Nicholas Kennan briefly looks at some recent decisions regarding vicarious liability.
Cases of vicarious liability are always difficult because they generally involve either denying a remedy to a genuine claimant or holding an innocent defendant liable.
If you were a director of Morrison Supermarkets you might wonder how the Supreme Court found your company liable for a petrol station attendant who assaulted a customer (Mohamud v Wm Morrison Supermarkets plc [2016] 2 AC 677) but, even though with a sigh of relief, not for an internal auditor who unlawfully published confidential employee data on the internet (Various Claimants v Wm Morrison Supermarkets plc [2020] 2 WLR 941). Given that a High Court Judge and three Court of Appeal Judges thought that Morrisons was vicariously liable for the acts of the internal auditor, you would at least be in good company.
It is necessary to briefly rehearse the facts and reasoning of each case. Mr Mohamud went into a petrol station kiosk owned by Morrisons to ask if some documents could be printed from a USB stick. Mr Khan, an employee of Morrisons, told Mr Mohamud that no such service was available and that he should leave albeit in rude and abusive terms. Mr Mohamud returned to his car but Mr Khan left the counter to follow him outside, opened the car door, repeated the instruction never to come back and then began an unprovoked attack causing serious injury.
Mr Mohamud’s claim failed at first instance and in the Court of Appeal because there was no close connection between Mr Khan’s employment and the assault. In essence the lower courts held that once Mr Khan came from behind the counter and followed Mr Mohamud to his car he had metaphorically taken off his uniform and was acting on his own personal improper motives. It will be recalled that the “close connection” test was set out in Lister v Hesley Hall Ltd [2002] 1 AC 215 because the previous test of asking whether an employee was carrying out an authorised act in an unauthorised way was not universally satisfactory; this was especially so in cases of sexual abuse in care homes because in no way could it said that abusing a child was an unauthorised way of caring for a child.
Lord Toulson gave the leading judgment in the Supreme Court and whilst he did not step away from the “close connection” test, he proposed that the court ask two questions in deciding whether an employer was liable for an employee’s actions. First, what was the field of activity entrusted to the employee? Second, was there sufficient connection between that field of activity and the wrongful conduct to make it right for the employer to be held liable under the principle of social justice? In Lord Toulson’s view Mr Khan’s job was to attend to customers and that included asking them to leave Morrisons’ premises. Whilst Mr Khan had gone about this in an improper way, it was nonetheless within the ambit of the activities assigned to him and his personal motives were irrelevant. When Mr Khan left the counter and opened Mr Mohamud’s car door he repeated the instruction not to return and reinforced it with violence, which Lord Toulson described as “an unbroken sequence of events” from the altercation in the kiosk and it followed that Morrisons was liable.
Before dealing with Mr Skelton’s wrongdoing, the Court of Appeal had the opportunity to apply the guidance in Mohamud in Bellman v Northampton Recruitment Ltd [2018] EWCA Civ 2214. Mr Bellman was employed by Northampton Recruitment and was attending a Christmas party for which his employer paid for the food, drink, taxis and accommodation at a nearby hotel. Much merriment ensued and it was decided that when the venue closed at midnight the party would continue at the hotel. At around 3 o’clock in the morning, Mr Major, the MD, who was by now inebriated, summoned the remaining employees and began to berate them on the running of the company using profane language and how he would do as he pleased. Mr Bellman challenged Mr Major whereupon Mr Major punched Mr Bellman causing him to fall, hit his head and sustain a serious brain injury.
At first instance the judge considered Mr Major’s field of activity in line with the test set out in Mohamud and concluded that Mr Major could not always be on duty just because he was in the presence of the company’s employees. The discussions took place during a discreet early hours drinking session that was of a different nature to the party, and consequently unconnected with the business.
In the Court of Appeal Lady Asplin said that when the previous case law was viewed through the prism of Lord Toulson’s analysis in Mohamud the answer was clear. Mr Major was purporting to act as the MD notwithstanding the time and place because he sought to exercise authority over subordinate staff albeit improperly, and that the attack arose out the position entrusted to him. Even if Mr Major was only a mere reveller when he arrived at the hotel, he chose to step back into the position of MD by summoning staff to an ad hoc meeting where he made explicit assertions as to the extent of his authority. Consequently Northampton Recruitment was liable.
Mr Skelton worked as an internal auditor for Morrisons and he developed an irrational grudge against the company following disciplinary action for running a side business from the post room. Mr Skelton was provided with confidential payroll data to pass onto the external auditors, but he copied the data of approximately 100,000 employees onto a flash drive and uploaded it to a publicly accessible file-sharing website from his own device. In doing so, Mr Skelton tried to frame another employee who had been involved in the disciplinary process.
Most lawyers thought that the lower courts had inflicted a hardship upon Morrisons because Mr Skelton had set out to deliberately harm the company and therefore must be on what is often described as “a frolic of his own.” However, applying Mohamud the outcome seemed fairly inevitable because Mr Skelton had been entrusted to disseminate confidential payroll data, and there was an obvious connection between that activity and unlawfully uploading the same data to the website. If Mr Khan’s actions from the initial altercation in the kiosk to the assault were a “seamless episode” and Mr Major made his employer liable by acting in the capacity entrusted to him, then surely Morrisons would be bound by Mr Skelton’s actions being a connected sequence of events arising out of his position? Furthermore, if Lord Toulson was right that motive was irrelevant then it was of no assistance to Morrisons to argue that Mr Skelton’s intentions were improper.
