The law of vicarious liability is on the move! In what could prove to be a landmark ruling, the Supreme Court rules in the awaited decision on vicarious liability and the independent contractor defence: Barclays Bank Plc v Various Claimants.

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The law of vicarious liability is on the move! In what could prove to be a landmark ruling, the Supreme Court rules in the awaited decision on vicarious liability and the independent contractor defence: Barclays Bank Plc v Various Claimants.

Published 1 April 2020

The Supreme Court has today handed down its decision following consideration of the appeal in Barclays Bank Plc v Various Claimants. The Court was asked to determine whether Barclays Bank was liable for the alleged sexual assaults committed by a GP medical examiner during medical examinations of prospective employees and employees. The Supreme Court have held that the GP was an Independent Contractor and as such Barclays Bank are not vicariously liable for his actions. We also discuss briefly the Supreme Court judgment in Wm Morrisons v Various Claimants, which was also handed down today.

The facts - Barclays Bank Plc v Various Claimants

This case involves a group litigation action on behalf of 126 Claimants seeking damages against Barclays Bank. They allege they were subjected to sexual assault by the late Dr Gordon Bates during medical examinations during the application process for employment with the bank, or as existing employees.

Medical examinations were made a requirement of the employment or offer of employment and Dr Bates was often referred to as “the bank’s doctor” or “our doctor”. The reports were provided on pro-forma examination forms bearing Barclays’ logo and were entitled “Barclays Confidential Medical Report”. Dr Bates conducted the vast majority, if not all, of the examinations requested by Barclays. The examinations were performed at his consultation room at his home.

Dr Bates died in 2009 and his Estate had long since been distributed. His medical defence organisation would not indemnify for alleged sexual assaults. The Claimants’ only legal recourse was to sue the bank.

Barclays denied the claim for vicarious liability. It argued Dr Bates was not an employee or in a situation akin to employment. It argued that Dr Bates was self-employed and engaged by the bank as an independent contractor; accordingly, Dr Bates alone should be liable for any assaults proved.

Finding at first instance and in the Court of Appeal

Both the Trial Judge and the Court of Appeal considered that the appropriate test to determine whether Barclays was vicariously liable for the medical examinations performed by Dr Bates was the two stage test handed down in the linked cases of Cox v Ministry of Justice and Mohamud v WM Morrisons Supermarkets (and later approved by the Supreme Court in AR & ES v Nottinghamshire County Council [2017] UKSC60)

This two stage test can be summarised as follows:

i. Is the relevant relationship [between Dr Bates and Barclays] one of employment or “akin to employment”?
ii. If so, was the act sufficient to closely connect with that employment or quasi-employment?

In determining the first stage of the test, the Trial judge and the Court of Appeal approved the five criteria identified by Lord Phillips in Catholic Child Welfare Society v Claimants [2012] UKSC56:-

i. The employer is more likely to have the means to compensate the victim and can be expected to have insured against that liability
ii. The act 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 out on the activity will have created the risk of the act being committed by the employee
v. The employee will to a greater or a lesser degree have been under the control of the employer

Both the Trial Judge and the Court of Appeal concluded that on evidence available Dr Bates’ relationship with Barclays satisfied the two stage test and each of the five criteria relevant to the first stage of that test. They considered that the extent of control [the fifth criterion in the first stage] was perhaps the most critical factor. The fact Dr Bates organised his own professional life and undertook other medical activities did not negate an argument that he was under the control of the bank. Nor did the fact he conducted examinations within his own home. An important factor in this case was the fact that Barclays directed and identified the questions to be asked and the physical examinations to be carried out by the doctor for the purposes of completing the template form. Control by the bank also manifested itself in directing the Claimant to a particular doctor and giving the Claimant no choice in the matter.

Both lower Courts also considered it just and fair that Barclays be held vicariously liable for the examinations performed by Dr Bates. In part, because an action against Barclays was the only possible legal recourse now available to the Claimants.

Barclays appealed.

Judgment of the Supreme Court

The Supreme Court have allowed the appeal, finding that Barclays are not vicariously liable for any wrongdoing of Dr Bates.

