Vicarious liability - is the party now over?

The Court of Appeal has reaffirmed that, in limited circumstances, an employer will be responsible for the actions of their employees outside of the workplace and after hours.

Background

In December 2011, following the defendant’s staff Christmas party, some employees left the party venue and continued drinking in the lobby of a nearby hotel. The group of employees included the managing director, Mr John Major.

At some point in the night, the conversation turned to the matter of work. During such discussion, Mr Major punched Mr Bellman (the claimant) twice, causing the claimant to fall and hit his head on the floor, reportedly causing a serious brain injury.

The matter was first heard in the High Court on November 2016, which found in favour of the defendant employer. The court held that Mr Major’s actions occurred during an out of hours social event, which was not a ’seamless extension’ of the earlier work Christmas party. In particular, the court was satisfied that the conversation about work matters did not give rise to a sufficient connection to support a finding of vicarious liability against the defendant. The claimant appealed the decision.

Applying Mohamud

In allowing the claimant’s appeal, the Court of Appeal confirmed that the Supreme Court’s decision in Mohamud v WM Morrison Supermarkets PLC [2016] was the leading authority. For a finding of vicarious liability, the court has to satisfy itself of a two-stage test:

1. The nature of the employee’s job
2. Whether there was sufficient connection between the role and his wrongful conduct to make it right for the employer to be held liable.

In applying the test, the court held Mr Major’s job role was to be assessed broadly, rather than to focus on what actual authority he had from the defendant. It was found that Mr Major was the sole controlling mind of the business; he operated a ‘round the clock’ business and saw managerial authority as a central part of his duties. Further, the assault occurred whilst he was seeking to exert his authority over a subordinate employee.

The court therefore found sufficient connection between Mr Major’s actions and his job and considered the defendant should be liable for his conduct.

In addition, it occurred on the same evening as the work event which had been paid for and orchestrated by Mr Major on behalf of the defendant. Mr Major was therefore not merely a fellow reveller. He was present as the defendant’s managing director, a relatively small company, and misused that position.

When receiving such a claim it will be important for a liability insurer to consider the terms of its policy, and in particular:

• Was the injury sustained in the course of, or did it arise out of, the claimant’s employment (if it is an EL claim)?
• Are there any relevant, valid exclusion clauses in the policy? Where indemnity must be provided due to compulsory insurance provisions (e.g. in employers' liability cases), there may be a right to recover from an insured.

Comment

This decision will no doubt cause concern for employers and their liability insurers (especially as we approach the Christmas season). Given that it is common in many businesses for employees of all levels of seniority to socialise after work, will liability now arise as a result of an argument between work matters, which leads to an assault? This case had very unusual facts: Mr Major’s job role was widely drawn, he was the only real decision maker in the company, his activities were almost unrestricted, and exercised at almost any time.

We agree with Lord Justice Irwin (who expressed some hesitation in allowing the appeal) that this case is not an authority to make employers an insurer for violent or other tortious acts by their employers.