Liability in tort for the actions of Third Party Contractors
June 15, 2020
By Louis Browne QC
On 1 April 2020 the Supreme Court handed down two landmark judgments in Barclays Bank Plc v. Various Claimants [2020] UKSC 13 (“Barclays”) and WM Morrisons Supermarkets Plc v. Various Claimants [2020] UKSC 12 (“Morrisons”).
Morrisons concerned the vicarious liability of employers in relation to deliberate data breaches committed by their employees.
This Article focuses upon the judgment in Barclays.
The Facts
126 Claimants brought a group litigation action against Barclays in respect of alleged sexual assaults committed by the late Dr Gordon Bates, between 1968 and 1984. The assaults were alleged to have occurred when he was performing medical examinations on prospective (or existing) employees of the Bank. The examinations were undertaken at Dr Bates’ home. The Bank arranged the assessments, advised the applicants to attend and provided Dr Bates with a pro forma report to complete.
Dr Bates was paid a fee for each report. He was not on retainer by the Bank. He undertook other work.
He died in 2009 and his estate (worth over half a million pounds) had been distributed. He could not be sued by the Claimants, but neither could the Bank claim contribution from him should any of those actions succeed. His medical defence union organisation had refused to provide indemnity for alleged sexual assaults. Therefore, the Claimants brought claims against Barclays.
The parties’ positions in the Supreme Court
The Appellants (Barclays) argued that the law was as stated in D&F Estates Ltd v Church Comrs [1989] AC 177
“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.”
The Claimants argued that the recent decisions in Christian Brothers [2013] 2 AC 1, Cox v Ministry of Justice [2016] UKSC 10: [2016] AC 660 and endorsed in Armes v Nottinghamshire County Council [2017] UKSC 60: [2018] AC 355 set out the appropriate test:
- What was the relationship between Dr Bates and Barclays and was it ‘akin to employment’;
- If so, was the act in question sufficiently linked to that relationship.
The Claimants submitted that there should be a multi-factorial approach in considering whether it was ‘fair, just and reasonable’ to impose vicarious liability on Barclays with regards to the five incidents set out by Lord Phillips in Christian Brothers; at para 35:
“(i) 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;
(ii) The tort will have been committed as a result of activity 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;
(v) The employee will, to a greater or lesser degree, have been under the control of the employer.”
The reasoning and decision of the Supreme Court.
As Lady Hale noted at paragraph 16, (i) – (v) above were policy reasons. However, there had been a tendency in the cases following Lister v Hesley Hall [2002] 1 AC 215 to elide the policy reasons for the doctrine of the employers’ liability for the acts of his employees (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, just and reasonable to impose such liability.
In allowing the appeal, Lady Hale at paragraph 22 concluded that there was:
“nothing to suggest that the 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, has been eroded”.
At paragraph 27 she stated, the question remained “whether the tortfeasor is carrying on business on his own account or whether he is in a relationship akin to employment with the defendant”.
If, when answering the first part of that question, it is clear that the alleged tortfeasor is carrying on his own independent business, then no further enquiries need be made; vicarious liability will not be established. If it is not clear, then the five considerations identified by Lord Phillips in the Christian Brothers case “may be helpful in identifying a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability.” [27]
Analysis
The Supreme Court emphasised that in the prevailing case law from the Court no doubt was cast on the conventional distinction between employees, and those analogous to employees, and independent contractors.
Put another way, the classic distinction is between work done for an employer as part of the business of that employer and work done by an independent contractor as part of the business of that contractor. The development from employment to “something akin to employment” had not undermined this conventional distinction; see Kafagi v. JBW Group Plc [2018] EWCA Civ 1157:
In considering whether a person was an independent contractor relevant factors would include the following; did the alleged tortfeasor run his own business, can he pick and choose what work to do, did he have his own insurance, could he work for other clients.
If the answer to all of those questions was yes, then the alleged tortfeasor will likely be treated as an independent contractor. Such a relationship is not akin to employment. In those circumstances, no question of vicarious liability can arise on the part of the organisation which engaged his services for any tort committed by him during the course of that engagement.
In doubtful cases, the five ‘incidents’ identified by Lord Phillips (set out above), may be helpful in identifying a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability, eg are workers who are technically self-employed or agency workers effectively part and parcel of the employer’s business.
These principles are of general application and are not special to cases of alleged sexual abuse.
The key will lie in understanding the details of the relationship.
It would be a step too far for the law to align the common law concept of vicarious liability with the statutory concept of “worker” per Employment Rights Act 1996 section 230(3). However, it may be helpful in considering the question of whether a person was an independent contractor to ask this. Is that person working under a contract whereby s/he undertakes to perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
