YEUNG MEI HOI v. TAM CHEUK SHING AND ANOTHER

CACV 136/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 136 OF 2014

(ON APPEAL FROM HCPI NO. 901 OF 2011)

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J U D G M E N T
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Hon Cheung JA :

Background

1.1  The plaintiff was assaulted by his co-worker, the 1^st defendant, in the course of their employment with the 2^nd defendant.  The plaintiff sustained injuries and sought damages against them.  The 1^st defendant did not contest the claim.  Judgment on liability was entered against him.  The 2^nd defendant disputed the claim.  Deputy High Court Judge Simon Leung assessed damages against the 1^st defendant in the sum of $600,275 with credit being given to the employee’s compensation paid to the plaintiff in the sum of $307,767.10.  The Judge, however, dismissed the plaintiff’s claim against the 2^nd defendant.  The plaintiff now appeals against the dismissal of his claim. 

1.2  The 2^nd defendant managed a residential estate known as Palm Springs in the New Territories (‘the Estate’). The plaintiff and the 1^st defendant were the 2^nd defendant’s employees and were assigned to work at the Estate.  The 1^st defendant was a security guard and a subordinate of the plaintiff who was a customer service supervisor. 

1.3  In the early morning of 27 August 2006 a taxi with a suspected drunken passenger on board entered the Estate without properly passing the guard at the main gate.  After the plaintiff learned about this, he used his walkie-talkie to ask the other security guards on duty to locate the whereabouts of the taxi.  Minutes later, the 1^st defendant reported his sighting of the taxi from his position.

1.4  The plaintiff proceeded to the security post where the 1^st defendant was stationed.  The plaintiff took the view that that it should not have taken so long for the taxi to travel from the main gate to the location reported by the 1^st defendant and that the 1^st defendant had failed to report to him promptly. The plaintiff enquired with the 1^st defendant about the matter.  The 1^st defendant was not happy with the enquiry and reacted rudely with some swearing.  At that point, the plaintiff also discovered that the 1^st defendant was not properly dressed up in his uniform.  The plaintiff took that as a breach of the 1^st defendant’s duty and decided to take a photograph of the 1^st defendant with his camera in order to report the matter to the employer.  The 1^st defendant then became agitated.  He tried to snatch the plaintiff’s camera, hit him with his fist and used the plaintiff’s walkie-talkie to strike the plaintiff’s head. As a result the plaintiff sustained head injuries.

The Judge’s finding

2.1   The issue in this appeal is whether the 2^nd defendant should be held vicariously liable for the assault committed by the 1^st defendant on the plaintiff.

2.2  The Judge held that the 2^nd defendant was not vicariously liable because it cannot fairly be said that the 1^st defendant carried out the assault in the course of execution of his duties as a security guard.  It was the plaintiff who was supervising and enforcing discipline on the 1^st defendant at that time.  In the course of that, the 1^st defendant’s outburst and act of violence to his superior was not at all expected in the discharge of his own duties as a security guard and subordinate.  The outburst and act of personal spite by the 1^st defendant against the plaintiff took the 1^st defendant out of the scope of the acts that could be interpreted as acts inherent in the nature or characteristics of the 2^nd defendant’s business carried out by the 1^st defendant. Nor could they be interpreted as acts advancing the interest or purpose of the 2^nd defendant. The Judge held that it is unjust, if not absurd, to attach vicarious liability on the part of the 2^nd defendant for such act of the 1^st defendant against the plaintiff.

2.3  To complete the picture the Judge also rejected the plaintiff’s claim against the 2^nd defendant on the basis that the 2^nd defendant was in breach of its duty as an employer or its general duty of care towards him or in breach of statutory duties. These are not pursued in this appeal.

Vicarious liability

1)   The close connection test

3.1   The Court of Final Appeal in Ming An Insurance Co (HK) Ltd v. Ritz-Carlton Ltd [2002] 3 HKLRD 844 departed from the previous test for an employer’s vicarious liability and adopted the ‘close connection test’.  The previous test which was known as the ‘Salmond test’ was that an employee’s tort is deemed to have been committed in the course of his employment if it is either (a) something authorised by his employer or (b) an unauthorised mode of doing something authorised by his employer [paragraph 14]. The ‘close connection test’ as formulated by Bokhary PJ is that a connection between the employee’s unauthorised tortious act and his employment is so close as to make it fair and just to hold his employer vicariously liable [paragraph 19].  Close connection is the basic criterion for vicarious liability in regard to all torts committed by an employee during an unauthorised course of conduct, whether intentional wrongdoing or mere inadvertence is involved.  The application of this test is always to be undertaken in context [paragraph 25].

