Supreme Court uphold Morrisons were not vicariously liable for the malicious actions of its employee
Key Contact: Claire Knowles
Author: Adam McGlynn
In this veritably vexing time of viruses and adversity it is rather refreshing to turn to the comparatively galvanising endeavours of our Supreme Court. Following controversial decisions in the lower courts a victorious judgement was handed down on 1 April for an invigorating case of vendetta, villainy, and vicarious liability – Morrisons v Various Claimants.
The facts of the case revolve around a disgruntled Morrisons employee, Mr Skelton, who surreptitiously published the personal data of 98,998 colleagues on the internet in retaliation for minor disciplinary proceedings against him. Mr Skelton was found guilty of multiple offences and sentence to eight years’ imprisonment. The victims of the data breach sought compensation by bringing a group litigation action against the employer, claiming that Morrisons should be held vicariously liable for Mr Skelton’s wrongful conduct.
The claimants were successful in both the High Court and the Court of Appeal on the basis that Mr Skelton’s actions were committed in the course of his employment. Morrisons had provided him with the data in order for him to carry out his duties as an internal auditor and, though he was not authorised to make the data public, he was authorised to disclose it to “a third party”, being their external auditors. The High Court found that Skelton’s actions were, therefore, in the course of his employment as they were “closely related” to the task assigned to him and followed an unbroken chain of events. The Court of Appeal considered whether Mr Skelton’s intention to harm his employer would impact the High Court’s finding, however, having concluded that motive was irrelevant they felt they had to reject Morrisons’ appeal.
On 1 April Morrisons finally emerged victorious as their appeal to the Supreme Court was unanimously accepted. Lord Reed explained that a sequence of events could not be considered merely as a causal chronology but must also appreciate the capacity in which Mr Skelton acted. The Court of Appeal’s conclusion that “motive is irrelevant” was found to be a misinterpretation of Lord Toulson’s use of the phrase in the case of Mohamud . On the contrary, motive is important when determining whether an employee acts in the course of their employment or in a personal capacity. When intending to harm his employer by publicising personal data Mr Skelton was not acting in some misguided attempt to further Morrisons’ business but was “on a frolic of his own” to achieve quite the opposite. Morrisons were therefore found not to be vicariously liable for Mr Skelton’s personal vendetta as disclosing the data on the internet went beyond his field of authorised activities and it would be not be fair and proper to consider his actions as within the ordinary course of his employment.
This is a welcome decision for employers who have been concerned that they might be found liable for the malicious actions of disgruntled employees following the controversial findings of the lower courts. The Court of Appeal’s decision in particular implied that employers would need to secure insurance against the risk of a rogue employee. Although the Supreme Court’s judgement here is a positive step the line separating actions performed in a personal capacity from those in the course of employment is still far from clear and highly situational. Employers should promote relationships of trust and confidence with their employees and incentivise positive conduct wherever possible. To mitigate the risks of unexpected breaches employers should take the time to ensure appropriate reporting and monitoring procedures are in place alongside a proportionate disciplinary policy. While the Court of Appeal’s ‘malicious employee insurance’ seems no longer necessary in general terms employers should still perform appropriate risk assessments and ensure that appropriate protections are in place.
For further advice on vicarious liability or any of the topics discussed above please contact our employment team.