Introduction

Under the common law doctrine of vicarious liability, a person may be liable for the negligence or other torts committed by another person. Two elements have to be shown before vicarious liability can be imposed: (1) the relationship between the two parties makes it proper for the law to make one pays for the fault of the other; and (2) there is a sufficient connection between the relationship and the fault by the tortfeasor (i.e. the wrongdoer). Historically, apart from relationships such as agency and partnership, the relationships that could give rise to vicarious liability were limited to that between an employer and an employee.

Recognising that the law of vicarious liability is developing, the UK Supreme Court (the “Supreme Court”) considered the circumstances in which an employer may be held liable for the wrongdoings of someone who is not an employee in the recent English case of Barclays Bank plc v Various Claimants [2020] UKSC 13.

Background

As part of its recruitment process, Barclays Bank (the “Bank”) required job applicants to pass a medical examination as a prerequisite for job offers. The Bank arranged the medical appointments with Dr Bates and provided him with a pro forma report headed “Barclays Confidential Medical Report” to be filled in. In return, Dr Bates was paid a fee for each report, but no retainer was paid by the Bank. The medical examinations took place in a consulting room at Dr Bates’s home. It was alleged that Dr Bates sexually assaulted the 126 claimants during those examinations. After Dr Bates passed away in 2009, the claimants brought a group action to seek damages from the Bank, claiming that the Bank was vicariously liable for the sexual assaults allegedly perpetrated by Dr Bates in the course of the medical examinations carried out for the Bank between 1968 and about 1984.

Legal principles

General position

Conventionally, a distinction has been drawn between a contract of employment and a contract for services. An employer may be liable for the negligence or other torts committed by its employees, but not those by an independent contractor in the course of the execution of the contracted work. After examining some recent cases, the Supreme Court identified the “sufficiently analogous to employment” test developed by the common law courts and made it clear that an employer can be held vicariously liable for the acts of someone who is not its employee, provided that the relationship between them is sufficiently akin or analogous to employment to make it fair, just and reasonable to impose vicarious liability.

The five “incidents”

The Supreme Court made reference to Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 which shed light on the development of the doctrine of vicarious liability beyond employment relationships. In that case, the Supreme Court held that “where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is ‘akin to that between an employer and an employee’.” (emphasis added) The five “incidents” referred to in that case were as follows:

1.        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;

2.        the tort will have been committed as a result of activity being taken by the employee on behalf of the employer;

3.        the employee’s activity is likely to be part of the business activity of the employer;

4.        the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee; and

5.        the employee will, to a greater or lesser degree, have been under the control of the employer.

While the Supreme Court recognised that the above five “incidents” may be helpful in doubtful cases in identifying a relationship that is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability, it also emphasised that they are not conclusive. The key is to scrutinize and understand the detailed features of the relationship, i.e. whether the tortfeasor is carrying on business on his own account or whether he is in a relationship akin to employment with the defendant. In clear-cut cases, it is not necessary to consider the five “incidents”.

While accepting the application of the doctrine of vicarious liability outside the strict confines of an employment relationship, the Supreme Court clarified that it has never extended to hold employers vicariously liable for the tortious acts committed by independent contractors. In other words, the recent development of the doctrine of vicarious liability has not eroded or undermined the classic distinction between employees and independent contractors.

Whether the Bank should be vicariously liable
for Dr Bates’s wrongdoings

On the facts, the Supreme Court found that an employment relationship clearly did not exist at any time between the Bank and Dr Bates. Nor was Dr Bates anything close to an employee of the Bank. Dr Bates was not paid a retainer which might have obliged him to accept a certain number of referrals from the Bank. He was paid a fee for each report and was free to refuse an offered examination should he wish to do so. He also carried his own medical liability insurance. Further, conducting medical assessments and examinations of employees or prospective employees for the Bank was only a comparatively minor part of the practice of Dr Bates, who had a wide portfolio of patients and clients. He also wrote for a newspaper column.

Based on the above, the Supreme Court concluded that Dr Bates was conducting business on his own account as a medical practitioner. Hence, it was held that the Bank was not vicariously liable for any wrongdoing of Dr Bates in the course of the medical examinations he carried out for the Bank.

Takeaways

Employers should bear in mind that they may be vicariously liable for the wrongdoings of non-employees engaged by them. To accommodate the more diverse range of relationships in the current workplace and for the same policy reasons as those for the development of the doctrine of the employer’s liability for the acts of his employees, recent decisions have broadened the boundaries of vicarious liability from the “employer-employee” relationship to relationships that are sufficiently “akin to employment”. In spite of this development, the doctrine has not been expanded to such an extent that employers are vicariously liable for the wrongdoings of those who are truly independent contractors.

The Supreme Court’s decision in Barclays Bank Plc v Various Claimants clarified the correct approach in assessing the potential liability of employers where tortious acts are committed by non-employees engaged by them. The question is always whether the tortfeasor is carrying on business on his own account, or whether he is in a relationship that is akin to employment with the person who had assigned him the relevant work. This is fundamentally a factual question and one should always closely examine the detailed features of the relationship.