A party seeking to restrict another's commercial activities must consider whether such terms are normal in similar, factual and contractual circumstances.
Vicarious liability is a common law principle of strict, no-fault liability for wrongs committed by another person.
An employer may be held vicariously liable for acts committed by an employee in breach of that individual’s own tortious duties, which is a form of indirect liability; it does not involve the attribution of the employee's act to the company. Instead, it means that where an employee has committed a breach of a tortious duty, his employer may be additionally answerable for that act or omission.
The Claimant in this matter was a sales manager for the Respondent company, Northampton Recruitment Ltd. The company’s managing director committed an assault against the Claimant at an informal after party that followed the official work Christmas party.
After the pre-arranged work Christmas party, some of the guests decided to go on to a hotel, where they were staying at the company’s expense, for more drinks. During the course of the evening, the discussion turned to work-related matters, including concerns that a new company employee was said to be receiving substantially higher pay than others. The director pointedly walked away from the discussion, but subsequently summoned the remaining employees and began to lecture them, at which point an argument arose between the director and the Claimant. The director punched the Claimant twice, despite the Claimant having held out his hands in a “gesture of surrender” after the first punch was thrown.
Unfortunately, on the second punch, the Claimant hit his head on the floor and sustained a serious brain injury that left him with significant cognitive dysfunction. The Claimant brought a personal injury claim against the company on the basis that it was vicariously liable for the actions of its employee.
High Court decision
The High Court dismissed the claim on the basis that there was an insufficient connection between the position in which the managing director was employed and his wrongful conduct. In the High Court’s view, the fact that the argument that arose at the after party on a work-related topic did not turn the interaction into something ‘in the course of employment’.
Court of Appeal decision
The Claimant appealed the initial decision on the issue of whether there was an insufficient connection between the managing director’s employment and his wrongful conduct.
The appeal was allowed. The Court of Appeal (CA) stated that two key matters needed to be considered when considering vicarious liability:
- Firstly, the nature of the wrongdoer’s job, to be construed broadly and objectively (in this case, what functions or field activities were entrusted to the managing director by the company?); and
- Secondly, whether there was sufficient connection between the wrongdoer’s job and the wrongful conduct to render vicarious liability appropriate?
In respect of the first matter, the CA found that the managing director’s functions were broad, and his remit and authority were wide. The managing director had responsibility for all management decisions and was, therefore, the “directing mind and will” of the company, with maintenance of his managerial responsibility being a central part of that role.
In respect of the second matter, the CA was of the opinion that there was sufficient connection between the managing director’s field of activities and the assault. Though the unscheduled after party was not a seamless extension of the Christmas party, it was not either an impromptu drinking session between colleagues that might occur on any night of the week after work. Therefore, the Court saw fit to view the after party in the context of the official work event that had been organised and paid for by the managing director.
The Court disagreed with the company’s argument that the managing director was merely a fellow reveller at the hotel. He attended the party in his capacity as managing director and exercised his authority over his employees by summoning them to lecture them on the extent and scope of his authority, with a view to quelling dissent. The attack arose in this context and was not attributable to something personal between the two parties, who were previously longstanding friends.
In this sense, there was sufficient connection between the managing director’s wrongful conduct and his role. The Court, therefore, held that the company was vicariously liable for his actions.
This decision is significant and follows a trend of recent cases where employers have been held vicariously liable for assaults carried out by employees (often where it seems that the employees’ actions are totally removed from what they were employed to do). Employers should be aware that misuse of authority can occur out-of-hours when employees are ‘off-duty’, and particularly by those in senior positions.
In light of the upcoming work Christmas party season, this case serves as a timely reminder to employers that vicarious liability situations may arise both during and after the official bar has closed. The distinction between official work parties and impromptu afterparties will not be the deciding factor. Employers should make all staff aware that their behaviour both during and after the work Christmas party (and any other social event) will be viewed as conduct in the course of employment and, therefore, the same standards of behaviour as those expected in the office will apply.
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