By Sam Dorne

Liability in tort depends upon proof of a personal breach of duty, with one true exception, vicarious liability. The law of negligence is generally fault based; a defendant is personally liable only for the defendant’s own negligent acts and omissions. The law does not, in the ordinary course, impose personal liability for what others do or fail to do. In the exceptional situations where a non-delegable duty is imposed, it is the discharge of the duty that is non-delegable. As Tipping J noted in Cashfield House,[1] performance of the duty can be delegated, but responsibility for that performance cannot.

Vicarious liability in tort requires a relationship between the defendant and the wrongdoer, and a connection between that relationship and the wrongdoer’s act or default, so that it is just that the defendant should be held legally responsible to the claimant for the consequences of the wrongdoer’s conduct.

In Woodland,[2] the Court noted that the boundaries of vicarious liability have expanded to embrace tortfeasors who are not employees of the defendant, but who stand in a relationship which is sufficiently analogous to employment. The boundaries have not extended to include truly independent contractors. Vicarious liability is constrained by the need to find a prerequisite relationship between the primary tortfeasor and the defendant. By contrast, imposition of a non-delegable duty focuses on the relationship between the defendant and the victim of the tort.[3]

The English courts have once again looked at the issue of vicarious liability involving sub-contractors in the case of Hughes v Rattan [2022] EWCA Civ 107.

The Court of Appeal provided helpful obiter comments on the first limb of the test for vicarious liability, namely the requirement that the relationship between the wrongdoer and the defendant be factually one of employer/employee or akin to such a relationship.

The Court of Appeal ultimately found against the defendant. Although there was no vicarious liability, there was a non-delegable duty, a breach of which made the defendant liable for the actions of sub-contractors.

Background

The claimant alleged that she received negligent dental treatment from three dentists on various occasions between August 2009 and December 2015. Dr Rattan (the defendant) was the owner and operator of the dental practice where the claimant attended.

The claimant was not treated by the defendant but rather by three associate dentists. The associates were contracted through associate agreements based on the British Dental Association standard contract. They were responsible for the standard of their own work, personally held indemnity cover for negligence claims, and were responsible for their own tax, amongst other things.

The High Court had to determine whether the defendant was liable for the acts or omissions of the associates by virtue of either a non-delegable duty of care or vicarious liability. The High Court found that both vicarious liability and a non-delegable duty were present. Therefore the claim could be made through either of these mechanisms.

That decision was appealed to the Court of Appeal.

Non-delegable duty of care

The case illustrates that the tests for non-delegable duty of care and vicarious liability are distinct and separate tests.

Non-delegable duty of care is a matter of the relationship between the claimant and the defendant and the control that the defendant has over the claimant. It is not a matter of control over the party carrying out the work. A non-delegable duty of care can exist even where the relationship between the defendant and the independent contractor carrying out the work is insufficiently akin to employment to give rise to vicarious liability.

When analysing the facts, the Court of Appeal agreed with the High Court that a non-delegable duty was present. As such, the claim could proceed against the defendant.

Vicarious liability finding

The Court of Appeal could have left it there; however, it went on to decide whether the defendant was also vicariously liable for the associates’ actions. In this, the Court of Appeal differed from the High Court.

The defendant argued that the High Court erred in law in making a finding that vicarious liability existed. They argued that it failed to consider various factors consistent with the associates being independent contractors when determining whether the relationship between the defendant and the associates was akin to employment.

The Supreme Court decision in Barclays Bank Plc v Various Claimants [2020] UKSC 13 was considered. In Barclays Bank the issue was whether the bank was vicariously liable for the sexual assaults committed by a late doctor. He was a medical practitioner with a portfolio practice. That entailed work as an employee in local NHS hospitals, undertaking medical examinations for emigration purposes, work for insurance companies, a mining company and a government board, and undertaking medical assessments and examinations of employees or prospective employees of the bank. The bank did not retain the doctor but paid a fee for each report.

The Supreme Court found that the bank was not vicariously liable. The critical question was whether the relationship with the defendant could properly be described as being akin (or analogous) to employment, with the focus being on the contractual relationship between the parties and that factors both for and against the relationship, being one akin to employment, should be balanced together.

In applying Barclays Bank, the Court of Appeal found the factors for the relationship were:

  • the fact that the practice controlled the opening hours of the practice premises and equipment;
  • the practice had a responsibility to provide contracted NHS services through the dentists; and
  • the dentists were contractually obliged to follow the policies and procedures of the practice (but these policies and procedures were found not to constitute substantive control of the dentists).

