October 16, 2018

Vicarious liability: Company liable for Christmas party assault by managing director

The Court of Appeal has found a company vicariously liable for an assault committed by its managing director on an employee following their Christmas party.

Overturning the first instance decision, the Court of Appeal found that there was a sufficiently close connection between the actions of the managing director and the Defendant's business.  The connection was established despite the unusual location and time at which the assault was occasioned on the Claimant.

This further extension of vicarious liability presents insurers and policyholders with further liability risks, and may result in additional vicarious liability claims ordinarily dismissed.

Background

Following a Christmas party at a golf club, half of the guests travelled to a nearby hotel for drinks.  They travelled in taxis organised and likely paid for by the Defendant. 

At the hotel, a conversation regarding work duties resulted in the Managing Director ("MD") of the Defendant lecturing the employees. A subsequent argument led to the Claimant being assaulted by the MD.  The Claimant suffered traumatic brain damage.

The Claimant brought a claim against the Defendant, alleging it was vicariously liable for the actions of the MD.  At first instance, it was found that as the official Christmas party had concluded, so had the 'work event'.  The conversation resulting in the argument was deemed to be insufficient to be considered something within the course of employment.  Emphasis was placed on the time and place of the conversation, rather than the content.

Accordingly, the High Court held there was insufficient connection between the assault and the MD's employment and the vicarious liability claim failed.

The Claimant appealed.

Appeal

The appeal did not seek to challenge the facts as found by the High Court.  Rather, it was argued that that the application of the facts in determining whether there was sufficient connection was defective.

Allowing the appeal, Lady Justice Asplin acknowledged that the most authoritative statement of the current legal position for vicarious liability is set out in the case of Mohamud. That case, along with that of Cox v Ministry of Justice, set out the relevant two-stage test for imposing vicarious liability on employers:

  1. Whether there was a relationship between a defendant and wrongdoer;
  2. Whether there was a sufficiently close connection between that relationship and the wrongdoer's actions to make it just that a defendant be responsible for harm suffered by a claimant as a result of those actions for reasons of social justice.

The case of Cox made clear that technical arguments regarding employment status will not bar the imposition of vicarious liability. The 'field of activities' assigned to a wrongdoer by a defendant company is to be addressed.

In considering this, Lady Justice Asplin acknowledged that the MD was the "directing mind and will" of the Defendant.  Objectively, it was clear he had "authority to issue instructions to more junior employees and generally had a wide remit."  

The Judge also found that the High Court was incorrect in finding that there was insufficient connection between the MD's field of activities and his actions during the assault; "despite the time and the place, [MD] was purporting to act as managing director." Asplin LJ dismissed the suggestion that the incident arose from "a group of drunken revellers whose conversation had turned to work." The MD was seeking to assert his authority at the relevant time, and there was no personal background to his assault of the Claimant.

Accordingly, the Court of Appeal disagreed with the High Court's overall conclusions on the context and circumstances of the assault in establishing a connection. 

What can we learn?

  • The concept of vicarious liability continues to expand and this case offers further clarification on the scope of the test in Mohamud. This case has once again made very clear that the circumstances of incidents, such as assault, are highly relevant when considering the imposition of the regime. It is an insufficient defence for employers to simply state that an incident occurred outside of the wrongdoer's traditional place of work or outside their working hours.
  • The Court of Appeal accepted there was a "temporal gap between the party and subsequent drinks". Irwin LJ agreed that the drinking was separate from the party, but Asplin LJ noted the reliance of the High Court on this was "misplaced". The discussion was found to be "naturally an assertion of or a re-assertion of [MD's] managerial role." Lady Justice Asplin differentiated this incident from the example given in the High Court of a "social round of golf between colleagues during which conversation turns to work." The assault came about as the MD was seeking to address issues of dissent with the Defendant's employees.
  • The appeal was granted due to the very particular circumstances of the incident. Lord Justice Irwin, whilst agreeing with Asplin LJ, was keen to emphasise "how unusual are these facts, and how limited will be the parallels to this case." He also stated that "This case is emphatically not authority for the proposition that employers became insurers for violent or other tortious acts by their employees."
  • The Court of Appeal was at pains to highlight the distinct nature of how the MD sought to exert his authority, beyond a mere discussion about work. However, it is clear that where senior employees are granted the authority to act in a non-traditional manner/ setting, this could result in a 'sufficient connection' being found.The MD acted in a manner consistent with his power, and this resulted in a vicarious liability being established.
  • The boundaries of vicarious liability have been extended considerably over recent years. This is partly to acknowledge that traditional models of employment are changing (the gig economy models such as Uber for example) but also because of a number of situations involving victims of assault where, but for a change in the law, victims may not have found redress.
  • The most significant recent extensions came in Barclays and Armes which allowed potentially large categories of people to claim. These could include those who suffered damage as a result of the negligent action of a contractor appointed by the "employer" and those who were abused by foster carers, contractors or volunteers. These decisions mean that others in factually related situations may be able to claim compensation. The law has not necessarily stopped moving given the current approach of the Appellate Courts and the continued expansion of liability seems most likely.