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Armes v Nottinghamshire CC: Vicarious Liability Spirals out of Control

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About The Author

James Smith (Regular Writer)

James is a Law student at the University of Warwick, with a particular interest in civil and commercial law. He is Careers Officer of Warwick Law Society, and is currently undertaking mini-pupillages with a view to becoming a barrister. 

You can delegate authority, but you cannot delegate responsibility.

Byron Dorgan

The law surrounding vicarious liability has been subjected to fast-paced development in recent years. As Samuel Cuthbert has examined for Keep Calm Talk Law, several recent decisions have gradually widened its scope from its original confines. Meanwhile, as Keir Baker has discussed for Keep Calm Talk Law, the changing nature of the employment market has triggered debate about its position in relation to companies like Uber.   

The Supreme Court’s decision in Armes v Nottinghamshire County Council [2017] is the latest ruling on this area of the law from the UK’s highest court. This article argues that this decision unacceptably broadened the law of vicarious liability, such that it now applies to too many relationships. This is, as the more recent Court of Appeal decision in Kafagi v JBW Group [2018] – which applied Armes [2017] – shows, a recipe for uncertainty and confusion.

Armes v Nottinghamshire CC

The Facts

In 1985, as a seven-year-old, the claimant (A) was taken into care by Nottinghamshire County Council (the Council) with a view to finding her foster parents. First, they placed her with Mr and Mrs Allison for a year. Mrs Allison abused her, employing ‘grossly excessive violence’. A was removed, and subsequently placed by the Council into the care of Mr and Mrs Blakely, where Mr Blakely sexually molested her.

The case proceeded on the basis that the Council was not negligent in its selection of foster parents. Therefore, the crucial question was whether – in the absence of fault – the Council could nonetheless be liable to A for abuse perpetrated by the foster parents. This could either arise because the Council owed her a non-delegable duty of care – that is, a duty that cannot be contracted out to another agent – or, alternatively, because the Council was vicariously liable for the foster parents’ torts.

The Decisions

The High Court said no to both questions. So did the Court of Appeal in NA v Nottinghamshire County Council [2015]. Both courts agreed that the Council did not have the requisite degree of control over the foster parents to be vicariously liable. Subsequently, the case was heard before the Supreme Court, which said that the Council could be vicariously liable.

Before the Supreme Court

Non-Delegable Duty of Care

A first appealed to the Supreme Court on the grounds that the Council owed her a non-delegable duty of care. This concept was lucidly described by Lord Brandon in McDermid v Nash Dredging [1987]:

The essential characteristic of the [employer’s] duty is that, if it is not performed, it is no defence for the employer to show that he delegated its performance to a person… Despite such delegation, the employer is liable for the non-performance of the duty.

If the Supreme Court in Armes [2017] found that a non-delegable duty of care was owed to A, the Council would be legally responsible for the foster parents’ tort – even though the harm was perpetrated by the foster-parents. In essence, while the Council could delegate performance of the duty of care, they could not avoid liability for its breach.

When does such a duty arise? Lord Sumption identified the classes of cases where a non-delegable duty is present in Woodland v Essex County Council [2013]:

  • The claimant is a patient, child, prisoner, care home resident or otherwise especially vulnerable or dependent on the defendant’s protection against risk of injury.
  • A separate antecedent relationship between claimant and defendant with an element of control placing the claimant under the charge of the defendant and where a positive duty to protect the claimant from harm has been assumed.
  • The claimant has no control over how the defendant performs its obligations.
  • The defendant delegated to a third party some integral part of the duty where the third party is exercising for that purpose the defendant’s care of the claimant with the attendant control.
  • The third party has been negligent in the performance of the relevant function assumed by the defendant and delegated to the third party.

Having applied these hallmarks of a non-delegable duty of care to the facts, the Supreme Court in Armes [2017] found that the Council did not owe a non-delegable duty of care to A. This conclusion revolved around the statutory powers granted to the Council by Section 10(2) of the Child Care Act 1980 (CCA 1980), which provides that:

A local authority shall… have the same powers and duties with respect to a person in their care… as his parent or guardian would have.

Importantly too, Section 22(2)(d) of the CCA 1980 establishes that local authorities will supervise and inspect foster-homes and remove the child if their welfare requires it. Section 22 of the CCA 1980 also enabled the Secretary of State to make regulations for welfare provision of boarded-out children. These regulations required local authorities to check on the child one month after the placement commenced, and subsequently every one to three months. Local authorities were also required to review the child’s health and progress every six months.

