Clarity given on the scope of the principle of vicarious liability in WM Morrison Supermarkets plc v Various Claimants

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By Paul Wilson, Barrister

As many of you will be aware, on Tuesday, the Supreme Court handed down its much anticipated judgment in WM Morrison plc v Various Claimants.

In doing so it addressed the misunderstandings that have arisen from its decision in Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11.

In a unanimous judgment given by Lord Reed, it was held that Mohamud was not intended to effect any change in the law of vicarious liability.   The test remains the so-called “close connection test” that is whether the wrongful conduct was so closely connected with the acts the employee was authorised to do that, for the purposes of the liability of his employer, it may fairly and properly be regarded as done by the employee while acting in the ordinary course of his employment.

The judgment re-sets the law following the decisions in this case in the High Court and then the Court of Appeal in relation to the difficult question of drawing a distinction between cases where an employee is, however misguidedly, engaged in furthering the employer’s business, and cases where an employee is engaged in solely pursuing his own interests and is “on a frolic of his own” to coin the well-known phrase.

In this case, Andrew Skelton, a senior auditor employed by Morrisons was subjected to disciplinary proceedings for minor misconduct and was given a verbal warning.   He harboured a grudge against the company as a result.   A few months later, the task of providing the company’s external auditors with the company’s payroll data was delegated to him and he was given access to the payroll data relating to the whole of Morrison’s workforce, constituting about 126,000 employees.   He transmitted the data to the external auditors as he had been instructed to do, but he also copied the data to a memory stick.  A couple of months later, under the guise of a pay-as-you-go mobile phone and a false e-mail account, he posted the data of over 98,000 employees to a publicly accessible file-sharing website.  Two months later (and on the same day on which Morrisons’ financial results were due to be announced) he sent CD’s containing the file anonymously to three UK newspapers purporting to be a concerned member of the public who had discovered the files on the file-sharing website.   He had taken this action in what was described as a “personal vendetta” against the company. Morrisons had to take immediate steps to ensure that the data was removed from the Internet, the police were informed and Skelton was arrested.   He was subsequently convicted and sentenced to 8 years’ imprisonment.  The company had had to spend more than £2 million in dealing with aftermath of the disclosure.

The claimants were the over 9000 employees of Morrisons who had brought proceedings against Morrisons alleging that it was vicariously liable for Skelton’s breach of statutory duty under the DPA 1998, his misuse of private information and his breach of his duty of confidence.  The High Court rejected Morrisons’ argument that Skelton’s conduct was not committed in the course of his employment and held that the company was vicariously liable for Skelton’s misconduct.   The company had provided him with the data in order for him to carry out the task assigned to him, and it was stated that what had happened thereafter was a “seamless and continuous sequence of events … an unbroken chain”.  Morrisons’ appeal to the Court of Appeal was dismissed. It held that his actions were “within the field of activities” assigned to him by Morrisons, emphasised that they constituted a “seamless and continuous sequence” or “unbroken chain” of events and crucially held that it was irrelevant that his motive had been to harm Morrisons.

In arriving at these conclusions, both the High Court and the Court of Appeal adopted language as quoted taken from the judgement of Lord Toulson in Mohamud.

According to the Supreme Court, the error lay in approaching the so-called “close connection test” as requiring the court to consider whether there was a temporal or causal connection between the employment and the wrongdoing and then whether it was right to for the employer to be held liable as a matter of social justice.   That was a simplification of the approach taken in Mahmud.  Words used such as “an unbroken sequence of events” and “a seamless episode” were really directed towards the capacity in which the employee was acting and not to the temporal or causal connection between the events.   Importantly, the motive of the employee is relevant.  The question of whether the misconduct was to be regarded as done by the employee in the ordinary course of his employment “is not determined according to the individual judge’s” sense of social justice but by reference to “orthodox common law reasoning,  in other words the established case law dealing with circumstances where it has been established that there is vicarious liability.

In the circumstances, Morrisons could not be vicariously liable for Skelton’s conduct: the disclosure of the data on the internet did not form part of his delegated function or “field of activities”, the unbroken chain of causation between the provision of the data to Skelton and that disclosure did not of itself satisfy the close connection test and the fact that he was acting for purely personal reasons in seeking vengeance against his employer was highly material.

The ramifications are that it will be more difficult to impose vicarious liability where employees act wholly or mainly in their own interests, despite the opportunity to commit the misconduct which their employment has afforded them.  The question of whether there will be vicarious liability will (hopefully) be less open ended and more certain since it is likely to be determined by analogy with case law dealing with similar circumstances.  The fact that the employment gives an employee the opportunity to commit a wrongful act is not going to be enough on its own to establish vicarious liability.  Motive and, indeed, whether the employee is “on a frolic of his own” will be highly relevant.