The importance of Various Claimants v Barclays Bank [2017]
1. A good claim becomes a bad one if there is no one against whom to enforce a judgment.
2. A doctor might be uninsured where:
a. He has engaged in criminal activity and his MDO have declined cover;
b. You are suing him for something not covered by his MDO e.g. some hip cases under the Consumer Protection Act;
c. He did not have cover – perhaps because of an error.
d. You are claiming more than £10m – that is the limit of most doctor’s indemnity.
e. He was operating on an NHS patient in a private hospital.
3. Your options:
a. Try to persuade the MDO to indemnify (not impossible, but difficult).
b. Consider proceeding against doctor’s own assets (usually unattractive because they have a house which is in joint names and which they cannot be forced to sell).
c. Try to involve the NHSLA/ NHSR either by establishing that some of the treatment was on the NHS or by arguing that there were failures of clinical governance within the NHS which contributed to the injury (as in Paterson cases).
d. Try to establish vicarious liability on the part of someone with deep pockets e.g. the private hospital where treatment took place.
Vicarious liability
4. This last option is suddenly usually the best. It is a new and fast moving area and private hospitals are suddenly realising that they are in trouble. On 13th September Spire announced that it would be contributing £27m to the £37m settlement fund for surgeon Ian Paterson’s victims.
5. Vicarious liability is much easier to establish now than previously. It has principally developed in the context of sexual abuse cases but the development of the law is not limited to this area.
6. The really groundbreaking decision for medical cases came on 26th July 2017 in Various Claimants v Barclays Bank where Nicola Davies J found in favour of the claimants on a preliminary issue against Barclays that they were vicariously liable for the sexual assaults committed by Dr Bates in the sixties and seventies on prospective female employees of the bank who were required to undergo a medical examination. This was a case where the claimants had to go after Barclays because the MDU refused to indemnify its dead former member. It is noteworthy that Spire’s settlement offer came only 6 weeks later in the Paterson cases.
7. To understand the Barclays case we need to review the tsunami of change in vicarious liability in recent years.
8. In Catholic Child Welfare Society and Others v Various Claimants [2012] UKSC 56 Lord Phillips at [19] observed that “The law of vicarious liability is on the move.” Reviewing the judgment of Ward LJ in E v English Province of Our Lady of Charity [2012] EWCA Civ 938 he identified the focus of determining the issue of vicarious liability as being in two stages:
“(1) was there a true relationship of employer/employee between D2 and D1? (2) was D1 acting in the course of his employment when he committed the tortious act?”
Lord Phillips agreed with the observations of Hughes LJ (as he then was) in the Court of Appeal judgment in the case namely that the test requires a synthesis of the two stages:
“i) The first stage is to consider the relationship of D1 and D2 to see whether it is one that is capable of giving rise to vicarious liability.
ii) …What is critical at the second stage is the connection that links the relationship between D1 and D2 and the act or omission of D1, hence the synthesis of the two stages.”
9. In considering the essential elements of Stage 1 Lord Phillips stated:
“Stage 1: the essential elements of the relationship
34. Vicarious liability is a longstanding and vitally important part of the common law of tort. A glance at the Table of Cases in Clerk & Lindsell on Torts, 20th ed (2010) shows that in the majority of modern cases the defendant is not an individual but a corporate entity. In most of them vicarious liability is likely to be the basis upon which the defendant was sued. The policy objective underlying vicarious liability is to ensure, insofar as it is fair, just and reasonable, that liability for tortious wrong is borne by a defendant with the means to compensate the victim. Such defendants can usually be expected to insure against the risk of such liability, so that this risk is more widely spread. It is for the court to identify the policy reasons why it is fair, just and reasonable to impose vicarious liability and to lay down the criteria that must be shown to be satisfied in order to establish vicarious liability. Where the criteria are satisfied the policy reasons for imposing the liability should apply. As Lord Hobhouse pointed out in Lister at para 60 the policy reasons are not the same as the criteria. One cannot, however, consider the one without the other and the two sometimes overlap.
35. The relationship that gives rise to vicarious liability is in the vast majority of cases that of employer and employee under a contract of employment. The employer will be vicariously liable when the employee commits a tort in the course of his employment. There is no difficulty in identifying a number of policy reasons that usually make it fair, just and reasonable to impose vicarious liability on the employer when these criteria are satisfied:
i. The employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability;
ii. The tort will have been committed as a result of activity being taken by the employee on behalf of the employer;
iii. The employee’s activity is likely to be part of the business activity of the employer;
iv. The employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee;
v. The employee will, to a greater or lesser degree, have been under the control of the employer.”
10. This pragmatic approach can be seen in two recent cases in the Supreme Court: Cox v Ministry of Justice [2016] UKSC 10 and Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11. In Cox the Supreme Court held that the MoJ was liable for an injury caused by a prisoner who was working in the prison kitchen. The ministry argued that the relationship between the Prison Service and prisoners was fundamentally different from an employer/employee relationship in that the Prison Service’s primary purpose was not a business or profit, but prisoners’ rehabilitation, and prisoners had no interest in furthering the Prison Service’s objectives; it was always necessary to ask whether it would be fair, just and reasonable to impose vicarious liability; and there was a risk of further claims arising should vicarious liability be imposed.
