Vicarious Liability – a return to first principles?

9 Apr, 2020

The Supreme Court decision in WM Morrisons Supermarkets plc v Various Claimants [2020] UKSC 12 returned the law on vicarious liability to long established common law principles.

Facts

Andrew Skelton was an employee with a grudge. His employer Morrisons Supermarket had given him a verbal warning for misconduct in the course of his role as a Senior Auditor.

Mr Skelton decided to get his revenge on Morrisons. In preparation for the annual audit, he was tasked with the collation of payroll data. Unbeknownst to his employer, he copied the data onto a personal USB stick and uploaded it to a publicly accessible file-sharing website, thus compromising the personal details of over 100,000 Morrisons employees.

In a class action, around 5,000 of the employees claimed compensation from Morrisons for breach of statutory duty under the Data Protection Act, breach of confidence and misuse of private information.

The main issue before the Supreme Court was whether Morrisons were vicariously liable for the actions of Skelton.

The High Court and Court of Appeal had both found that they were. Both courts relied heavily on a 2016 Supreme Court decision, coincidentally also involving Morrisons Supermarket, called Mohamud v WM Morrisons Supermarkets PLC [2016] UKSC 11.

The case of Mohamud

In Mohamud, a customer had attended a petrol station kiosk and approached one of the staff members (K) with an enquiry. K, whose job was to serve customers, responded with abuse and ordered the customer to leave. He then immediately followed the customer onto the forecourt and subjected him to a violent and unprovoked assault.

In giving the lead judgment, Lord Toulson identified a two-stage test for determining vicarious liability:

(a) what functions (or “field of activities”) had been entrusted by the employer to the employee; and

(b) whether there was sufficient connection between the employee's wrongful conduct and the position in which he was employed to make it right for the employer to be held liable under the principle of social justice.

Lord Toulson described this test as a “simplification of the essence” of the principles that could be gleaned from existing case law, in particular, the judgment of Lord Nicholls in Dubai Aluminium [2003] 2 AC 366. 

In Mohamud, the Supreme Court found the supermarket vicariously liable for the assault on the Claimant. K’s job was to serve customers. There was an unbroken sequence of events from the serving of the customer to the assault on the forecourt. The motive for the assault was irrelevant: it did not matter why K chose to attack the Claimant, only that he did so in the course of his employment.

Decision of the Supreme Court in the present case

The Supreme Court found that Morrisons were not liable for the disclosure of personal data by Mr Skelton. In reaching that conclusion, they found that the High Court and Court of Appeal had fundamentally misunderstood Lord Toulson’s judgment in Mohamud in three key respects:

(a)    The “unbroken sequence of events”

(b)    The relevance of motive

(c)    The principle of social justice

The reliance on the “unbroken sequence of events”

In finding Morrisons liable for the actions of Skelton, the lower courts referred to the “unbroken sequence of events” identified by Lord Toulson in Mohamud. There was an unbroken link between the employment and the disclosure. Skelton would not have had access to the data if he had not been employed by Morrisons. There was a causative link between the employment and the unlawful act, and therefore (they reasoned) Morrisons was vicariously liable for the actions of Skelton.

The Supreme Court were highly critical of this approach. The reference in the case of Mohamud to an “unbroken sequence of events” was not directed to a temporal or causal connection between the various events, but to the capacity in which K was acting when those events took place.

In Mohamud, K served the Claimant in his capacity as an employee. The initial exchange and the assault were part of an unbroken sequence of events, and it would therefore be artificial to suggest that at some point after the initial encounter but before the assault K had “taken off the uniform”.

Conversely, there would be no question of Morrisons being held liable if K had happened to see an acquaintance on the forecourt and assaulted them for entirely personal reasons.

In respect of Skelton, the Supreme Court found that there was no “unbroken sequence of events” between his lawful activities as an auditor and the disclosure. The disclosure of the data could not possibly be said to be within his “field of activities”, in that it was not an act he was authorised to do.

The very fact that Skelton’s employment gave him the opportunity to disclose the material is insufficient to satisfy the “sufficient connection” limb of the test as expressed in Mohamud.

The relevance of motive

The trial judge was unsettled by finding Morrisons liable in a case where the entire purpose of the disclosure had been to cause injury to them. He was concerned that in doing so the court was in some way acting as an accessory to Skelton’s nefarious aims. However, he relied upon Lord Toulson’s pronouncement in Mohamud that “motive is irrelevant” to set aside his concerns and find the company liable.

The Supreme Court rejected this approach. The statement in Mohamud that “motive is irrelevant” was not intended to be a principle of general application. In Mohamud, K’s motive for attacking the Claimant was indeed irrelevant: it did not matter why K chose to attack the Claimant, only that at the point at which he did, he was still acting in the course of his employment.

In this case, Skelton’s motive is clearly highly relevant. He was on a personal quest to revenge himself on Morrisons for the disciplinary proceedings some months earlier.  He was not acting within the field of his activities as an employee: quite the contrary, he was seeking to cause damage to his employer’s business.

The principle of social justice

The final criticism levied by the Supreme Court was the inappropriate reliance by the lower courts on the “principle of social justice” espoused by Lord Toulson in Mohamud.

The Supreme Court pointed out that this phrase was not an invitation to the court to determine if it was right for the employer to be held liable as a matter of social justice. Vicarious liability for wrongdoing by an employee is not determined according to individual judges’ sense of social justice. It is decided by orthodox common law reasoning.

Comment

This case is a timely reminder of the pitfalls of taking soundbites from a judgment without consideration of the wider context. The consequence of doing so in this case was that the Court of Appeal unwittingly re-formulated the test for vicarious liability.

In correcting the error, the Supreme Court returned to first principles. They re-established the distinction drawn by Lord Nicolls in Dubai Aluminium  between “cases … where the employee was engaged, however misguidedly, in furthering his employer’s business, and cases where the employee is engaged solely in pursuing his own interests: on a ‘frolic of his own’, in the language of the time-honoured catch phrase.”

Undoubtedly, Mr Skelton went off on a frolic of his own. Perhaps the Court of Appeal could be accused of doing the same.

 

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