Member Article

Court of Appeal finds that vicarious liability should be extended to cover acts by independent contractors

Employers generally bear legal responsibility for the misdeeds of their employees under the principle of vicarious liability – but what about independent contractors? The Court of Appeal has recently tackled that thorny issue and the result is likely to have an impact on many businesses warns Dean Parnell, Partner at Sydney Mitchell LLP.

The case concerned 126 women who applied for jobs with a high street bank and were required to undergo pre-employment health examinations by a GP. The women claimed that the doctor took the opportunity to sexually assault them. After solicitors launched proceedings on their behalf, a judge found that it would be fair, just and reasonable for the bank to hold vicarious liability for the doctor’s actions.

In challenging that ruling, the bank – which neither admitted nor denied that the sexual assaults occurred – argued that the GP was neither its employee nor was their relationship akin to employment. He was self-employed and had been engaged as an independent contractor. It was submitted that it was preferable to have a bright line test and that the imposition of vicarious liability should not be extended beyond relationships that are, or are close to, employment.

In ruling on the matter, the Court noted that use of independent contractors is increasingly prevalent in the modern economy. They often perform operations intrinsic to business enterprises over long periods and are subject to precise obligations and high levels of control. Depending on the particular facts of a case, vicarious liability could thus be extended to such a relationship.

In the particular case, the GP was deceased and his estate had been distributed. The bank was thus clearly in a better position to satisfy the women’s claims if they succeeded. He had examined the women on the bank’s behalf and, although they might have had the benefit of being alerted to health problems, the principal benefit was clearly to the bank as their prospective employer.

In dismissing the appeal, the Court noted that the examinations were part of the business activity of the bank and that the risk of wrongdoing had arisen from the bank’s engagement of the GP to perform them. He was paid a fixed fee for each examination and the level of the bank’s control over him was sufficiently high to make the bank vicariously liable for his actions. The Court’s ruling opened the way for the women to pursue their damages claims to trial.

This was posted in Bdaily's Members' News section by Sydney Mitchell LLP .