Dear Colleagues;

Thanks for noting this, Phillip. This decision, Catholic Child Welfare Society v Various Claimants [2012] UKSC 56 (21 Nov 2012) is perhaps the worst private law decision I have read from a superior court in some time.

Let me make it clear from the outset that I do not object to the outcome, holding the De La Salle Brothers civilly liable for the consequences of the horrendous cases of child abuse committed by the members of the order. This has become a huge issue in Australia in the last week, with the Prime Minister here announcing a national Royal Commission to investigate cases of institutional child abuse and alleged cover-up by the authorities, not only in the Roman Catholic church but in other private and Government institutions. Locally, in my city of Newcastle, the State Government previously announced that it would run an inquiry into allegations of cover-up of abuse by church authorities. That may lead to successful claims for damages in the future, and if it does, I completely support the outcome. Indeed, as a Christian, I completely agree with recent comments to the effect that : "If it comes to it, the church must be willing to embrace bankruptcy, lose property and all power, not in employing lawyers to protect it, but in doing whatever it takes to seek recompense for those damaged under its care." http://publicchristianity.org/library/whatever-it-takes-sexual-abuse-and-the-church#.UK1yi4V16Kw

BUT- distorting the established rules of private law liability to achieve this result is not a good policy. And that is what this decision does.

The facts of the case were that abuse had been committed over some years by Brothers, some of whom were employees of a range of bodies whom the court calls the "Middlesborough Defendants" (the Employers). It was accepted in the lower courts, and not challenged in the SC, that those who employed the Brothers could be held vicariously liable for their sexual assaults. (I completely accept that is right, of course, under established precedent.) But those Defendants wanted to also have a ruling that the De La Salle Institute were vicariously liable for the actions of the Brothers (and whatever the status of the Institute as an unincorporated body, they were accepted not to be the employers of the brothers.) Note up front that what we have here is in effect an action between 2 insurance companies- the claimants who have been harmed are already going to recover damages from the Employers; the issue is whether the damages will be also apportioned to the Institute.

There is a complexity about the legal personality of the Institute, as I mentioned; I don't really object to the way that the SC deals with that, at least on first reading. So I will assume that in one way or another one could access the funds of the local representatives of the Institute if other principles of vicarious liability were established- see eg [33].

In brief, on vicarious liability (VL) in the SC here (Lord Phillips, with whom 4 other members of the Court agree) we see that:

(1) the decision of the CA in Viasystems should be accepted as good law- see [20](iv) where the principle is said to be that "two different defendants, D2 and D3 [may] each.. be vicariously liable for the single tortious act of D1; and in [21] this is said to be unchallenged by counsel and to represent a "sound and logical incremental development" of the law.

I cannot quite believe that counsel for the Institute chose not to challenge Viasystems. I have thought this decision was bad law since it was first handed down (indeed, I see on going back to the ODG archives that it was the first case I posted about on this forum in 2005!) It represented a major transformation of the law of vicarious liability. It was unclear at the time whether it meant that a worker could have 2 employers, or simply that we would extend the circumstances in which vicarious liability would apply beyond that of employment. It now seems that the authoritative interpretation of the case is that of Rix LJ (see [45]), noted at [43] here- and the test is said to be : is the employee "so much a part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence"? In one sense I suppose this is just an extension of the "organisation" test for employment which has been followed in the UK (but clearly rejected by the High Court of Australia since Stevens v Brodribb.)

A key fact about Viasystems is that since it was decided in 2005 it has never been applied! That is, while its authority has been conceded in a couple of cases, no other case has come down on the side of actually finding dual vicarious liability. But now it seems we have an explanation for this in Lord Phillip's judgment at [46]- those cases were just plain wrong! Rix LJ's test should have been applied, as it is "arguable that the facts of each case could have supported a finding of dual vicarious liability".

So we end up with a situation where the new test is that a relationship can give rise to vicarious liability if it is "akin to that between an employer and an employee".

(2) This was the approach of the CA in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust [2012] EWCA Civ 938, which we have commented on here previously and which I also criticised at the time. I must say I have never before seen an appeal where the appellate court has decided to dispense its opinion on a case which is not before it so freely, as in this decision and its comments on JGE. Clearly Lord Phillips thinks the decision of Ward LJ in that decision was brilliant: "the impressive leading judgment" he calls it in [19], lauding its scholarship. But it was not the decision under appeal! I have no idea whether an appeal is pending, but after these gratuitous comments one would have to say that any appeal would be useless. So serious arguments that might have been presented on either side are not to be heard by the SC, who have effectively decided two appeals for the price of one.

(3) The distinction between an employee and an independent contractor, illogical as it may sometimes seem, is still a part of the common law. But the comments at [36] virtually wipe out the difference. Lord Phillips says:

"Today it is not realistic to look for a right to direct how an employee should perform his duties as a necessary element in the relationship between employer and employee. Many employees apply a skill or expertise that is not susceptible to direction by anyone else in the company that employs them. Thus the significance of control today is that the employer can direct what the employee does, not how he does it."

