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Vicarious Liability: Clarifying A "Close Connection"

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About The Author

Peter Lennon (Joint Editor-in-Chief )

Peter Lennon recently completed the LPC at the University of Sheffield, and is a future trainee of Mills & Reeve LLP. Before law, Peter studied History at Selwyn College, Cambridge. His main areas of interest are corporate law, administrative law, and legal policy. Outside the law, Peter enjoys writing, cooking, and pretending to know about football.

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This article is the second part in a series on vicarious liability. The previous article in this series, which focused on the first step of vicarious liability and the “akin to employment” test, can be found here.

“To search for certainty and precision in vicarious liability is to undertake a quest for a chimaera.”

Lord Dyson

The modern test for vicarious liability consists of two steps. For a party to be held vicariously liable for a tort there must be:

  1. An employer-employee relationship between that party and the tortfeasor
  2. A sufficiently close connection between that employment and the tort committed

Where the previous article in this series focused on the first step, the type of relationship that can incur vicarious liability, this article will focus on the second step, the types of conduct that it may apply to. The recent Supreme Court case of WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12 has attempted to clarify the “sufficiently close connection” test and the precedent set by Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11.

For the sake of clarity, this article will refer to the 2016 case as Mohamud, and the more recent 2020 decision as WM Morrison Supermarkets.

The Facts of WM Morrison Supermarkets

WM Morrison Supermarkets involved a senior auditor at Morrisons, Mr Andrew Skelton, who was subject to disciplinary proceedings and given a verbal warning in July 2013. In November 2013 he was given payroll data on Morrisons’ workforce and tasked with transmitting it to the external auditors, KPMG. Skelton subsequently made a copy of the data and leaked it online, attempting to frame a fellow employee who had been involved in his disciplinary proceedings.

The claimants at first instance were 9,263 employees or former employees of Morrisons, who claimed the company had breached the Data Protection Act 1998 and was also vicariously liable for the publishing of their private information by Skelton. The elements of the case relating to the Data Protection Act are beyond the scope of this article, which will focus on the vicarious liability issue.

The trial judge, Langstaff J, found that Morrisons had no primary liability for Skelton’s actions, but was vicariously liable for them. He relied in particular on language from Mohamud, as well as on Lord Phillips’ five factors from Christian Brothers, discussed in Part One. The Court of Appeal upheld this judgment, and Morrisons subsequently appealed to the Supreme Court, leading to the present case.

The “Close Connection” Test

One of the major problems with vicarious liability is that for as long as it has existed, it has been more of a loose tool of justice than a concrete set of principles, often resting heavily on the facts of a particular case and the court’s evaluation of what is most fair in the situation. The doctrine resists easy attempts at simplification, which are usually too narrow to cover all the situations vicarious liability should – and in precedent decisions, has – applied to.

In Salmond on Torts (1907), Sir John Salmond made one of the more enduring attempts at simplifying the doctrine, defining wrongful conduct “in the course of employment” as:

“either (a) a wrongful act authorised by the master or (b) a wrongful and unauthorised mode of doing some act authorised by the master”

This definition was consistently applied but frequently stretched throughout the 20th century and struggles to capture deliberate acts of misconduct which the court nonetheless feels an employer should be held responsible for. Lord Toulson in Mohamud (paras 26-34) lists a number of cases where the “unauthorised mode” criteria was applied, despite not really seeming to fit the facts.

This weakness in the Salmond definition was fully on display in Lister v Hesley Hall Ltd [2002] 1 AC 215, which dealt with sexual abuse by the warden of a boarding school. To quote Lord Reed’s summary of that case in WM Morrison Supermarkets (para 21):

“Even on its most elastic interpretation, the sexual abuse of children could not be described as a mode, albeit an improper mode, of caring for them. Lord Steyn (with whom Lord Hutton and Lord Hobhouse of Woodborough agreed) said that it was not necessary to ask whether the acts of sexual abuse were modes of doing authorised acts. He posed the broader question whether the warden's torts were so closely connected with his employment that it would be just to hold his employers liable.”

Lister is the origin of the “close connection” test in vicarious liability, building on previous case law such as Rose v Plenty [1975] EWCA Civ 5, where Scarman LJ defended attaching liability to an employer which had expressly forbidden the wrongful conduct by stating that “the principle of vicarious liability is one of public policy” – a view also stated by Salmond on Torts itself. The Lister test is inherently more flexible than the Salmond formula, but for that very reason is open to overly liberal interpretation and application by courts. Lister was arguably an example of the court deciding on the just result, and then concocting a justification for it after the fact.