The Supreme Court in Armes [2017] opted to interpret the Council’s powers and duties under the CCA 1980 narrowly. Significantly, it held there was a distinction between the high-level functions undertaken by the local authority – namely, supervising the fostering process – and the day-to-day activities carried out by foster parents. Lord Reed described the functions of the local authority under the CCA 1980 as:

[T]he duty of the local authority is not to perform the function in the course of which the claimant was abused (namely, the provision of daily care), but rather to arrange for, and then monitor, its performance.

This narrow interpretation is significant. It means the child is not ‘dependent on the defendant’s protection against risk of injury’ – thus failing to meet one of Lord Sumption’s hallmarks of a non-delegable duty from Woodland [2013]. Hence, under the regime outlined by Parliament in the CCA 1980, the Council did not owe a non-delegable duty of care.

The issue troubling the Supreme Court in Armes [2017] in particular was the issue of family visits. If the duty under the CCA 1980 was non-delegable, the Council would be liable for torts committed by family members. In Lord Reed’s view, this would be undesirable. It would create a form of state insurance and dissuade local authorities from allowing visits to family members. This provided a compelling policy reason against imposing a non-delegable duty.

Vicarious Liability

A’s alternative ground of appeal before the Supreme Court was that the Council was vicariously liable for the torts that had been committed against A by the foster parents.

The concept of vicarious liability holds that employers may be vicariously liable for the torts of their employees committed in the course of their employment. For a century, when deciding whether to impose vicarious liability, the English courts had applied the test articulated by the legal scholar Sir John William Salmond. This held that vicarious liability could be imposed where an agent (a) performs a wrongful act authorised by their employer, or (b) performs an authorised act in an unauthorised mode.

However, in recent years, the courts have moved away from this approach; as Lord Phillips rightly stated in Various Claimants v Catholic Child Welfare Society [2012], ‘the law of vicarious liability is on the move’. Indeed, the expansive decision in Armes [2017] was only made possible due to a recent chain of authorities that started with Lister v Hesley Hall [2001]. This merely required a “sufficient connection” between the employee’s tort and the course of their employment.

Based upon this test, an obvious objection arises: foster parents are not employees of the Council. However, in Catholic Child Welfare Society [2012], the Supreme Court held that a relationship ‘akin to that between an employer and employee’ could justify the imposition of vicarious liability. Lord Phillips also identified five factors courts should consider when deciding whether a relationship is sufficiently close to an employer-employee relationship. These include the employer’s ability to pay compensation, its control over the employee, and the extent of the employee’s integration into the employer’s business activities.

Foster parents are independent civilians who choose to adopt a child in care, and who (one would hope) are without a commercial motive. It therefore seems odd that they should be treated as employees of the Council. However, following Catholic Child Welfare Society [2012], the relationship in question need not be perfectly akin to employment; merely sufficiently analogous. Thus, as Lord Reed explained in Armes [2017]:

[T]he foster parents provided care to the child as an integral part of the local authority’s organisation of its child care services… [I]t is impossible to draw a sharp line between the activity of the local authority, who were responsible for the care of the child and the promotion of her welfare, and that of the foster parents… [T]he torts committed against the claimant were committed by the foster parents in the course of an activity carried on for the benefit of the local authority.

In this case, the foster parents were acting for the benefit of the Council and were integrated into the Council’s business. Foster parents were trained, recruited, and paid by the Council. It exercised powers of inspection and supervision and had the power to remove children from foster-homes; a high degree of control was therefore present. Furthermore, the Council had sufficient means to meet a substantial award of damages; foster-parents may not have such financial resources. And, lastly, placing children like A in the care of foster-parents created a relationship of trust and confidence, which ‘renders the children particularly vulnerable to abuse’.

In light of all these factors, the Supreme Court in Armes [2017] concluded that the Council could be vicariously liable for the foster parents’ torts against A.

Commentary on Armes

A key rationale of vicarious liability is that employers are better placed to pay costly damages than individual employees. However, this relies upon employers knowing where they stand so they can allocate financial resources accordingly. As such, they must know for whom they may be vicarious liable. Therefore, the law of vicarious liability must be specific. The decision in Armes [2017] fails to achieve this laudable goal. 