3.2  In that case the doorman of a hotel drove a limousine hired by the hotel and injured two pedestrians.  Part of the doorman’s duties included acting as a ‘car jockey’.  This involved moving cars, and sometimes limousines in the absence of the chauffeurs, that caused an obstruction in the hotel forecourt.  The accident happened when the doorman drove a bell boy to collect food for the employees of the hotel.  The hotel’s liability was established because although car jockeys were not authorised to drive limousines for the purpose of collecting food, the fact remained that car jockeys routinely drove limousines during the course of their employment along the route where the accident happened, albeit for a different purpose, and that limousines were sometimes used for the purpose of collecting food, although they were driven by a chauffeur.  Further, the practice of collecting food existed, and it was not only for the purpose of the hotel’s employees, but also of the hotel, for it was obviously in their interests that employees be adequately fed.  Under the then prevailing practice, collecting food was properly regarded as incidental to the employment of the employee involved. Hence, the ‘close connection’ criterion was satisfied. 

3.3  The Court of Final Appeal adopted the ‘close connection test’ from the English House of Lords decision of Lister v Hesley Hall Ltd [2002] 1 AC 215 which in turn adopted the test from the Supreme Court of Canada decisions of Bazley v Curry (1999) 174 DLR (4^th) 45 and Jacobi v. Griffiths (1999) 174 DLR (4^th) 71 which involved sexual abuse of children respectively in residential care facilities for the treatment of emotionally troubled children and a youth club.

3.4  In Lister the claimants were residents in a boarding house attached to a school owned and managed by the defendants.  The warden of the boarding house employed by them, without their knowledge, systematically sexually abused the claimants. The claimants claimed damages against the defendants for the personal injuries involved.  It was held that having regard to the circumstances of the warden’s employment, including the close contact with the pupils and the inherent risks that it involved, there was a sufficient connection between the work that he had been employed to do and the acts of abuse that he had committed for those acts to be regarded as having been committed within the scope of his employment and the defendants should be held vicariously liable for them.

3.5  More recently in Various Claimants v. Catholic Child Welfare Society [2013] 2 A.C. 1 at paragraph 35, Lord Phillips of Worth Matravers identified policy reasons that usually make it fair, just and reasonable to impose vicarious liability on the employer when five criteria are met :

i) the employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability;

ii) the tort will have been committed as a result of activity being taken by the employee on behalf of the employer;

iii) the employee’s activity is likely to be part of the business activity of the employer;

iv) the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee;

v) the employee will, to a greater or lesser degree, have been under the control of the employer.

3.6  In that case the defendants were respectively a lay Roman Catholic order (‘the Institute’) with lay brother teachers and the Roman Catholic Diocese (‘the Diocese’).  The Diocese entrusted the Institute to nominate a brother to act as headmaster and appointed other brothers to teach in a residential school for boys.  The lay brother teachers of the Institute physically and sexually abused the students in the school.  The Diocese was held responsible for the abuse.  The issue for the Supreme Court’s determination was whether the Institute should share joint vicarious liability.  It held that the relationship between the Institute and the brothers had enabled the Institute to place the brothers in teaching positions and, in particular, in the position of headmaster, who was the person largely responsible for the running of the school; that there was thus a very close connection between the relationship between the brothers and the Institute and the employment of the brothers as teachers in the school; that the placement of brother teachers in a residential school for vulnerable boys who were virtually prisoners, in the precincts of which the brothers also resided, greatly enhanced the risk of abuse by them if they had a propensity for such misconduct; and that, accordingly, it was fair, just and reasonable for the Institute to share with the diocesan bodies vicarious liability for the abuse committed by the brothers.

2)  Relevance of risk

4.1   One matter which calls for discussion is the relevance of risk under the close connection test.  Litton NPJ in Ming An Insurance discussed the implication of risk :

‘ 35. As stated in Winfield & Jolowicz on Tort (16^th ed., 2002) at para.20-9 the underlying idea is that the injury done by the servant must involve a risk sufficiently inherent in or characteristic of the employer’s business that it is just to make the employer bear the loss.’

4.2  Then at paragraph 42, he stated that :

‘ …..Hence, in seeking an answer to the question “Is the servant’s wrongful act so closely connected with his employment that it would be fair and just to hold the employer vicariously liable?” it must be remembered that the issue is not free standing, and matters such as the servant’s duties at the time when the tort occurred, whether he was acting in the interests of the employer or solely for himself, et cetera, are still relevant. And, casting one’s eyes a little wider, the court should also have regard to the business activities of the employer broadly speaking and ask if the risk which gave rise to the damage (here the servant’s reckless driving of someone else’s limousine) was created by those activities: If they were, that was a risk which the employer could have insured against.’