In reaching this decision, the Supreme Court considered previous judgments applying the five criteria. They acknowledged that the definition of ‘worker’ was shifting in employment law, but that this shift should not undermine the distinction between employees and independent contractors. The Supreme Court considered that as far as vicarious liability is concerned, there was still a distinction between employment and relationships akin to employment, on the one hand, and the role of independent contractor, on the other.

The question therefore is still whether the ultimate alleged wrongdoer (in this case Dr Bates) is carrying on business on his own account or whether he is in a relationship akin to employment. In doubtful cases, the five criteria will be helpful in identifying whether the relationship is one which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability. On the other hand, where it is clear that the wrongdoer is carrying on his own independent business, it is not necessary to consider the five criteria: in such cases, vicarious liability will not apply. The key lies with understanding the details of the relationship.

Here, the Supreme Court considered that Dr Bates’ relationship with the Bank was not akin to that of an employee. He was a part time employee of the health service. The fact that the Bank sent him the forms to complete and made arrangements for the examinations was not sufficient to establish a relationship akin to employment. Dr Bates was not paid a retainer. He had the ability to refuse an offered examination, had his own medical liability insurance and carried out a business on his own account. The Bank was one of his clients. The Supreme Court did not need to apply a detailed analysis of the five criteria, but reached a view on the facts that Dr Bates was clearly an independent contractor.

Accordingly, the Supreme Court allowed Barclays’ appeal.

Wm Morrisons v Various Claimants

Morrisons also deals with questions of vicarious liability. In that case, an employee in the internal audit department of Morrisons, Mr Skelton, unlawfully disseminated data relating to its employees, in a deliberate attempt to frame a work colleague. A group of those employees brought an action against Morrisons on the basis that Morrisons were vicariously liable for the unlawful dissemination of their data. In the lower courts, Morrisons had been held vicariously liable. Morrisons appealed.

The Supreme Court considered that the dissemination was not an act that Skelton was allowed to do and that the mere fact that his employment gave him the opportunity to do the wrongful act did not mean that Morrisons should be held liable. Most importantly, however, the Supreme Court held that Skelton’s wrongful act was not sufficiently close to his authorised work to be considered as being done by him in the ordinary course of his employment. Accordingly, they allowed the appeal.

Impact

These two judgments may have far-reaching consequences, but for different reasons.

Morrisons - There had been a trend in recent past judgments for courts to find employers vicariously liable in circumstances where previously the employee’s acts were considered to be outside the scope of their employment. Arguably, the decision of the Supreme Court in the Morrisons’ case, by restating the law redresses the balance. As ever, each case must be judged on its facts. However, to use the old jargon, the courts may now be more open to consider that an employee was ‘on a frolic of his/her own’ and find the employer not vicariously liable.

Barclays - The decision of the Supreme Court in Barclays will provide comfort for healthcare organisations engaging the services of Independent Contractors. As ever, each case has to be judged on its facts. Although in some cases, it will be fair and just to impose vicarious liability where on closer scrutiny there is a relationship akin to employment, there is still an independent contractor defence. In a healthcare setting, the Supreme Court judgment may help both private medical healthcare providers and dental practices defend cases involving wrongdoing of those engaged by them as independent contractors. In such cases, depending on the facts, the defendant should be the independent contractor.

It should, however, be noted that Claimants can still argue that although vicarious liability may not apply, an organisation should be considered to be under a non-delegable duty of care. The Supreme Court mentioned this principle in passing. As a leading healthcare and medical malpractice firm in the UK, DACB remain on hand to advise you on these issues, which should come as welcome relief to practices that rely upon independent contractors as part of their healthcare provision.

Authors

Simon Perkins

Simon Perkins

Bristol

+44 (0) 117 918 2040

Jonathan Bonser

Jonathan Bonser

Manchester

+44 (0) 161 934 3107

Bryony Steele

Bryony Steele

Winchester

+44(0)1962 70 5588

Bridie Mahoney

Bridie Mahoney

Manchester

+44(0)161 934 3118