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The Law of Vicarious Liability Is On The Move

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About The Author

Samuel Cuthbert (Private Law Manager)

Sam read Philosophy at Durham University, followed by the GDL funded by the Lord Brougham Scholarship and a Hardwicke Scholarship from Lincoln's Inn. Sam is now spending a year, prior to undertaking the BPTC, to develop his legal interests in a paralegal capacity. His legal career is starting in a M&A paralegal role at a large Viennese firm. He is a passionate speaker and has his sights set firmly on a career at the bar.

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[Vicarious liability] is one of the principal instruments whereby the law achieves a measure of loss distribution and avoids placing the consequences of accidental harm upon the shoulders of a single individual.

J A Jolowicz, The Cambridge Law Journal Vol. 26, No.1 (Apr., 1968) p150

Establishing Vicarious Liability (VL) is premised on the notion that doing so will allow the law to be fair, just, and reasonable in situations where there is (1) the necessary relationship between the defendant and the wrongdoer, and (2) the necessary connection between that relationship and the wrongdoer's conduct. In 2012, Lord Philips in Various Claimants v Catholic Child Welfare Society (CCWS) roused: ‘the law of vicarious liability is on the move’. This platitude remains apt today; the recent case of Cox v MoJ saw a development of the first limb of the VL test, and the similarly recent Mohamud v WM Morrison Supermarkets extended the scope of the second.

What follows is a discussion of these two cases in light of the preceding CCWS case. I suggest that there is credence in a ‘floodgates argument’ with reference to the problems incurred when broadly interpreted legal principles are combined with comprehensively insured employers and disingenuous claimants.

CCWS

The case concerned CCWS who operated the children’s homes that had been the setting for physical and sexual abuse of the children living there by a visiting parish priest. Over a decade later, the victims brought a claim against CCWS for vicarious liability. The Supreme Court ruled that unincorporated associations could be held liable on the basis that: (i) there could be vicarious liability (VL) for illegal activities; (ii) the term ‘employee’ should be broadly defined; and (iii) liability could be shared.

In CCWS, Lord Phillips highlighted five criteria for establishing when it may be deemed fair, just, and reasonable to impose vicarious liability:

(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 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;

(v) The employee will, to a greater or lesser degree, have been under the control of the employer. [35]

However, these criteria were discussed in Cox, and found not to carry equal weight.

Cox v MoJ

Mrs Cox (C) was an employed member of prison kitchen staff. In the course of her work, she bent down to assist a prisoner who had dropped a bag of rice in a bid to prevent a spillage. As she did so, another prisoner (Mr Inder), dropped the sack of rice he was carrying which fell onto Mrs Cox’s back and injured her.

The question for the court was whether the relationship between Mr Inder and the prison could be construed as one of employment. At first instance, it was held that the prisoner’s relationship with the prison was not akin to an employment relationship by virtue of the fact that prisoners were required to work; the relationship was not a voluntary one in which both parties acted for their own interests.

However, the appeal was allowed pursuant to the reasoning that Mr Inder’s work was performed out of compulsion for, and for the benefit of, the prison service. The CCWS criteria was refined to situations in which:

(1) the tort will have been committed as a result of activity being taken by the tortfeasor on behalf of the defendant, (2) the tortfeasor’s activity is likely to be part of the business activity of the defendant, and (3) the defendant, by employing the tortfeasor to carry on the activity, will have created the risk of the tort committed by the tortfeasor. [22]

There is little conceptual difficulty in applying these criteria to Cox. The tort was committed as a result of Mr Inder’s working in the prison kitchen on behalf of the prison to assist preparing meals for the other inmates. The provision of meals to inmates is a constituent part of the prison’s business activity. Mr Inder was working in the prison kitchen on the instructions of the prison officials, thus the prison created the risk of his committing the tort. As such, VL was held to extend – in the right circumstances - to torts committed by an individual, even when said individual is not being paid for their services. This was made explicitly clear by Lord Reed:

…it is not essential to the imposition of vicarious liability that the defendant should seek to make a profit. [35]

Mohamud v WM Morrison Supermarkets

Mohamud concerned a petrol station attendant attacking a customer. The Claimant sought to print a number of documents from a USB and asked the attendant (the tortfeasor) if that would be possible. The attendant told him that it was not; he was then offensive to the Claimant, before attacking and injuring him on the forecourt of the petrol station.