The “close connection” test was subsequently considered in Dubai Aluminium Company Ltd v. Salaam [2002] UKHL 48, a commercial fraud case. In that case Lord Nichols endorsed the concept of “close connection”, acknowledging that the concept was imprecise but arguing:

“This lack of precision is inevitable, given the infinite range of circumstances where the issue arises. The crucial feature or features, either producing or negativing vicarious liability, vary widely from one case or type of case to the next. Essentially the court makes an evaluative judgment in each case, having regard to all the circumstances and, importantly, having regard also to the assistance provided by previous court decisions.”

Ultimately, a key aspect of vicarious liability is a court’s subjective view of the facts, guided by the decisions of previous courts. This will remain both a key element of the doctrine and a frustration for its critics for as long as vicarious liability persists in English law.

The Other Morrisons Case: Mohamud v WM Morrison Supermarkets

Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11 dealt with the case of a petrol station attendant, Mr Khan, who threatened and racially abused a costumer before pursuing him onto the forecourt and assaulting him. Lower courts concluded that there was not a sufficiently close connection between the assault and Mr Khan’s employment to hold Morrisons vicariously liable. The claimant subsequently appealed to the Supreme Court, arguing that the “close connection” test should be replaced by a broader test of “representative capacity” – if a reasonable observer would consider the employee to be acting as a representative of the company while committing the tort, vicarious liability should attach.

Much of the subsequent confusion over Mohamud stems from the fact that in the face of this argument, the Supreme Court overturned the lower courts’ decision and found that Morrisons was vicariously liable for Mr Khan’s assault, while also explicitly rejecting the new “reasonable observer” test.

The Mohamud case has been discussed heavily elsewhere (including in several articles at Keep Calm Talk Law), but there are three sections of Lord Toulson’s judgment that are particularly relevant to the 2020 decision in WM Morrison Supermarkets.

1. The “Field of Activities”

Attempting to summarise the “close connection” test, Lord Toulson borrowed a phrase from an older case, Central Motors (Glasgow) Ltd v Cessnock Garage and Motor Co 1925 SC 796, and stated at paras 44 and 45 of Mohamud that:

“In the simplest terms, the court has to consider two matters. The first question is what functions or “field of activities” have been entrusted by the employer to the employee, or, in everyday language, what was the nature of his job.

...

Secondly, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice which goes back to [Chief Justice] Holt.”

2. The “Unbroken Sequence of Events”

Lord Toulson argued that part of Mr Khan’s job was to deal with customers, and his abusive statements to the claimant, followed by commanding him to leave the premises, were within that “field of activities”. The subsequent pursuit out onto the forecourt and the assault that followed were “an unbroken sequence of events”. Per Lord Toulson:

“I do not consider that it is right to regard him as having metaphorically taken off his uniform the moment he stepped from behind the counter. He was following up on what he had said to the claimant. It was a seamless episode.”

3. “Motive is Irrelevant”

In a notably brief comment before summing up his judgment, Lord Toulson added at para 48:

“Mr Khan’s motive is irrelevant. It looks obvious that he was motivated by personal racism rather than a desire to benefit his employer’s business, but that is neither here nor there.”

The Supreme Court’s (New) Ruling

The Supreme Court’s decision was given by Lord Reed, but it is worth noting that Lady Hale, who gave the decision in Barclays Bank, also presided over this case and concurred with Lord Reed’s decision. Both were also involved in the decision in Mohamud, and WM Morrison Supermarkets focuses primarily on clarifying how that case has been misinterpreted in subsequent rulings.

At first instance, Langstaff J explicitly used language from Mohamud to argue that Morrisons should be vicariously liable for Skelton’s actions. He argued that there was “a seamless and continuous sequence of events… an unbroken chain” from Morrisons giving the payroll data to Skelton to his leaking it online. In addition, he argued that the disclosure of the data was within Skelton’s “field of activities”, as that field involved collating that data and transmitting it to a third party. He also highlighted Lord Phillips’ five factors from Christian Brothers, discussed in Part One.

Lord Reed was surprisingly forthright in overturning the lower courts’ decisions, stating that the trial judge and the Court of Appeal had “misunderstood the principles governing vicarious liability in a number of relevant respects”.

The “Field of Activities”

On the “field of activities” mentioned in Mohamud, Lord Reed stated that the trial judge had interpreted this much too broadly. He cited Kooragang Investments Pty Ltd v Richardson & Wrench Ltd [1982] AC 462, where Lord Wilberforce commented:

“the underlying principle remains that a servant, even while performing acts of the class which he was authorised, or employed, to do, may so clearly depart from the scope of his employment that his master will not be liable for his wrongful acts.”

