UK: Vicarious Liability - Where Can The Line Be Drawn?

In the English case of Nassir Kafagi v JBW Group Limited [2018] EWCA Civ 1157, the Court of Appeal refused to find that the defendant was vicariously liable for the actions of a contractor.  As previously narrated in our updates on Vicarious liability remains on the move... and Vicarious liability - Scotland moves in the same direction as England & Wales, the recent trend has been to extend the scope of vicarious liability and so this decision offers useful guidance on the limits of the modern approach. 

Facts

Mr Kafagi, the claimant, alleged that he had been assaulted by two bailiffs who were at his property to collect council tax arrears. 

The first bailiff (Mr Boylan) had been sub-contracted by JBW Group (the defendant) to collect the debt on behalf of the local authority. The presence of the second bailiff (Mr Fenwick) had been arranged by the first bailiff without the defendant's knowledge.

The bailiffs had each paid a £10,000 bond to the local court as was required of all bailiffs carrying on business. Mr Boylan also had his own indemnity insurance.

Procedural History

The claim was raised in the County Court where the district judge heard an argument restricted to the nature of the relationship between the defendant and the two bailiffs. The district judge, Coonan, dismissed the case on the basis that the bailiffs were not employed by the defendant. 

The claimant appealed to the recorder who found that the relationship was not one of or akin to employment and upheld the district judge's decision. 

The claimant was granted permission to appeal to the Court of Appeal because the law of vicarious liability and its application to the activities of bailiffs and others involved in enforcement was of potentially wider significance. The decision to grant permission also recognised the strength of recent authority extending the scope of vicarious liability; although it should be noted that the Supreme Court's judgments in Cox and Armes were published after the recorder's decision in this case. 

The Court of Appeal decision

The Court of Appeal's decision hinged on whether or not the relationship between the defendant and the two bailiffs had particular characteristics which justified the imposition of vicarious liability. The court relied upon principals drawn from three recent Supreme Court Judgements; The Catholic Child Welfare Society and others v Various Claimants and others [2012] UKSC 56 (Christian Brothers); Cox v Ministry of Justice [2016] UKSC10  and  Armes v Nottinghamshire County Council [2017] UKSC 60.

It was accepted that vicarious liability was not restricted to relationships of employment and could apply to other relationships.

The five characteristics which are pertinent to such a finding were set out by Lord Phillips in the Christian Brothers case; (i) The employer is more likely to have the means to pay compensation;(ii) the wrong will have been committed as a result of activity undertaken by the employee on behalf of the employer; (iii) the activity is likely to be part of the business activity of the employer; (iv) the employer by engaging the employee to carry on the activity will have created the risk; and (v) the employee will have been, to a greater or lesser degree, under the control of the employer.

Those factors were further refined by Lord Reed in the Cox case, where he indicated that some factors were more important that others. Less important were the wealth and insurance status of the defendant and the extent of the defendant's control, albeit Lord Reed accepted that there must be a "vestigial degree of control". 

The significant factors were (i) the fact that the wrong occurred in the performance of activity carried out on behalf of the defendant, (ii) the act was part of the defendant's business activities and (iii) the defendant had created the risk by engaging the wrongdoer to carry out the act.  In Cox, Lord Reed noted that vicarious liability would not apply where the activities were "entirely attributable to the conduct of a recognisably independent business of his own or of a third party".

Ultimately, however, there was little discussion of the application of the particular facts of this case to the recent authority in relation to vicarious liability. The court attached significance to the fact that the wrongdoer could turn down work offered by the defendant, he could conduct the collection of debt in whatever legal manner he saw fit without control from the defendant and he could delegate or share the collection with another person without the consent or knowledge of the defendant (as indeed he did). Reliance was placed on the personal bond paid by certified bailiffs such as the wrongdoer into court. This was to allow security against which individuals who feel they have been wronged by a bailiff can recover. It was also relevant that the wrongdoer, Mr Boylan, maintained his own indemnity insurance. That finding might seem to cut across Lord Reed's view that the defender's wealth and insurance status is not an important factor but in this case the fact of insurance was taken to support the view that Mr Boylan was carrying out his activities as an independent business, rather than as an emanation of the defendant's.

The court referred to the fact that Mr Boylan worked for other clients and could in fact have been engaged directly by the local authority to enforce the council tax debt. In that sense he could in other contexts be a competitor rather than an employee of the defendant. It was concluded that the relationship between Mr Boylan (and Mr Fenwick) and the defendant was not akin to one of employment. 

Comment

This case can be distinguished from the facts in Armes, Cox and the Christian Brothers cases by the commercial nature of the bailiff's activities and the fact that he was running his own discrete and readily identifiable business. The defendant was only one of many clients and, although Mr Boylan was sub-contracted in this instance, he could have been a competitor elsewhere. In that regard he was not in the same hierarchical relationship as the wrongdoers in the other cases. 

The Scottish case of Grubb v Shannon [2018] SC GLA 13 concerned a wrongdoer who was, to some extent carrying on her own business. However, in that case she was considered to be substantively integrated into the defender's business. In the present case, the wrongdoer had sufficient control to turn down work from the defendant, to engage other staff and presumably, although not considered, to fix the price for his services. 

This is a useful decision which delineates some limit to the otherwise expanding scope of vicarious liability. No doubt there are further developments to come.

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