In the Supreme Court, Lord Reed said that Mr Skelton’s unlawful disclosure of the data did not form part of the field of activities entrusted to him in the sense of the words used by Lord Toulson in Mohamud. Clearly Mr Skelton’s employment afforded him the opportunity to make the unlawful disclosure but that alone was not sufficient to impose liability on Morrisons. Accepting there was no previous case addressing the question of whether an employer might be vicariously liable for an employee’s acts when those acts were deliberately intended to harm the employer, Lord Reed set about considering previous cases including Bellman. Lord Reed drew upon Lord Nicholls’ distinction in Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 between those cases “where the employee was engaged, however misguidedly, in furthering the employer’s business, and cases where the employee is engaged solely in pursuing his own interests: on a ‘frolic of his own’, in the language of the time-honoured catch phrase…” Mr Skelton was not engaged in furthering the business of Morrisons when he made the unlawful disclosure but rather engaged on a personal vendetta; consequently, this was not so closely connected with the acts he was authorised to do that it could be considered as done in the course of his employment for the purposes of making Morrisons liable to third parties.
But, I hear you cry, this reasoning must surely consider motive and Lord Toulson tells us motive is irrelevant. Lord Reed puts little weight on that comment, reading it as nothing more than Lord Toulson simply addressing a point raised by the trial judge that it was unclear why Mr Khan became violent. Lord Reed is comfortable with that reading because Lord Toulson had already concluded in his judgment that Mr Khan was going about Morrisons’ business albeit in an improper way.
The position seems to be that if an employee is acting (a) within the field of activity entrusted to him by his employer and (b) such acts are in furtherance of the employer’s business even if carried out in an unlawful manner, then there is likely to be a sufficiently close connection to say that the acts where carried out in the course of the employee’s employment such that it is just to make the employer liable. However, if at (b) the acts are personal then the employer is unlikely to be liable.
On the same day that the Supreme Court handed down its decision in Wm Morrison Supermarkets it also handed down another decision on vicarious liability: Various Claimants v Barclays Bank plc [2020] 2 WLR 960. The facts are fairly easily stated in that between 1968 and 1984 Barclays arranged for an independent doctor to carry out pre-employment medical examinations on job applicants. The examination was not merely to determine whether an individual was fit for the relatively physically undemanding work of a high street bank but whether he or she could be recommended for the accompanying benefit of life insurance linked to the bank’s pension scheme. It is alleged that the doctor sexually assaulted a number of young female job applicants during the course of their examinations (and I make it clear now that there has been no finding of fact either way in this case).
At first instance and on appeal the bank was found liable. The Supreme Court disagreed and reiterated that the law does not treat a person as liable for the wrongful acts of someone who was not their employee unless the relationship between them was sufficiently akin to employment such that it would be just and reasonable to impose vicarious liability. In this case the doctor was plainly carrying on business on his own account, he was paid a fee for each report rather than a retainer, he was free to refuse requests for an examination and the bank was one of a number of clients. The doctor’s relationship with the bank was not in anyway close to that of an employee and consequently the bank could not be liable for his actions.
On one hand Wm Morrison Supermarkets and Barclays Bank provides us with fairly clear guidance on doctrine of vicarious liability, but on the other hand the application of that guidance may still cause some difficulties. Take Mohamud as an example. Mr Khan was entitled to tell Mr Mohamud to leave his employer’s premises. Mr Mohamud was in the process of doing so and had returned to his car, presumably about to drive off, so there was no need for Mr Khan to leave the counter to repeat the instruction let alone reinforce it with violence. Let us not forget that it was suggested that Mr Khan had his own improper motives for assaulting Mr Mohamud, so was he on any less of a frolic of his own when leaving his post to assault Mr Khan than Mr Skelton was when he unlawfully uploaded data to a website?
What if the situation in Barclays Bank arose but the now hypothetical doctor was not an independent contractor but employed as an occupational health physician? Would vicarious liability then be imposed? The examinations would plainly have been within the scope of activities entrusted to the doctor, but when the examination moved from the genuine to the sexually motivated would there be sufficient connection with the examination to impose liability on the bank or would the doctor metaphorically have taken off his white coat? One could just as easily say that the sexual assault arose from an unbroken sequence of events that started with a proper medical examination, as one could say that the doctor was engaged in satisfying his own desire rather than furthering the objective of his employer. And how relevant might it be that a manager at the bank to whom the doctor reported would be unable to tell him how to carry out an examination let alone violate the privacy of the consulting room?
One hopes that the Supreme Court guidance provides a sufficiently robust framework for first instance judges to make just decisions depending on the facts of the case before them, but one cannot help but hear the echo of Lord Pearce in ICI Ltd v Shatwell [1965] AC 656 when he said that the doctrine of vicarious liability is based on “social convenience and rough justice.”