Employer was not vicariously liable

Tuesday Law Report: 23 February 1999 Credit Lyonnais Nederland NV (now known as Generale Bank Nederland NV) v Export Credits Guarantee Department House of Lords (Lord Slynn of Hadley, Lord Woolf, Lord Steyn, Lord Clyde, Lord Millett) 18 February 1999

AN EMPLOYER could not be vicariously liable for the acts of his employee performed in the course of his employment which were not in themselves tortious, but which only constituted a tort when combined with other acts which were not performed in the course of his employment.

The House of Lords dismissed the appeal of Credit Lyonnais Nederland NV ("the bank") against the decision of the Court of Appeal that the Export Credits Guarantee Department ("ECGD") was not vicariously liable for losses it had sustained as a result of fraud.

ECGD issued guarantees to assist UK exporters. It issued a series of guarantees to the bank in relation to puchases by it from a Mr Chong of bills of exchange drawn in respect of fictitious export transactions entered into by companies which he owned or controlled.

Mr Pillai, a senior underwriter of ECGD who dealt with the issue of the guarantees, was corrupted by Chong and assisted him in the fraud practised on the bank. The bank commenced proceedings against ECGD claiming, inter alia, that ECGD was vicariously liable in tort for Pillai's acts in underwriting the guarantees.

The bank's appeal to the Court of Appeal against the judge's decision that ECGD was not liable for the loss it had sustained was dismissed, the court holding that, although by the time Pillai authorised the issue of the guarantees he was a party to a common design with Chong to deceive the bank by a fraud of which the issue of the guarantees was an essential part there was nothing unlawful in the issue of the guarantees, and the other acts he performed to assist Chong were not within the course of his employment or the scope of his authority.

The bank appealed, on the grounds (i) that where an employee assisted in the violation by another of an individual's rights pursuant to a common design to that end, the employee incurred liability as a joint tortfeasor for the violation, and his employer incurred vicarious liability for the violation if the assistance by the employee was in the course of his employment; and (ii) that the bank was entitled to succeed because Pillai's own acts of assistance were themselves tortious because they were carried out with the intention of bringing about a violation of the bank's rights.

Jonathan Sumption QC and Richard Slade (Linklaters & Paines) for the bank; Gordon Pollock QC, Jonathan Hirst QC and Graham Dunning (Clyde & Co) for ECGD.

Lord Woolf said that the principle on which vicarious liability depended was that the wrong of the servant for which the master was liable was one committed in the course of his employment.

The present case raised starkly the question whether, in the case of a joint tort, it was sufficient to make the master liable if the acts of his servant, for which he was responsible, did not in themselves amount to a tort but only did so when linked to other acts which were not performed in the course of the employee's employment.

The short answer to that question was that the actions of Pillai in the course of his employment could not be combined with the actions of Chong, which if done by Pillai would have been outside the course of his employment, to make ECGD vicariously liable for the consequence of Pillai's and Chong's combined conduct.

The submission that acts of assistance in connection with another's wrong became themselves tortious, if carried out with the intention of bringing about the violation of a third party's rights, was novel because it did not require those acts of assistance to be in themselves actionable wrongs. The only purpose for establishing the existence of such a tort was to make ECGD vicariously liable for Pillai's conduct, and that was not a justification for the recognition of a new tort.

Kate O'Hanlon

Barrister

Arts and Entertainment
At this year's SXSW festival in Austin, Texas

Music Why this music festival is still the place to spot the next big thing

Arts and Entertainment
Russell Tovey, Myanna Buring and Julian Rhind Tutt star in Banished
tvReview: The latest episode was a smidgen less depressing... but it’s hardly a bonza beach party
Arts and Entertainment
Crime watch: Cara Delevingne and Daniel Brühl in ‘The Face of an Angel’
film review
Arts and Entertainment
music Malik left the Asian leg of the band's world tour after being signed off with stress last week
News
Author J.K. Rowling attends photocall ahead of her reading from 'The Casual Vacancy' at the Queen Elizabeth Hall on September 27, 2012 in London, England.
peopleNot the first time the author has defended Dumbledore's sexuality
Arts and Entertainment
‘The Royals’ – a ‘twisted, soapy take on England’s first family’
tv Some of the characters appear to have clear real-life counterparts
News
Brooks is among a dozen show-business professionals ever to have achieved Egot status
people
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
A cut above: Sean Penn is outclassed by Mark Rylance in The Gunman
film review
Arts and Entertainment
arts + ents
Arts and Entertainment
James Franco and Zachary Quinto in I Am Michael

