MODERN APPROACH TO THE DOCTRINE OF VICARIOUS LIABILITY

By Bizibrains Okpeh*

On the LawPavilion Blog, this paper is a 2-part publication (this is part 2), use the button at the bottom to continue reading. Don’t miss any part of it. Remember to leave your comments and thoughts in the Comment Section. You can also download this article through the link below.

ULTIMATE BEARER(S) OF THE BURDEN OF VICARIOUS LIABILITY

The popular rhetoric shared by many legal writers is that the employer bears the burden of vicarious liability and a fortiori the burden of insurance.[1] While this submission is generally true, it may not always stand the test of legal scrutiny. Thus, the possibilities exist that the burden of vicarious liability may crystallise on any one or a combination of the following, that is, an employer, employee, insurer, and/or the public (consumers or taxpayers).

Employer (insured)

The general notion that the employer answers for the tort of his employee occasioned in the course of his employment and consequently bears the burden of insurance to cover for such liabilities may not always be true. The reasons for this are not far-fetched. First, the claim that the employer bears the burden of insurance is only in theory. This is because, in concrete realities, the employer passes the cost of insurance to the general public, who are the ultimate consumers and from whom he recoups the premium he may have paid on the insurance policy.

Secondly, though statistics are hard to come by in Nigeria, available data suggests overwhelmingly that most employers in Nigeria hardly undertake any liability insurance policy. For instance, as of 2016, Popoola quoting Nigerian Insurance Industry Database (NIID) reported that out of the over 16 million vehicles on Nigerian roads only about 4.3 million have valid auto insurance cover with 12 million having fake motor insurance policies.[2]This includes both private and commercial drivers, some of whom are employed by transport companies and other employers of labour cutting across various businesses.

Although this is with respect to auto insurance, it may be submitted that it fairly represents the attitude of employers towards liability insurance in Nigeria. Eventually, the employer may resort to his common law remedy of indemnity against the employee to recoup, in whole or part, whatever loss suffered on account of the employee’s intentional or negligent torts.[3]Under these circumstances, therefore, it can hardly be said (without some measure of arbitrariness or simplification) that the employer is indeed the true bearer of the burden of vicarious liability.

Employee (Tortfeasor)

The employee may eventfully bear the cost of his own tort, if not completely, at least partially. This is especially so where the employer brings an indemnity action against the employee.[4] This position appears to be supported by statute.[5]Thus, the legal reality that the employer can recover damages both at common law and under statute from his employee for torts committed in the course of his employment only buttresses the eventual ‘personal liability’ of the employee for his own tort. Therefore, whether by complete indemnity or partial contribution, the employee shares some kind of burden for the employer’s vicarious liability.

However, it is humbly submitted that this is not good law. It may have the effect of enriching the insured or the insurer[6]at the expense of the employee, as against placing a burden on them.[7] Thus, it is on this note that the modern approach leans towards limiting the employer’s right of indemnity against the employee. A very good example is the position in the Australian State of New South Wales (NSW).[8]

Insurance Company (Insurer)

One of the social effects of insurance on society is that it changes who bears the cost or burden of injuries. Where the employer insures against vicarious liability, the effect is that the burden to compensate any victim of the employee’s torts committed in the course of his employment passes to the insurer (to wit the insurance company) provided that the employer is up to date with his premium in accordance with the policy undertaken.[9]

However, the question is; to what extent can this claim stand? For a start, while in theory, the insurer accepts to shoulder the risk of vicarious liability, when the risk eventually ripens to a loss in practice, the insurer may contest his liability to pay so much so that sometimes, it is actually absolved of any such liabilities.[10] In circumstances such as this, which are quite in abundance, considering that there are insurance litigations as much as there are insurance policies, it is the insured (employer) rather than the insurer (insurance company) that eventually shoulders the burden.

Also, by the principle of subjugation, the insurer may institute an indemnity claim against the employee, who may be liable to indemnify the insurer where the action succeeds.[11]Thus, the insurer gets to retain the reward of the action for indemnity or contribution as well as the premium paid on the policy. This certainly does not look like a bad business nor does it resemble a great burden.[12]

Consumers (Tax Payers)

One of the palliative measures available to the employer to cushion the effect of vicarious liability is to conveniently pass the burden to the insurance company upon the payment of premium, which premium he is to recover by inflating the prices of his goods and/or services.[13]If the ‘premium’ which the employer pays on the policy to absolve himself of the burden of vicarious liability by passing it to the insurer represents the burden on him, then by increasing the prices of his goods and/or services to recover the same premium, that same burden may be said to have been equally passed to the consumer. Thus, in effect, the consumer bears the burden as much as the insurer. Again, where the State is held vicariously liable, it satisfies the judgment debt using taxpayers’ money. In this guise, it may be concluded that consumers (taxpayers) bear the burden of vicarious liability for the liability of the State is in effect the liability of taxpayers.

