Barclays Bank plc v Various Claimants [2020] UKSC 13

The Supreme Court gave yet more guidance on vicarious liability, this time in the context of independent contractors.

Full judgment, dated 1 April 2020

Summary:

This case involved sexual assaults committed by a medical examiner contracted by Barclays on an examination by examination basis. Lady Hale gave an overview of the recent law on vicarious liability cases concerning tortfeasors who were not employees. She concluded that the recent case law had made no change to the principle that truly independent contractors cannot generate vicarious liability on the part of those who employ their services and she outlined the test for who is and is not an independent contractor.

Discussion:

This was the second judgment delivered on 1 April 2020 relating to the vicarious liability of employers, following the Morrisons case (see previous blog). The judgment was given by Lady Hale and the court had exactly the same composition as in the Morrisons case. Lady Hale referenced the connection in paragraph 1 of the judgment, in which posed the question how far the law on vicarious liability was to move, echoing a dicta of Lord Phillips in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56. She very specifically identified two stages that were relevant: first, whether or not the relationship was such as could give rise to vicarious liability (“stage 1”, the issue in this case) and, second, whether or not the conduct was the connection between the relationship and the wrongdoing itself (“stage 2”, the subject of the Morrisons case).

The facts of the case are set out at paragraphs 2 onwards. Dr Gordon Bates was a doctor who did medical examinations of Barclays Bank employees (1). The purpose of the examination was to show they were fit for work (2). He was paid per report. Many of those examined were women in their teens (4). The Rs’ allegations were that Dr Bates had inappropriately examined their breasts, vaginas or anuses. Dr Bates had died in 2009 and his estate had been distributed, so could not be sued (5). The issue of A’s vicarious liability was ordered to be tried as a preliminary issue. Nicola Davies J held A liable. The Court of Appeal dismissed A’s appeal. (6)

A argued that Dr Bates was an independent contractor, and so could not incur vicarious liability per D & F Estates Ltd v Church Comrs [1989] AC 177 (7). Rs argued that the Catholic Child Welfare case (referred to in the judgment as Christian Brothers), along with Cox v Ministry of Justice [2016] UKSC 10 and Armes v Nottinghamshire County Council [2017] UKSC 60, had replaced that straightforward proposition with a more nuanced approach, concerned with whether it was “fair, just and reasonable” to impose liability even though the tortfeasor was not an employee (8).

Lady Hale proposed to examine those three authorities as well as their precursor E v English Province of Our Lady of Charity [2012] EWCA Civ 938 (9).

The recent decisions are set out from para 10 onwards. Lister v Hesley Hall Ltd [2001] UKHL 22 is cited as being a case about stage 2, though it is acknowledged to have brought to the fore some important policy considerations through its citation of various Canadian authorities. Bazley v Curry [1999] 2 SCR 534 utilised the principle that where there was sufficient connection between the creation of the risk and the wrongdoing, liability should flow (by contrast with Jacobi v Griffiths [1999] 2 SCR 570, where abuse took place in an employee’s home outside working hours).


The first stage 1 case was said to be Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2005] EWCA Civ 1151, in which negligent fitters who had been employed on a labour only basis one defendant to another, who was a sub-contractor, caused damage to a factory. Both defendants were vicariously liable, either because both were in a position to control the fitters made (May LJ) or because the fitters were so much part of the work, business or organisation of the defendants that it was just to make them both liable. 

E was a case about a claimant who was abused by a priest, while she lived in a children’s home run by nuns. The English Province was the trust that stood in the place of the bishop, who had appointed the priest. The priest’s relationship with the EP was held to be “akin to employment”. Lady Hale emphasised at para 13 that Ward LJ did not question the traditional employee/contractor distinction, but rather plotted where the priest fell in between those poles, finding that he fell closer to employee, because he was paid a wage or salary to work under the control of his employer for his employer’s business. 

Para 14 addresses Christian Brothers, in which the claimants had been physically and sexually abused by teachers at a school run by the Catholic Child Welfare Society, who were also members of the Institute of Christian Brothers. The question was whether the Brothers could be vicariously liable. Para 15 cites the famous five reasons why it is usually fair, just and reasonable to impose vicarious liability on an employer for torts committed by an employee in the course of his employment. Para 16 cites the dicta of Lord Hobhouse in Lister that “an exposition of the policy reasons for a rule is not the same as defining the criteria for its application.” A passage of Ward LJ’s in is then cited, which provides that albeit the policy reasons have to be understood, the case law should not develop simply “as an expedient reaction to the problem confronting the court.”

