By Insurance and Personal Injury Team

Hong Kong, 10 May 2021: Vicarious liability is a long-established legal principle whereby one party may be held partly responsible for the wrongful actions of another. It is a scenario frequently encountered in personal injury cases where an employer is deemed liable for the wrongful act of an employee for reasons of policy.

There are two elements at the heart of the principle: first, the existence of a relationship between the two parties; and second, the wrongful act is connected to this relationship.

Currently in Hong Kong, there needs to be an employer-employee affiliation for vicarious liability to be pursued; the principle does not apply to independent contractors engaged by an employer. In England and Wales, the Court restated the latest legal position by fine-tuning the traditional principle of vicarious liability to accommodate modern-day employer-employee relationships, as evidenced by a series of Supreme Court rulings. 

Supreme Court trilogy

In the landmark case The Catholic Child Welfare Society and others v Various Claimants and The Institute of the Brothers of the Christian Schools and others [2012] UKSC 56 – otherwise known as the Christian Brothers case – there were allegations of physical and sexual abuse by teachers from the Institute of Christian Brothers in a residential school owned by the Catholic Child Welfare Society.

The Institute argued it should not be vicariously liable since the school management had entered into employment contracts with the teacher brothers and managed both them and the school, whereas these critical features did not exist in the Institute’s relationship with the brothers. The court disagreed, stating that the Institute’s relationship with the brothers “had many of the elements, and all the essential elements, of the relationship between employer and employees”. Thus the Institute should share liability with the school managers.

Cox v Ministry of Justice [2016] UKSC 10 concerned a female catering manager in a prison who was injured when an inmate accidentally dropped a sack of rice on her back. Her claim against the Ministry of Justice was first dismissed by a lower court which ruled the inmate was not an employee of the prison service. The Supreme Court found in favour of the catering manager, however. It said inmates working in kitchens were integrated into the operation of the prison and there was a risk they may commit negligent acts, which was recognised by the provision of health and safety training received by the inmates.

In the case Armes v Nottinghamshire County Council [2017] UKSC 60, the female claimant was abused by foster parents with whom she had been placed by the County Council. Her claim for damages from the local authority was allowed by the Supreme Court by a majority of 4-1. The court found the County Council carried out the recruitment, selection and training of foster parents, paid their expenses, and supervised the fostering, thus the foster parents were not carrying on an independent business.

In delivering the Supreme Court’s unanimous ruling in the Christian Brothers case, Lord Phillips highlighted the expansion of the traditional employer-employee relationship and pointedly remarked: “The law of vicarious liability is on the move.” That said, two relatively recent judgments by the same court have clarified the current legal position, at least in English law.

Barclays Bank and WM Morrison cases

Barclays Bank plc v Various Claimants [2020] UKSC 13 concerned a self-employed doctor whose work included conducting medical examinations of prospective Barclays Bank employees. The bank paid him a fee for each medical report but did not keep him on retainer. Following his death, a group of claimants came forward alleging the doctor had sexually assaulted them during the examinations. A lower court and the Court of Appeal held that Barclays was vicariously liable for any assaults that were proven.

Barclays appealed to the Supreme Court, arguing that since the doctor was clearly an independent contractor, not an employee, it could not be held liable for his wrongdoing. The claimants countered that the law had been broadened by the court’s decisions in Christian Brothers, Cox v Ministry of Justice and Ames v Nottinghamshire County Council.

The Supreme Court upheld Barclays’ appeal. In giving the unanimous decision, Lady Hale stated: “There is nothing … in the trilogy of Supreme Court cases … to suggest that the classic distinction between employment and relationships akin or analogous to employment, on the one hand, and the relationship with an independent contractor, on the other hand, has been eroded.”

WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12 featured malicious conduct by an employee who worked on the internal audit team of supermarket chain WM Morrison. Holding a grudge after being verbally warned for minor misconduct, the man uploaded payroll data for the firm’s entire workforce to a public file-sharing website. Some of the affected employees brought proceedings against the firm.

Delivering the unanimous verdict in favour of WM Morrison, Lord Reed noted it was “abundantly clear” the employee was not engaged in furthering his employer’s business but was pursuing a personal vendetta. The fact that his employment gave him the opportunity to commit the wrongful act “would not be sufficient to warrant the imposition of vicarious liability”.

Application in Hong Kong

To date, the courts here have been reticent to follow the UK’s expanded scope. The most recent notable case was Ho Kwok Kei v AS Watson & Company, Ltd [2019] 3 HKLRD 592 in which the High Court considered the matter of a supermarket store manager who was injured during a goods delivery by an independent contractor. The manager sought damages not only from the contractor but also the supermarket, arguing the approach of Cox v Ministry of Justice that the supermarket was vicariously liable because deliveries by the contractor were an integral part of its business.

The Honourable Mr Justice Lam, having reviewed the trilogy of Supreme Court cases, commented: “Given the existing state of the law in Hong Kong as has been applied at the highest levels, I have some doubt whether it is open to the Court of First Instance to follow the Cox line of authorities and expand the scope of vicarious liability in this fundamental way.”

He said that given his ultimate conclusions in the case, the question of whether the supermarket was vicariously liable for the contractor’s actions was academic. “As such this is plainly not an appropriate case in which to consider expanding the law of vicarious liability.”

Summary

Mr Justice Lam’s ruling was delivered almost two years ago, before the more recent cases of Barclays Bank and WM Morrison clarified the UK’s position. It is still unclear if Hong Kong will adopt the expanded scope set out in the trilogy of Supreme Court rulings from 2012-17. Such development would undoubtedly have significant implications to employment insurance coverages. In any case, employers should be mindful to the potential risk of liability for wrongful actions of persons carried out not only by employees, but also independent contractors over whom they exercise a strong and close degree of control.

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