The ever-widening scope of vicarious liability

Adam Ohringer

Adam Ohringer considers the recent judgment of Various Claimants v Barclays Bank plc [2017] EWHC 1929 (QB) and its implications on vicarious liability.

Introduction

A company has been held vicariously liable for the acts of an independent contractor.  In the ground-breaking Judgment of Nicola Davies J in Various Claimants v Barclays Bank plc [2017] EWHC 1929 (QB) the scope of vicarious liability has been extended further than ever before and beyond most expectations.  Businesses and their insurers will have to adapt to the new legal landscape.

The story so far

Vicarious liability arises in common law where both:

1. the wrongdoer is in an employee of the defendant or in a relationship akin to employment; and,

2. the tort committed is sufficiently connected with the position in which he was employed

In a series of decisions, the Court of Appeal and the Supreme Court has found various ministers of religion and active members of religious orders to be in a relationship akin to employment.  In Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1, Lord Phillips set out five factors making it fair, just and reasonable to impose vicarious liability:

1. 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;

2.  The tort will have been committed as a result of activity being taken by the employee on behalf of the employer;

3. The employee's activity is likely to be part of the business activity of the employer;

4. The employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee;

5. The employee will, to a greater or lesser degree, have been under the control of the employer.

In Cox v Ministry of Justice [2016]  AC 660 , the Supreme Court refined and applied the same principles to establish that prisoners working in a prison kitchen were in a relationship akin to employment.

The facts of Various Claimants v Barclays Bank plc

Between 1967 and 1984 Dr Gordon Bates was contracted by Barclays Bank to carry-out medical examinations on its new recruits in the North East region.  At the time (in the days before disability discrimination laws) offers of employment with the Bank were conditional on the applicant passing a medical check.

The Bank instructed the applicants to see Dr Bates to undergo the medical examination and each were then provided with an appointment.  Dr Bates conducted the examinations at his home where he had a consulting room.  He would then complete a standard form bearing the Bank’s logo and entitled ‘Barclays Confidential Medical Report’ which he returned to the Bank which would then decide whether to confirm the offer of employment.

For each examination completed, Dr Bates would invoice the Bank for a set fee.

In addition to his work for Barclays, Dr Bates also conducted pre-employment medical examinations for other companies and undertook other medical work at local hospitals.

Dr Bates died in 2009.  In 2013 a police enquiry commenced into allegations of sexual assaults by him in the course of his medical examinations.  In this case, 126 claimants brought complaints that they had been sexually assaulted by Dr Bates when undergoing pre-employment medical examinations when recruited by the Bank.

The question for the Court was whether the Bank was vicariously liable for the wrongful acts of Dr Bates. 

The Claimants argued that Dr Bates was acting on behalf of the bank, was under its control and was engaged to further its business interests.  The Bank’s position was that Dr Bates was an independent contractor and could not on any analysis be considered part of its workforce.

The Judgment

Nicola Davies J considered the five factors set out by Lord Phillips in turn and concluded as follows:

1. Dr Bates’ estate had been distributed and he was not insured for claims of this type.  The only legal recourse for the Claimants was against the Bank.

2. The medical examinations were undertaken as part of the Bank’s recruitment procedure.

3. Dr Bates was acting for the benefit of the Bank in its endeavour to recruit suitable employees without which it could not function.  He was therefore an integral part of its business.

4. The Bank created a risk of the tort being committed by requiring its recruits – many of whom were unaccompanied 15-16 year old girls - to be medically examined by Dr Bates.

5. The Bank arranged the appointments with Dr Bates and required him to answer specific medical questions set out on its form.  There was sufficient control over what Dr Bates was required to do for the Bank although, of course, how he conducted the examinations was left to him as a supposed-professional.

Having answered the five factors in the affirmative, the Court concluded that Dr Bates was in a relationship akin to employment with the bank. 

It perhaps then came as little surprise, applying the approach of the Supreme Court in Mohamed v WM Morrison Supermarkets plc [2016] AC 677, that the Court found the assaults were sufficiently connected with the Dr Bates’ work for the Bank for it to be vicariously liable for those acts.  The abuse took place in the course of the medical examinations he was conducting for the Bank.  Dr Bates had taken advantage of the physical proximity that permitted and the authority he had over the victims by virtue of him being both a doctor and one engaged by their soon-to-be-employer.

Analysis – A step forward or a step too far?

It was relatively easy to see how a minister of religion or a prisoner undertaking work in the prison kitchen could be considered in a relationship akin to employment.  Such relationships have most of the characteristics of employment but simply lack the necessary contractual relationship. However, finding that an independent contractor relationship is akin to employment takes matters to an extreme.  Such a relationship is the very opposite of employment.

The Judgment suggests that the questions of whether a relationship is akin to employment for the purposes of vicarious liability should be answered without reference to the tests which are applied in the context of employment law.  The fact that Dr Bates would most likely have been considered neither an employee nor a worker for the purposes of any employment protections, anti-discrimination legislation or taxation is apparently irrelevant.  

If Dr Bates was in a relationship akin to an employee then would the conclusion be the same in the following common scenarios:

An agency nurse in a hospital?

A television broadcaster engaged through a service company?

An electrician appointed as a sub-contractor by a building developer?

A taxi driver who works through an online platform?

The Court was clearly looking to provide the Claimants with a remedy.  Claimants and their representatives will see this as an extension of established legal principles as part of a sympathetic development in this area of law.  Businesses will no doubt see this as an unprincipled departure from legal orthodoxy which will lead to great uncertainty. 

The importance of the legal issues raised by this case and the need for legal certainty suggests that the Supreme Court might be called upon again to provide clearer directions.  The prevalence of independent contractors in the so-called ‘gig economy’ makes the need for clarity all the more urgent.