Legal Update March 2016

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3. Mar 2016

UK SUPREME COURT HOLDS COMPANY RESPONSIBLE FOR CASHIER’S RED MIST

It was a typical day for Mohamud. On the way to a community event, he stops by a petrol station and enters the kiosk. He speaks to the cashier, Amjid Khan, but instead of the expected service-line response, Mohamud is treated to a vitriol laced, racist tirade that ends with Khan ordering him to leave the premises. Mohamud gets into his car but before he could drive off, Khan appears and punches Mohamud. When Mohamud exits the car, he is set upon and brutally attacked by Khan.

In A M Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11 (“A M Mohamud”), the UK Supreme Court was asked to decide whether Khan’s employer, W M Morrison Supermarkets, should be vicariously liable for Khan’s acts. In deciding the test for vicarious liability, the Court affirmed the “close connection” test, where the issue would be whether the employee’s conduct had a sufficiently close connection with his employment to make it just for the employer to be held vicariously liable.

Applying the above test, the UK Supreme Court unanimously held that Khan’s course of conduct had a “close connection” to the job entrusted to him, reversing the decision of the English Court of Appeal and the trial judge.

Lord Toulson explained that Khan’s job was to attend to customers and to respond to their inquiries. While Khan’s initial response was extreme, it fell within the field of activities assigned to him. In particular, in giving the order that Mohamud was to leave the premises, Khan was purporting to act about his employer’s business. As a corollary to Khan’s field of activities, Lord Toulson held that Khan’s subsequent conduct in following Mohamud to his car and the physical altercation that followed was merely a continuation of Khan’s order to keep away from his employer’s premises.

Lord Toulson concluded that while Khan’s course of conduct was a gross abuse of his position, the conduct was in connection with the business in which he was employed to serve customers and as such, the employers should be held responsible.

It can be seen that the English Courts have construed the employee’s field of activities in an extremely broad manner. Hence Khan’s job scope was defined to be “interacting with customers”, which is itself a very broad definition of a cashier’s job. Further, the acts of ordering the customer off the premises and engaging in a physical altercation, whilst not within Khan’s authority (and Mr Khan’s supervisor had expressly ordered him to stop), was nevertheless found to be of sufficient connection or at least a continuation of “interacting with customers”.

Singapore’s position on vicarious liability

The above legal reasoning is broadly in line with the Singapore Court of Appeal’s approach in Skandinaviska Enskilda Banken v Asia Pacific Breweries [2011] SGCA 22 (“Skandinaviska”). In Skandinaviska, Chia Teck Leng, who was the finance manager of Asia Pacific Breweries, perpetrated an elaborate fraud over Skandinaviska Bank spanning over 4 years. Chia’s acts included conning the bank into offering various credit facilities to Asia Pacific Breweries (“APB”), purporting to accept the facilities on APB’s behalf and even falsifying APB director’s resolution.

Applying the same “close connection” test, the Singapore Court of Appeal found that Chia’s acts were not connected to Chia’s employment. As a finance manager with limited powers, Chia had very little financial authority and the fraudulent acts perpetrated were not connected with Chia’s employment at all. Moreover, the Singapore Court found that Chia’s fraud did not further Asia Pacific’s aims and was not related to anything inherent in Asia Pacific’s enterprise.

As both the English and Singapore Courts are applying the same test, the case of A M Mohamud is likely to have a persuasive effect on the local Courts. As such, businesses and companies alike should be aware that they may have to bear the burden of rogue employees, especially those in the service industry where employees will interact with customers on a frequent basis.

Lip KaiContributed by:
Ng Lip Kai
Associate
nglipkai@jtjb.com

Lip Kai read law at the Singapore Management University. Lip Kai interned at the firm in 2013 before he graduated with a Bachelor of Laws and joined the firm as a Practice Trainee in December 2014. After being called to the Singapore Bar in August 2015, he was retained in the firm as an Associate. Lip Kai’s main areas of practice are Shipping & Admiralty and Commercial Dispute Resolution.

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This update is for general information only and is it not intended to constitute legal advice. JTJB has made all reasonable efforts to ensure the information provided is accurate at the time of publication.

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