A. Historical Development

Sir John Salmond was born in North Shields, Northumberland, and emigrated with his family to New Zealand in his teens.Footnote ³⁴ He studied law at University College of London and later became a judge in New Zealand. Prior to that he was an academic at the University of Adelaide and it was there that he wrote most of The Law of Torts. The textbook remained in print until 1996 with subsequent editions baring the title Salmond on the Law of Torts, and finally, Salmond and Heuston on the Law of Torts to reflect the contribution of Robert Heuston who took over authorship after Salmond's death in 1924.

The formulation of the Salmond test used by the English courts was present in the very first edition of Salmond's textbook, The Law of Torts, published in 1907:

What was it about this test that made it so influential? One possible answer lies in how Salmond presented the test. Critically, when Salmond wrote the Law of Torts, he was an academic. Furthermore, he was an academic who had been trained in a university. He was not a barrister and had not learned the legal craft from other barristers at the Inns of Court. As an academic, the intended audience for Salmond's textbook included students.Footnote ³⁶ He therefore had to adopt a style of presentation that was easier for students to digest.Footnote ³⁷ That style included conveniently labelled, discrete sections within each article of the text and the inclusion of a convenient summary (or, less charitably, reduction) of the content at the beginning of the section.

The style adopted by Salmond was in stark contrast to many of the texts that were produced by and for barristers trained at the Inns of Courts at the time, of which Clerk and Lindsell's Law of Torts was an example.Footnote ³⁸ There were other textbooks written by barristers in publication, but (as will be seen below) there is evidence that Salmond was directly influenced by Clerk and Lindsell's text when formulating the test that came to bear his name.

First published in 1889, the style adopted by Clerk and Lindsell's text is perhaps best described as minimal. It contained long sections of prose divided into articles, with headings kept to a minimum. Each article provided extensive coverage of the range of cases that a barrister might need to consider in respect of a particular legal issue. The only real navigation aids were margin notes and the extensive case list provided at the beginning of the text. The different priorities of the textbooks in terms of style can be gleaned by comparing the respective length of the contents’ pages (Salmond – six pages; Clerk and Lindsell – three pages) and the case lists (Salmond – 16 pages; Clerk and Lindsell – 46 pages).Footnote ³⁹

The thoroughness of Clerk and Lindsell's text had its uses. Salmond cited Clerk and Lindsell in his textbook when explaining the “Course of Employment” element of his test for vicarious liability.Footnote ⁴⁰ The section from Clerk and Lindsell to which Salmond referred is as follows:

The derivative nature of Salmond's test is immediately apparent. So too is the denseness of Clerk and Lindsell's text. The succinctness of Salmond's test may therefore have been a factor in its use and longevity.

It was not just the structure of Salmond's textbook that was shaped by his time in universities, but also its content. As evident throughout the textbook, Salmond was familiar with legal history. This knowledge was most likely acquired during his time in universities. With this knowledge, he could suggest a taxonomy of the different forms of liability in tort and, more relevantly for present purposes, outline the reasons why vicarious liability might be imposed.Footnote ⁴² It should be noted that Salmond's ambitions in outlining a taxonomy of tort law were relatively conservative. Unlike other academic authors, Pollock for instance,Footnote ⁴³ Salmond had no desire to develop a unifying theory of tort law. Indeed he was criticised by other academics for this lack of ambition.Footnote ⁴⁴

The concept of vicarious liability can be traced to Roman law and the well-documented liability of a master for the wrongdoing of a slave.Footnote ⁴⁵ In Roman law, this was because the slave was the property of the master and could therefore be viewed as an extension of the master himself. Similar reasoning underpinned the liability in Roman law of a husband for the misconduct of his wife and a father for the misconduct of a child. Blackstone was aware of, and utilised, the Roman conception of liability for the misconduct of another when explaining the vicarious liability of a master for the misconduct of a servant in the Commentaries. Footnote ⁴⁶ Notwithstanding the largely commercial nature of the relationship between master and servant, Blackstone followed the Roman law and equated the relationship between master and servant with the other “great relations in private life”: husband and wife and parent and child.Footnote ⁴⁷ Blackstone also adopted the Roman explanation of the liability: qui facit per alium facit per se (“he who acts through another does the act himself”).Footnote ⁴⁸ After outlining a number of English cases in which a principal had been held liable for the wrongdoing of an agent, Blackstone explained the basis of the liability in the following terms:

It should be noted that Blackstone appeared to use the terms “agent” and “servant” interchangeably.

