Satellite litigation window firmly shut by Supreme Court
Supreme Court holds that an employer does not owe its employees a duty of care during misconduct litigation proceedings
James-Bowen and others v The Commissioner of Police of the Metropolis  UKSC 40 (Lady Hale, Lords Mance, Kerr, Wilson and Lloyd-Jones)
In a judgment of critical importance to the conduct of civil litigation, the Supreme Court has held that an employer does not owe its employees a duty of care to protect them from economic and reputational harm in relation to the way it conducts litigation arising out of alleged misconduct on their part. In doing so it overturns a judgment of the Court of Appeal decision that would potentially have had “a chilling effect on the defence of civil proceedings” (per Lord Lloyd-Jones, paragraph 35).
The claimants were police officers who were alleged to have assaulted BA in the course of a search of his family home. BA brought a claim against the Commissioner. Immediately prior to the settlement of that claim, liability was admitted. The claimants were subsequently prosecuted for assaulting BA. They were acquitted in May 2011. The claimants argued that the Commissioner owed them a duty of care in relation to her conduct of the claim brought by Mr Ahmed. They alleged that they had been given assurances that their interests would be protected and the fact of the admission and settlement led the claimants to suffer damage to their health and welfare.
The claims were struck out by the High Court in May 2015 but the Court of Appeal held it was arguable that the Commissioner owed the officers (1) a duty to defend the litigation as effectively as possible and (2) a duty (when deciding whether to compromise the claim and if so on what terms) to take reasonable care not to sacrifice their professional reputations without good reason and without giving reasonable warning of what he intended to do. The Commissioner appealed.
The Commissioner’s appeal was unanimously upheld and the claim dismissed. The duty of care claimed would not be fair, just or reasonable because:
- Conflict of interest - the interests of the employer and the relevant employees is fundamentally different. The employer must be able to carry out its own investigation and make its own strategic decisions including “what degree of importance he attaches to successfully defending the claim and what financial and other resources should be devoted to its defence” (para 30).
- Policy considerations:
- Parties to litigation should be able to avail themselves of the process of litigation in order to resolve their disputes without the fear of incurring liability to third parties (e.g. employees) if they do so.
- Such a duty might deter or delay an employer from settling a claim where it was otherwise appropriate to do so and could lead to delay or disruption to the litigation process where there was a dispute between the employer and employee as to the appropriate way the defence should be conducted.
- It was likely to result in satellite litigation in the form of collateral challenges to the outcome of earlier proceedings.
- Legal professional privilege - employers would likely have to waive legal privilege in order to provide evidence that there had been no breach of the duty of care contended for. The fear of having to disclose privileged documents in future civil claims may inhibit frank discussion between an employer and its legal advisers.
The importance of this decision in the context of civil litigation generally, and in the public sector specifically, cannot be overstated. If the Court of Appeal’s reasoning had been upheld then it would have applied to any organisation sued vicariously for the alleged failings of an employee (e.g. a claim against a health trust or any other NHS employer for clinical negligence by a doctor or other employee). The impact of such a duty of care would not only have extended the potential liability of a public body exponentially but would also have had scope to both paralyse the manner in which its defence was conducted and compromise its ability to act in its own interests.
Whilst as a matter of good practice employers should always be mindful of their employees’ interests when conducting litigation, in a strong and practical judgment the Supreme Court recognised the important principle that an employer should be free to defend a claim “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”.
Weightmans LLP acted for the Commissioner of the Police of the Metropolis in this case. If you have any questions or would like to know more about our update, please contact Rachel Kneale (Partner).