In Barclays Bank v Various Claimants  EWCA Civ 1670 the Court of Appeal considered whether the High Court was correct when it decided that Barclays Bank (the Bank) was vicariously liable for sexual assaults committed by a doctor who had been engaged by the Bank to undertake pre-employment medical examinations on prospective female employees.
In this case, 126 claimants alleged that they had been sexually harassed by a doctor who had been engaged by the Bank to undertake medical assessments.
The doctor was not an employee of the Bank but was a self-employed independent contractor who was paid a fee for each examination. At the time, the Bank required applicants to undergo a medical examination as part of their recruitment process and instructed the doctor to carry this out.
The alleged assaults took place between 1968 and 1984 in a consultation room at the doctor's home. The doctor died in 2009 and his estate was distributed. Allegations against the doctor first surfaced in 2013 and, following a police investigation, it was concluded that there would be sufficient evidence to prosecute the doctor if he was still alive.
The claimants subsequently sought damages against the Bank and the question of vicarious liability was considered as a preliminary issue by the High Court.
High Court decision
The High Court considered the test for vicarious liability and applied a two stage test. This involved asking the following questions:
- Is there a relationship between the primary wrongdoer and the person alleged to be liable, which is capable of giving rise to vicarious liability?
- Is the connection between the employment (or other relationship) and the wrongful act or omission so close that it would be just and reasonable to impose liability?
Applying the above tests, the High Court found that stage one of the test was satisfied. It also held that there was a sufficiently close connection with the engagement to satisfy the second stage of the test. It therefore held in favour of the claimants and decided that the Bank was vicariously liable for the alleged sexual assaults committed by the doctor.
The Bank appealed against the High Court's decision and specifically in relation to the first stage of the test. Its grounds for appeal were:
- The Court had wrongly concluded that the doctor's relationship with the Bank was akin to employment
- The Court had failed to find that the doctor was an independent contractor. The Bank's main argument was that the doctor's status of independent contractor was a complete defence to the claim, following the decision in E v English Province of Our lady of Charity  EWCA Civ 938
- The Court wrongly applied the law to the undisputed facts.
Court of Appeal decision
The Court of Appeal dismissed the appeal and upheld the High Court's decision. When reaching its decision the Court of Appeal acknowledged that since the first instance decision, the Supreme Court in Armes v Nottinghamshire County Council  UKSC 60 had affirmed the two stage test laid down in Cox and Mohamud v WM Morrison Supermarkets Plc  UKSC 11. It also acknowledged that the law on vicarious liability had developed in recent years and now requires an answer to the specific questions laid down in Cox and Mohamud (rather than whether the alleged tortfeasor was an independent contractor).
The Court of Appeal also reviewed the High Court's application of the relevant test and reached the following conclusions:
- While it could be argued that the medical examinations were of some benefit to the claimants, it was "clear beyond doubt" that the principal benefit was to the Bank. For example, the medical examinations were an essential part of the Bank's recruitment process.
- Carrying out a medical assessment was a "clear" example of a business activity being part of the Bank's organisation and integral to the business. This was particularly the case given that the workforce was an intrinsic part of the Bank's business and the examinations were undertaken as part of the recruitment process.
- The Bank had created the "risk" of the tort being committed as it had arranged for the medical examinations to be carried out solely by the doctor and provided the claimants with details of where and when to attend.
- The doctor was under the control of the Bank. For example, the Bank had identified the questions to be asked, the nature and purpose of the examinations to be undertaken and the form of report that had to be completed. The claimants were also directed to that particular doctor for an assessment, which was a condition of the offer of employment.
- Although the Bank had more means to compensate the victims (as compared with the distributed estate of the doctor), the High Court was right to give little weight to this criterion.
The Court of Appeal therefore dismissed the Bank's appeal and held that the Bank was vicariously liable for the alleged sexual assaults carried out by the doctor.
The Court of Appeal decision reaffirms the potential issues associated with engaging independent contractors and the risks that employers could face in terms of vicarious liability. It also highlights the fact that hiring an independent contractor is no longer a defence to vicarious liability and therefore employers need to be very careful when deciding which contractors to engage.
The decision also extends and widens what is regarded as a "business activity" and suggests that an employer could be held vicariously liable where it engages independent contractors to carry out its recruitment procedures. It may result in an increased number of claims, particularly by claimants who were previously prevented from bringing claims.
While each case will be considered on its own facts, employers will no doubt be concerned about the potential impact this decision could have on their business, and the financial consequences if they are held vicariously liable for the acts of their contractors. Employers should therefore be careful when using third parties, such as occupational health providers and medical experts, and should carry out a full and proper due diligence exercise. They should also ensure that they have the correct public liability insurance in place to protect against this type of liability.