The factors against the relationship were:

  • the dentists were not required to be exclusive to the practice or to work any minimum hours; they were free to work as little as they wanted – or, for other practices, that the defendant had no right to control the treatment provided;
  • they were responsible for their own tax payments;
  • that they shared the liability for bad debts;
  • that they were required to have in place their own indemnity arrangements; and
  • they had to pay for their own professional clothing and professional development.

In weighing up these competing factors the Court of Appeal found that the test was not met. The Court was particularly swayed by the independence of the dentists from the practice. As such, it was held that the relationship was not akin to employment, and so vicarious liability did not arise.

Analysis

The decision on vicarious liability has adopted the common-sense approach taken by the Supreme Court in the Barclays Bank case, namely, that an independent contractor is an independent contractor. In other words, to be in a position to be vicariously liable for the actions of another in this setting, there is a clear requirement that the relationship between the transgressor and the defendant be factually one of employer/employee or akin to such a relationship.

The judgment will therefore be welcomed by businesses which utilise independent contractors.

However, businesses will still need to be alive to the issue of their non-delegable duties. For example, in New Zealand, courts have held non-delegable duties exist in many situations, including in relation to the construction of houses, flats, or units in unit title developments.[4] Just because a party may not be liable for the actions of another separate contractor, they may still be liable if they owe a non-delegable duty of care to another party.

Conclusion

For a number of years, the English courts have been clarifying the extent to which employers are held accountable through vicarious liability. Arguably, there has been a rolling back of the broader liability attaching to a contractor, as can be seen in the Rattan case, which will be welcome news to many. However, care must be taken, especially if the duty of care is attached to a non-delegable duty which would still be a gateway for potential claims.

 

[1] Cashfield House v D & H Sinclair Limited [1995] 1NZLR 452 (HC)

[2] Woodland v Essex County Council [2013] UKSC 66, [2014] AC 537.

[3] A Builder’s Duty of Care – When Should it apply to the Directors and Employees of Companies involved in the Creation of Defective Buildings? Grant Brittain (2017).

[4] Mt Albert Borough Council v Johnson [1979] 2 NZLR 234 (CA); Morton v Douglas Homes Ltd [1984] 2 NZLR 548 at 591/17–593/1; Body Corporate 188529 v North Shore City Council [2008] 3 NZLR 479 (HC); Body Corporate 185960 v North Shore City Council HC Auckland CIV-2006-404-3535, 22 December 2008; Body Corporate 183523 v Tony Tay & Associates Ltd HC Auckland CIV-2004-404-4824, 30 March 2009; Body Corporate 191608 v North Shore City Council HC Auckland CIV-2008-404-002358, 19 February 2009 (in which case the developer was also designer and builder and as such owed duties of care to the owners of the units); Keven Investments Ltd v Montgomery [2012] NZHC 1596 ; and Body Corporate 346799 v KNZ International Co Ltd [2017] NZHC 511.

“Route to the decision” – Scottish court rejects challenge to adjudicator’s decision that did not expressly address a material line of defence

Written by Kate Holland In UK Grid Solutions Limited and Amey Power Services Limited v Scottish Hydro Electric Transmission PLC,[1] the unsuccessful party to an adjudication sought to resist enforcement on the grounds that 1) the adjudicator had failed to address a...

Asking a decision-maker to take a sneaky peek isn’t a strategically clever move: adjudicator’s decision held unenforceable due to breach of without prejudice rules

Written by Maria Cole A party (AZ) brought proceedings in the England and Wales Technology and Construction Court (Court) to enforce the decision of an adjudicator against the respondent (BY).[1] During the adjudication, AZ had placed without prejudice emails before...

Failed waterproofing causes a flood of costs

Written by Sam Dorne Legal battle over failed waterproofing comes to an end after plaintiffs prove their damages at the High Court in duty of care breach. Water water everywhere In the heart of Flat Bush, Auckland, stand the Nikau Apartments – a residential complex...

Mayor Brown is right about why public sector contracts go over time and over budget

Written by Rabin Rabindran and Derek Firth  In his opinion piece (NZ Herald 21 February 2024) Mayor Brown provides a number of reasons for these overruns.  They include an obsession with governance skills rather than a range of skills directly useful to the sector...

