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21 November 2018
The Court of Appeal has ruled that a company was vicariously liable for the violent conduct of its managing director in physically attacking one of his employees at a Christmas party, leaving him severely disabled.(1)
The legal principle of vicarious liability makes employers liable for wrongful acts committed by their employees in the course of their employment. Traditionally, the course of employment was understood to mean the employee's actions had to be a wrongful and unauthorised mode of carrying out their normal duties. In contrast, if they were "on a frolic of their own" the employer would escape responsibility.
In more recent times, the courts have replaced this with a more flexible test that makes an employer liable for wrongs committed by an employee where there is a sufficient connection with the employee's employment, such that it would be fair to hold the employer vicariously liable (Lister v Hesley Hall Ltd  UKHL 22).
In 2016 the Supreme Court affirmed this test and said it involved two questions:
The Supreme Court said the second question should be approached by applying the principle of social justice that businesses should bear the loss caused by risks associated with the business materialising, including the risk of an employee misusing their position – "one of life's unavoidable facts" (Mohamud v WM Morrison Supermarkets plc  UKSC 11).
That said, cases concerning vicarious liability are invariably fact-specific, with courts seemingly having difficulty applying the concepts of 'sufficient connection' and 'social justice' to specific factual scenarios. This is well illustrated by the case recently considered by the Court of Appeal.
Bellman was a sales manager employed by Northampton Recruitment Ltd. In December 2011 the company held its Christmas party for office staff and their partners at a local golf club. At around midnight, the managing director Major initiated a move to a nearby hotel for further drinks.
Shortly before 3:00am, during a work-related argument, Major punched Bellman twice, knocking him out such that he fell back and hit his head on the ground. Bellman sustained a fracture to his skull which led to severe brain damage. He sued his employer, alleging that it was vicariously liable for Major's assault.
A High Court judge dismissed the claim, concluding there was insufficient connection between Major's employed position and his wrongful conduct to render Northampton Recruitment Ltd liable under the principle of social justice. The injury occurred during a drunken discussion long after the work event had ended and the fact the conversation had turned to work before the assault was not enough to support a finding of vicarious liability.
Bellman appealed to the Court of Appeal on the basis that the judge had failed to take into account the nature of Major's job as managing director and had therefore been wrong to decide there was insufficient connection between his employed position and his wrongful conduct.
Having considered the two-stage test set out in Mohamud and in particular the field of activities entrusted to Major, the Court of Appeal allowed Bellman's appeal. In doing so, the Court of Appeal relied heavily on the High Court judge's own factual findings.
The judge had found that Major was in charge of all aspects of Northampton Recruitment Ltd, with no set hours and authority to control his own methods of work, much of which was directly or indirectly connected to Northampton Recruitment Ltd. He also viewed the maintenance of his managerial authority as a central part of his role.
In relation to the evening in question, the judge had found that the Christmas party had been paid for and orchestrated by Major on behalf of Northampton Recruitment Ltd. He had offered to pay for taxis to take guests to an after-party at the nearby hotel, where much of the alcohol was paid for by the company. The assault on Bellman occurred immediately after a discussion about work, during which Major became angry that his management was being questioned. He had lectured the employees present on how Northampton Recruitment Ltd was his business, he paid their wages and made the decisions.
The Court of Appeal agreed that the unscheduled drinking session was not a seamless extension of the Christmas party, but said that it must be viewed in the context of the evening's events. Even if Major had taken off his managerial hat when he first arrived at the hotel, he "chose to don it once more and to re-engage his wide remit as managing director and to misuse his position when his managerial decisions were challenged". On the facts as found, there had been a re-assertion of Major's and Bellman's former roles before the assault took place and no suggestion that Major's behaviour had arisen "as a result of something personal".
The Court of Appeal concluded that there was sufficient connection between Major's field of activities and the assault to make it just for Northampton Recruitment Ltd to be held vicariously liable for his actions.
One of the Court of Appeal judges was at pains to emphasise the unusual facts of this case, which rarely arise. In his view, the crucial factors were Major's dominance as Northampton Recruitment Ltd's only real decision-maker and how the work discussion at the after-party became an exercise in him "laying down the law" by explicitly asserting his authority. The Court of Appeal judge considered that liability will not arise just because there is an argument about work matters between colleagues, which leads to an assault, even when one colleague is markedly more senior than the other. This case was "emphatically not authority for the proposition that employers become insurers for violent… acts by their employees".
Nonetheless, the result in this case instinctively feels correct and in tune with the approach to close connection in Mohamud, which was itself a case of violent assault in which the Supreme Court held a supermarket vicariously liable for an employee's unprovoked attack on a customer.
Some of the previous case law has suggested that vicarious liability requires a "seamless extension of events" (ie, the link between the employee's employment and their wrongful conduct must be unbroken). The Court of Appeal's judgment departs from this type of approach, making clear that substantive or time-related differences between the employee's functions and the wrongful act must be viewed in a wider context. It confirms that employers can be vicariously liable for actions taking place outside the normal employer-employee environment, such as an off-duty misuse of authority by someone in a senior position.
More generally, the trend in case law since the modern approach was introduced towards the beginning of this century has clearly been to expand the scope of vicarious liability and apply it in a wider range of circumstances.
For further information on this topic please contact Toria Barnes or Richard Lister at Lewis Silkin by telephone (+44 20 7074 8000) or email (email@example.com or firstname.lastname@example.org). The Lewis Silkin website can be accessed at www.lewissilkin.com.
(1) For further information please see Bellman v Northampton Recruitment Ltd.
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