From the generality of the foregoing, it may be submitted that it is an oversimplication to claim that the employer or the insurer bears the burden of vicarious liability without due regard to other stakeholders, such as the employee and taxpayers or consumers who are equally in the vicarious liability chain and may, in appropriate circumstances bear or share in the burden of vicarious liability.

Immunity and/or Derogation from Vicarious Liability

Vicarious liability, being a common law principle has long been established to operate both under Nigerian and English Jurisprudence. However, in recent times, the doctrine has suffered great distortions in the guise of immunity, absolute or qualified from any legal processes granted to certain entities. This includes but is not limited to Crown/State immunity,[14] trade unions immunity,[15] and United Nations/associated institutions immunity.[16] Foreign governments also enjoy immunity from legal processes in certain respects in Nigeria.[17]The ultimate effect of these immunities is that these entities cannot be held vicariously liable for the torts occasioned by their employees in the course of their employment.

Modern Approach to the Doctrine of Vicarious Liability

A review of available cases and statutes, especially in Australia and England, tends to show that there has been a progressive and expansive development on the operation of vicarious liability. This is in sharp contrast with the situation in Nigeria. This work will explore this recent development by examining notable pronouncements of Nigerian and English courts on vicarious liability, especially in respect of the special relationship and course of employment tests.

Pronouncements on Special Relationship Test

Although many relationships may give rise to vicarious liability, the relationship is classically one of master and servant.[18] The question as to what constitutes a master/servant relationship has already been discussed above.[19] What remains to be examined is the approach of Nigerian and English courts in determining when a master/servant relationship exists. Under English law, the present position is that for there to be an employer/employee relationship, there need not necessarily be a contract of employment. The epicenter of this ‘legal quake’ in England is traceable to the decision of the United Kingdom Supreme Court in the case of Various Claimants v Catholic Child Welfare Society[20]which was further magnified by the same court in the case of Cox v Ministry of Justice.[21]

This expansive approach to the relationship test beyond the delineation of a contract of employment is, according to Lord Phillips,

to ensure fairness and justice so that once the relationship is not strictly one of employer-employee properly so-called, but it is, nevertheless, ‘akin’ to it, then it will be just and reasonable to impose vicarious liability on the employer.[22]

Cox v Ministry of Justice (supra) at 7

The reason being that such a situation binds the tortfeasor into a closer relationship with the defendant than would be the case for an employee, thereby strengthening, rather than weakening the case for imposing vicarious liability.[23]

To Lord Reed, the import of the extension lies in the guarantee that the law shall protect the victims of torts irrespective of any variations in the legal relationship between businesses and members of their workforces.[24] The Law Lord concluded by stating that:

the purport of the modern approach is that a relationship other than one of employment is in principle capable of giving rise to vicarious liabilities where harm is wrongfully done by an individual who carries on activities as an integral part of the employer’s business.[25]

Ibid p.9

This modern approach by English courts, with its wider tentacles, seems to be in sharp contrast with the law and practice of vicarious liability in the modern Nigerian legal system.[26] Perhaps, the Court of Appeal’s decision in the case of Shell Petroleum Development Co. (SPDC) v Dino[27] vividly illustrates this contrast. In that case, the court stated that

‘facts as to a master/servant relationship are matters in the realm of contract between the parties, which except as provided by statute, cannot be said to be of such notoriety to justify being judiciously noticed.’[28]

Ibid

Again, the court considered sections 2, 18, 19, 20 and 21 of the Police Act Cap 359 (now sections 142, 21, 22, 23 and 24 of the Police Act 2020[29]) and came to the ultimate conclusion that the supernumerary police officers whose services were withdrawn by the appellant in accordance with the law continued to be officers of the Nigerian Police Force until their appointments are eventually determined by virtue of section 22(1) of the Police  Act (now section 25(1)).[30] The court further held that having regards to the relevant statutes, the trial court wrongly found the appellant vicariously liable for the alleged tort of the supernumerary police officers committed within the scope of the officers’ statutory powers.[31] The court also held that at any rate, had the respondents made out their case, the officers of the force would remain liable for their wrongful conduct rather than the appellant. The officers were not the appellant’s servants.[32]

