Australia: Vicarious liability litigation duties

Last Updated: 16 November 2018
Article by Bill Madden

Abstract

This article reviews a recent decision of the United Kingdom Supreme Court, where the court was called upon to consider but firmly rejected an argument that an employer owed a duty to an employee. The duty argued for was that the employer should take reasonable care to protect the employee from economic and reputational harm when defending a claim asserting vicarious liability on the part of the employer for the acts of an employee.

Introduction

As most recently recognised by the High Court in Prince Alfred College Inc v ADC1in some circumstances an employer may be vicariously liable for the intentional criminal acts of an employee. That matter concerned allegations of sexual abuse, but such liability may also arise in relation to the acts of security personnel and of police officers.

This article addresses the argument that, in conducting the defence of such a claim, the employer may owe a duty to the employee to take reasonable care to protect them from economic and reputational harm. That argument was recently addressed by the United Kingdom Supreme Court in James-Bowen v Commissioner of Police of the Metropolis.2

Background and basis of the claim

A suspected terrorist, BA, issued civil proceedings against the Commissioner in which he alleged that the Commissioner was vicariously liable for the serious assaults which he alleged certain police officers had inflicted on him in the course of his arrest. The officers were not defendants in the action nor were contribution proceedings brought against them by the Commissioner. The defence filed by the Commissioner denied liability.

On the third day of the trial, the Commissioner settled the claim on the basis of agreed damages of £60,000 and agreed costs of £240,000 with an admission of liability and an apology for "gratuitous violence" to which BA had been subjected by the officers.

The officers later commenced the present proceedings against the Commissioner alleging breach of contract, negligence and misfeasance in public office arising from the manner in which the Commissioner had defended BA's claim. They alleged that a press release issued by the Commissioner following settlement of the claim was tantamount to endorsing their culpability. They sought compensation for reputational, economic and psychiatric damage.

The claim by the officers was put on three bases, however of particular interest was the allegation that:

(3) The Commissioner owed the officers a duty of care in tort and concurrently in contract as employer or quasi- employer to take reasonable care to safeguard their safety, health, welfare (including economic and professional welfare) and reputational interests, in the preparation and conduct of the defence to BA's claim and when considering and effecting any settlement of it.3

Findings

The court noted that the officers held the public office of constable and were not employees, however proceeded on the basis that the Commissioner and the officers should be treated as if they were employer and employees, while recognising that, in the absence of any actual contract, any duty derived by analogy with the standard terms implied in an employment contract must necessarily sound as a duty of care, rather than be absolute.4

It was further noted that the mutual obligation of employer and employee not, without reasonable and proper cause, to engage in conduct likely to destroy or seriously damage the relationship of trust and confidence required between employer and employee is a standardised term implied by law into all contracts of employment. However, no precedent could be found for the extension of that implied term to a general duty of care owed by an employer to protect the economic interests of employees. Nor did the court in this matter hold that the imposition of the novel duty would be fair, just and reasonable.5

Conflicting interests was also seen as a hurdle to the imposition of such a duty, with the court mentioning D v East Berkshire Community Health NHS Trust6where a majority of the House of Lords held that health care and childcare professionals investigating allegations of child abuse did not owe a duty of care to the parents of the children concerned—a similar issue to that which arose in Sullivan v Moody.7 While the fact that the recognition of a duty of care may potentially subject an individual to conflicting duties was held to be not conclusive against its recognition in all situations, it is a competing under- lying policy consideration.8

The overall approach of the court to the issue is perhaps best summed up in the following passage:

The interests of an employer who is sued on the basis that he is vicariously liable for the tortious conduct of his employees differ fundamentally from the interests of those employees. The financial, commercial and reputational standing of the employer may be at stake. It is the employer who will incur the cost of defending the proceedings which, however successful the defence may be, is most unlikely to be recovered in full, and who, if unsuccessful, will bear the liability to the claimant. The employer must be able to make his own investigation into the claim and to assess its strength based on the conduct of his employee and the prospects of a successful defence. In this regard, he will need to form his own view as to the reliability and veracity of his employee and as to how the employee is likely to perform as a witness. The interests of insurers may have to be taken into account. The employer will have to decide what degree of importance he attaches to successfully defending the claim and what financial and other resources should be devoted to its defence. He may consider that, however strong the prospects of a successful defence, he cannot justify the cost and effort of defending the claim and that it should, therefore, be settled.9

Policy considerations relating to the conduct of litigation were also noted by the court as a relevant factor, in that decisions in the conduct of the defence, such as which inquiries to undertake, which experts to instruct, which witnesses to call or which resources to devote to resisting the claim, are essentially matters for the employer as defendant and should be taken free of anxiety as to possible future claims by the employees on the basis that the case should have been run differently.10

Discussion and conclusions

The conclusion reached in this matter by the United Kingdom Supreme Court appears similar to that which might be expected had the issue been before the High Court of Australia. The same outcome would seem to follow, had the acts of the employee been negligent rather than intentional.

A related issue was to be addressed by the High Court earlier this year in the matter of Govier v Uniting Church in Australia Property Trust (Q),11 where the employee argued in favour of a duty of care to an employee when conducting an investigative process.12 The employee had alleged that she suffered psychiatric injury as a result of the employer's actions. The trial judge had held that no such duty existed and the employee's appeal was dismissed by the Queensland Court of Appeal.13 Unfortunately, the grant of special leave to appeal was revoked during the course of oral argument, when it became apparent that the contract of employment was not in evidence. Reference to that contract would have been necessary to analyse the tortious duty which the appellant argued for.

The absence of an employment contract in James-Bowen v Commissioner of Police of the Metropolis leaves open the possibility of a similarly framed claim based more squarely on breach of contract, where an express term in an employment agreement requires an employer not to act in such a way as to unreasonably damage the interests of an employee. However, such a term would be uncommon and so such a claim may not arise.

This article was originally published in the LexisNexis Australian Civil Liability Newsletter Volume 15 Number 6

Footnotes

1Prince Alfred College Inc v ADC (2016) 258 CLR 134; 335

ALR 1; [2016] HCA 37; BC201608462.

2 James-Bowen v Commissioner of Police of the Metropolis

[2018] UKSC 40 per Lord Lloyd-Jones with whom Lady Hale,

Lord Mance, Lord Kerr and Lord Wilson agreed.

3 Above n 2, at [7].

4 Above n 2, at [15].

5 Above n 2, at [21]. Caparo Industries plc v Dickman [1990] 2

AC 605; (1990) 1 ACSR 636.

6 D v East Berkshire Community Health NHS Trust [2005] 2 AC

373; [2005] All ER (D) 292 (Apr); [2005] UKHL 23.

7 Sullivan v Moody; Thompson v Connon (2001) 207 CLR 562;

183 ALR 404; [2001] HCA 59; BC200106147.

8 Above n 2, at [29].

9 Above n 2, at [30].

10 Above n 2, at [35].

11 Govier v Uniting Church in Australia Property Trust [2018]

12 A similar claim was mentioned in the James-Bowen v Com-

missioner of Police of the Metropolis judgment, above n 2,

at [25]: Calveley v Chief Constable of the Merseyside Police

[1989] AC 1228; [1989] 1 All ER 1025.

13 Govier v Uniting Church in Australia Property Trust (Q)

[2017] QCA 12; BC201700555.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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