20 November 2018
In this case, the Court of Appeal concluded an employer was liable for the actions of its managing director, who had attacked an employee at drinks following the official Christmas party.
Vicarious liability is a common law principle of strict, no-fault liability for wrongs committed by another person. In an employment relationship, it makes an employer liable for the actions of an employee where there is sufficient connection with the employment, even if the employer itself has done nothing wrong (Lister v Hesley Hall Ltd (2001)).
The Supreme Court held in Mohamud v WM Morrison Supermarkets Plc (2016), that a court considering whether an employer was vicariously liable should ask itself:
Mr Bellman was a sales manager at a recruitment company with two offices in Northampton and Nuneaton. His childhood friend, Mr Major, was the managing director and shareholder of the company.
In 2011, about a month before the company's Christmas party, a new employee (Mr Kelly) joined the Northampton office. Employees heard he was being paid significantly more than others.
On 16 December, the company’s Christmas party took place at a golf club. All employees and partners were invited: 24 people in total. Many of the guests were staying the night at a nearby hotel. At the end of the party, around half the guests (including Mr Bellman and Mr Major) went back to the hotel, where they continued to drink in the lobby on the apparent understanding that either Mr Major or the company would pick up the bill.
At about 2am, they began to discuss work, a discussion that continued outside and during which Mr Bellman brought up Mr Kelly's appointment. This proved to be a controversial topic and Mr Major stormed back inside, where he summoned the remaining employees at 3am and began to the lecture them "on how he owned the company, that he was in charge… and that he paid their wages". Mr Bellman said it would be better if Mr Kelly worked from the Nuneaton office and in response, Mr Major swore and then punched Mr Bellman, who asked him to stop. Despite the efforts of others present to hold him back, Mr Major punched Mr Bellman again. Mr Bellman fell backwards and was knocked unconscious, fracturing his skull and causing a haemorrhage.
The High Court (Cotter J) considered the case law on vicarious liability, including Mohamed.
The High Court noted that Mr Major was the managing director of the company, and in effect "the directing mind and will" of what was a small company.
There was an expectation that employees would attend the party, but the organised party at the golf club had ended, and with it any expectation or obligation on employees: "what was taking place at 3.00 a.m. at the hotel was a drunken discussion that rose after a personal choice to have yet further alcohol long after a works event had ended." A discussion that veered eventually back to work, after social or sports topics, could not provide a sufficient connection to work to give rise to vicarious liability against their employer.
The High Court held that as a principle of social justice and economic policy there was insufficient connection between Mr Major's position and the assault for the company to be held liable.
The Court of Appeal disagreed with the High Court and found that the company was vicariously liable for Mr Major's attack on Mr Bellman.
Mr Major was the "directing mind" of the company, and had responsibility for all management decisions and a wide remit and authority.
Courts should not focus on what an employee is expressly authorised to do but to look broadly and objectively at the field of activities assigned to him, taking account of the employee's position. In Mohamud and other cases, vicarious liability has been found where the employee has "used or misused the position entrusted to him" in a way which injured a third party.
Mr Major's job was of a wide nature, and there was sufficient connection between his job and his assaulting Mr Bellman. The drinking session might have been unscheduled, but should be seen against the background of the evening's events – it was on the same evening as the work event paid for and organised by the managing director, and Mr Major chose to wear his "metaphorical managing director's hat" when he delivered a lecture to his subordinates. He asserted his authority in the presence of around half the company's staff, and misused that authority. There had already been about 45 minutes of work discussion before his managerial decisions were challenged, and the drinkers had attended the party in their roles of staff and managing director.
It was significant that Mr Major was a senior employee, in a dominant position with a supervisory role which he re-asserted when he thought it necessary.
All three judges agreed that the company should be vicariously liable, but one (Irwin LJ) expressed reservations. He noted that the facts were unusual. In his view, the party and the after-party were two separate events, but Mr Major's role was almost unrestricted in relation to the company's business, and he was "laying down the law" and quelling dissent at the after-party discussion.
The judgment is a useful reminder of the authorities in this area and, while the circumstances of this case may be unusual, it is a reminder to employers that they risk being held liable for improper behaviour at works events, especially where alcohol is served.
The case is not, as Irwin LJ pointed out, authority for the proposition that that employers are insurers for violent or tortious acts by their employees just because there is an argument about work matters which turns violent, even when one employee is more senior than the other. The principles can be difficult to apply and the outcome will often depend upon a court making a full and careful analysis of the facts and circumstances of each case.