A careful reading of all the authorities suggests that a two-limb test for vicarious liability now exists. Firstly, taking into account Lord Phillip’s factors in Catholic Child Welfare Society [2012] (as subsequently refined by Lord Reed in Cox v Ministry of Justice [2016]), it is asked whether the relationship was similar to an employer-employee relationship. Secondly, it is asked whether the tort was sufficiently closely connected to that relationship.

The decision in Armes [2017] has profound implications for the first limb of this test. Take its facts: following the commencement of the A’s placement with foster parents, the Council checked up on her after one month, and subsequently checked up on her monthly. This was consistent with regulations. The Supreme Court held that this – when coupled with the statutory power to bring A back into care – amounted to sufficient control for vicarious liability to be imposed.

Monthly check-ups arguably represent a very small degree of control. If this is sufficient to justify the imposition of vicarious liability, employers cannot be certain for whom they will be vicariously liable.

In fact, it can be argued that Armes [2017] muddies already-murky waters. The existing law was already too broad, and this decision imports an undesirable degree of further uncertainty into the law, making it difficult for potential defendants to be certain for whom they may be vicariously liable. It is increasingly apparent that vicarious liability is being hijacked of giving effect to judicial instinct for social justice.

The Development of Vicarious Liability Post-Armes: A Recipe for Disaster?

The decision in Armes [2017] was recently considered by the Court of Appeal in Kafagi [2018], where a local authority contracted a company to collect debt on their behalf. Bailiffs – employees of the defendant – assaulted the claimant. The Court of Appeal said that the local authority was not vicariously liable.

Crucially, the defendant in Kafagi [2018] was an independent company. In Cox [2016], Lord Reed noted that vicarious liability would not be imposed where the torts were ‘entirely attributable to the conduct of a recognisably independent business’. The bailiffs could carry out debt collection in any lawful manner they deemed appropriate – without the local authority’s consent. They could contract or delegate debt collection – without the local authority’s consent. So vicarious liability could not be imposed because the defendant was a discrete company, and the local authority did not control its activities.

Crucially, Kafagi [2018] can be distinguished from Armes [2017] in two ways. Firstly, the defendant in Kafagi [2018] was an independent company. In Armes [2017], the foster parents were held to have been enmeshed within the local authority’s hierarchical structure. Secondly, the defendant in Kafagi [2018] was commercially-motivated.

Reading Armes [2017] and Kafagi [2018] in tandem hints at a nascent problem in vicarious liability. These cases turned upon degree of control the defendant exercised over the tortfeasor. In Armes [2017], vicarious liability was imposed because foster parents were an ’integral part of the local authority's organisation of its child care services’. In Kafagi [2018], the fact that the company was discrete, readily identifiable, and uncontrolled meant that vicarious liability was not imposed.

This may have harmful real-world effects. To avoid vicarious liability, defendants – be they employers or local authorities – will be keen to exercise as little control as possible over the actions of independent contractors. The more a defendant’s services are provided by independent companies – with less training, supervision, or control – the less likely it is that defendants will be vicariously liable. This means they avoid costly litigation and paying damages. In short, the law’s renewed emphasis on control as a requirement for vicarious liability post-Armes [2017] encourages defendants to avoid the valuable oversight, scrutiny, and management of hazardous activities.

Conclusion

Vicarious liability is a powerful and practical weapon for giving effect to social justice. Rather than individual workers paying damages, their employers do – and they are more likely to have “deep pockets”. However, following a chain of recent decisions, it is uncertain what activities are similar to employment.

Armes [2017] only deepens this confusion. When considered alongside Kafagi [2018], this decision demonstrates a renewed emphasis on control as a primary requirement for vicarious liability, so a wide range of activities, such as fostering – which do not intuitively seem akin to employment – are brought within its pale. This makes the law confusing. It may also have undesirable real-world effects: by contracting out services and exercising little control, corporations may avoid vicarious liability and its accompanying costs.

Ultimately, it is argued that greater judicial reluctance to find vicarious liability in novel cases would be a welcome development. This would foster legal certainty and discourage corporations from shirking responsibility by slackening their control of contracted services.

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Tagged: Courts, Employment Law, Justice, Supreme Court, Tort Law, Vicarious Liability

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