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SC double decision on vicarious liability

03 April 2020. Published by Natalie Drew, Senior Associate

Handed down on 1 April, the two, separate, Supreme Court judgments on vicarious liability were no April Fool's jokes; they are serious and welcome responses to a difficult issue.

Handed down on 1 April, the two, separate, Supreme Court judgments on vicarious liability were no April Fool's jokes; in fact, they are a considered response to a serious issue, and have been heartily welcomed by many, including healthcare businesses and their insurers.

In both cases, the Supreme Court overturned the decisions of the Court of Appeal and found that Barclays Bank and Morrisons were not vicariously liable for the acts of: an independent contractor (in the case of the bank), and a disgruntled employee (in the case of the supermarket). 

We explore some of the key details, and consider the impact that the decisions will have, particularly in the healthcare arena.

Barclays Bank plc v Various Claimants

The Claimants had alleged that Barclays Bank was vicariously liable for the actions of the late Dr Gordon Bates – an independent contractor – who was alleged to have committed sexual assaults against prospective employees of Barclays whilst carrying out pre-employment medical examinations on behalf of the bank. 

The original High Court judgment (of 2017) concluded that the bank was vicariously liable for Dr Bates' actions (as did the subsequent Court of Appeal decision), but the five Supreme Court Justices disagreed, permitting the Bank's appeal, and concluding that, in fact, it was not vicariously liable for the independent contractor. 

Some of the key features of the Supreme Court's reasoning were as follows:

  • Dr Bates was a "classic independent contractor"– he carried out work for the NHS, conducted medical examinations for a range of clients, and wrote a weekly newspaper article;
  • He was "working for his own business or enterprise" as opposed to for the bank: he was in business "on his own account as a medical practitioner, with a portfolio of patients and clients. The work for the bank was a very small proportion of his work";
  • It was also noted that "he no doubt carried his own medical liability insurance";
  • Dr Bates had autonomy – he could "refuse to do a requested examination if he chose".

VM Morrisons Supermarkets pls v Various Claimants

 The facts of the Morrisons case are very different. Here, Andrew Skelton, a senior internal auditor – and a (disgruntled) employee (as opposed to an independent contractor) – was asked to transmit payroll data to KPMG. Instead, he released personal data (pertaining to around 100,000 Morrisons employees) online and sent it anonymously to UK newspapers. 

He received an eight-year jail sentence, and 5,000 Morrisons employees subsequently brought a group action for compensation. Again, the High Court and Court of Appeal concluded that Morrisons was vicariously liable, but the Supreme Court disagreed, finding that the online disclosure of the data was not part of Mr Skelton's "field of activities", as it was not an act he was authorised to do. Furthermore, it stated:

"although there was a close temporal link and an unbroken chain of causation linking the provision of the data to Skelton for the purpose of transmitting it to KPMG and his disclosing it on the internet, a temporal or causal connection does not in itself satisfy the close connection test".

Taking a similar approach to that of the Barclays case above, the president of the Supreme Court, Lord Reed said: Skelton was not engaged in furthering Morrisons' business when he committed the wrongdoing in question' – which appears to be, therefore, a key consideration.

Comments and Conclusions

Of course, whilst every case will be determined on its individual facts, the two Supreme Court decisions are helpful in illustrating the general view of the Court in this complicated arena. 

By refusing to extend the principles of vicarious liability to both independent contractors, or employees acting far outside of the scope of their employment, the Supreme Court has given a firm steer on this area of law and restored some boundaries. This will be of great reassurance to businesses and their insurers. 

In the healthcare arena, it is encouraging to see the Court give a strong endorsement of the principle that private healthcare providers are not vicariously liable for the activity of independent contractors, such as those with practising privileges. However, care needs to be taken by clinics and healthcare providers as to how they contract with and regulate such individuals – for example, limiting the level of 'control' that is exerted over the contractor, and considering for whose benefit the business is being conducted.