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Vicarious liability and independent contractors

18 July 2018

The Court of Appeal’s judgment in the case of Barclays Bank plc and Various Claimants has been handed down. It confirms that Barclays Bank ('the Bank') is vicariously liable for sexual assaults conducted by Dr Gordon Bates during employees’ pre-employment medical examinations.

The facts

126 claimants sought damages against the Bank following a police investigation in 2013 for alleged sexual assaults perpetrated by Dr Gordon Bates (deceased) during pre-employment examinations which took place at the consulting rooms of Dr Bates at his home.

The Bank denied Dr Bates was an employee or in a situation ‘akin to employment’ on the basis that he was a self-employed independent contractor. He charged a set fee for each medical examination and would invoice the Bank accordingly. During the relevant time period Dr Bates was also performing similar services for other organisations.

The High Court concluded that vicarious liability was established on the basis of a two stage test first referred to in the case of Catholic Child Welfare Society v Various Claimants [2012] UKSC 56 and subsequently in the cases of Cox v Ministry of Justice [2016] UKSC 10 and Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11.

The Bank challenged the High Court’s decision for the following reasons:

  • it had wrongly concluded that Dr Bates’ relationship with the Bank was akin to employment
  • it had failed to find Dr Bates was an independent contractor. Recent court decisions regarding vicarious liability including the Supreme Court decision in Armes v Nottinghamshire County Council [2017] UKSC 60 had not abolished or abrogated the status of independent contractors
  • it wrongly applied the law to the 'undisputed facts' by concluding:
    • that the assessment of relative means between the Bank and Dr Bates should have been reached as at the time of the alleged tort, not at the time of the litigation
    • that as Dr Bates had carried out medical examinations for the Bank he was not an independent contractor
    • that the examinations were integrated into the Banks’s business
    • that the engagement of Dr Bates by the Bank 'created a risk of abuse'
    • that the Bank 'exercised control' over Dr Bates.

The decision

The Court of Appeal upheld the decision of the lower court, and confirmed that Dr Bates' relationship with the Bank was one akin to employment. It was clearly correct that the activity was being carried out on behalf of the Bank. Whilst there were benefits to the successful claimants it was clear beyond doubt that the principal benefit was to the prospective employers. For the same reasons this process was also part of the business activity of the Bank.

The risk of the tort arose from the arrangements made by the Bank. Vicarious liability concerns the liability of an 'innocent party'. Negligence does not need to be proven since it would then be redundant to approach the matter as one of vicarious liability. It is the potential defendant’s acts which put the claimant in a position of risk. The Bank specified the nature of the examinations as well as specifying the time, place and examiner.

The medical examinations were closely connected with the relationship between the Bank and Dr Bates. They were the whole purpose of the relationship. Without them the relationship would not have existed.

Impact of the decision

The decision is yet further evidence that a conventional employment relationship is not required to establish vicarious liability. The law now requires answers to specified questions (the two stage test) laid down in Cox and Mohamud and confirmed in Armes rather than providing an answer to a specific question – 'was the alleged tortfeasor an independent contractor?'

The implications of the judgment are far ranging and will extend beyond the realms of historical sexual abuse claims to impact on sports clubs, outward bound and activity organisations, faith organisations, and charities. It will no longer be possible to argue that vicarious liability cannot exist on the basis that the third party is an employed independent contractor. Further detail on the impact can be found here.

This also impacts on insurance. Public liability insurance is not compulsory in the UK. Organisations will need to consider and review their existing insurance arrangements, and give consideration to making insurance provision if none currently exists.

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