We updated you in our August 2018 Newsletter Case update (1) Employer’s liability – it’s more likely on the Court of Appeal’s decision in Barclays Bank plc v Various Claimants that Barclays was liable for the conduct of the late Dr Gordon Bates who was an independent contractor who conducted medical examinations and assessments on behalf of Barclays.
The Court of Appeal considered that the relationship between Dr Bates and Barclays was “akin to employment“ and that the wrongful conduct of Dr Bates was sufficiently closely connected with that employment.
We also updated you in our April 2020 Newsletter Case update: Morrisons data breach that the Supreme Court found in that case that an employer will not be liable for an employee’s criminal act if it was not closely linked to the employee carrying out their legitimate duties.
The Supreme Court has overturned the Court of Appeal’s decision (on the same day as handing down its decision on vicarious liability in Morrisons data breach). The Supreme Court decided that Barclays was not vicariously liable for Dr Bates’ actions. Dr Bates was an independent contractor who was in business on his own account with a portfolio of patients and clients; he was neither an employee of Barclays nor anything close to an employee.
Summary: Is an employer liable for the wrongful acts of an independent contractor?
No, says the Supreme Court in Barclays Bank plc v Various Claimants, (available here) (as long as the contractor was carrying on business on his own account and was not in a relationship akin to employment with the employer).
Facts: The late Dr Gordon Bates conducted medical examinations and assessments on behalf of Barclays Bank from 1968 until 1984. The medical exam was an essential part of offers of employment with the bank and prospective employees had no choice but to have it. There was a set fee paid to Dr Bates for each examination (he would fill in a proforma provided by Barclays) and he was not obliged to accept any particular level of work from Barclays.
Dr Bates was later found to have engaged in inappropriate examinations requiring the individuals to strip down to their underwear and examined their breasts and/or digitally penetrated the anus or vagina.
Victims claimed that Barclays were vicariously liable for the actions of Dr Bates as an employee.
Barclays denied he was an employee or in a situation akin to employment. He was instead an independent subcontractor and, as such, liable only on his own part.
The High Court considered the preliminary issue of whether Barclays was vicariously liable for the sexual assaults by Dr Bates.
The High Court considered the two stage test (as set out in previous case law):
On applying these tests, the Court found Barclays liable for the conduct of Dr Bates.
Barclays appealed to the Court of Appeal on the basis that the application of stage 1 of the test was incorrect and on the basis that Dr Bates’ status as an independent contractor was a complete defence to the claim.
The Court of Appeal upheld the High Court’s decision and held that Barclays was vicariously liable for the alleged sexual assaults carried out by Dr Bates. The Court of Appeal rejected the submission that Dr Bates’ status as an independent contractor was a defence to the claim. The Court of Appeal emphasised that the correct method is to apply the two-stage test to the particular facts of the case.
On doing so, the Court of Appeal found as follows:
Barclays appealed to the Supreme Court.
Lady Hale, giving the unanimous judgment of the Supreme Court, reversed the decisions of the High Court and Court of Appeal and held that Barclays was not vicariously liable.
Lady Hale said that “the question therefore is, as it always has been, whether the tortfeasor is carrying on business on his own account or whether he is in a relationship akin to employment with the defendant”. She went on to find that Dr Bates was in business on his own account and therefore the Bank was not vicariously liable for any wrongdoing in the course of the medical examinations he carried out for the Bank.
Some of the key features of the Supreme Court’s reasoning were as follows:
Implications: This decision (together with the Supreme Court’s decision in the Morrisons data breach case), marks a change in direction in the law on vicarious liability, which had been expanding in the last few years. Both decisions will come as a relief to insurers and employers, who have seen their potential liability expand with previous decisions on the issue of vicarious liability.
The judgment of the Supreme Court in Barclays indicates the common-sense and pragmatic approach to be taken in the future: If an individual is carrying on a business on their own account (i.e. they are an independent contractor or acting under a contract for services) then no vicarious liability arises and that is the end of the enquiry. As Lady Hale states, this was, and always has been, the law.