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FREE BOOK CHAPTER from 'A Practical Guide to Vicarious Liability' by Mariel Irvine

29/11/18. Chapter One - Overview

To search for certainty and precision in vicarious liability is to undertake a quest for a chimaera. Many aspects of the law of torts are inherently imprecise.”
Per Lord Dyson in Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11.

There have been at least five decisions of the Supreme Court relevant to vicarious liability since 2012. A topic of importance in a minority of cases, and sometimes described as “geeky”, has been forced into the spotlight.

What is vicarious liability? It is a legal principle. When applied, one party is substituted for another and held liable for that other party’s wrongdoing. Sometimes the replacement party may be blameworthy or bear some “primary liability” of its own. At other times, it may have no primary liability.

It is an emotive issue when it concerns the imposition of liability on a blameless party, in circumstances where someone else is in the wrong. The applicability of the doctrine depends on public policy. A party is targeted in litigation because it has the financial means to satisfy a judgement, when the culpable party has not. In cases where the claimant rightly recovers compensation, the wrongdoer may be seen to escape Scott free.

When deciding whether the principle applies, the Supreme Court has suggested the depth of a party’s pockets is not the most significant of several factors to be taken into account. In Cox v Ministry of Justice [2016] UKSC 10 Lord Reed said at paragraphs 20 - 22:-

It is, of course, true that where an individual is employed under a contract of employment, his employer is likely to have a deeper pocket, and can in any event be expected to have insured against vicarious liability. Neither of these, however, is a principled justification for imposing vicarious liability. The mere possession of wealth is not in itself any ground for imposing liability. As for insurance, employers insure themselves because they are liable: they are not liable because they have insured themselves. On the other hand, given the infinite variety of circumstances in which the question of vicarious liability might arise, it cannot be ruled out that there might be circumstances in which the absence or unavailability of insurance, or other means of meeting a potential liability, might be a relevant consideration.

Insurers remain unconvinced. Some believe the Market is being required to fund a system of no-fault compensation. On the one hand it is right that meritorious claimants recover compensation where they have suffered damage as a result of another’s wrong doing. On the other hand, there are many circumstances where insurers have indemnified policy holders who are blame free. Liability policy wordings have been reviewed following the imposition of vicarious liability for the commission of serious criminal offences. What can an organisation do to reduce the risk of engaging a future criminal who has no previous criminal convictions? Very little.

It is important to remember that the principle of vicarious liability is not confined to the law of tort . The rationale underlying the principle holds good for equitable wrongs. The rationale also holds good for a wrong comprising a breach of a statutory duty or prohibition which gives rise to civil liability, provided always the statute does not expressly or impliedly indicate otherwise. (Per Lord Nicholls of Bikenhead when giving judgement in Majrowski v Guy's and St Thomas's NHS Trust [2006 UK HL 34, at paragraph 10]

Lord Nichols went on to make a finding of vicarious liability against an NHS Trust under the Protection from Harassment Act 1997. In late 2017, in the first date leak class action, the High Court held an employer was vicariously liable for personal data breaches and criminal offences committed by an employee under the now obsolete Data Protection Act 1998: see Various Claimants v William Morrisons Supermarket PLC [2017] EWHC 3113. In October 2018 the Court of Appeal upheld the decision. In due course, vicarious liability may similarly be imposed under the Data Protection Act 2018.

A statute may expressly impose vicarious liability for wrongdoing. Under section 88 of the Police Act 1996, a Chief Constable may be liable “in respect of any unlawful conduct of his servants in the course of their employment.” The Equality Act 2010 imposes vicarious liability on employers in a range of circumstances.

Express statutory vicarious liability is not restricted to the employer/employee relationship. In Unite the Union v Nailard [2018] EWCA Civ 1203, the Court of Appeal held the Union was vicariously liable for the harassment perpetrated by an elected official since the official was its agent within the meaning of section 109 (2) Equality Act 2010. In an older case, the partners of a firm of solicitors were found vicariously liable for the “wrongful assistance” provided by a dishonest partner in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48. The partner was held to be acting in the ordinary course of the business of the firm, within the meaning of section 10 Partnership Act 1890.

The principle extends to unincorporated associations and the relationship of principle and agent at common law. In the very recent case of Frederick v Positive Solutions (Financial Services) Limited [2018] EWCA Civ 431, His Honour Judge Dight, sitting as a Deputy High Court judge, concluded it was not necessary to go back beyond two personal injury cases, the Christian Brothers case and also Cox, to determine the law of vicarious liability in a case of pure economic loss. The Court of Appeal upheld his decision, although it declined to consider whether any unitary modern law of vicarious liability was to be applied in a case of agency.

This book reviews the law of vicarious liability so as to provide a clear practical guide on how the principle may be applied to cases of tortious wrongdoing. In Dubai Aluminium , Lord Nicholls made reference to the infinite range of circumstances where the issue arises. The crucial feature or features, either producing or negativing vicarious liability vary widely from one case, or type of case to the next. Essentially the court makes an evaluative judgement in each case, having regard to all the circumstances and, importantly, having regard also to the assistance provided by previous court decisions…


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