BuildLaw Issue 53

March 2024Download PDF   CONTENTS From the Editor BuildLaw in Brief A cat among pigeons Major changes to seismic building standards Failed waterproofing causes a flood of costs Asking a decisionmaker to take a sneaky peak isn’t a strategically clever...

High Court soundly dismisses judicial review of adjudication determinations but may inadvertently have put the cat among the pigeons

By Alexander Lyall In Sam Pemberton Civil Ltd v Robertson,[1] the High Court considered applications for judicial review of two related adjudication determinations. In dismissing the applications, the Court underscored some of the key functions of the Construction...

Technocratic payment regime not the priority under the Construction Contracts Act

Written by Alexander Lyall In Dem Home Ltd v New Gate Ltd[1] the High Court considered whether a payment claim had been validly served under the Construction Contracts Act 2002 (the CCA). The decision is an ever-important reminder that the CCA is designed to maintain...

Highly stressful circumstances: Court of Appeal assesses contract in earthquake insurance mess

Written by Alexander Lyall   The Court of Appeal (the Court) has issued a decision in a long-running dispute between a Christchurch homeowner and her insurance and legal advocates. Pfisterer v Claims Resolution Service Limited & Anor[1] contains a close look...

Kane v Venues NSW: The Handrail Tale

Written by Sam Dorne The case of Venues NSW v Kane [2023] NSWCA 192, involving a patron’s fall within the lower concourse of the western grandstand of the McDonald Jones Stadium in Newcastle, Australia, looks at a fundamental legal question surrounding the duty of...

How do you solve a problem like retentions?

Written by Kate Holland The use of retentions in construction contracts is culturally ingrained in the industry but it is increasingly seen as an outdated and unfair practice. In the UK, there have long been calls to abolish or regulate retentions, but little progress...

The “measured duty” to love thy neighbour: private nuisance and naturally occurring hazards

Written by Maria Cole A Christchurch landowner, whose property sits at the foot of unstable clifftop land purchased by the Crown following the Canterbury earthquakes, has failed in the Supreme Court to obtain damages in “private nuisance” for the risk of further...

BuildLaw Issue 52

December 2023Download PDF   CONTENTS From the Editor BuildLaw in Brief How do you solve a problem like retentions? The “measured duty” to love thy neighbour: Private nuisance and naturally occurring hazards. Disruption claims: Are your project records up to date?...

New regulations for building products

Written by Richard Pidgeon The Building (Building Product Information Requirements) Regulations 2022 set out how information about building products contributes to building code compliance. The regulations stipulate that information on how products are to be installed...

Mainzeal saga ends in the Supreme Court

By Richard Pidgeon In Yan v Mainzeal Property and Construction Limited [2023] NZSC 113 the Supreme Court upheld damages against Mr Yan in the sum of $39.8 million and the remaining three directors (including Dame Jenny Shipley) jointly with Mr Yan in the sum of $6.6...

Obstructed view review

Written by Maria Cole Introduction In Wynyard Quarter Residents Association Incorporated v Auckland Council and Orams Group Limited,[1] a group of apartment owners filed judicial review proceedings seeking to overturn an Auckland Council decision to grant resource...

The losing streak is over: English rugby wins… right to bring claim against contractor

Written by Alexander Lyall Nearly 10 years on, English rugby finally has a victory related to the 2015 Rugby World Cup. In FM Conway Ltd v Rugby Football Union,[1] a company contracted by the English Rugby Football Union (the RFU) for maintenance works at Twickenham...

Keep calm and carry on: English Court of Appeal overturns controversial High Court ruling and clarifies guiding principles in serial adjudications

By Kate Holland The English High Court caused concern earlier this year when it held that an adjudicator had breached natural justice by holding himself bound by a previous adjudicator’s findings. Now, in Sudlows Ltd v Global Switch Estates 1 Limited,[1] the Court of...

Moving home

Written by Richard Pidgeon A family became dissatisfied with a house removal firm who had shifted their home from Remuera to Katikati. In Stott v Uplifting Homes Ltd [2023] NZHC 1514, the High Court determined the level of compensation after the contract was...

Big loss for insurer in legal battle with Napier Council over leaky building clause

Written by Sam Dorne In a recent case, the Supreme Court of New Zealand ruled in favour of the Napier City Council in an insurance claim involving building defects including weathertightness or “leaky building” issues, in what is seen as a return to the status quo...

