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Company held liable for managing director’s violent conduct

18 October 2018

The Court of Appeal (“CA”) 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.

Background

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 [2001] UKHL 22).

In 2016, the Supreme Court (“SC”) affirmed this test and said it involved two questions:

  • What functions or “field of activities” were entrusted to the employee, i.e. what was the nature of the job?
  • Was there sufficient connection between the employee’s position and the wrongful conduct so as to make it just and reasonable for there to be vicarious liability?

The SC 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 his or her position – “one of life’s unavoidable facts” (Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11).

That’s all well and good, except that 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 case that has just been considered by the CA.

Facts of the case

Mr Bellman was a sales manager employed by Northampton Recruitment Ltd (“NR”). 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 Mr Major initiated a move to a nearby hotel for further drinks.

Shortly before 3am, during a work-related argument, Mr Major punched Mr Bellman twice, knocking him out such that he fell back, hitting his head on the ground. Mr Bellman sustained a fracture to his skull which led to severe brain damage. He sued his employer, alleging that it was vicariously liable for Mr Major’s assault.

A High Court judge dismissed the claim, concluding there was insufficient connection between Mr Major’s employed position and his wrongful conduct to render NR 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.

Mr Bellman appealed to the CA, 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.

Court of Appeal decision

Having considered the two-stage test set out in Mohamud (above), and in particular the “field of activities” entrusted to Mr Major, the Court of Appeal allowed Mr Bellman’s appeal. In doing so, the CA relied heavily on the High Court judge’s own factual findings.

The judge had found that Mr Major was the directing mind and will of NR, in charge of all aspects of the business, with no set hours and authority to control his own methods of work, much of which was directly or indirectly connected to NR. 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 Mr Major on behalf of NR. He had offered to pay for taxis to take guests to “after-party” at the nearby hotel, where much of the alcohol was paid for by the company. The assault on Mr Bellman occurred immediately after a discussion about work, during which Mr Major became angry that his management was being questioned. He had lectured the employees present on how NR was his business, he paid their wages and took the decisions.

The CA agreed that the unscheduled drinking session was not a seamless extension of the Christmas party, but said it must be viewed in the context of the evening’s events. Even if Mr 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 Mr Major’s and Mr Bellman’s former roles before the assault took place, and no suggestion that Mr Major’s behaviour arose “as a result of something personal.”

The CA concluded that there was sufficient connection between Mr Major’s field of activities and the assault to make it just for NR should to be held vicariously liable for his actions.

Implications

One of the CA judges was at pains to emphasise the unusual facts of this case, which would rarely arise. In his view, the crucial factors were Mr Major’s dominance as NR’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 CA judge considered that liability would 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 SC 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” – i.e. the link between the employee’s employment and his or her wrongful conduct needs to be unbroken. The CA’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 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 of the 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.

Bellman v Northampton Recruitment Ltd judgment available here

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