To litigate vicariously

Employers beware! The scope of vicarious liability continues to widen …

For firms, and other legally constituted entities, their liability to third parties can only be vicariously incurred. Vicarious liability in the context of employment is the basis in terms of which liability is imposed on the employer for a wrongful act committed by an employee during the course and scope of employment.

Despite being applied for more than a century, no acceptable theory has ever been advanced for the existence of vicarious liability. More often than not, it is not a defence for an employer to argue that the employee in question chose to ignore or disobey standing instructions or orders.

Since firms can only act through the people they employ, vicarious liability regulates how these institutions interact with the public. It is often said that the basis for imposing vicarious liability on firms lies in social policy, which seeks to ensure that those who achieve their economic interests through others, are responsible for the wrongful acts committed in the process.

Further, vicarious liability is also justified on the grounds that employers are best placed to deter their employees from committing wrongful acts in the course of employment. For example, an employer can sanction or discipline employees who commit wrongful acts, or impose other deterrence measures through the contract of employment.

For vicarious liability to be imposed on an employer, the wrongful act must be committed by an employee. In addition, the act must be committed in the course and scope of employment. The terms “course of employment” and “scope of employment” do not have firm boundaries and therefore lack specificity. It is not always straightforward whether or not a wrongful act was committed in the course of employment and if that act falls within the scope of employment.

As a consequence, courts have developed factors which need to be evaluated in order to separate cases where vicarious liability ought to be imposed on an employer, from those where it should not. One of these factors is if there is sufficient closeness or connection between the act, or acts, of the employee and the employment. If the act of the employee is totally unconnected with the job he or she was hired to do, the employer is not vicariously liable.

Another factor is whether or not the presence of an employee at a particular place and time was dictated or necessitated by employment. Vicarious liability is more likely to be imposed if the employee committed the wrongful act while at a place and time if his employment required him to be there.

Courts also consider whether the wrongful act is sufficiently connected with what the employee was supposed to do as part of his or her job, even though it was an improper way of doing the authorised task. Here a distinction is usually drawn between an employee who does the work wrongly (or contrary to a laid down procedure) and one who does what he or she is not employed to do at all.

These factors were used by British courts in three interesting cases which were heard in 2011 and 2012. Two of these cases have some similarities. Both involve one employee assaulting another and the attacks followed a lawful instruction by one employee to another.

The first is Weddall versus Barchester Healthcare Ltd [2012], a case heard in the Court of Appeal. In that case W was the deputy manager of a care home owned by the defendant (employer). M was a senior health assistant (but junior to W) at the same facility. The two men did not get along well. One day W telephoned M and asked him to stand in for another employee who was sick. A misunderstanding arose between W and M, and M (already drunk at the time) telephoned the employer offering to resign.

M then cycled to the care home where he attacked W before fleeing. M was later arrested and convicted of assault. W sued the employer and the question, which the court had to consider, was whether or not the employer was vicariously liable for the assault on W by M. The court ruled that the employer was not vicariously liable for the violent act committed by M as M was on a crusade of his own, which had no connection whatsoever with his employment.

In the second case, Wallbank versus Wallbank Fox Design Ltd [2012], also heard by the Court of Appeal, Wallbank performed different, but related, roles for the defendant company which employed him – he was manager, director and sole shareholder.

Four other employees worked for the defendant including one Mr Brown, who was employed as a powder coater. One day, as Brown was using the oven to make metal bed frames, Wallbank instructed him to put more frames through in order to optimise use of the oven. Brown did not like the way Wallbank spoke to him. He went over to Wallbank, grabbed him and threw him onto a table causing a fracture to his lower back. Wallbank sued the employer and the court ruled that the employer was vicariously liable for Brown’s actions.

In these two cases physical and temporal closeness played a decisive role. In the Weddall case the instruction was communicated to M while he was at home in the early evening. M then cycled all the way to work where he physically attacked W. This was a clear case of M going on a “frolic” of his own – a term South African courts disapprove of – and in such situations courts are less inclined to impose vicarious liability.

By contrast, in the Wallbank case the two workers in question were actually on the production floor when one did not take kindly to how he was instructed by another (who was perfectly entitled to give the instruction) and attacked him almost instantaneously.

The final case is JGE versus Trustees of the Portsmouth Roman Catholic Diocesan Trust [2011] which came before the High Court. In the context of vicarious liability this case is extraordinary. It involved a claim brought on behalf of a child following sexual abuse by a priest. The case is extraordinary because the priest had no contract of employment with the defendant trust and there was no wage agreement between the trust and the priest. Furthermore, there was no framework within which the trustees could control, dismiss, or discipline the priest. In many respects the priest was his own boss. Consequently, when the claim was brought, the trust’s defence was that the priest was not an employee, therefore there could be no vicarious liability.

Historically there has never been a general doctrine of vicarious liability. Its basis has been limited to employment situations. At face value, given the clear historical position, one would be inclined to agree with the trust’s argument. But the court ruled that, in cases such as this, it is necessary to be pragmatic and go beyond the strict formalities of the relationship and “scrutinise the substance and reality of it”.

As a consequence the court reasoned that: since the trust appointed the priest, gave him a uniform and premises from which to operate, and created an environment where he would interact with children while assuming some degree of authority over him, they (the trust) had assumed responsibility for any wrongdoing by the priest. Therefore the court ruled that the trust was vicariously liable for the priest’s wrongdoing. The trust indicated its intention to appeal this decision to the Court of Appeal and it remains to be seen if such a liberal application of vicarious liability will be confirmed if the matter is taken to the Supreme Court in the United Kingdom.

From these three cases it is clear that one must be an employee for the employer to be vicariously liable. In addition, the connection or closeness between the wrongful act and the employment is ultimately the most decisive factor in determining if liability will be imposed or not.

After this recent case it is clear that courts no longer confine vicarious liability within a formal employment arrangement, but are moving towards a general doctrine of vicarious liability. The warning for employers is that boundaries for vicarious liability will continue to be stretched, making it harder for them to escape liability for virtually any wrongful act of their employees.

Legally Speaking is a regular column by Albert Mushai and Hugh-David Hutcheson, both in the school of Economics and Business Sciences, University of the Witwatersrand. Mushai holds a master’s degree from the City University, London, and was the head of the insurance department at the National University of Science and Technology in Zimbabwe before joining Wits University as a lecturer in insurance. Hutcheson holds a PhD from Wits and is a lecturer in insurance.