BuildLaw Issue 51

September 2023Download PDF   CONTENTS BuildLaw in Brief Keep calm and carry on Mainzeal saga ends in the Supreme Court New Zealand: Insurance under Scrutiny Obstructed view review Case in Brief: Esk Valley marae injunction Res judicata and declarations relating...

Take a rain cheque – Full Federal Court of Australia reads common sense into insurance policy

By Alexander Lyall A decision by the Full Federal Court of Australia has provided clarification about the wording of an insurance policy for a construction project. In Acciona Infrastructure Australia Pty Ltd v Zurich Australian Insurance Limited [2023] FCAFC 47,[1] ...

Case update: English Court of Appeal confirms ‘useless’ ADR procedure too uncertain to enforce

By Kate Holland In our December 2022 issue of BuildLaw, we reported on a case in the English High Court[1] about an unusual alternative dispute resolution (ADR) procedure in a construction contract that was held to be too uncertain to be an enforceable condition...

English Court of Appeal confirms ‘useless’ ADR procedure too uncertain to enforce

By Kate Holland In our December 2022 issue of BuildLaw, we reported on a case in the English High Court[1] about an unusual alternative dispute resolution (ADR) procedure in a construction contract that was held to be too uncertain to be an enforceable condition...

Disgruntled builders lose defective cladding dispute

By Sam Dorne In Goodman-Jones v Hughey & ors [2023] NZHC 604, two experienced builders brought a claim for damages for a perceived defective installation of cladding for a new build. Despite the action being brought against multiple defendants the Court found that...

BuildLaw Issue 50

June 2023Download PDF   CONTENTS BuildLaw in Brief: Recent key developments in the construction industry Bad faith and without substantial merit – What it means and what it takes Disgruntled builders lose defective cladding dispute High-rise blues Build-to-Rent:...

Craftiness is not an abuse of process

With cashflow a persistent concern for companies in the construction industry, a recent decision in the New South Wales Supreme Court may alleviate some of the stress. The decision should affirm to struggling parties that there is no problem with taking strategic...

Privileged glimpses: Curtain falls on art gallery’s nuisance ‘human zoo’ exhibit

By Kate Holland The UK Supreme Court has ruled that the London Tate Modern’s public viewing gallery overlooking the luxury glass-walled apartments nearby, is a visual intrusion amounting to the tort of nuisance. The decision in has attracted criticism for prioritising...

Waiver and estoppel arguments raised in interim payment dispute

By Sam Dorne The English Court of Appeal case of A & V Building Solutions Limited v J & B Hopkins Limited has highlighted issues parties face when there is ambiguity in relation to dates for requesting interim payment in construction contracts.[1] The case...

Doing business in Australia? Then you need to know when you still might have to pick up the whole tab

By Maria Cole If you have a commercial contract in Australia, it’s probably governed by Australian law, which includes the proportionate liability regime.[1] Broadly, proportionate liability means if there are multiple parties to a contract and things go wrong, a...

Parliament passes sweeping amendments to construction payment regime

By Alexander Lyall Parliament has recently enacted legislation allowing for comprehensive changes to the Construction Contracts Act 2002. The Construction Contracts (Retention Money) Amendment Act 2023 passed its third reading on Wednesday 29 March and received Royal...

BuildLaw Issue 49

March 2023Download pdf   CONTENTS Diamond Glass slices damages in airport contract Case in Brief: Craftiness is not an abuse of process (Kennedy Civil Contracting Pty Ltd (Administrators Appointed) v Richard Crookes Construction Pty Ltd [2023] NSWSC 99) That...

Builder terminates contract with a “sorry mate…costs are going through the roof”

By Kate Holland With the construction industry in the grip of labour and supply shortages and spiralling costs, a recent decision of the Queensland court is a timely reminder of the established principles of contractual repudiation. The decision is a warning to...

Ripping up the Resource Management Act

By Adrian Sharma The Resource Management Act 1991 (RMA) is one of New Zealand’s most important pieces of legislation. It governs what can be built where, when, and how. But more than 30 years on from its introduction, and after numerous amendments, the controversial...

To bespoke or too bespoke – the case of an ADR clause that couldn’t be enforced

By Kate Holland In a recent English decision, the Technology and Construction Court held that a clause in a construction contract requiring the parties to refer a dispute to ADR was a condition precedent to commencing litigation in the courts. However, the Court also...

The Court of Appeal sounds the all clear and it’s business as usual under the CCA: so file a payment schedule or pay up!