11. In Mohamud the Supreme Court overturned the High Court and Court of Appeal to hold that a supermarket was liable for the criminal acts of its employee who was a petrol station attendant. The customer had attended a petrol station kiosk run by the supermarket and had approached one of the staff members (K) with an enquiry. K, whose job was to serve customers and see that the petrol pumps and kiosk were kept in good running order, responded with foul-mouthed abuse and ordered the customer to leave. He then followed him onto the forecourt where he told him to keep away and subjected him to a violent and unprovoked assault. The customer brought proceedings against the supermarket, claiming that it was vicariously liable for the assault. The trial judge held that it was not liable because there was no sufficiently close connection between the assault and what K was employed to do. The Court of Appeal upheld his decision, finding that while K’s employment involved interaction with customers, that was insufficient to fix the supermarket with vicarious liability for his violence: his duties did not involve him being placed in situations where there was a clear possibility of confrontation.
12. And so to Nicola Davies J’s decision, I set out her conclusion in full because it shows the current judicial approach. I have added in each section in parenthesis the likely position in respect of the uninsured surgeon.
“45. Five criteria:
i) The defendant is more likely to have the means to compensate the victim than the tortfeasor and can be expected to have insured against that liability;
Underlying the concept of vicarious liability is the fact of two innocent parties and a balance having to be weighed. Dr Bates died some eight years ago, his estate has long since been distributed. The claimants have no recourse against Dr Bates, his medical defence insurers would not indemnify for alleged sexual assaults. The only legal recourse the claimants have is to sue the Bank for the vicarious acts of its tortfeasor. There is no issue that the Bank or its insurers have the means to meet such claims.
The private hospital (whether Spire, Bupa, Nuffield, Ramsay etc.) will be good for the money.
ii) The tort will have been committed as a result of activity being taken by the employee on behalf of the employer;
An applicant’s employment was conditional upon the Bank being satisfied, as a result of the medical examination, that the applicant was medically suitable for service in the Bank and was recommended for life insurance at ordinary rates. Dr Bates was the chosen doctor of the Bank. Prospective employees or existing employees were given no choice as to the doctor to be seen. The Bank made arrangements for the medical examinations, directing present or future employees where to go and when. The medical reports completed by Dr Bates were headed with the Bank’s logo, signed by himself and by the relevant claimant. The claimants felt compelled to undergo the pre-employment examination because they understood (correctly) that it was an essential stage of the Bank’s recruitment process. The claimants had no reason to be examined by Dr Bates other than their proposed or existing employment with the Bank. It was the Bank which paid for the examination not the claimant. The work carried out by Dr Bates was for the benefit of the Bank, to ensure that those who were employed by the Bank had the health to carry out its work. Given all of these facts I find that the medical examination, assessment of a claimant and subsequent report of the same to the Bank by Dr Bates was performed for the benefit of the Bank and on its behalf.
The business of private hospitals is to bring patients onto their site to have a procedure for which they are charged. It is a statement of the obvious to say that a patient injured by a negligent surgeon has suffered a tort as a result of activity being undertaken on behalf of the hospital.
iii) The tortfeasor’s activity is likely to be a part of the business activity of the defendant;
The purpose of the pre-employment medical examination was to enable the Bank to be satisfied that a potential member of staff would, health wise, be an effective member of its workforce. A workforce is an intrinsic part of the business activity of a bank, it could not function as a business without it. The medical assessment enabled the Bank to satisfy itself that a present or future employee was physically suitable for the work which they were, or were to be, employed to do. The requirement to undergo the medical examination emanated solely from the Bank, it was of no health benefit to the individual concerned. In providing a medical assessment and conclusion, namely that a claimant was physically suitable to be a member of its workforce, Dr Bates was acting for the benefit of the Bank and in so doing was an integral part of the business activity of the Bank.
Again the surgeon’s activity in the operating theatre or elsewhere in the hospital will have been part of the hospital’s business activity.
iv) The employer, by employing the employee to carry on the activity, will have created the risk of the tort committed by the employee;
The Bank directed the claimant where to go for a medical examination. Many of the claimants were young girls, who were being seen and examined by a doctor they did not know. The claimant had no choice as to the doctor and was directed by the Bank to be seen and examined by him at his home. The Bank directed the doctor to perform a physical examination which included a chest measurement. The claimants, many of whom were 15 or 16, saw the doctor alone in his room when, as part of the medical examination, they were asked to remove clothing. In my judgment given the factual set of circumstances the Bank did create the risk of the tort which was allegedly committed by Dr Bates.