Film review Michael Glatze biopic isn't about a self-hating gay man gone straight

Arts and Entertainment
A scene from the movie 'Get Hard'
tvWill Ferrell’s new film Get Hard receives its first reviews
Arts and Entertainment
Left to right: David Cameron (Mark Dexter), Nick Clegg (Bertie Carvel) and Gordon Brown (Ian Grieve)
tvReview: Ian Grieve gets another chance to play Gordon Brown... this is the kinder version
Arts and Entertainment
Benedict Cumberbatch and Martin Freeman in the first look picture from next year's Sherlock special

TV
Arts and Entertainment
Because it wouldn’t be Glastonbury without people kicking off about the headline acts, a petition has already been launched to stop Kanye West performing on the Saturday night

music
Arts and Entertainment
Molly Risker, Helen Monks, Caden-Ellis Wall, Rebekah Staton, Erin Freeman, Philip Jackson and Alexa Davies in ‘Raised by Wolves’

TV review
Arts and Entertainment

TV
Arts and Entertainment
James May, Jeremy Clarkson and Richard Hammond in the Top Gear Patagonia Special

TV
Arts and Entertainment
Game of Thrones will run for ten years if HBO gets its way but showrunners have mentioned ending it after seven

Game of Thrones
Arts and Entertainment
Mans Zelmerlow will perform 'Heroes' for Sweden at the Eurovision Song Contest 2015

music
Arts and Entertainment
Elizabeth (Heida Reed) and Ross Poldark (Aiden Turner) in the BBC's remake of their 1975 original Poldark

Poldark review
Arts and Entertainment
Daniel Craig as James Bond in Skyfall

Mexican government reportedly paying Bond producers for positive portrayal in new filmfilm
Arts and Entertainment
Disney’s flying baby elephant is set to return in live-action format
filmWith sequels, prequels and spin-offs, Disney plays it safe... and makes a pachyderm
Arts and Entertainment
Nazrin with Syf, Camden
photography
News
The QI Elves photographed at the Soho Theatre. They are part of a team of researchers who find facts for the television programme 'QI'.
people
Arts and Entertainment
‘The Royals’ – a ‘twisted, soapy take on England’s first family’
tv0-star review: Sean O'Grady gives it his best shot anyway
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

    The saffron censorship that governs India

    Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
    Prince Charles' 'black spider' letters to be published 'within weeks'

    Prince Charles' 'black spider' letters to be published 'within weeks'

    Supreme Court rules Dominic Grieve's ministerial veto was invalid
    Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

    How did fandom get so dark?

    Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
    The galaxy collisions that shed light on unseen parallel Universe

    The cosmic collisions that have shed light on unseen parallel Universe

    Dark matter study gives scientists insight into mystery of space
    The Swedes are adding a gender-neutral pronoun to their dictionary

    Swedes introduce gender-neutral pronoun

    Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
    Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

    Disney's mega money-making formula

    'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
    Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

    Lobster has gone mainstream

    Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
    Easter 2015: 14 best decorations

    14 best Easter decorations

    Get into the Easter spirit with our pick of accessories, ornaments and tableware
    Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

    Paul Scholes column

    Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
    Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

    The future of GM

    The greenhouses where Monsanto 'plays God' with the future of the planet
    Britain's mild winters could be numbered: why global warming is leaving UK chillier

    Britain's mild winters could be numbered

    Gulf Stream is slowing down faster than ever, scientists say
    Government gives £250,000 to Independent appeal

    Government gives £250,000 to Independent appeal

    Donation brings total raised by Homeless Veterans campaign to at least £1.25m
    Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

    The most borrowed book at Bank of England library? Oh dear

    The book's fifth edition is used for Edexcel exams
    Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

    Cowslips vs honeysuckle

    It's the hunt for UK’s favourite wildflower
    Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

    Did a botched blackmail attempt help Cyril Smith escape justice?

    A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss