Examining the scope of vicarious liability

Various claimants v Barclays Bank Plc [2017] EWHC 1929

Executive Summary

The High Court has ruled that Barclays Bank is vicariously liable for the actions of a doctor it engaged to undertake pre-employment examinations on their behalf.

Facts

Over a period of 16 years, Barclays Bank Plc required prospective and some current employees to undergo medical examinations with Dr Bates at his surgery. No choice was given to them to be examined by a female or other doctor. The bank made the appointments with him, and paid him a set fee for each examination. Following each examination, Dr Bates completed a medical examination pro forma headed with the bank’s logo which was returned to, and used by, the bank when making an offer of employment. The claimants alleged that during the examinations, Dr Bates had sexually assaulted them. A police enquiry in 2013 had concluded that there was sufficient evidence to pursue a prosecution but unfortunately Dr Bates had died by this juncture and his Estate had been disposed of.

It was undisputed that Dr Bates owed a duty to each claimant to carry out the examination without injuring the claimant intentionally or negligently. The group litigation brought on behalf of 126 claimants alleged that Barclays Bank Plc was vicariously liable for the actions of the doctor it had instructed and who was working on its behalf. In response, the bank maintained that Dr Bates was an independent contractor rather than an employee, who undertook examinations for a number of companies. The bank argued that as the doctor was neither exclusively engaged by the bank, nor did he examine the patients at the bank’s premises, he did not have a contract of employment with the bank and was akin to any independent doctor for whom it was not vicariously liable.

Decision

In her judgment, Her Honour Mrs Justice Nicola Davies acknowledged that the law relating to vicarious liability has developed significantly since the time when it was necessary to show a strict employer/employee relationship. She affirmed the two stage test as to whether vicarious liability arises in a particular case as follows:

1. Is the relevant relationship one of employment or “akin to employment”?
2. If so, was the tort sufficiently closely connected with that employment or quasi employment?

In respect of the first stage of the test, HHJ Davies followed the five criteria laid out in Catholic Child Welfare Society & Others v Various Claimants [2012] UKSC56 to find that the bank was in a relationship akin to employment with Dr Bates:

• The defendant is more likely to have the means to compensate the victim than the tortfeasor and can be expected to have insured against that liability – a balance had to be weighed between two innocent parties and whilst the claimants had no recourse against Dr Bates, his medical defence insurers (who had refused indemnity) or his Estate, the bank and its insurers had the means to meet such claims.
• The tort will have been committed as a result of activity being taken by the employee on behalf of the employer – The offers of employment were conditional upon the examinations thus it was the bank rather than the individuals who benefited from Dr Bates’ work, as the claimants had no reason to be examined by Dr Bates other than as a result of the bank’s request. The test was therefore satisfied, particularly in light of the bank’s role in selecting and arranging appointments with the doctor.
• The tortfeasor’s activity is likely to be a part of the business activity of the defendant – in Her Honour’s opinion, a workforce is an intrinsic part of the business activity of a bank and the purpose of an examination was to satisfy the bank that a potential member of staff would be an effective member of that workforce. Consequently, Dr Bates was acting for the benefit of the bank and was therefore an integral part of the bank’s activity.
• The employer, by employing the employee to carry on the activity, will have created the risk of a tort committed by the employee – given the bank directed claimants where to go for examination, gave no choice as to the doctor to be seen, and directed Dr Bates to perform a physical examination which included chest measurements, the bank satisfied this criterion.
• The employee will, to a greater or lesser degree, have been under the control of the employer– whilst acknowledging that the condition of control had less significance now, HHJ Davies found that the bank exerted a higher level of prescription than might usually be found in the context of a doctor’s examination, given that the bank directed the questions to be asked and physical examinations to be undertaken, as well as directing the claimants to this particular doctor without any opportunity for choice. The test of control was therefore satisfied on the facts. It mattered not that Dr Bates also worked for other companies and away from the bank’s premises.

In respect of the second stage of the test, the tort was deemed to be sufficiently closely connected with the quasi employment on the basis that the task of carrying out medical examinations was entrusted to Dr Bates and the alleged sexual abuse was inextricably interwoven with that activity. Further, it was just and fair to render the bank vicariously liable for Dr Bates’ actions given that the assaults occurred during medical examinations carried out at the bank’s request, and the civil claim against the bank was the only legal recourse still available to the claimants.

Commentary

Since the decision in Mohamud v WM Morrison Supermarkets 2016 UKSC 10 (wherein the supermarket chain was held to be vicariously liable for the actions of its employee assaulting a customer), the next development in the concept of vicarious liability has been awaited with apprehension. This latest decision is a stark reminder that a formal contract of employment is unnecessary to impose vicarious liability on an innocent party for the actions of others undertaking activity on their behalf.

It is unfortunate for the bank that Dr Bates had died and his Estate disposed of by the time the claims were brought as the decision is clearly influenced by a desire for social justice for these innocent claimants. Notwithstanding that, it is clearly the degree of influence exerted by Barclays Bank over the examinations that ultimately led to the decision. Any lesser involvement may have been sufficient to enable them to escape liability.

This decision has wide ranging implications for all those in quasi employment relationships, and their insurers, particularly in respect of third party arrangements like pre-screening medicals, external occupational health arrangements, and outsourced training activity. HR departments are encouraged to review their arrangements, with a heightened need to consider the extraction of appropriately worded indemnities from third party providers, alongside other checks and safeguards. A level of control over third party providers of these services can put organisations at risk of a finding that such providers are judged to be an employee rather than an independent contractor in an employment tribunal. Now, as a result of this decision, it can also potentially fix an organisation with vicarious liability for the tortious acts committed by those undertaking these outsourced activities on their behalf.

As employment arrangements become more diverse than ever, particularly in the gig economy, it is likely that the doctrine of vicarious liability will be required to undergo further examination by the courts in the not too distant future.

To discuss the issues arising from this judgment, please contact Peter Forshaw, Partner on 0151 242 7935 or peter.forshaw@weightmans.com. 

If you would like some advice following a review of your HR arrangements please contact Ben Daniel, Partner in our Employment, Pensions and Immigration team on 0113 213 4054 or ben.daniel@weightmans.com  or your usual contact in our employment law team.