Skelton was authorised to take the data and transmit it to a third party, but he was never authorised to leak the data onto the internet, and this clearly departed from the scope of his task.

Lord Phillips’ Five Factors

The five factors from Lord Phillips were completely irrelevant to the matter at hand. As discussed in Barclays Bank, Lord Phillips’ points were justifications for extending vicarious liability to a non-employee – they had nothing to do with the “close connection” test, and the trial judge should not have considered them.

The “Unbroken Sequence”

A temporal or causal connection between employment and the wrongful conduct does not in itself satisfy the “close connection” test. According to Lord Reed, Lord Toulson’s comments in Mohamud regarding an “unbroken sequence of events” were less concerned with the timeline of events and more so with the capacity in which the employee was acting.

A useful counter-example is Warren v Henlys Ltd [1948] 2 All ER 935, where a petrol station attendant had a verbal altercation with a customer, as in Mohamud. The customer then departed, and returned with the police to make a complaint, during which the attendant then assaulted him. Per Lord Toulson in Mohamud:

“At the time of the incident the relationship between the plaintiff and the attendant had changed from that of customer and representative of the petrol company to that of a person making a complaint to the police and the subject of the complaint.”

Both the 1948 court (applying the Salmond formula) and Lord Toulson (applying the “close connection” test) agreed that vicarious liability should not attach in those circumstances due to the change in relationship – the attendant was no longer acting in his capacity as an employee, but in a purely personal one. Persons can act in a number of different capacities – consider the distinction in company law of whether a person is acting as a shareholder, a director, or an ordinary member of the public – and it is part of the court’s task to determine which capacity they were acting in when they committed the wrongful act.

Motive Is Relevant

Despite stating that “motive is irrelevant”, Lord Toulson’s judgment in Mohamud did not mean motive was completely irrelevant in vicarious liability. Lord Toulson had in fact considered at length whether the attendant was acting on his employer’s business or purely for personal reasons. Lord Reed argued that the statement “motive is irrelevant” had been directed – perhaps somewhat carelessly – at the trial judge in Mohamud, who had noted that the reason for Mr Khan’s aggressive outburst was unknown.

Turning back to Skelton, the Supreme Court had to consider Skelton’s actions afresh. The court focused on whether Skelton had been engaged in an “independent personal venture”, rather than his employer’s business. Lord Reed cited the principle from Joel v Morison [1834] EWHC KB J39:

“The master is only liable where the servant is acting in the course of his employment. If he was going out of his way, against his master’s implied commands, when driving on his master’s business, he will make his master liable; but if he was going on a frolic of his own, without being at all on his master’s business, the master will not be liable.”

This principle was also considered by Lord Nicholls in Dubai Aluminium:

“The matter stands differently when the employee is engaged only in furthering his own interests, as distinct from those of his employer.”

The Supreme Court found that Skelton was not in any way furthering his employer’s interests – in fact, he was acting directly against them, on a personal vendetta of his own. Overturning the decisions of the lower courts, they found that Morrisons could not be held liable for his conduct.

Conclusion

Like Barclays Bank, WM Morrison Supermarkets spends most of its time revisiting and clarifying the complex case law of vicarious liability, in this case Mohamud. Given how frequently that case is cited in the teaching of torts, Lord Reed’s judgment offers several useful comments:

  • The appropriate authority for the second step of vicarious liability is still the “close connection” test from Lister and Dubai Aluminium. Mohamud did not change this.
  • Mere causation or temporal connection is not enough to satisfy the test; neither is the fact that the tortfeasor’s employment gave them the opportunity to commit the tort.
  • The core of the test is a question of what capacity the tortfeasor was acting in, and motive is relevant insofar as it helps determine this.
  • Lord Phillips’ five factors are not relevant to this step of vicarious liability – only the first.

While it does much to clarify the position post-Mohamud, this case does not change the fact that the “close connection” test is ultimately a subjective determination by the courts, based on the facts and precedent from similar cases. Vicarious liability is fundamentally a tool to ensure just results where the strict principles of the law would otherwise cause unjust ones. This will always be unsatisfactory to some critics, but the Supreme Court continues to affirm that vicarious liability serves a vital function in the law of torts, and the “close connection” test appears to be here to stay.

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Tagged: Data Protection, Employment Law, Supreme Court, Tort Law

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