Collins English dictionary: “frolic”… .a light hearted activity; gaiety; merriment.

Vicarious liability continues to generate legal argument and appeals to higher courts – in this article we look into the can of worms of vicarious liability in the context of outsourcing.

It is well established that an employer is vicariously liable for the torts of its employees where these occur “in the course of employment”. This principle is enshrined in the common law doctrine known as “let the master answer”.  

In judgments dating back more than 200 years, judges have used the expression a “frolic of his own” to describe acts which are considered to be outside the course of employment and, accordingly, not covered by the vicarious liability of the employer.  

Over recent years where disputes have arisen as to whether an act or omission occurred in the course of an employee’s employment, the courts have tended to find in favour of the claimant, thus widening the scope of vicarious liability. Case law has developed broad factors to be taken into account in deciding such cases, including:  

  • The context and circumstances in which the acts occurred, since these may show that the act was incidental to, and therefore within the scope of, employment.
  • The time and place where the acts took place which, while relevant, may not be conclusive. 
  • The fact that the employment provided the employee with the opportunity to perform the acts, although this does not necessarily mean that the acts were within the scope of their employment.

Two recent cases (heard together) in the Court of Appeal, Wedall v Barchester Healthcare3 and Wallbank v Fox Designs4, involved violent employees attacking managers. These provide contrasting examples of when an employer is vicariously liable (Wallbank: employee refused a reasonable instruction and inflicted grievous bodily harm on his manager) and where an employer is not vicariously liable (Weddall: drunk employee returned to work on his bike to attack his manager).  

Looking at the case law it is apparent that claims involving vicarious liability give rise to considerable legal argument and uncertainty as to whether the specific actions can fairly be considered to have occurred in the course of the employee’s employment. In some cases judges seem to stretch the point, allowing claims presumably to give the claimant access to the employer’s liability insurance. Quite a few of the cases are only finally resolved on appeal.

The Weddall and Wallbank cases show that the issue has not gone away. Injury or damage caused by an employee can give rise to complicated arguments as to liability especially where the damage occurs in the course of outsourced services or co-located parties. In the 1973 case of Morris v Ford5 the following chain of events arose:

  • a forklift truck driver, employed by Ford, injured another person on site, Mr Morris (an employee of Ford’s cleaning contractor); •• Mr Morris sued Ford on the basis they were vicariously liable for his negligence;
  • Ford claimed under the cleaning contract, from the cleaning contractor (Mr Morris’ employer) relying on an indemnity for all losses or liabilities arising out of the cleaning services;
  • the cleaning contractor claimed that, having indemnified Ford, it had the right to claim against the careless Ford employee, on the basis that Ford’s rights against the employee were subrogated to the cleaning contractor.

These concurrent claims arose from a web of legal concepts and liabilities. Mr Morris claimed in tort. Ford claimed under contract law. The cleaning contractor claimed on the basis of a common law right of subrogation (where, having indemnified Ford, they should be entitled to assume Ford’s rights against Mr Morris for failure to use reasonable care and skill as an employee). This is based on Lister v Romford Ice6 where it was held employees are liable to their employer for loss or damage they cause, although in practice employers and their insurers rarely seek to enforce this right.

Using fairly elaborate legal argument (with Lord Justice Stamp dissenting), Lord Denning in the Court of Appeal held that the right of subrogation only arose as an equitable remedy and, accordingly, whether or not such right arose was at the discretion of the Court (that is, it was not an absolute legal right). In the circumstances of this particular case, he found that it was not just and equitable that the cleaning contractor should be entitled to bring a claim (in the name of Ford) against the careless employee. He said the doctrine of subrogation could not be used in this instance to make the Ford employee personally liable for his carelessness. He described the decision in Lister v Romford Ice as “unfortunate” and noted that its “ill effects” had only been avoided by an agreement between insurers not to enforce it. Accordingly, thanks to Lord Denning and the voluntary agreement of insurers, employees are generally not pursued for personal liability for loss and damage arising due to their carelessness.

The indemnity in the Ford contract was especially wide. It covered all losses for damage or injury “howsoever caused arising out of, or in connection with, the services” and even applied where the loss or damage was caused by the negligence of Ford or its servants or agents. The parties were not co-insured and this odd allocation of liability appears to run contra to both the mantra that each risk should sit with the party best able to manage it, and insurance that was likely to be available to each of the parties. That said, some PFIs include similarly wide indemnities (and waivers of subrogation) for personal injury, including injury caused to the service provider’s own staff due to negligence of the Authority staff. In the normal course, one would expect the Authority to be vicariously liable for the negligence of its employees. Service providers suffering these claims should perhaps dig out the judgment in Morris v Ford and seek to challenge Lord Denning’s finely balanced ruling, that the right of subrogation cannot be extended to negligent employees. As quoted in the judgment, “it is a well-known principle of law that where one person has agreed to indemnify another, he will on making good the indemnity, be entitled to succeed to all the ways and means by which the person indemnified might have protected himself against or reimbursed himself for the loss7.