By Maria Cole A decision issued by the High Court last year caused a “head in hands” moment in the construction industry in relation to the payment claim regime. The High Court set aside a statutory demand which had been filed to enforce a payment claim as a debt due...

BuildLaw Issue 48

December 2022Download pdf   CONTENTS The Court of Appeal sounds the all clear and it’s business as usual under the CCA: so issue a payment schedule or pay up! Case in Brief: Builder terminates contract with a “sorry mate… costs are going through the roof” but...

Labelling an image as an ‘artist impression’ was found not to give a developer artistic licence in a claim of misleading and deceptive conduct over an ‘off-the-plan’ premium apartment

By Maria Cole Australian consumer protection law was given an outing in the Federal Court of Australia when a developer merely added the words ‘artist impression’ to a computer generated image it intended to use in its marketing materials for an ‘off-the-plan’...

Fire risk – defective cladding litigation heats up

By Sam Dorne In England and Wales, the Technology and Construction Court in Martlet Homes Ltd v Mulalley & Co Ltd [2022] EWHC 1813 (TCC) (14 July 2022) has released the first decision arising out of a defective cladding dispute following the Grenfell Tower...

BuildLaw Issue 47

September 2022CONTENTS Competition not working well in residential building suppliesmarket Fire risk – defective cladding litigation heats up Case in Brief: Supreme Court of New South Wales finds forcemajeure clause offered no protection for loss and damage togoods in...

WA Supreme Court finds no implied licence to use home design plan

By Kate Holland In a recent Australian case, the WA Supreme Court was unwilling to interpret a contract between a home builder and their client to imply a licence allowing the client to use the builder’s design in whatever way they pleased. Although the case was...

Overhaul coming to the regulation of engineers

By Sam Dorne The Ministry of Business, Innovation and Employment (MBIE) undertook a consultation in 2021 to reform the regulatory regime for engineers. The reforms will move away from a voluntary accreditation scheme into a formal regulated regime.   Current...

Expert “evidence” needs to be more than just bald assertions to win the day

By Adrian Sharma Leakage issues in a building can be a real dampener. A recent decision of the Queensland Civil and Administrative Tribunal (the Tribunal) which considered conflicting expert evidence on water ingress issues in a newly built property highlighted the...

An adjudicator’s decision on a construction contract is definitely worth the paper it’s written on!

By Maria Cole It’s only in rare circumstances that the courts will interfere with the decision of an adjudicator on a construction contract. A recent decision out of the English Technology and Construction Court (TCC) considered arguments that an adjudicator acted in...

You break it you bought it: Supreme Court confirms you can’t cancel a contract for failure to satisfy a condition if your own behaviour had a material effect on the failure

By Belinda Green.   We’ve known for a long time that a party can’t rely on a failure to satisfy a condition if the condition failed to satisfy because of their action. But we never really had an explanation of how bad that “failure” had to be until now. In its...

BuildLaw Issue 46

March 2022CONTENTS You break it you bought it: Supreme Court confirms you can’t cancel a contract for failure to satisfy a condition if your own behaviour had a material effect on the failure Case in Brief: Unhelpful expert witness sees homeowners succeed in defective...

Limitation for payment claims under construction contracts

By Sam Dorne The decision in Hirst v Dunbar [2022] EWHC 41 (TCC) considers the impact of payment provisions in a construction contract, whether through contract or implied terms, and the commencement of the limitation period for payment claims under the contract. It...

Extensions of time in construction contracts

By Jo O’Dea   In an extension of time claim, blame for the delay was a relevant consideration when assessing what was “fair and reasonable”.   In CAJ v CAI [2021] 5 GCA 102, the Singapore Court of Appeal considered the issue of extensions of time in...

BuildLaw Issue 45

March 2022CONTENTS Extensions of time in construction contracts Construction contract procedure and dispute resolution: There really is a reason to pay attention to the boring stuff Principals beware, constructive acceleration is here UK: Important announcement on the...

Testing the waters: New South Wales Supreme Court considers the prevention principle

By Hannah Aziz  Court provides further confirmation that the prevention principle can be excluded by the terms of a contract.   Introduction Following our recent commentary comparing the operation of the prevention principle in New South Wales and Victoria, the...

Construction contract or product warranty? Not all collateral warranty disputes can be adjudicated

By Belinda Green Collateral warranties might be parasitic on a construction contract, but that doesn’t automatically mean they are one. The individual wording and circumstances need to be considered. In some cases, like in Toppan Holdings Limited v Simply Construction...
Skip to content