The Supreme Court holds that the law is clear - there is no vicarious liability for the independent contractor

The Barclays Bank (Dr Gordon Bates) Group Litigation

The Supreme Court’s judgment in this group litigation is a watershed in clarifying the correct approach to stage 1 of the established 2-stage test for vicarious liability.

The factual background to the litigation

A group of 126 claimants sought damages against Barclays Bank Plc (“the Bank”) in relation to sexual assaults which they allege were inflicted by Dr Gordon Bates between 1968 and 1984. Dr Bates died in 2009. The vast majority of the claimants were applicants for employment with the Bank. A small number were existing employees. The Bank engaged Dr Bates as an independent contractor to carry out medical examinations. The purposes of the examinations were to establish whether a claimant was medically suitable for service in the Bank and a suitable candidate for life assurance at ordinary rates. Every claimant was required to attend Dr Bates at his home, where he had a consulting room. Every claimant alleges that they were sexually assaulted by Dr Bates during examination.

A group litigation order was made on 6 April 2016, and on 15 December 2016 Nicola Davies J ordered that there should be a trial of a preliminary issue, namely:

“Whether the defendant is vicariously liable for any assaults that any claimant may prove to have been perpetrated by Dr Gordon Bates in the course of medical examinations carried out at the request of the defendant either before or during their employment with the defendant”.

The claimants contended that they were compelled to attend an examination which was conducted for the Bank’s benefit; that Dr Bates completed a proforma report bearing the Bank’s logo; and that the Bank organised and paid for the examination. The Bank’s central argument was that as Dr Bates was an independent contractor then, in line with established legal principle, vicarious liability could not arise for his actions. As Ward LJ unequivocally asserted in E v English Province of our Lady of Charity [2012] EWCA Civ 938: “the law is clear: the employer is not vicariously liable for the torts of his independent contractor.”

 At the trial of the preliminary issue of vicarious liability in July 2017 the judge (Nicola Davies J) concluded that: 

1. The relationship between the Bank and Dr Bates was capable of giving rise to vicarious liability; and
   
   
2. There was a sufficiently close connection between the purpose for which Dr Bates was engaged and the assaults giving rise to each claim so as to make it fair, just and reasonable to impose vicarious liability.

 The Bank was thus vicariously liable for proven assaults by Dr Bates.

The Bank appealed the judge’s findings on stage 1. On 17 July 2018 the Court of Appeal (Leveson, McCombe and Irwin LJJ) dismissed the Bank’s appeal. The Bank appealed to the Supreme Court, which heard that appeal on 28 November 2019.

The Supreme Court judgment

On 1 April 2020 the Supreme Court (Lady Hale, Reed, Hodge, Kerr and Lloyd-Jones JSC) allowed the Bank’s appeal and held that the Bank was not vicariously liable for any wrongdoing of Dr Bates in the course of the medical examinations he carried out for the Bank.

Lady Hale delivered the unanimous judgment, which is exemplary in its lucidity, concision and clarity. There was an acknowledgment that the law of vicarious liability had been on the move. However, this case and that of WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12 (which we will review in a separate article) raise the question of how far the law can move in relation to each of the two stages of the vicarious liability test.

The Bank’s central argument was that although recent decisions had expanded the categories of relationship giving rise to vicarious liability beyond a traditional contract of employment, the fact that Dr Bates was an independent contractor meant that no vicarious liability could arise in this case. In contrast, the respondent claimants contended that recent Supreme Court decisions including Christian Brothers, Cox v Ministry of Justice [2016] UKSC 10, Mohamud v WM Morrison Supermarkets Plc [2016] UKSC 11 and Armes v Nottinghamshire County Council [2017] UKSC 60 had taken away that defence; instead, Lord Phillips’ Christian Brothers criteria should be applied to every scenario in order to decide whether it is fair, just and reasonable to impose vicarious liability on one person for the actions of someone who is not their employee.