In writing the Law of Torts, Salmond appeared to take his lead from Blackstone, labelling the vicarious liability of a master for the tort of a servant,Footnote ⁵⁰ along with the vicarious liability imposed on a husband for the torts of his wife, as forms of “absolute liability” (although Salmond noted that the latter was less significant at the time the textbook was written).Footnote ⁵¹ Unlike Blackstone, however, Salmond attempted to more clearly distinguish the relationships between principal and agent and master and servant. This distinction had been highlighted in the English cases decided after Blackstone's Commentaries and had, once again, been examined in detail by Clerk and Lindsell, with the authors’ digesting the two categories of case separately.

In Salmond's view, a principal could only be held vicariously liable for an agent where the commission of the actual tort engaged in by the agent had been authorised by the principal.Footnote ⁵² Note, Salmond does not use the term “agent” in a contractual sense.Footnote ⁵³ Instead, he uses the term more generally to refer to one person doing something on behalf of another person; specifically, being “authorised” to commit a tort on behalf of another person. There need not be any ongoing relationship between the defendant and the so-called “agent” for the commission of such a tort to be authorised. Nor need there be any ongoing relationship between the defendant and the claimant, as would exist if the “agent” was to act in a contractual capacity.Footnote ⁵⁴ A defendant engaging a thug to maim the claimant is a good example of what Salmond had in mind when he discussed this form of vicarious liability.

In contrast, an employer was not only vicariously liable for the tort of an employee the employer had authorised the employee to commit, but for the tort of an employee that was “so connected with [non-tortious] acts which [the employer] has so authorised”Footnote ⁵⁵ that it could be treated in the same way. The way Salmond draws the link between the two forms of liability is significant. The basis of the two forms of vicarious liability is the same – authorisation of conduct. It is broader in the employment relationship, but only by analogy with the vicarious liability that could be imposed when the defendant authorises an “agent” to commit a tort on the defendant's behalf. The extent of the analogy drawn by Salmond is clear from the text of the Salmond test itself. Both elements of the test rest upon the idea of authorisation of conduct by the person held vicariously liable for the commission of a tort by another person.Footnote ⁵⁶

In formulating the test in this way, Salmond effectively combined the strengths of both Blackstone and Clerk and Lindsell. Blackstone had already explained the basis of vicarious liability arising in category (a), the tort being seen, by extension, as that of the employer herself.Footnote ⁵⁷ Salmond adopted that explanation and developed it by analogy in category (b) to explain the extensive range of cases digested by Clerk and Lindsell in which vicarious liability was imposed by reason of an employment relationship in circumstances in which the commission of the tort had not been directly authorised by the employer.

What then is it about the employment relationship that attracts this extended form of vicarious liability? The most likely answer seems to be the authority vested in an employer to direct the conduct of an employee for the employer's benefit.Footnote ⁵⁸ The term “authority” is used to refer to the general capacity of an employer to direct the conduct of an employee for the employer's benefit.Footnote ⁵⁹ The vesting of such “authority” in an employer by an employee under an employment contract is a natural precursor to the employer giving the employee a specific direction to commit a tort (which can then be said to have been “authorised” by the employer). The existence of such “authority” is broader than that found within an “agency” relationship (in the broader sense used by Salmond). It extends beyond “authorising” the commission of a particular tort to a capacity to direct more generally the conduct of an employee whilst at work for the employer's benefit.Footnote ⁶⁰

The importance of such authority can be seen in Salmond's attempt to justify the extended form of vicarious liability that arose by reason of an employment relationship:

What is being suggested is that vicarious liability is imposed by reason of an employment relationship because the nature of the employment relationship (specifically the authority an employer has to direct the conduct of an employee) means that an employer may very well have had a role in causing the tort to be committed, either directly by actual authorisation (category (a) of the Salmond test) or indirectly by engaging in some other conduct when directing the employee without which the tort would not have been committed (category (b) of the Salmond test).Footnote ⁶² As a stranger to the employment relationship, an injured claimant would be at a distinct disadvantage in having to prove the extent of an employer's involvement in the commission of the tort by the employee. In Salmond's view, vicarious liability is imposed on an employer to overcome such evidential difficulties. This explains the significance of an employment relationship to the imposition of vicarious liability. It also explains why an employer has a right of indemnity against an employee at common law.Footnote ⁶³ As Salmond notes, “very often this presumption does not accord with the facts”.Footnote ⁶⁴

Despite the popularity of the Salmond test, there does not appear to be any judicial reference by the English courts to the unique justification proffered by Salmond for the vicarious liability imposed by reason of his test. Although unique, Salmond's justification is not anomalous. Other examples of evidential “gap-filling” devices being utilised within the law of torts include res ipsa loquitur and the controversial Fairchild exception to causation.Footnote ⁶⁵

B. Attributes of “Formality”

The considerable period in which the Salmond test was used by the English courts means that there is extensive evidence of the legal reasoning process engaged in by judges when applying the test. When analysed in terms of Atiyah and Summers’ four attributes of formality, the legal reasoning process appears relatively “formal”. Each of the different attributes of formality will be examined in turn, starting with authoritative formality.

