Out-Law News | 27 Jul 2018 | 4:03 pm | 3 min. read
The court said it would not be "fair, just or reasonable to impose on an employer a duty of care to defend legal proceedings so as to protect the economic or reputational interests of his employee".
The Supreme Court considered complaints raised by police officers over the way the head of the Metropolitan Police Service handled a defence against claims that she was vicariously liable for their conduct.
The officers had been accused of assaulting a man they had arrested on suspicion of terrorism in 2003. The man sued the Met police commissioner, arguing she was liable for the actions of the officers. The case was settled in the middle of the trial. The officers were later charged with assault occasioning actual bodily harm, but were acquitted. They subsequently sued the Met police commissioner, arguing that she had breached her duty of care to them in the manner in which she had defended the claims she faced.
However, the Supreme Court ruled that employers do not owe employees a duty of care over the way they defend legal claims.
Although the relationship between a police force and police officer is not technically that of employer-employee, the court said the situation was analogous to that situation. Commercial litigation expert Michael Fletcher of Pinsent Masons, the law firm behind Out-Law.com, said that the court's ruling in the case would therefore be welcomed by businesses that find themselves defending claims brought against them based on vicarious liability for the actions of their employees.
"Particularly where allegations of fraud or other misconduct are involved, defending such claims can be a complex and delicate exercise, but the Supreme Court has at least closed off the possibility of companies being exposed to claims in tort by employees who may disagree with the way in which the company’s defence has been conducted or the terms of a commercial settlement of the dispute," Fletcher said.
"Nevertheless, businesses and their legal teams need to remain alive to when separate legal representation may be required for individuals or distinct corporate entities involved in an investigation or dispute," he said. "Lawyers who do not carefully handle these sorts of issues may find themselves exposed to professional negligence claims."
"On the facts of this particular case, the lawyers instructed on behalf of the Met police commissioner were not found to have assumed responsibility to the officers for the conduct of the litigation, and that conclusion was not appealed to the Supreme Court. However, each case will be fact-specific and lawyers instructed by a company who do not make sufficiently clear that they are communicating with individuals in their capacity as witnesses not clients, or who go further than the lawyers in this case did in terms of the giving of assurances or advice to the individuals, may well still find themselves exposed to claims that they have assumed responsibility to those individuals as well as to the company," Fletcher said.
The Supreme Court determined that providing for such a duty of care would be "inconsistent with the important legal policy which encourages the settlement of civil claims and seeks to promote out of court settlement", could result in the "delay or disruption of civil proceedings", and spur "satellite litigation" between employers and employees.
"An employer who wishes to defend a claim based on vicarious liability for the alleged conduct of his employees should be entitled to defend the claim in the way he sees fit, notwithstanding that his employees will or may as a result be subjected to public criticism during the trial process," the Supreme Court ruled. "He should be free to do so without having constantly to look over his shoulder for fear that his conduct of the defence may expose him to a claim by his employees."
"Decisions in the conduct of the defence, such as which inquiries to undertake, which experts to instruct, which witnesses to call or which resources to devote to resisting the claim, are essentially matters for the employer as defendant and should be taken free of anxiety as to possible future claims by the employees on the basis that the case should have been run differently. The proposed duty would, to my mind, inevitably inhibit the conduct of the defence," it said.
Litigation expert Craig Connal QC of Pinsent Masons said the Supreme Court judgment also contained interesting comments about common interest privilege.
"Most typically, common interest privilege is deployed to protect from third party disclosure communications between parties who have a common interest in the subject matter which is at issue, i.e. its normal use is as a shield against these third parties," Connal said. "The comments of the Supreme Court, interestingly, focused on the less common example of common interest privilege as a sword – as a means of obtaining documents, due to common interest, which would otherwise be protected by legal professional privilege."
"In the present case the court made clear that the 'shield' might well have been available. However, they decided that the 'sword' was not – 'something more' than mere interest in the same topic was required. The judges then concluded that the relationship between the Met police commissioner and the officers is not such as to meet that additional requirement. Accordingly, they would not have been allowed to see, for instance, the advice received by the Met on the conduct of the litigation," he said.