In Cox’s case,[33] the court had found that when prisoners work in the prison kitchen or elsewhere, they are integrated into the operation of the prison.[34] And that the fact that the prison service is under a statutory duty to provide prisoners with useful work, is not incompatible with the imposition of vicarious liability. The legislation does not itself exclude the imposition of vicarious liability.[35] If these submissions were to be reconciled with the Nigerian case of SPDC v Dino,[36] one would be inclined to think that a police officer attached to a firm, who acts for and on behalf of the firm, and for the firm’s benefit, and upon the general instructions or directions of the firm stands in such circumstances that his activities can be said to be analogous to one which is integral to the firm’s business as long as such activities subsist.

Of course, it may be argued that Cox’s case[37] is distinguishable from the SPDC’s case[38] as the former involves prisoners who were at all times subject to their terms of service in the prison service and the latter involves police officers who may from time to time be withdrawn from the service of the appellant company, the Christian Brothers case[39] undoubtedly sweeps aside this argument. More so, the Police Act[40] does not in itself exclude the imposition of vicarious liability.

Pronouncements on Course of Employment Test

The meaning of course of employment and what constitutes same have already been treated above. Here, the concern is to trace the present position of the law under Nigerian and English legal regimes. There has been a remarkable development in respect of the course of employment test in England. This development has the effect of broadening the field of activities within which an employee could be said to be acting in the course of his employment. This landmark decision was delivered by the United Kingdom’s Supreme Court in the case of Mohamud v Morrison Supermarkets Plc.[41]

The court considered a host of cases that ultimately manifested vicarious liability as an area of law continually on the move[42] and the expansive nature of the course of employment test, to wit Central (Glasgow) Ltd v Cessnock Garage and Motor Co,[43]Lister v Hesley Hall Ltd,[44]and Dubai Aluminium Co. Ltd. v Salaam,[45]inter alia. Thus, by holding the respondent supermarket liable in damages to the appellant the court, per Lord Toulson, gave it yet its most expansive interpretation.[46] The law Lord rejected the notion that an employee who commits a tort outside the immediate environment of his employer’s business has ‘removed his uniform’ and thus acted outside the scope of his employment.[47]

What then is the present position of the law in Nigeria? It may be doubtful to suggest that Nigerian courts have given the test such an expansive scope.[48] Although cases on vicarious liability in Nigeria do not come as frequently as they do in England, with the expansion of the course of employment test in the latter, it remains to be seen how Nigerian courts would approach the test going forward. Whether they will be inclined to be persuaded by Mohamud’s case[49] is a speculative venture that only time will reveal.

This being what it is, the recent case of Buildwell Plant Equipment (B.P.E) (Nig.) Ltd v Roli Hotels Ltd.[50]may further shed some light on the approach of Nigerian courts to the course of employment test. In that case, the Court of Appeal was of the opinion that since the defendants (employees) worked from 8am and closed by 5pm, as trailer drivers, lighting a candle in a hotel room where they were accommodated and leaving it unattended had nothing to do with their employment, as they at that moment were on a frolic of their own.

Thus, the court impliedly referred to the respondents as ‘gold-diggers’ as ‘the claim appears to be an exercise intended to convert the unfortunate fire incident to a gold-digging venture.’[51] But it may well be asked, what has taken the defendants to the hotel? Were they there on their own account or in furtherance of the appellant’s business, being a contract won in Koko? Is this connection too remote a conclusion to draw? These questions illustrate the difficulties associated with the course of employment test and the seeming restricted interpretation thereof by Nigerian courts.[52]

However, it must be noted that in the recent case of Anambra State Environmental Sanitation Authority (ASESA) v Ekwenem[53] the Court of Appeal did show some inclination of giving the test a wider interpretation. Although this case did not turn on the scope of employment test, the Court of Appeal upheld the judgment of the trial court to the effect that the appellant was vicariously liable for the destruction and theft of the respondent’s property by the appellant’s employees. It is only a pity that this progressive interpretation of the scope of employment test was subsequently distorted by the same court in the case of Buildwell Plant Equipment (Nig.) Ltd v Roli Hotels.[54] Whatever the case, it may be concluded that under the English law, the course of employment test has been given its most expansive interpretation yet,[55] and it is doubtful if the same can be said of the test under Nigerian jurisprudence.

