The Supreme Court has delivered a decision in Hickey v McGowan [2017] IESC 6 which has important consequences for business and commercial entities dealing with litigation arising from the acts of their employees. Two judgments were delivered which are available here and here .

Background

The plaintiff attended a Marist National School from 1969 to 1972 and alleged that he was sexually abused there by a teacher. He sought damages arising from that. The Supreme Court decision makes important pronouncements on the circumstances in which employers might be liable for acts by their employees.

‘Close Connection’ test

In previous cases, the Supreme Court had applied a test which rejected liability on the part of employers for sexual abuse by an employee and in doing that, had rejected the ‘close connection’ test, which could involve such liability, depending on the context.

In this case, the majority judgment of the Supreme Court effectively reverses that position, finding that “the close connection test must be taken to represent the law in Ireland…it seems clear that that test was satisfied in this case. The abuse took place during the very act of teaching in the classroom”.

In general terms, the adoption of the ‘close connection’ test tends to broaden the range of circumstances in which an employer may be liable for actions on the part of its employee, including in very extreme circumstances such as, in this instance, sexual abuse. At its simplest, a Court asked to decide whether or not an employer should be liable, will ask itself whether or not there was a ‘close connection’ between the acts in question and the work which the employee was engaged to perform.

No-Fault Liability and ‘Deep Pockets’

The majority decision of the Supreme Court is quite discursive and discusses ideas of ‘no-fault’ liability and the supposed desirability of a wronged party having recourse to a Defendant with ‘deep pockets’. Those theoretical arguments were rejected: “There is in my view no discernible movement in the common law world to expand vicarious liability, and therefore liability without fault, on the basis merely of an ability to pay alone, and any such development would raise fundamental issues”.

However, the decision does also confirm that a business or employer may be liable for acts by employees without any specific failing or want of care on its part “it is now clear that there can be vicarious liability without fault for acts of sexual abuse”.

Liability of Unincorporated Entities or their Members

The Marist Order is an unincorporated association – it is not a company or partnership or other legally recognised entity. In that regard, it is perhaps similar to some amateur sports clubs, for instance.

Importantly, the Supreme Court’s majority judgment finds that the members of such clubs or unincorporated associations can be personally liable for the acts of other members. The judgment emphasises that the liability which arises is that of the individual members – i.e. personal liability on their part – as opposed to liability on the part of the unincorporated association itself:-

members of the Order are…members of an unincorporated association and they do not have any direct liability for the acts of others. However, for the reasons set out above, I consider that they have a vicarious liability for the acts of other members… any current member of the association is not vicariously liable for acts of a member prior to the defendant becoming a member of the association. In my view, the members for the time being at the time the act is committed are liable rather than the members, for example, at the time the proceedings are commenced”.

This represents a fundamental departure from the previously understood position: it may have serious consequences for members of unincorporated associations such as sports clubs.

Summary

A number of points arise from this important decision:-

  1. The adoption of the ‘close connection’ test will broaden the circumstances in which employers generally are liable for acts by their employees. In the present, extreme example, sexual abuse perpetrated by an employee was involved. Other examples include:-
    • In Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11, the Supreme Court of England and Wales held a business liable for a violent attack on a customer by one of its employees. That employee had been racially abusive, followed a customer to his car, and punched him in the head. Nevertheless, it was found that there was a ‘close connection’.
    • In Gravill v Carroll [2008] EWCA Civ 689 the English Courts imposed liability on an employer rugby club in relation to an ‘on-pitch’ fight involving two semi-professional rugby players. One had punched the other during an interval in the game. The sports club had liability for that assault by its player.
    • In Wallbank v Wallbank Fox Designs an employee – who the Court noted was "not a wholly satisfactory employee" – assaulted his boss after being asked to work more efficiently. His boss sustained a fracture of a vertebra in his lower back. Liability was imposed on the employer on the basis that the assault was ‘closely connected’ to employment.
  1. It is confirmed that the fact that a Defendant may or may not have ‘deep pockets’ is irrelevant to the question of whether they ought to be liable. However, a business might be liable without fault for the acts of employees.
  1. Members of unincorporated associations can have personal liability without fault for acts by other members. That liability is personal liability on the part of each of the members of that unincorporated association at the time that the act itself was carried out. New members joining after the event do not ‘inherit’ that liability.

Advice should be taken where appropriate, given the important consequences for employers, businesses and members of unincorporated associations such as sports clubs, societies, political parties, schools, charitable organisations and non-profit organisations.