Date: Thu, 13 Jul 2006 07:08:14 +0100

From: Robert Stevens

Subject: Torts in the House of Lords Again

For most purposes, it doesn't matter whether you adopt the Master's Tort theory (ie that the words/actions are attributed to the employer) or the Servant's Tort theory (ie that the liability is attributed to the employer). In the former case the employer is liable jointly as principal. In the latter, he is held strictly liable for a wrong he does not personally commit.

In Majrowski, I think the result is the same regardless of the approach. "Persons" who can be guilty of harassment under the Act was not confined to "natural persons" and so if the acts of harassment are attributed, the employer should be liable. In Darling, by contrast, the duty on the wording of the legislation was only on the employee.

Adopting one or the other approach, what is the correct result in these two scenarios:

(1) A public body employs an official who is guilty of a gross wrong, which would entitle the claimant to punitive damages. Can the employer be held liable for such damages?

(2) An employer is held vicariously liable for the fraud of its employee. Third parties were also parties to the fraud and the employer claims a contribution from them. Should the employer be treated as an innocent party claiming against fraudsters, or as a fraudster claiming a contribution from fellow fraudsters?

There are many many other examples where it makes a difference, but I won't bore the list further.

Robert Stevens
Barrister
University of Oxford

Neil Foster writes:

Dear Robert etc;

A very interesting decision, in my view, relating closely to the area of breach of statutory duty which as many of you will know is an area I am very interested in. The question I am most interested in (Australia not having the Protection from Harassment Act 1997 though we have similar provisions in anti-discrimination legislation) is whether at common law an employer can be vicariously liable for the tort of breach of statutory duty.

It is usually stated in the textbooks that up until now the House of Lords had declined to clarify this point. Certainly in Imperial Chemical Industries Ltd v Shatwell [1965] AC 656 Lord Pearce seemed to specifically leave the point open at 688G-689A. But the comments of their Lordships elsewhere in the decision were really explicable on no other grounds, and often came very close to being directly on point. So at one point Lord Hodson says: "unless the company has some defence of its own it must accept vicarious liability for the participation of James in the accident" (680D). Lord Pearce's comment at 687E stated that an employer may be "vicariously in breach of [a] statutory duty" which is not in terms binding on the employer directly.

Nevertheless, apparently out of deference to the High Court of Australia decision in Darling Island Stevedoring & Lighterage Co Ltd v Long (1957) 97 CLR 36, his Lordship on the next page said that it is "not necessary to decide the point" and "I prefer to reserve the matter for future consideration". With respect, this very much had the feel of a paragraph added at the last minute when his Lordship had discovered the High Court judgement. There seemed no doubt from the rest of the judgement that the House believed an employer vicariously liable in the circumstances. Hence I always thought that apart from Lord Pearce's concluding words the rest of the judgement must stand for the proposition that a master can be vicariously liable for a breach of a statutory duty imposed directly on an employee.

This is indeed contrary to the High Court's decision in Darling Island Stevedoring, although it is not contrary to the policy implemented by the NSW Parliament to overturn that decision later (in passing the Law Reform (Vicarious Liability) Act 1983 s 7), and it may even be queried (given the lack of support for the "master's tort" theory today) whether the current High Court would uphold its own prior decision on the point.

I am pleased to say that Lord Nicholls gives an excellent analysis of this topic in Majrowski (which is to say he agrees with the view I had reached, of course!). He even pays due deference in paras [12]-[15] to the High Court of Australia decision in Darling Island, and comes to the very sensible conclusion that these days the High Court itself does not usually use the "master's tort" theory (citing Hollis v Vabu). I have commented before on this forum that it is about time the High Court revisited Darling Island to clarify the question.

This decision, then, puts it beyond doubt that the law of England at least is that (1) there may be vicarious liability for a tort based on a statutory duty - see paras [10], [57], [77], [81] and impliedly at [74]; (2) there will in fact be a presumption that where Parliament has not excluded vicarious liability that it will normally apply - see paras [16]-[17], [57], [78], [81].

Where there was some difference of opinion amongst their Lordships was whether or not the statute had impliedly excluded such liability in the specific case of harassment actions. Three of their Lordships seemed inclined to think that vicarious liability might have been excluded by considerations drawn from the way the legislation was drafted - see Lord Hope at [43], the whole of Baroness Hales' "counter-factual" judgement ("if we were policy-makers"), Lord Brown at [81], and even Lord Carswell regarded the question as "evenly balanced". But the inclusion of an amendment to the Scottish limitation of actions legislation referring specifically to possible liability of "the employer or principal" of someone personally responsible for the harassment led all of the House to the view (however reluctantly) that Parliament had intended that there be vicarious liability.

On the other hand, Lord Nicholls' careful analysis of the practical problems raised by the fact that there are almost identical "harassment" actions available under EU-mandated discrimination laws, but which actions all include specific defences for employers (see paras [31]-[39]) leads me to suspect that Parliament might take the hint and amend the 1997 Act to include such defences. But as I'm not there I don't have a feel as to whether that would be politically likely or not. To paraphrase Baroness Hale at [74], I'm not a policy-maker or legislator, merely a humble academic construing the language used by the Court.

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