4.3  Lord Phillips in Catholic Welfare Society highlighted this point :

‘ 74 It is not easy to deduce from the Lister case [2002] 1 AC 215 the precise criteria that will give rise to vicarious liability for sexual abuse. The test of “close connection” approved by all tells one nothing about the nature of the connection. Lord Clyde and Lord Hobhouse found it significant that the tortfeasor’s employment involved exercising care for the victim. Only Lord Millett expressly endorsed the importance that the Canadian decisions attached to the creation of risk. This has, however, been identified as of significance in most of the cases that have followed.’

4.4  He then reviewed cases such as Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366, Bernard v Attorney General of Jamaica [2004] UKPC 47, Brown v Robinson [2004] UKPC 56, PC, Majrowski v Guy’s and St Thomas’s NHS Trust [2007] 1 AC 224 and Maga v Archbishop of Birmingham [2010] EWCA Civ 256; [2010] 1 WLR 1441; [2010] PTSR 1618, CA which considered the element of risk.  He stated that the precise criteria for imposing vicarious liability for sexual abuse are still in the course of refinement by judicial decision but he concluded that risk is indeed a criterion in the close connection test.

‘ 86 Starting with the Canadian authorities a common theme can be traced through most of the cases to which I have referred. Vicarious liability is imposed where a defendant, whose relationship with the abuser put it in a position to use the abuser to carry on its business or to further its own interests, has done so in a manner which has created or significantly enhanced the risk that the victim or victims would suffer the relevant abuse. The essential closeness of connection between the relationship between the defendant and the tortfeasor and the acts of abuse thus involves a strong causative link.

87  These are the criteria that establish the necessary “close connection” between relationship and abuse.  I do not think that it is right to say that creation of risk is simply a policy consideration and not one of the criteria.  Creation of risk is not enough, of itself, to give rise to vicarious liability for abuse but it is always likely to be an important element in the facts that give rise to such liability.’

3)  Examples of assault by employees

5.1   In Lister, Lord Millett at paragraph 80, held that employers have long been held vicariously liable in appropriate circumstances for assaults committed by their employees and he went on to explain some cases in which the employer was held not liable for assaults committed by the employees.  The cases referred to such as Warren v Henlys Ltd [1948] 2 All ER 935 and Deatons Pty Ltd v Flew (1949) 79 CLR 370 are rather old cases.  As Litton NPJ in Ming An Insurance observed at paragraph 38, this branch of the law has been in a state of evolution for some time, and the tendency has been toward more liberal protection of innocent third parties.  He further held that :

‘ 39. In answering the question “does the prohibition limit the sphere of employment or does it only deal with conduct within the sphere of employment” under the old Salmond test, Diplock LJ (as he then was) said in Ilkiw v Samuels [1963] 1 WLR 991 at p.1004 that the matter must be looked at broadly; the court should not “dissect the servant’s task into its component activities”. It can be said that the twin cases in the Supreme Court of Canada, Bazley v Curry (1999) 174 DLR (4th) 45 and Jacobi v Griffiths (1999) 174 DLR (4th) 71, and Lister v Hesley Hall Ltd [2002] 1 AC 215 itself, have pushed this broad approach even wider.’

5.2  The modern cases illustrated the trend.  An example is Fennelly v. Connex South Eastern Ltd., English Court of Appeal, judgment dated 11 December 2000.  A ticket inspector at a railway station assaulted a passenger who was suspected by him to have passed the gate without producing the ticket.  The inspector blocked the passenger and demanded the ticket.  There were exchanges between the two but the passenger eventually produced the ticket and walked on but was pulled back by the inspector and was assaulted.  The trial judge held the employer of the inspector was not vicariously liable for the assault.  He held that until the assault the inspector’s acts were authorised, however, after the passenger had walked on the employer had no interest in what the inspector did next.  He was not by then carrying out any task which they authorised or wanted him to do.  He was doing nothing that he was authorised to do.  He was not going about his employer’s business but his own.

5.3  The decision was reversed on appeal.  Buxton LJ held at paragraph 17 that the judge had adopted too narrow an approach on the concept of authorisation and a broader approach is required.  He held that :

‘ Absent Mr Sparrow’s [i.e. the inspector’s] status as a ticket inspector he would have had no right at all to call after Mr Fennelly [the passenger] and to block him in this way or otherwise to impede his progress.’

