The Court of Appeal gave judgment on 17th July 2018 confirming the circumstances in which a business or organisation will be liable for the conduct of independent contractors and sub-contractors. This is known as vicarious liability. The judgment does not create new law but clarifies the circumstances under which vicarious liability applies. Even if a business or organisation is completely innocent of the misconduct carried out by independent contractors, it can still be vicariously liable for the misconduct.

In the case of Barclays Bank PLC v Various Claimants [2018] EWCA Civ 1670 the bank appealed against a decision on a preliminary issue dealing solely with the issue of vicarious liability. There were 126 Claimant’s seeking compensations against Barclays in respect of sexual assaults to which they allege they were subjected by the late Dr Gordon Bates. The majority of the Claimants were applicants for employment with the Bank and the remainder were existing employees. In each case the claimant was required to attend the consulting room of Dr Bates at his home. In each case the claimant alleges she was sexually assaulted by Dr Bates in the course of his examination.  (Liability in respect of the alleged assaults will be determined at a later hearing).

Dr Bates died in 2009. He practised as a general practitioner until around 1968 and from then until 1984 he conducted medical examinations and assessments on behalf of Barclays Bank for employees and prospective employees. The medical examinations were made a requirement of the claimants’ employment or offer of employment. Dr Bates was paid a set fee for each examination. In 2013 the police conducted an enquiry in to at least 48 victims of alleged sexual assault by the late Dr Bates, with the conclusion that had Dr Bates been alive sufficient evidence to pursue a criminal prosecution.

When considering whether an organisation should be vicariously liable for the conduct or misconduct of its contractors there is a two stage test to be applied. This is:-

1.  Is the relevant relationship one of employment or “akin to employment”?
2. If so, was the tort (eg misconduct or neglect) sufficiently closely connected with that employment or quasi-employment.

In respect of the first stage question there are five criteria to be considered and taken into account when reaching a decision. These are:-

1. the employer is more likely to have the means to compensate the victim and can be expected to have insured against that liability;
2. the tort will have been committed as a result of activity being taken by the employee on behalf of the employer;
3. the employees activity is likely to be part of the business activity of the employer;
4. the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee; and
5. the employee will, to a greater or lesser degree, have been under the control of the employer.

After the two stage test has been applied there is a further matter which the Judge can consider and this is whether the decision that the company or organisation is vicariously liable is a just and fair decision. This is a balancing exercise between two innocent parties. In the Barclays case the trial Judge concluded that it was just and fair to uphold vicarious liability, in part because action against the Bank was the only possible legal recourse now available to the Claimants.

The trial Judges findings that the claims of the Claimants against Barclays Bank satisfied the two stage test were upheld by the Court of Appeal.