Crucially, he told the Claimant that he was not to return to the premises. This sequence of events engaged the second limb of the test for VL when considered by the Supreme Court: the connection between the nature of the tortfeasor/defendant relationship, and the action which gave rise to the claim.

The question for the Court was, therefore, whether the personal injury caused by the tortfeasor was sufficiently closely connected to his employment. Lister and Others v Hesley Hall Ltd provided the test for quantifying this connection, outlining the need for closeness between the course of employment and the tortious action.

Counsel for the Claimant in Cox drew attention to the imprecise nature of such a test; the Court responded that this was “inevitable given the infinite range of circumstances where the issue of vicarious liability might arise” [20].

In spite of the imprecision of the test, the Court concluded that the attendant’s actions were ‘inexcusable but within the “field of activities” assigned to him’ [47]. This was justified on the grounds that from the point of service to the point of attack, there had been one ‘seamless progression’ of events and, moreover, that the tortfeasor had assumed a business role when he intimated that that the Claimant was not to return to the premises. This judgment makes clear that the Court no longer recognises the need for close proximity in the relationship between employment and tortious act.

Floodgates: An Ever Present Concern

Both of the cases discussed above extend the law of vicarious liability considerably. Inevitably, then, there are ‘floodgates’ arguments to be made. I contend that, where insurers are engaged in the litigation process, their commercial motivations give credence to such arguments.

Lord Reed drew attention to the supposed flaws of such an argument in Cox:

 …Like the Fat Boy in The Pickwick Papers, counsel sought to make our flesh creep. It was argued that, if the present claim succeeded, there would be similar claims arising from the other activities undertaken by prisoners with a view to their rehabilitation, such as educational classes or offending behaviour programmes. There was also a risk of fraudulent claims being made for prisoner on prisoner incidents. A finding of vicarious liability might lead the prison service to adopt an unduly cautious approach to the type of tasks which prisoners were given the opportunity to do, given the potential impact on scarce financial resources. [43]

He outlines that there is “an intelligible distinction” between taking part in activities relating to rehabilitation (which is undoubtedly an aim of the prison system) and working as an integral part of the operation of the prison and for its benefit. He further makes clear that fraudulent claims are already a prevalent risk in cases relating to personal injury, but that the courts are proactive in protecting against this and will continue to be so.

This is true in cases such as Cox which do not centre on the commercial motivations of insurance companies. However, once these motivations are engaged, extending VL becomes a more precarious development.

The Mohamud judgment attributes no weight to the individual prejudices of the tortfeasor. Suppose an employer was unaware of an employee’s racism having carried out a reasonable level of due diligence, and that employee committed a racist attack whilst at work – would it be fair to find a sufficiently close relationship between the employment and the tortious act?

This was considered in Mohamud by Lord Toulson, who observed that it was “obvious that he [the tortfeasor] was motivated by personal racism rather than a desire to benefit his employer’s business.” However, he further considered that this was “neither here nor there.” The onus remains on the employer to maintain tight control of recruitment, and not to facilitate a setting for tortious activity.

This is the potential issue. VL is partly premised on the notion that employers have deeper pockets and/or comprehensive insurance cover. The problem is the level to which extending the scope of that liability extends dependence on insurance companies to cover any loss. The commercial motivations of insurance providers do not necessarily align with the notions of fairness and justice proffered by the Mohamud judgment.

The potential result is that in the knowledge that the scope for establishing VL has widened, insurance providers will be more reluctant for cases to reach court given the risk of losing and having to pay damages and costs to the other side. This makes settlement ever more favourable. A willingness to settle out of court in turn encourages claimants to bring less credible claims in the hope that issuing a claim form represents an easy payout from insurers unwilling to take the risks that prolonged litigation brings. Meanwhile the employer is left in the difficult position of having to pay the excess on each claim that engaged the insurance provider. Such a position does not seem fair, just, or reasonable.

Therefore, whilst Lord Philips’ oration remains true, and the law of vicarious liability continues to expand, I fear that movement is not in the best interests of justice. And so by way of a conclusion, I venture to suggest that express caution needs taking to ensure that commercial interests do not usurp those of justice in the assignation of liability.

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Tagged: Commercial Law, Personal Injury, Vicarious Liability

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