Conclusion

In the main, this work examined the contemporary approach to vicarious liability. It found that, while vicarious liability in Nigeria appears to be restrictive or narrow and inclined to ‘classical vicarious liability,’ modern approach to vicarious liability appears to be progressive and expansive. It is, therefore, recommended that judicial and legislative actions in Nigeria should be geared towards a progressive interpretation of vicarious liability to bring Nigerian jurisprudence up to speed with modern legal development.

---

*Okpeh is a lawyer, researcher and analyst. Reach him at bizibrains@gmail.com

MORE REFERENCES AND CITATION

• [1]See Kodilinye & Aluko, Op cit p.235
• [2]Popoola, N. ’12 Million Nigerian Motorists Carry Fake Insurance Papers’ The Punch Newspapers February 8, 2016 available at http://punchng.com/12-million-nigerian-motorists-carry-fake-insurance-papers accessed on 9th January, 2017
• [3] See Lister v Romford Ice & Cold Storage Co.(1957) AC 555
• [4]Lister v Romford Ice & Storage Co. (supra); Semtex v Gladstone (1954)1 WLR per Finnemore J; Saheli v Commissioner of Police AIR 1990 S.C 513
• [5]See the Labour Act Cap L1 Laws of the Federation of Nigeria, 2004  Section 5(1) which seems to support the employee’s liability to indemnify the employer by providing to the effect that the employer may deduct from the employee’s wages or salaries where he suffers any loss as a result of the employee’s negligence.
• [6] By the principle of subrogation, the insurer assumes the rights of the insured (employer).
• [7]Ikwue, Op cit p.47
• [8] The (New South Wales) Employee Liability Act,1991 Sections 3 & 5; the Insurance Contract Act,1984 Section 66
• [9]See Halsbury’s Statutes vol.22 4^thedn (London: Butterworths,1991) p.2
• [10]See the United States case of  Public Service Mutual Insurance Co. v Camp Raleigh Inc. 233 A.D.2d 273 (1996);   650 N.Y.S.2d 136 where a motion to an action against the insurer for indemnity claim failed.
• [11]Ivamy, H. General Principles of Insurance Law 6^th edn (London: Butterworths, 1993) pp.501-502
• [12]The principle of subrogation is a protective device, not for the employee but the business interest of the insurer, so much so that the insurer may benefit twice over under the policy and not otherwise.
• See Ward, A. & McCormack, G. ‘Subrogation and Bankers Autonomous Undertakings’ (2000) 116  The Law       Quarterly Review p.125
• [13]See Kodilinye &Aluko, Op cit p.235
• [14] See the Petitions of Rights Act, 1964 Section 3; the English Crown Proceedings Act,1947 Section 2(5)(6)
• See also Ransome-Kuti v  Attorney-General of the Federation [2001] FWLR (pt.80 ) 1637 at 1683-1686
• [15] See the Trade Unions Act Cap T14 Laws of the Federation of Nigeria, 2004  section 24(1)(2)
• See also Otuturu, GG. ‘Trade Unions and Economic Torts’ (2010)4 N0.4 Nigerian Journal of Labour Law and Industrial Relations p.59; Hassan, AR. ‘Liability in Torts  of a Trade Union and its Members’ (2010) 4 N0.2 Nigerian Journal of  Labour Law and Industrial Relations p.22
• [16]See the  Charter of the United Nations, Article 105 (1); the Convention on the Privileges and Immunities of the         Specialised Agencies,1947; the Diplomatic Immunities and Privileges Act Cap D9 Laws of  the Federation of Nigeria, 2004 Section 11; the Diplomatic  Privileges (United Nations and International Court of Justice) Order section 3; the Motor Vehicles Insurance (UNICEF) (Exemption) Order,  Order 2
• See also Zechariah, M. & Bulus, LM. ‘Legal Personality and Immunity of United Nations: Nature, Scope and Conundrums’ (2014) 5 N0.1 Benue State University Law Journal pp.14-141
• Seethe Motor Vehicles (Third Party Insurance) Act CapM22 Laws of the Federation of Nigeria, 2004 Section5(a); the Schedule of the Motor Vehicles (Foreign Governments) (Exemption) Order; This subsidiary legislation appears to exempt the United States Government from the effect of the Motor Vehicles (Third Party Insurance) Act CapM22 Laws of the Federation of Nigeria, 2004 Section 3 (which is to the effect that an owner of a motor vehicle must insure it against third-party liability) and a fortiori, vicarious liability due to losses which may be occasioned by the use of such uninsured motor vehicles.
• [18] See Cox v Ministry of Justice [2016]UKSC10
• [19]See chapter  two, paragraph 2.5.2
• [20][2012] UKSC 56; [2013]2 AC 1 (The Christian Brothers Case)
