The April edition of PI Focus Magazine features James Byrne’s article on ‘Vicarious Liability’

News | Mon 18th Apr, 2016

Bearing the Burden – Vicarious Liability, Cox and Mohamud

When Lord Phillips observed that the law of vicarious liability was ‘on the move’ he was acknowledging a simple truth; ultimately it is a law all about policy. It is a law motivated by public expectation, namely the public expects our Courts, where they can, to find defendants with the financial means, usually by placing reliance on insurance, to provide effective compensation to the injured and vulnerable. As such it has and will inevitably change over time to provide what the Courts determine are just solutions to the current demands of modern Britain. And so it has come to pass that the law of vicarious liability is on the move again. This time it is driven by the complimentary judgments of Lords Toulson and Reed in the conjoined Supreme Court appeals of Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11 and Cox v Ministry of Justice [2016] UKSC 10.

Prior to the mid-1960s the law of vicarious liability was a rather stagnated affair. From its medieval origins the only significant change prior to that date was a recognition by the end of the nineteenth century that what was originally a law based on the implied command and consent principle between a master and servant needed to expand to recognise the massive changes brought about by the industrialisation of British society to include when a servant was acting in the scope of his master’s employment (the scope of employment was stringently expanded to include where defendants’ had borrowed employees in 1947 ).

Since the 1960s the Courts have yet again responded to significant structural changes introduced into the labour market, coupled with the development of a growing compensation culture, by adopting a far more liberal approach to providing a just and practical remedy to people who suffer as a consequence of wrongs perpetrated by those who introduce risk. Incremental changes introduced by the Courts have included: First, that a defendant may be vicariously liable for the tortious acts of the tortfeasor even though the act in question constituted a violation of the duty owed to the defendant and even if the act in question was a criminal offence. Second, it is possible for an unincorporated association to be vicariously liable for the tortious acts of one or more of its members. Third, vicarious liability can even extend to liability for a criminal act of sexual assault. Fourth, it is possible for two different defendants to both be vicariously liable for a single tortious act of the tortfeasor they control.

The modern approach of the Court in determining whether a defendant to be held vicariously liable has now broadly been distilled into a two-stage question:

1. What sort of relationship has to exist between the tortfeasor and a defendant before the defendant can be made vicariously liable in tort for the conduct of the tortfeasor? – The appeal of Cox was concerned with this first question.
2. In what manner does the conduct of the tortfeasor have to be related to that relationship, in order for vicarious liability to be imposed on the defendant? – The appeal of Mohamud was concerned with the second.

Cox – The relationship between the tortfeasor and defendant

It is now uncontroversial that vicarious liability can arise in the absence of a contract of employment. In the Christian Brothers Case Lord Phillips observed (at para 47): “Where the defendant and 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'”. At paragraph 35 he had previously set out the criteria as being:

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

In Cox the primary issue for the Supreme Court to consider was whether the prison service (an executive service of the defendant) was vicariously liable for the act of a prisoner in the course of his work in the prison kitchens when he negligently dropped a heavy bag of rice onto a catering manager, Mrs Cox, causing her injury.

The trial judge found that there was not a relationship akin to employment between the tortfeasor and the prison service. The prisoner was required to work in the kitchens as a matter of prison discipline, rehabilitation and discharging his obligations to the community. It was not a voluntary, but instead penal, relationship and although the work done by the prisoner might have contributed to the economic operation of the prison, the situation was not one in which the tortfeasor was furthering the prison’s business.

This reasoning was firstly rejected by the Court of Appeal and then the Supreme Court who overturned the decision and found a relationship akin to employment. Lord Reed, giving lead judgment, relied on the Christian Brothers Case criteria but held that not all factors were of equal significance. In particular the first and fifth factors were held, in most circumstances, to be less significant. Of the remaining criteria he adjudged that those three factors were inter-related and that the founding principle was that defendants should be held liable for torts that may fairly be regarded as risks of their business activity, whether committed for the purpose of furthering those activities or not. At paragraph 29 of is judgement Lord Read stated:

“…[Lord Phillip’s criteria] is intended to provide a basis for identifying the circumstances in which vicarious liability may in principle be imposed outside relationships of employment. By focusing upon the business activities carried out by the defendant and their attendant risks, it directs attention to the issues which are likely to be relevant in the context of modern workplaces, where workers may in reality be part of the workforce of an organisation without having a contract of employment with it, and also reflects prevailing ideas about the responsibility of businesses for the risks which are created by their activities. It results in an extension of the scope of vicarious liability beyond the responsibility of an employer for the acts and omissions of its employees in the course of their employment, but not to the extent of imposing such liability where a tortfeasor’s activities are entirely attributable to the conduct of a recognisably independent business of his own or a third party. An important consequence of that extension is to enable the law to maintain previous levels of protection for victims of torts, notwithstanding changes in the legal relationships between enterprises and members of their workforces which may be motivated by factors which have nothing to do with the nature of the enterprises’ activities or the attendant risks.”

Lord Reed went on to comment that the Courts should not apply a narrow focus when evaluating the relationship between the tortfeasor and the defendant, including the meaning of words such as business, enterprise and benefit. Further, that the criteria itself should not be applied mechanically or slavishly. Ultimately it was for the Court to stand back and consider whether the imposition of vicarious liability would be fair, just and reasonable.

On the facts of Cox it was clear that the work carried out by the tortfeasor was an essential function of the prison and if not done by prisoners would have been required to be done by someone else. As a result it was safe to conclude that work carried out by the tortfeasor was for the benefit of the running of the prison and was part of their enterprise. The prison took the benefit of the tortfeasor’s work and there was no reason not to take its burden.

Mohamud – The close connection test

In Mohamud the Court turned to the second stage of the vicarious liability question as referred to by Lord Steyn in Lister as being ‘close connection test’, namely, whether there was sufficient connection between the position in which the tortfeasor was employed and his wrongful conduct to make it just for the employer to be held liable.

Mr Mohamud was a customer at a petrol station operated by the respondent when he suffered a violent physical attack at the hands of the respondent’s employee, a sales assistant, who wanted Mr Mohamud leave the premises. The attack was gratuitous, racially motivated and completely unprovoked. The respondent argued that they should not be held responsible for the actions of their employee because applying the close connection test it could not be argued that the attack was closely related to the tortfeasor’s employment duties. Both the County Court and the Court of Appeal agreed with the respondent. The Court of Appeal’s decisions was appealed and the Supreme Court was invited by the appellant to reconsider the close connection test and replace it with a new test to ensure a just result.

Lord Toulson, giving the lead judgment of the Supreme Court, rejected the appellant’s invitation to depose of the close connection test and create a new one. He reasoned that he was not persuaded that there was anything wrong with the Lister approach and that he did not see that the law would be improved by a change in vocabulary.

Instead, finding for the appellant, Lord Toulson sought to apply the close connection test in a far more liberal way than it had previously been applied. Beforehand, vicarious liability had only be found where the tortfeasor’s tortious conduct was related to employment duties and responsibilities that created a special risk of harm e.g. where wardens in residential homes had abused children in the care on the basis they were in a position trust over these children in an unsupervised setting (as in Lister), or bouncers at nightclubs who had assaulted customers on the basis that they were employed to keep order, using force if necessary . Yet in Mohamud, the Court expanded the scope of the test to look at matters broadly. It held that the attack, though inexcusable, was committed by the tortfeasor attempting to force Mr Mohamud to leave the premises, and as such it was clearly in the field of his employment activities as it was clearly connected with his employer’s business. It was an unbroken sequence of events. Lord Toulson commented “I do not consider that it is right to regard [the tortfeasor] as having metaphorically taken off his uniform the moment he stepped from behind the counter.”

Where do Cox and Mohamud leave the law of vicarious liability?

Both judgments have moved the law of vicarious liability further into uncertain grounds. Both have endorsed a more generous approach to answering the two-stage question in an attempt to secure what the Court considers fairer, just and reasonable results.

The decision in Cox, whilst clarifying the application of Lord Phillip’s criteria test, should be treated as a positive judgment for claimants as it is likely to broaden the circumstances when a relationship akin to employment exists to include organisations who are carrying out activities which are in furtherance of their own interests e.g. such as the volunteer sector.

Claimants should also view Mohamud positive light, as again the Court has sought broaden when the vicarious liability applies. Nonetheless, the exact scope of the changes brought about by Mohamud is difficult to define. Ultimately the extent to which the court will by willing to apply this new approach will only become clearer as more cases are heard and decided.