5.4 He continued :

‘ [18] Against that background I consider it artificial to say that just because Mr Fennelly [i.e. the passenger] was walking on, what happened next - immediately next - was divorced from what Mr Sparrow [i.e. the inspector] was employed to do. The necklock sprang directly out of the altercation. The altercation was being conducted by Mr Sparrow on behalf of his employer, dealing as he thought appropriate with a passenger who was not reacting as the employer would have wished; it would not have occurred without Mr Sparrow’s power to inspect tickets when he was on his employers’ premises. It is difficult to say in any realistic terms that this was not all one incident. That is underlined by the finding that the judge made about what Mr Sparrow said when he was actually putting Mr Fennelly into the necklock. When he said, as the judge found and as I have already indicated, words to the effect of “I have had enough of this”, he was referring back to the aggravation and obstruction that Mr Fennelly had caused him when he was looking at his ticket. In my judgment therefore there are strong reasons in this case for thinking that the judge looked at the matter, as was said at one point of the argument, in too nice a way, and thus described the incident in an artificial way.’ (emphasis added)

5.5   See further : Mattis v. Pollock (trading as Flamingos Nightclub) [2003] 1 WLR 2158 and Ling Man Kuen v. Chow Chan Ming and another, unrep. (DCPI 1445/2005).

5.6  Mr Wong, counsel for the 2^nddefendant, on the other hand referred to Cheung Chak Fui v. Sun Hing Organization Plastic Management Limited (HCPI 91/2008).  The plaintiff, a supervisor of a factory, was assaulted by a co-worker.  The plaintiff sought damages for personal injury against the employer.  The plaintiff had previously reprimanded the co-worker about his job performance and his relationship as a married man with a female colleague.  The co-worker had made repeated violent threats to the supervisor.  The supervisor reported these matters to the employer.  One day the co-worker went to the supervisor’s office and assaulted him.  Au J held that the employer having been made aware of the threats was negligent in not taking reasonable measures to prevent the assault from happening.  However, he held that the employer was not vicariously liable for the assault because the close connection test had not been satisfied.

Consideration of this case

6.1  While recognizing the limit imposed on appellate courts to interfere with finding of fact by a trial judge, my view is that the Judge in the present case has, contrary to the close connection test, adopted too narrow an approach on the scope of employment.  On the plaintiff’s part, he obviously was acting within the scope of his employment when he confronted the 1^st defendant about his performance and his uniform.  As the Judge found, the plaintiff was supervising and enforcing discipline on the 1^stdefendant.  However, the focus on the close connection test is on the scope of employment of the employee who carried out the unauthorised act.  In this case the 1^stdefendant was on duty when he suddenly lost his temper and assaulted the plaintiff.  Specifically at that moment of time his scope of employment required him to be subject to the supervision and discipline of the plaintiff which became an issue because the 1^st defendant had failed to report promptly the location of the taxi and properly wear his uniform.  This caused the plaintiff to make inquiries with him and to take his photograph for the purpose of reporting the matter to the employer.  In my view the 1^st defendant’s unauthorised act of assault during this moment was closely connected with his employment.

6.2   Further the 2^nd defendant manages the Estate and provides security service in the form of security guards.  The system of supervision and discipline of these guards by a superior officer that has been put in place by the 2^nd defendant carries with it a risk that the subordinate may react in an unauthorised way in the course of being subject to the supervision and discipline by his superior officer.  In his finding the Judge referred to ‘act of personal spite’ by the 1^st defendant. In my view there is no evidence to support this finding when the Judge rejected the plaintiff’s evidence that the 1^st defendant had previously threatened him with violence.  In my view it is fair and just to hold the employer vicariously liable because this risk can be insured against by the employer.

6.3  Mr Wong submitted that in essence what the 1^st defendant had done was an act of insubordination.  He asked rhetorically why should an employer be held vicariously liable for an act of insubordination by his employee.  In my view this begs the issue that this Court is required to address.  In the first place the term ‘insubordination’ is emotive.  But more critically it is too general a description when one is required to carry out a contextual consideration to see whether there is a close connection between the employment and the unauthorised act.  In the present case the outburst by the 1^st defendant was part of the incident wholly connected to his employment and therefore satisfies the close connection test.

6.4  As to the case of Cheung Chak Fui, it is again important to emphasize that whether a close connection exists is very much a contextual consideration.  Unlike the present case, the decision is based on the particular fact that the assault occurred at a time when the parties were not engaged in work related discussions.

Conclusion

7. I would allow the appeal, set aside the judgment below and enter judgment for the plaintiff against the 2^nd defendant for the sums as assessed together with the interest ordered by the Judge.

Costs

8. The plaintiff is to have the costs of the appeal and below.  His own costs are to be taxed in accordance with Legal Aid Regulations.

Hon Yuen JA :

9. I agree with the judgment of Cheung JA.

Hon Chu JA :

10. I agree with the judgment of Cheung JA and the orders set out in paragraphs 7 and 8 above.