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Vicarious Liability and Independent Contractors

The law of vicarious liability has been steadily developed by the Courts over the last 20 years.  It is essentially a public policy decision to make institutions that have the financial means, including insurance, compensate survivors for the actions of a third-party perpetrator, usually an employee.  The institution is likely to be unaware of the assaults and the Courts are therefore naturally reluctant to impose vicarious liability, unless there are good public policy reasons for doing so.

Typically, vicarious liability would assist a survivor of sexual abuse at school as the Local Education Authority can be held liable for the abuse committed by a teacher. Likewise claims can be successfully brought against charitable institutions such as the Scouts or the church when survivors have been abused by scoutmasters and priests who may well be untraceable or impecunious.

Whereas the law of vicarious liability is relatively well understood in relation to employees, some defendant insurers have still resisted claims when the perpetrator is an independent contractor of the organisation being sued.

The Barclays Bank Case

In Barclay’s Bank v Various Claimants, the Court of Appeal heard an appeal from Barclays Bank that it should not be vicariously liable for sexual assaults upon prospective female employees by a doctor who conducted medical examinations on behalf of the bank prior to employment with it.  The medical examinations were a requirement of Barclay’s offer of employment and were conducted by Dr Bates in a consulting room at his house. Having examined the prospective employee Dr Bates then completed a “Barclays Confidential Medical Report”. If the medical report was satisfactory the bank made an offer of employment. Dr Bates was paid a set fee by the bank for each examination.

By 2013 a number of women examined by Dr Bates complained to the police. They reported that Dr Bates had required them to undress at least down to their underwear. Allegations were also made of inappropriate examinations of their breasts and/or digital contact or penetration of the anus and vagina.  By then Dr Bates had died and his estate had long since been distributed. Accordingly, the claimants’ only recourse to compensation was to allege that Barclays was vicariously liable for the sexual assaults perpetrated by Dr Bates.

It was the claimant’s position that the medical examinations served the bank’s purposes as the report included reassurances that the individual concerned was medically suitable for work in the bank, and by selecting medically fit employees the bank minimised its risk of health problems amongst bank staff.  It was also the case that Dr Bates could recommend acceptance of life assurance policies at discounted rates.

The court of appeal reaffirmed that the legal test required an analysis:-

1.  Of the relationship between Dr Bates and Barclays to see whether it was one that was capable of giving rise to vicarious liability.  Previous case law had established that a business relationship that amounted to employment or “akin to employment” would suffice.

2.  Whether there was a connection in the relationship between Dr Bates and Barclays, and the sexual assaults.  This is referred to as the close connection test.

In relation to the close connection test the Court had regard to five criteria:-

1.  Whether Barclays was more likely to have the means to compensate the victims and could be expected to have insured against that liability

2.  Whether the sexual assaults were committed as a result of activity being taken by Dr Bates on behalf of Barclays

3.  Whether Dr Bate’s examinations were likely to be part of the business activity of Barclays

4.  Whether Barclays by engaging Dr Bates to carry on the examinations created the risk of the sexual assaults being perpetrated

5.  Whether Dr Bates was, to a greater or lesser extent, under the control of Barclays when he conducted the medical examinations

Barclays stated that the medical examinations were not:-

1.  Merely for the benefit of the bank, as the prospective employees stood to gain employment and the benefit of cheaper life insurance

2.  Part of the business activity of the bank and had a wholly separate pre-employment function.

Thus, Barclays alleged the medical examinations were not integrated into its business activity. The bank further stated that it did not create the risk of Dr Bates abusing his patients any more than other medical examinations might be said to do.  Indeed, Barclays stated it exercised no greater control over Dr Bates then was consistent with the instruction of a medical expert and independent contractor giving his professional opinion.

By contrast the claimants argued that the Court must look not at the way in which the documents presented the bank’s relationship with Dr Bates but rather should analyse the facts upon which Dr Bates had been engaged. The claimants:-

1.  Emphasised the long and continuing relationship between Barclays and Dr Bates

2.  Dr Bates had been described as the “banks doctor”

3.  The medical reports were prepared in accordance with bank pro formas and

4.  The young female applicants were required to submit to intimate examinations if they wanted a job at Barclays.  They had no choice about being examined by a doctor and in particular by Dr Bates

The claimants therefore argued the bank exercised a high degree of control over Dr Bates and the manner in which the examinations were carried out conferred a significant risk of sexual assault.

The Court of Appeal agreed with the claimants.  The judges noted that:-

1.  Barclays had more ability to satisfy the claims than the long-distributed estate of Dr Bates.

2.  The principal benefit of the medical examinations conducted by Dr Bates were for the bank.  Indeed, the bank only employed applicants who had passed the medical examination. For this reason, the examinations were also a part of the business activity at the bank in just the same way as any recruitment process.  

3.  The Court emphasised that the issue of the control exercised by the bank over Dr Bates was the most critical factor.  Although the examinations were conducted at Dr Bates’ home and therefore away from bank premises, in all other respects Dr Bates was acting on the instruction of the bank, was paid by the bank, examined only prospective bank employees, was required to complete a bank medical questionnaire and was referred to as the “banks doctor” or “our doctor”.

4.  Lastly and perhaps not surprisingly the Court considered it was just and fair to impose vicarious liability on Barclays for the sexual assaults carried out by Dr Bates.

This case represents a development of the law of vicarious liability in favour of prospective claimants. Hitherto there had been some uncertainty that institutions could be held vicariously liable for sexual abuse carried out by perpetrators who were not employees and were therefore independent contractors.  That uncertainty has now been resolved.

This is especially important for survivors of sexual abuse who seek compensation but up until now have been unable to claim against an institution because the perpetrator was not an employee.  

If you have been sexually abused or you know someone else who has and want a free, confidential and no obligation discussion about the issues then please call Robert Shaw on 01392 345332, or Samantha Robson on 01392 345331, or email enquiries@robsonshaw.uk.