• See also Province (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2005] EWCA Civ 1151; [2006]QB 510; E     v English Province of Our Lady of Charity [2012] EWCA Civ 938; [2013]QB 722
• [21] [2016] UKSC 10, per Lord Reed (with whom Lord Neuberger, Lady Dyson and Lord Toulson agreed). This case  followed the Christian Brothers Case to the fullest effect.
• [23]Cox v Ministry of Justice (supra) at 13, per Lord Reed
• [24]Ibid  p.11
• [26] In the recent case of Iyere v B.F.F.M Ltd, (supra) the Nigerian Supreme Court reiterated the present position of the law in Nigeria thus, ‘the legal basis of employment (relationship) (by whatever means) remains the contract of   employment between the employer and the employee.’
• [27][2007] All FWLR (pt.362)1942, per Muhammad JCA; This case shares some similarities with the English case of Cox v Ministry of Justice (supra) in that it also largely involves the question of the relation between a public authority performing statutory functions for public benefit, on one hand, and an individual whose activities were alleged to form part of the means by which the authority performs its functions, albert in this case, the nature of the functions were also called into question.
• [29] Note that the Police Act 2020 is yet to be gazetted. When this is done, there may be slight changes in terms of arrangement of sections, inter alia.
• [30] Cap 359  Laws of the Federation of Nigeria, 1990 (now the Police Act 2020).
• [31]Ibid
• [32]Ibid
• [33]supra
• [34]Ibid
• [35]Ibid
• [36]supra
• [37]supra
• [38] supra
• [39] supra
• [40] Cap 359 Laws of the Federation of Nigeria, 1990 (now Police Act 2020).
• [41][2016] UKSC11, per Lord Toulson (with whom Lord Neuberger, Lady Hale, Lord Dyson and Lord Reed agreed).
• [42] It must however be stated that the notion that vicarious liability is on the move is far from being a consensus.         See Mohamud v Morrison Supermarkets Plc (supra) at pp.18 -19, per Lord Dyson.
• [43]Supra; where Lord Cullen first used the phrase ‘within the field of activities,’ which Lord Toulson in Mohamud’s case (supra) interpreted to conjure a wider range of conduct than acts done in furtherance of the employee’s       employment simpliciter.
• [44]Supra
• [45]Supra; In that case, Lord Nicholls (with whom Lords Slym and Hutton agreed) held, ‘… [1]t is a fact of life, and    therefore to be expected by those who carry on business, that sometimes  their agents may exceed the bounds of    their authority or even defy express instructions. It is fair to allocate risk of loses thus arising to businesses rather        than leave those wronged with the sole remedy, of doubtful value, against the individual employee who              committed the wrong.’
• [46] Formulating the present position of the law in England the law Lord stated thus, ‘in the simplest terms, the court has to consider two matters. The first question is what functions or field of activities have been entrusted by the employer to the employee, or in everyday language, what was the nature of his job … [T]his must be addressed broadly. Secondly, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct …’ [Italics mine]see Mohamud  v Morrison Supermarkets Plc (supra) at 16
• [47] See Mohamud’s case (supra) at 17
• [48] It appears Nigerian courts have always been loath to view this test broadly. In the old case of Meniru & Ors v  Igwe & Anor  [1963] NSCC,  the Federal Supreme Court, per Taylor, FJ upholding the decision of the trial court to the effect that the 2^nd defendant was not vicariously liable for the tort of the 1^st defendant held that an employee who disobeys his employer’s order is acting outside the scope of his employment and the employer cannot be held         liable for the employee’s performance of an act which he was not employed to perform, such an act being outside the employee’s scope of employment. Confer (cf.) Rose v Plenty [1976]1WLR141, where the English Court of      Appeal held to the opposite effect.
• [49]supra
• [50]Supra
• [51]Ibid p.277, per Ngwuta, JCA. Again, this position of the Nigerian Court of Appeal contrasts sharply with the   English position as re-emphasised by Lord Porter in the old English case of Weaver v Tredegar Iran & Co. Ltd         (1940) AC. 955. In that case, Lord Porter reiterated that a man’s work does not only consist in the task which he is               employed to perform but that it also includes matters incidental to the task.
• [52] See B.P.E v Roli Hotels Ltd (supra)
• [53][2001] FWLR (pt.51) 2034 at 2054
• [54]Supra
• [55] See Mohamud’s case (supra)