Lady Hale concluded that:

There appears to have been a tendency to elide the policy reasons for the doctrine of the employer’s liability for the acts of his employee, set out in para 35 of Christian Brothers, with the principles which should guide the development of that liability into relationships which are not employment but which are sufficiently akin to employment to make it fair and just to impose such liability.”*

Lady Hale explains why this tendency has arisen by reference to paragraph 47 of the judgment in Christian Brothers, where Lord Phillips said that the relationship may be “akin to employment” where the relationship “has the same incidents”, by which he appeared to mean the five factors. Lady Hale opines that he did not mean only the five factors (18) because (i) in E Ward LJ had not interrogated only the five factors, but had conducted a more searching investigation, and (ii) because in Christian Brothers at paragraphs 56-58 Lord Phillips had not applied the factors directly but had instead listed specific aspects of the relationship that convinced him it was “akin to employment”.

As a post-script to Christian Brothers, Lady Hale referenced Woodland v Swimming Teachers Association [2013] UKSC 66, in which Lord Sumption had stated that vicarious liability, notwithstanding the Christian Brothers judgment, had never extended to “truly independent contractors”.

Cox was the next case addressed (20). There the prison service was alleged to be vicariously liable for the negligence of a prisoner who was working under a prison catering manager on prison service pay. It was held to be liable. Lady Hale admits that “[i]t is fair to say that Lord Reed did focus on the five policy factors identified by Lord Phillips.” He had concluded (with Lady Hale’s emphasis retained):

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 a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question.

Lady Hale opined that whether using the “akin to employment” test or Lord Reed’s alternative formulation, the result would have been the same (21).

Finally, Armes was dealt with. Here the issue was whether the council could be vicariously liable for physical and sexual abuse committed by foster parents with whom a child had been placed by the council. Lord Reed had adopted the same approach as in Cox, applying the five incidents, placed significant emphasis on the lack of any other source of compensation and the extent of control exercised by the local authority and concluded that “the foster parents … cannot be regarded as carrying on an independent business of their own”. The council were held liable.

Lady Hale’s conclusion on review of the authorities, therefore, was that there was nothing in the previous caselaw that suggested that the traditional employee/contractor distinction had been eroded. In fact Kafagi v JBW Group Ltd [2018] EWCA Civ 1157 had reasserted it, and the Singapore Court of Appeal in Ng Huat Seng v Mohammad [2017] SGCA 58, in addressing the argument that Christian Brothers and Cox had undermined the distinction, had found that they had not and had gone on to state that they could not see how vicarious liability could ever be extended to independent contractors.

Paragraph 27, therefore, re-asserted the test for identifying whether or not vicarious liability may exist for the acts of a non-employee:

The question therefore 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.

The inevitable conclusion of that test, in this case, was set out at paragraph 28. Dr Bates was at no time an employee of the bank and nor was he anything close. The appeal was therefore allowed.

At paragraph 29 Lady Hale allowed herself some comment on the evolving nature of employment. She set out the two types of worker now recognised by employment law, being a traditional employee (by way of an employment contract) and someone who agrees to perform work or services for another party, whose status is not that of client or customer of the worker. The latter workers are, Lady Hale stated, arguably emblematic of the type of individuals who might have a relationship “akin to employment” rather than being contractors, and the distinction may be helpful for future cases. However, she rejected making an exact alignment.

*NB: This is the exact elision that Lord Reed appeared to perform, when he said of the five factors at para 31 of Morrisons that “Those factors were not concerned with the question whether the wrongdoing in question was so connected with the employment that vicarious liability ought to be imposed, but with the distinct question whether, in the case of wrongdoing committed by someone who was not an employee, the relationship between the wrongdoer and the defendant was sufficiently akin to employment as to be one to which the doctrine of vicarious liability should apply.” As pointed out in that blog, the factors are not concerned with the latter question, but are rather, as Lady Hale says, an exposition of why employers are held liable for the acts of their employees.

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