News

Stop Press :Vicarious liability – clarity from the Supreme Court

In a decision released on 1 April 2020, the Supreme Court in WM Morrisons Supermarkets PLC v Various Claimants [2020] EWCA Civ 2339 has provided much needed clarity on the circumstances in which an employer is vicariously liable for the conduct of its employees.

Facts

Mr Skelton, a senior employee at Morrisons, leaked personal data of 98, 9981 fellow employees online and to three national newspapers. Prior to leaking this information, Mr Skelton was subject to disciplinary proceedings. Following his disciplinary proceedings, Mr Skelton harboured a grudge against Morrisons which led to his disclosure.

A group action was brought against Morrisons for damages for ‘distress, anxiety, upset and damage’. The claim was predicated on the basis that Morrisons was vicariously liable for breaching its statutory duty under section 4(4) of the DPA, misuse of private information and breach of confidence. The question under consideration was whether Morrisons should be held vicariously liable for Mr Skelton’s conduct.

Decision

The Supreme Court ruled that both the court at first instance and Court of Appeal had misunderstood the principles relating to vicarious liability (at [31]) in various respects:

(1) The lower courts were wrong to conclude that Mr Skelton’s disclosure fell within his functions or field of activities.

(2) The Court of Appeal placed too much emphasis on the five factors listed in Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1 (at [35]). Those factors were concerned with whether the relationship between an employer and employee was ‘akin to employment’, not whether the conduct was so connected with the employment that vicarious liability ought to be imposed.

(3) A temporal or causal connection does not in itself satisfy the ‘close connection’ test.

(4) The reason why Mr Skelton acted wrongfully was not irrelevant. Conversely, it was an important consideration i.e. whether he was acting on his employer’s business or for purely personal reasons (‘a frolic of his own’).

In determining whether Morrisons should be held vicariously liable for the actions of Mr Skelton, the Supreme Court clarified that the question is whether Mr Skelton’s disclosure was ‘so closely connected with acts he was authorised to do that, for the purposes of the liability of his employer to third parties, his wrongful disclosure may fairly and properly be regarded as done by him while acting in the ordinary course of his employment’. In considering Mr Skelton’s employment and conduct, the Supreme Court decided that it would not be fair or proper to regard Mr Skelton’s conduct as falling within his ordinary employment.

The Supreme Court reiterated the distinction between conduct where an employee engages (however misguidedly) in furthering his employer’s business, and cases where the employee engages in conduct on a ‘frolic of his own’. In WM Morrisons, the Supreme Court found that Mr Skelton was pursuing a personal vendetta against his employer for earlier disciplinary proceedings – he was not engaged in furthering his employer’s business. His conduct was not so closely connected with acts which he was authorised to do.

This is a significant decision. In circumstances where an employee has leaked data with the specific intention to harm their employer, the employer may not be held vicariously liable. 

Francis will be covering this case and the topic of vicarious liability in greater detail at No 18 Chambers civil litigation seminar.