usually rely on a combination of both tests sometimes called the ‘economic reality’ test: Market Investigations Ltd v Social Security [1969]

Employee is hired out to another company: Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Ltd [1947] HL and Hawley v Luminar Leisure Ltd [2006] CA Dual vicarious liability: Viasystems v Thermal Transfer Ltd [2005]

Relationship ‘akin to employment’ Courts now permit in seemingly exceptional cases liability where the person to be made liable and the wrongdoer are in a relationship ‘akin to employment’. Introduced by JGE v English Province of Our Lady of Charity [2011]. How to establish a relation ‘akin to employment’? Various Claimants v Catholic Care Welfare Society [2012]: Five incidences that certain nonemployment relationship might be treated as akin to employment: I. The employer is more likely to have the means to compensate the victim than the employee and can have expected to have insured against that liability. II. The tort will have been committed as a result of the 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 out 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 Recognition of a novel category of relationships ‘akin to employment’ by reference only to a list of five broadly framed characteristics/incidences was bound to cause difficulties and in two subsequent cases the Supreme Court has sought to clarify matters: • Cox v Ministry of Justice [2016] UK SC 10, [2016] AC 660: ‘The result of this approach is that a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by the defendant and for its benefit … and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question’ (Lord Reed, [20])

See further: Armes v Nottinghamshire County Council [2017] •

Barclays Bank v Various Claimants [2020] UKSC 13 (NB: NEW DEVELOPMENT NOT COVERED IN TEXTBOOK!) Lady Hale: When the tortfeasor was ‘in business on his own account’ the relationship was not ‘akin to employment’ = confirming the longstanding/classic distinction between employment and relationships akin or analogous to employment, on the one hand, and the relationship with an independent contractor, on the other hand. It had never been intended that the five factors ‘were the only criteria by which to judge the question’ = shift away from reliance on Lord Phillips’s five factors towards an enquiry focused on the particularities of the relationship between the tortfeasor and the defendant: ‘the details of the relationship, and its closeness to employment’ Approach applied: JXJ v The Province of Great Britain of the Institute of Brothers of the Christian Schools [2020] EWHC 1914

In light of recent developments, it is suggested that you adopt the following approach when considering whether a relationship gives rise to vicarious liability: I. Apply the conventional distinction between ‘contract of employment’ and ‘contract for services’. If that produces a clear classification of the tortfeasor as either employee or independent contractor, then that concludes the analysis. II. If it does not, then consider the relationship between the tortfeasor and the defendant, and the extent to which that relationship is analogous to an employment relationship. Ask: Whether the tortfeasor held a position functionally analogous to employment, for example as regards his accountability to the defendant entity, integration into its structure, and performance of duties aimed at pursuing its aims and objectives on its behalf. Although the key ‘will usually lie in understanding the details of the relationship’, in doubtful cases the five criteria identified by Lord Phillips may be helpful, but they are not to be applied as a standalone test, and they need not be considered at all where it is clear that the tortfeasor is carrying on his own independent business NOTE: When applying this approach it will be important to consider which relationships have previously been held to qualify as “akin to employment”. Case law of the Supreme Court (discussed above) is useful and still valid.

b) HURDLE TWO: Did the tortfeasor commit a tort? The employee must have committed a tort in order for the possibility of vicarious liability to arise. Very important to note: there is more to tort than negligence!! Vicarious liability has been applied to • Harassment (Majrowski v Guy’s and Thomas’s NHS Trust [2006] HL 6) • Battery • Sexual assaults • Stealing • Misuse of private information

c) HURDLE THREE: Did the tortfeasor commit the tort in the course of their

employment? An employer will be vicariously liable for torts committed by an employee ONLY IF the tort is committed in the ‘course of their employment’. This creates the necessary connection between the tortfeasor, their employer and the claimant. When is an employee acting in the course of their employment? Traditionally = ‘Salmond Test’: whether the employer’s act was a ‘wrongful and unauthorised mode of doing some act authorised by the master’. Introduces some difficulties in the context of wilful wrongdoing, and this issue was exposed when many claims were lodged against local authorities and other institutions in respect of physical and sexual abuse suffered by the claimants while they were children in care. These cases stretched the traditional formula ‘to breaking point’ since ‘[e]ven on its most elastic interpretation’, sexual abuse of children ‘could not be described as a mode, albeit an improper mode, of caring for them’. (Mohamud v WM Morrison Supermarkets Plc, [39]) Shift away = Lister v Hesley Hall [2002]: ‘close connection’ test which means that vicarious liability arises where the employee’s unlawful conduct was ‘so closely connected with his employment’ that it is fair and just to make the employer liable. The approach in Lister has since been applied by the House of Lords in Dubai Aluminium Co Ltd v Salaam [2003] and WM Morrison Supermarkets Plc v Various Claimants [2020] UKSC 12 (NB: NEW DEVELOPMENT NOT COVERED IN THE TEXTBOOK!!) Following WM Morrison Supermarkets Plc v Various Claimants the test is whether the wrongful conduct of the employee was so closely connected with acts the employee was authorised to do that, for the purposes of the liability of his employer, it may fairly and properly be regarded as done by him while acting in the ordinary course of his employment. Nevertheless, the Supreme Court stressed the importance of earlier decisions when considering whether conduct occurred in the course of employment… This test must be applied ‘with regard to the circumstances of the case before the court and the assistance provided by previous court decisions’ [24]. Incompetents and misguided enthusiasts: Century Insurance v Northern Ireland Road Transport Board [1942] AC 509. Frolics and Detours: Smith v Stages [1989] 1 All ER 833, Whatman v Pearson (1868) LR 3CP 422, Storey v Ashton (1869) LR 4 QB 476, and Williams v Hemphill 1966 SC (HL) 31 Express Prohibitions: Twine v Bean’s Express Ltd (1946) 175 LT 131; Rose v Plenty [1975] ICR 4, Criminal acts of employees: Lister v Hesley Hall [2002]; Mattis v Pollock [2003]; N v Chief Constable of Merseyside Police [2006]; Maga v Birmingham Roman Catholic Archdiocese Trustees [2010] EWCA Civ 256; Mohamud v Wm Morrison Supermarkets Plc [2016] UKSC 11

4. -Theoretical underpinnings of vicarious liability As we have seen, courts and commentators tend to argue that vicarious liability can be justified, if at all, on the basis of a combination of various policy considerations. The problem is that if we were really committed to furthering these particular policies, the law would look very different

1.

These policy considerations cannot explain the particular rules on vicarious liability that the courts have in fact developed. 2. These policy considerations extend beyond the employment context. In each case, a real commitment to furthering these policies would lead not only to changes in the law of vicarious liability but a radically different law of tort – indeed they would require us to view tort law as fundamentally misconceived. See further argument discussed in H&R at pgs 609-610....