In Barclays Bank v Various Claimants, the Court of Appeal reaffirmed that the “independent contractor defence” no longer exists; organisations can now potentially be liable for the acts of third party contractors.
The claimants brought a group litigation action against the defendant bank (the “Bank”) in respect of alleged sexual assaults committed by Dr Gordon Bates. At the relevant time, the majority of the claimants were prospective employees of the Bank (some were existing employees) and were required to undergo medical examinations as part of this recruitment process; it is during these examinations that the assaults allegedly took place. Dr Bates was not an employee but rather an independent contractor.
The question put to the courts as a preliminary issue was whether the Bank could be held vicariously liable for the actions of Dr Bates.
The Court of Appeal, upholding the High Court’s decision from July last year, answered this question in the affirmative. It rejected the “bright line” argument that employers should not be vicariously liable for actions of independent contractors, despite noting that this would “make easier the conduct of business for parties and their insurers”.
The Court confirmed that the question involved a two-stage test: (i) is the relevant relationship one of employment or “akin to employment” and (ii) if so, was the tort sufficiently closely connected with that employment or quasi-employment.
Turning to the first stage, the lower court had been correct to find that the five relevant criteria (as first identified by Lord Phillips in Catholic Child Welfare Society) had been met:
- The Bank (or its insurers) was more likely to have the means to compensate the victims and could be “expected to have insured against that liability”; however, the Court stated that this criterion carries little weight and liability could not be found on this alone;
- Whilst of some benefit to the prospective employees, “it was clear beyond doubt that the principal benefit” of the medical examinations was to the Bank;
- This process was part of the Bank’s business activity; indeed, “there could hardly be a clearer example” of this;
- Whilst “the variety of facts in negligence cases are legion”, in this particular case the risk of the tort had arisen from the actions of the Bank; these actions did not need to amount to negligence for this criterion to be met; and
- Most crucially of all, Dr Bates was to a greater or lesser degree under the control of the Bank. When reviewed in the context of the relevant activity (medical examinations, assessments and reports), the Bank had exercised sufficient control to fulfil this criterion as well.
Regarding stage 2 of the test, the Court of Appeal agreed with the lower court’s finding that the medical examinations were sufficiently closely related to the relationship between the Bank and Dr Bates; in fact, they “were the whole purpose of that relationship”.
Whilst it may be subject to further appeal, this decision means that organisations could now find themselves potentially liable for the actions of independent contractors as well as direct employees. This could result in an influx of cases in respect of historic injuries, in which claimants had previously been unable to identify a sufficiently wealthy defendant.
The decision will be of keen interest to insurers; public liability insurance is not compulsory in the UK and many organisations will need to consider whether protection is now necessary. Even for entities that already have this in place, traditional provisions relating to contractors offer limited mitigation and will need to be reviewed.
It should be noted that this question of vicarious liability was put to the courts as a preliminary issue; there are still several lines of defence available to employers, such as causation and limitation arguments.