By inviting surgeons to use its facilities (and charging for doing so) the private hospital has created the risk.
v) The employee will, to a greater or lesser degree, have been under the control of the employer;
The fact that Dr Bates organised his own professional life and carried out other medical activities does not negate an argument that he was under the control of the Bank. Were this to be a strict employer/employee situation the fact of part-time employment and/or whether the employee has one or more other jobs does not prevent an employer from being vicariously liable for acts or omissions occurring during the course of the employee’s relevant employment. Further the fact that Dr Bates performed the examinations in his own home does not negate the “control” argument. An employer can be vicariously liable for the act of its employee, e.g. a driver, even though the alleged act or omission takes place outside the employer’s premises. What has to be looked at is the control which existed as between the Bank and Dr Bates in respect of the identified activity namely medical assessments, examinations and reports.
Lord Reed in Cox agreed with Lord Phillips in Catholic Child Welfare Society in identifying the significance of control as being that the defendant can direct what the tortfeasor does not how he does it. This would be of particular relevance in this situation where the individual is conducting a medical examination and should be utilising his particular professional expertise and knowledge. It is of note that the Bank was directional in identifying the questions to be asked and the physical examinations to be carried out by the doctor for the purpose of completing the templated form. The control was of a higher level of prescription than might usually be found in the context of an examination required to be performed by a doctor. The control also manifested itself in directing the claimant to a particular doctor and giving the claimant no choice in the matter. I am satisfied that the Bank exerted sufficient control to satisfy this criterion. Accordingly the relevnt criteria in respect of Stage 1 are met.
Private hospitals exercise significant control over all surgeons using their facilities – they say what operations can be done, when, by whom and for what fee.
Stage 2: Was the tort sufficiently closely connected with that employment or quasi employment?
46. The alleged sexual assault occurred during the course of a medical examination which the defendant required the claimants to undergo in respect of present or future employment. The task of carrying out the medical examination was entrusted to Dr Bates by the defendant. The task assigned to Dr Bates placed him in a position to deal with the claimants. On the alleged facts he abused that position. It is difficult to see how it can sensibly be argued that his acts did not fall within the activity tasked to him. To use the words of Lord Phillips in Catholic Child Welfare Society in [84]:
“…the relationship has facilitated the commission of the abuse by placing the abusers in a position where they enjoyed both physical proximity to their victims and the influence of authority over them…”
The claimants were in physical proximity to Dr Bates by reason of the nature of the examination. He was a doctor and, at the time of these offences, is likely to have been viewed by young women as being in authority not least because he was the doctor chosen by their present or prospective employer to carry out a medical examination relating to their employment. The sexual abuse took place when the doctor was engaged in the duties at the time and place required by the Bank. On the facts I find that the alleged sexual abuse was inextricably interwoven with the carrying out by the doctor of his duties pursuant to his engagement by the Bank. In the circumstances I find that the tort is so closely connected with that employment or engagement as to satisfy the second stage. If the doctor punches the patient in the car park in an argument over a parking space I can see the argument that there is insufficient connection but for anything ‘medical’ that happens it is hard to see how there could not be a sufficient connection.
47. Applying the check of whether my conclusions are just and fair I accept that this is a balancing exercise between two innocent parties. I understand the submission made on behalf of the defendant that had these claims been made earlier Dr Bates and his estate could have had the financial means to meet them. The ability of any person to make a claim of sexual abuse is never straightforward. These are claims made many years after the alleged abuse and in the Master Defence the defendant has taken the limitation point. The action against the Bank is the only legal recourse now available to claimants. Balancing those factors and applying the just and fair test does not cause me to alter the conclusions. Accordingly I find that the defendant is vicariously liable for any assaults that any claimant may prove to have been perpetuated by Dr Gordon Bates in the course of medical examinations carried out at the request of the defendant either before or during their employment with the defendant.”
I cannot see any basis for the ‘is it fair, just and reasonable’ test to defeat a claim by a patient of an uninsured doctor against the hospital.
13. In summary it seems to me that if Barclays were liable for Dr Bates it will be very difficult for any private hospital to argue that they are not liable for anything medical that goes on at one of their sites – whether or not they regard the surgeon as an independent contractor or not.
14. There must be many claims which are not currently pursued because of difficulties in establishing that there is someone who is good for the money. The Barclays case will open the door wide open to a claim against the private hospital. It is difficult to overstate the significance of this decision for claimants or private hospitals.
Postscript
On 18th October 2017 the Supreme Court gave its judgment in Armes v Nottinghamshire County Council, finding by a majority of 4-1 that a council is vicariously liable for sexual abuse committed by a foster carer against a child in care. The Supreme Court’s decision, overturning the decision in favour of the council at first instance and in the Court of Appeal, is in my view unsurprising and fits the trend towards choosing between two innocent parties and favouring the victim over the party with deep pockets or insurance. In Armes the five fold test identified above was followed and it was thought fair, just and reasonable to find vicarious liability. The decision only strengthens my view that private hospitals will struggle to avoid vicarious liability for any tort arising out of anything ‘medical’ on their premises.