But the right to direct what is done, not how it is done, is precisely the defining characteristic of an "independent contractor" relationship. Is the SC saying that we should just abandon this distinction altogether? Allow vicarious liability for all independent contractors? The massive implications of such a shift (including, of course, in the calculation of risk involved in issuing insurance policies) is not discussed at all in this throw-away line.

(4) The bottom line? We now have a new test for what is called "stage 1" of the question of vicarious liability. See [60]: VL can exist where the relationship between [D1 and D2] is "sufficiently akin to that of employer and employees".

Bizarrely, after formulating a foundational change to private law, in para [61] Lord Phillips blithely suggests that the case could have been decided on simpler grounds! VL could be established if a brother was "acting for the common purpose of the brothers as an incorporated association". This may or may not represent the rule for VL of members of an unincorporated association, but of course it was clearly not relevant to this case, where sexual abuse could not in any way have been described as the "common purpose" (one would sincerely hope!) of the association. It is very hard to know where para [61] fits, since his Lordship then goes on to discuss the real issue here: in what sense is sexual abuse part of the "scope of employment" (or, we now presumably have to say, the "scope of the quasi-employment"?)

(5) There is a sound review of this issue in the recent cases on VL for sexual abuse in employment situations. I have to concede that his Lordship is justified in his comment at [82] that the High Court of Australia's decision on the matter in Lepore shows "a bewildering variety of analysis". But it does at least stand in the line of Bazley and Lister in holding that VL for sexual abuse is possible. In the end I agree with the conclusion that, if the relationship between the Institute and its Brothers were legally sufficient to create vicarious liability, the abuse here would have fallen within the class of activities for which VL should be imposed, as the D "created or significantly enhanced the risk that the victim would suffer the relevant abuse"- [86].

To conclude: there is a very significant comment at [85] which I think arguably provides a clue to the way that this case was resolved: "There is currently concern at the possibility that widespread sexual abuse of children may have occurred within the entertainment industry". Even to an observer outside the UK it seems that the shadow of Jimmy Saville lies over these proceedings. The outrage and anger at what happened in the BBC is perfectly justified. But I have to say it may also have had an impact on the way that this decision is framed.

Lord Phillips is perfectly correct to note at [34] that VL is a "longstanding and vitally important part of the common law of tort". But I disagree with his too simplistic formulation that 

"The policy objective underlying vicarious liability is to ensure, insofar as it is fair, just and reasonable, that liability for tortious wrong is borne by a defendant with the means to compensate the victim." (emphasis added)

This is one of the mix of "policy objectives" but it is not the only reason that the law has had for the doctrine. The too-great emphasis on simply looking around for someone with deep pockets who is "connected" to the harm in some way is not sufficient. This judgment will open up a wide and unpredictable area for "quasi-employment" relationships to create vicarious liability.

The fact is that the common law already has a doctrine under which strict liability can be imposed for the actions of non-employees. It is called the doctrine of "non-delegable duty". This post is already too long but I only want to say that I think this doctrine, with appropriate and genuinely "incremental" tweaking, could have provided a perfectly orthodox ground for finding the Institute liable here. The tweaking that would be needed would be (1) for the UK courts, as has been done in Australia for some years, to recognise the relationship between an educational institution and the minor pupils it takes care over, as one creating a "non-delegable duty"; (2) for courts generally, as sadly is precluded by the illogical ruling in NSW v Lepore in Australia, to recognise that a non-delegable duty can create liability for intentional torts in the same way that it creates liability for negligence.

Regards

Neil

On 21/11/2012, at 9:36 PM, Phillip Morgan wrote:

Dear List Members,

 

This morning the United Kingdom Supreme Court gave judgment in the CCWS case, another vicarious liability abuse case, this time concerning vicarious liability in the context of an unincorporated association, The Institute of Brothers of the Christian Schools.  The case looks at vicarious liability in the context of unincorporated associations, and examines (rather briefly) the role of risk at the second stage of establishing vicarious liability. 

 

http://www.supremecourt.gov.uk/decided-cases/docs/UKSC_2010_0230_Judgment.pdf

 

Kind regards,

 

Phillip

_______________________

 

 

Phillip Morgan,

 

Lecturer in Law,

 

York Law School,

The University of York,

Freboys Lane,

York,

YO10 5GD,

United  Kingdom,

 

https://www.york.ac.uk/law/staff/morgan/

https://www.york.ac.uk/law/

Neil Foster
Associate Professor in Law,
Newcastle Law School;
Faculty of Business & Law
University of Newcastle
Callaghan NSW 2308
AUSTRALIA

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ph 02 4921 7430
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