Client Alert: Employers' Vicarious Liability
The Supreme Court (SC) has handed down judgment in the cases of Cox v MOJ (2016) UKSC 10 and Mohamud v WM Morrison Supermarkets plc (2016) UKS C11.
In finding for the claimant in both cases the SC has given guidance as to the nature of the relationship which may give rise to vicarious liability.
Although holding that there was no need for the law governing the circumstances in which an employer should be held vicariously liable for an employee to change, the SC has recognised that there have been developments as to the type of relationship between an individual and their employer, justifying a widening of the nature of relationships where vicarious liability may be imposed.
The ’close connection’ test first articulated in Lister v Hesley Hall Ltd (2002) 1AC 215 remains the appropriate standard in determining the circumstances in which vicarious liability will apply.
The SC rejected the claimant’s submissions in Mohamud that the test should be extended to ‘whether the employee (described as an ‘authorised representative‘ of the employer) commits a tort in circumstances where the reasonable observer would consider the employee to be acting in that representative capacity’.
What does this mean for insurers?
The judgments are not helpful.
Although the SC resisted the claimant’s attempts to widen the test, it is disappointing that on the facts they held that Mohamud was able to satisfy the ‘close connection’ test.
The judgment arguably does extend the circumstances in which vicarious liability will apply.
In providing guidance as to the sort of relationship which may give rise to vicarious liability; by widening the nature of such relationships, the SC has created scope for further claims.
Cox v MOJ
Mrs Cox was a catering manager at HM Swansea. She supervised prisoners who worked alongside civilian catering staff.
On 10 September 2007 she instructed some prisoners to take some kitchen supplies to the kitchen stores.
Whilst doing so one of the prisoners accidently dropped a sack of rice onto Mrs Cox’s back causing her injury.
Her claim that the Prison Service (an executive agency of the MOJ) was vicariously liable for the negligent acts of the prisoner failed at first instance but succeeded in the Court of Appeal.
Mohamud v WM Morrison Supermarkets plc
In Mohamud, the claimant entered the defendant’s petrol station and kiosk where customers would normally pay for their purchases. Having parked his car the claimant went to the kiosk and asked Mr Khan, an employee of the respondent, if he could print some documents from a USB stick. Mr Khan, who was employed to oversee the petrol pumps and ensure the kiosks were kept in good order and to serve customers, refused in a rude manner. The claimant challenged the response and Mr Khan responded in an abusive manner ordering the claimant to leave.
The claimant returned to his car followed by Mr Khan. Before he was able to drive off the claimant was subjected to a serious and unprovoked attack.
The claimant’s case against the respondent on the basis that they were vicariously liable for Mr Khan’s actions failed at first instance, and before the Court of Appeal (CoA). It was held that there was an insufficiently ‘close connection’ between what Mr Khan was employed to do and his conduct in attacking the claimant.
The claimant appealed to the SC challenging whether the ‘close connection’ test was the appropriate standard to apply. He also argued that his claim should have succeeded in any event.
In Cox, the Court placed significant reliance on Various claimants v Catholic Child Welfare Society (2012) UKSC 56, the ‘Christian Brothers’ case, in which Lord Phillips referred to five factors which make it fair, just and reasonable to impose vicarious liability where the defendant and tortfeasor are not bound by a contract of employment.
The factors are not of equal significance albeit the three most important factors are interrelated:
- The tort will have been committed as a result of an activity carried out by the tortfeasor on behalf of the defendant.
- The tortfeasor’s action is likely to be part of the defendant’s business activity.
- The defendant, by engaging the tortfeasor to carry out the activity, will have created the risk of the tort committed by the tortfeasor.
The fact that the defendant is more likely to have the means to compensate the victim and can be expected to have relevant insurance is unlikely to be of independent significance in most cases. The final factor that the tortfeasor will have been under the control of the defendant no longer has the significance it was once considered to have. It is no longer realistic to look for a right to direct how a person should perform their duties as a necessary element to establish the relationship.
In the present case the SC went on to hold that the general approach described in ‘Christian Brothers’ is not confined to special cases but provides a basis for identifying when, in principle, vicarious liability may be imposed outside employment relationships.
The MOJ’s submissions that requiring prisoners to work serves the purpose of rehabilitation were rejected. The SC held that prisoners working in kitchens provide services integral to the furtherance of its aims, in this instance the provision of prisoners’ meals. The prison service placed prisoners in a position where there was a risk they may commit assigned activities in a negligent manner. The prisoners were working under the direction of prison staff. The prison service was vicariously liable to Mrs Cox.
The SC also went on to say that in those cases where the ‘Christian Brothers’ criteria are satisfied there should generally be no need to re-assess the fairness, justice and reasonableness of the result. The criteria are designed to ensure that vicarious liability is imposed where it is fair, just and reasonable to do so.
The ‘close connection’ test relied on by the Court in Mohamud was ‘whether the employees’ torts were so closely connected with their employment that it would be just to hold the employer liable’.
Lord Toulson, giving the leading speech in the present case, said that in applying the test the SC would need to consider:
- What was the employee’s job and
- Was there sufficient connection between the position in which he was employed and the wrongful conduct to make it right for the employer to be held liable.
Their Lordships held that whilst Mr Khan’s response to the claimant’s request was inexcusable, interacting with customers was part of his job. The reasoning was that Mr Khan was not considered to have ‘stepped out of his uniform’ when he came from behind the counter and followed the claimant onto the forecourt. When he followed him to the car and told him not to come back to the petrol station, this was not something personal between them but an order to keep away from his employer’s premises. In giving the order he was purporting to act about his employer’s business. Mr Khan’s motive for his attack was irrelevant. It did not matter whether he was motivated by personal animosity rather than a desire to benefit his employer’s business.
These decisions do not alter the law in relation to the tests to be applied when considering vicarious liability. They do however display a willingness on the part of the SC to push the boundaries as to the circumstances where they make findings of vicarious liability. Whilst one can perhaps understand (although not necessarily agree with) the SC’s logic in Cox, their views in Mohamud are of concern. How could even the most prudent of employers have prevented Mr Khan’s attack, seemingly based on racist motivations?