The High Court and the Court of Appeal had both adopted the approach put forward on behalf of the claimants. The Supreme Court fundamentally disagreed, for a number of very clear and cogent reasons: 

• Lord Phillips’ five criteria, which Lady Hale described as incidents, were not a dogmatic and/or exhaustive legal test to be applied in every situation of potential vicarious liability. Rather, they are policy reasons. And although policy reasons have played a significant role in informing the development of the law relating to vicarious liability, that role does not then turn those policy reasons into legal rules. By implication, that is the error which the lower courts had made;
• This analysis is supported by the fact that in reaching their conclusions on stage 1, neither Ward LJ (in E v English) nor Lord Phillips (in Christian Brothers) applied the five criteria. Instead, they looked at the detailed features of the index relationship before making their respective decisions;
• Soon after the decision in Christian Brothers, Lord Sumption had made it very clear in Woodland v Swimming Teachers Association [2013] UKSC 66 that nothing in the Christian Brothers judgment casts any doubt on the rule that vicarious liability did not extend to independent contractors;
• Although Lord Reed did apply the five criteria in Cox, even if he had not done so the result in that case would have been the same. And Lord Reed was also very clear in his judgment that the distinction remained intact between (a) work done for an employer as part of the business of that employer; and (b) work done by an independent contractor as part of the business of that independent contractor.
• Further, even though Lord Reed also applied the five criteria in Armes, he did so in the course of examining the relationship between the foster parents and the local authority in some detail. And within his conclusions he stated that ‘the foster parents…cannot be regarded as carrying on an independent business of their own’.

Lady Hale thus concluded (and all of her colleagues agreed) that there was nothing in these recent Supreme Court authorities which eroded or extinguished the principle that a relationship with an independent contractor was not one which gave rise to vicarious liability.

As yet further evidence of the correctness of this approach, Lady Hale referred to two more recent decisions, Kafagi v JBW Group Limited [2018] EWCA Civ 1157 and Ng Huat Seng v Mohammad [2017] SGCA 58. In each of those cases, our own Court of Appeal and Singapore’s highest court  reached decisions which reflected a clear understanding that the Supreme Court’s judgments in Christian Brothers, Cox and Armes had not in any way undermined the distinction between employers and independent contractors.

 Lady Hale summarises the position succinctly at paragraph 27 of her judgment:

 ‘The question therefore is, as it has always been, whether the tortfeasor is carrying out business on his own account or whether he is a relationship akin to employment with the defendant. In doubtful cases, the five ‘incidents’ identified by Lord Phillips may be helpful in identifying a relationship which is sufficiently akin to employment to make it fair, just and reasonable to impose vicarious liability’….’But the key, as it was in Christian Brothers, Cox and Armes, will usually lie in understanding the details of the relationship. Where it is clear that the tortfeasor is carrying on his own independent business it is not necessary to consider the five incidents’. (Emphasis added)

Application of the law to the facts

Dr Bates was in business on his own account with a portfolio of patients and clients. He was a Schedule D taxpayer through his regular chest clinics at a local hospital. He wrote a local newspaper column. He also conducted similar medical examinations for many other commercial organisations, each of which would have chosen questions for him to answer. Even though Dr Bates completed a form headed with the Bank’s logo that of itself could not change the relationship between him and the Bank. He organised his own diary. A very limited proportion of his work was for Barclays, and for that work he submitted an invoice and was paid a fee. He was not on a retainer with the Bank and could have refused to undertake any examination offered to him. He was clearly an independent contractor. Thus the Bank could not be vicariously liable for any wrongdoing during medical examinations that he carried out for the Bank.

Commentary

Insurers, practitioners and any organisation that engages independent contractors of whatever type, from auditors to window cleaners, will breathe a huge sigh of relief. The independent contractor sits outside the scope of vicarious liability. The position is, in essence, what it had always been understood to be before this litigation began to move through the courts. We have welcome clarity on stage 1 of the test.

Should the Court of Appeal judgment have been upheld, it would have created a myriad of problems not least that, in the absence of an independent contractor defence, a ‘fair, just and reasonable’ test would have to be undertaken in every single scenario where there was no formal contract of employment. That would also have left practitioners in the situation of applying Lord Phillips’ criteria as though they were a specific set of legal tests, when in fact they are policy reasons. And of course that exercise would have to be carried out not only in cases of non-recent abuse, but across every class of risk in which an independent contractor might be involved. That would have been a nightmare scenario not only for insurers and advisers but also for underwriters having to apply their minds to how far a risk might extend.

Instead, thanks to this lucid and authoritative judgment the bright line of the independent contractor defence, which was feared to have been dimmed to the point of invisibility, remains very much in force and will continue to shed light where the Court of Appeal would have cast so much darkness.