Vicarious liability — the new boundary dispute

3 April 2020 by Robert Kellar QC

In the Christian Brothers case Lord Phillips of famously declared that “the law of vicarious liability is on the move”. The recent decision of the Supreme Court in Barclays Bank v. Various Claimants [2020] UKSC 13 has brought that movement to a juddering halt. The question posed by the appeal was a simple one. Is it possible to be vicariously liable for the acts of a self-employed ‘independent contractor’? The answer the Court gave in this case was ‘no’.

Factual Background

The group litigation concerned the vicarious liability of Barclays for sexual assaults in the 1970s and early 1980s. The alleged assaults were committed in the North East by a now deceased general practitioner: Dr Bates.

Dr Bates was a self-employed medical practitioner with a portfolio practice. His work included conducting medical assessments and examinations of prospective Barclays employees. Barclays required job applicants – many of them aged 16 or under –  to pass pre-employment medical examinations as part of its recruitment procedures. Barclays arranged the appointments with Dr Bates and provided him with a pro forma report headed “Barclays Confidential Medical Report”. Dr Bates was paid a fee for each report. If the report was satisfactory, the applicant’s job offer would be confirmed, subject to satisfactory GCE examination results. 

Dr Bates conducted the (unchaperoned) medical examinations in a consulting room at his home. It was alleged that Dr Bates sexually assaulted 126 claimants in the group action during their medical examinations. After Dr Bates died in 2009, the claimants sought damages from Barclays.

The Court of Appeal

At first instance, the judge held that Barclays was vicariously liable for any assaults that Dr Bates was proved to have perpetrated. The Court of Appeal agreed and dismissed Barclays’ appeal.

In finding that the Bank was liable, the Court of Appeal focussed on the “five factors” described by Lord Phillips in the Christian Brothers Case [2012] UKSC 56  at paragraph 35, and by Lord Reed in Cox v. Ministry of Justice [2016] UKSC 10  paragraphs 20-23. These were:

(i) the employer is more likely to have the means to compensate the victim 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, and

(v) the employee will, to a greater or lesser degree, have been under the control of the employer.

The Court of Appeal held that the application of these factors to a particular case was the answer to whether vicarious liability arose. It dismissed the Banks’ reliance upon the “independent contractor defence”. Lord Justice Irwin stated that:

… it seems clear to me that, adopting the approach of the Supreme Court, there will indeed be cases of independent contractors where vicarious liability will be established. Changes in the structures of employment, and of contracts for the provisions of services, are widespread. Operations intrinsic to a business enterprise are routinely performed by independent contractors, over long periods, accompanied by precise obligations and high levels of control. Such patterns are evident in widely different fields of enterprise, from construction, to manufacture, to the services sector.

On the facts, both the High Court and Court of Appeal agreed that Lord Phillips’ five factors were readily applicable to the Bank’s relationship with Dr Bates.

The Judgment of the Supreme Court

The Court’s starting point, and its final destination, was the proposition that:

It is trite law that the employer of an independent contractor is, in general, not liable for the negligence or other torts committed by the contractor in the course of the execution of the work: see D & F Estates Ltd v Church Comrs [1989] AC 177 at 208,

The Court held that there was nothing in the Christian Brothers case, Cox v. Ministry of Justice or Armes v. Nottinghamshire CC to cast doubt on the classic distinction between employees (and those in relationships “akin to employment”) and independent contractors. Vicarious liability did not arise in respect of the latter.

The central question remained whether the tortfeasor was “carrying on business in his own account” or whether he was in a relationship “akin to employment” with the Defendant. The key would usually lie in understanding the “details of the relationship”.

Where it was clear that a tortfeasor was carrying on business in his own account it was not necessary to go on to consider the various tests (the “five factors”) described in previous Supreme Court decisions. On the facts, it was clear that Dr Bates was in business in his own account. Therefore the Bank was not liable.

The Court also considered whether vicarious liability might arise in respect of self-employed people working in the “gig” economy: eg. Uber drivers, Pimlico Plumbers. Such people may not be employees in the traditional sense but may be “workers” within the meaning of section 230 (3) of the Employment Rights Act 1996. The Court observed that asking whether a person was a “worker” may be helpful in distinguishing “true” independent contractors from those were in a relationship “akin to employment”. However, the Court held that it would be going “too far down the road to tidiness” to align the law on vicarious liability precisely with the statutory concept of “worker”. This statutory concept which had been developed for a quite different set of reasons.

Comment

The reception of the Supreme Court’s decision is likely be mixed. Some will welcome the decision as one which restores sensible boundaries to the runaway principle of vicarious liability. Others will rue the decision as a retrograde step. The author, who declares his bias as junior counsel for the Claimants in Barclays, falls into the latter camp.

At the heart of of the Supreme Court’s decision was the long established principle that a defendant is not liable for the torts of their independent contractors. But the Court did not explain why that should be so. Rather the justification for the independent contractor defence was treated as being self-evident. In the author’s view, Lord Phillips’ five “policy reasons” for imposing vicarious liability are plainly capable of applying to independent contractors. The High Court and Court of Appeal had no difficulty in finding that they applied to Dr Bates. If the policy reasons apply to independent contractors it is not obvious why liability should not follow.

The policy reasons for imposing vicarious liability are particularly important in cases involving sexual abuse. One of the justifications for the imposition of vicarious liability is that certain types of business may give rise to an inherent risk of sexual abuse: e.g. boarding schools, care homes. The risk arises because those working for the organisation are – through their jobs — given power over, and intimate contact with, vulnerable children or adults. It is a tragic fact of life that this trust and power may be abused. It is therefore fair to fix the enterprise with liability where the risk of doing business ripens into harm: see e.g Bazely v. Curry 174 DLR (4th) (1999). Again, this important policy reason is capable of applying with as much force to independent contractors as to conventional employees.

But does the the Barclays’ case restores an easily understood “bright line” rule? The Supreme Court’s decision means that many cases will now turn upon the slippery distinction between persons “carrying on business in their own account” and those in a relationship “akin to employment”. That distinction is easy to state but may well be difficult to apply. The Court stated that asking whether the tortfeasor was a “worker” may provide a clue. However, the boundary between workers and non-workers has given rise to protracted litigation in the employment law context^[1].  In James v. Redcats (Brands) Limited [2007] ICR 1006, Elias J observed that “the attempt to map the boundary separating workers from those in business dealing with a customer have proved elusive” [52]. The boundary drawn by the Supreme Court may prove to be just as indistinct.

In the author’s view, the Barclays’ case sets the the scene for further litigation where these boundary disputes of the future need will be settled.

Robert Kellar QC is a barrister at 1 Crown Office Row. He was junior counsel to the claimants/respondents in this case.

[1] See Hospital Medical Group v. Westwood [2012] EWCA Civ 100539 and Hashwani v. Jivraj [2011] UKSC 4040.