It will be recalled that there are two aspects of authoritative formality: validity formality and rank formality. Validity formality refers to the source of the relevant legal “form”, in this case, the Salmond test itself. For obvious reasons, very little weight is usually attributed to academic textbooks as a source of law, academics having no recognised status as law makers. The Salmond test was, however, subsequently adopted by the House of Lords.Footnote ⁶⁶ For this reason the Salmond test can be viewed as having relatively high validity formality notwithstanding the test originating in an academic textbook.

It should be noted that there was a significant delay between the publication of Salmond's textbook and the Salmond test being formally adopted by the House of Lords. The first reference to the Salmond test by judges who sat on courts in England is found in a 1942 judgment by the Privy Council. The Salmond test was relied upon by the Supreme Court of Canada in Canadian Pacific Railway Co. v Lockhart Footnote ⁶⁷ to impose vicarious liability on an employer and the Privy Council confirmed on appeal that use of the test had been appropriate.Footnote ⁶⁸ It took a further 20 years for the House of Lords to formally adopt the Salmond test as part of English law in the 1966 decision of Williams v A. W. Hemphill Ltd. Footnote ⁶⁹ (this time on an appeal from Scotland, Scottish law in this respect being viewed as the same as English law). One obvious explanation for the delay was the convention of the English courts at the time to not refer to living authors.Footnote ⁷⁰ Another possible explanation is the doctrine of common employment which prevented an action being brought for vicarious liability by an employee in respect of the tort of a fellow employee. This doctrine reduced the range of circumstances in which an action for vicarious liability might be brought, thus reducing the opportunities for the English courts to clarify and develop the law. The doctrine of common employment was not fully abolished until 1948.Footnote ⁷¹

In terms of rank validity, the legal reasoning process encapsulated by the Salmond test can be described as having relatively high rank validity during the period of its operation. Once adopted by the House of Lords, use of the test could only be limited by legislation or the House of Lords itself (as finally occurred with the test's replacement in Lister v Hesley Hall Ltd. Footnote ⁷²). The abolition of the doctrine of common employment saw also the removal of any legislative intervention with respect to vicarious liability. It follows that the adoption of the Salmond test by the House of Lords afforded the test its highest possible ranking short of being incorporated into legislation.

It is more difficult to assess the content formality of the legal reasoning process encapsulated by the Salmond test due to the historic reluctance of the English courts to expressly incorporate substantive reasons as part of the legal reasoning process.Footnote ⁷³ As guided by Atiyah and Summers, the content formality of the Salmond test is to be determined by reference to the extent to which the test was shaped by fiat and/or produced results that were either under or over-inclusive in terms of any substantive reason identified as the basis for introducing that test.

It cannot be said that the Salmond test was shaped by fiat. As the history of the test demonstrates, Salmond exercised considerable care when formulating the test to encapsulate both the historical development of vicarious liability as a concept (as described by Blackstone) and the more recent cases decided by the English courts distinguishing vicarious liability within the agency and employment relationships (as digested by Clerk and Lindsell). Although the English courts do not appear to have expressly adopted the substantive reason outlined by Salmond for his test, they did adopt the precise formulation of the test prescribed by Salmond, quoting it verbatim on numerous occasions. To the extent that Salmond himself did not shape the test by fiat, neither then did the English courts.

But how can it be determined whether the results of applying the Salmond test are under or over-inclusive in terms of any substantive reason identified as the basis for introducing that test when the English courts failed to adopt any substantive reason as part of the legal reasoning process when applying the test? The nature of the challenge is self-evident. Some assistance in addressing the challenge can be found in the particular way in which Salmond formulated the test. It will be recalled that at the core of the Salmond test lies an analogy. The analogy is drawn between the vicarious liability that is imposed on a principal for the tort of an “agent” because the principal has authorised the commission of the tort (agent being defined in a broad, non-contractual sense) and the more extensive vicarious liability that is imposed on an employer for the tort of an employee because the commission of the tort is either authorised or “so connected with acts which [the employer] has so authorised”Footnote ⁷⁴ that it can be treated the same way. To the extent this analogy has been made explicit within the Salmond test itself, it can be argued that it provided the English courts with a tool to reduce the risk that application of the test might produce results that were either under or over-inclusive in terms of any substantive reason identified as the basis for introducing the test (whether the substantive reason outlined by Salmond or some other derived by the courts).

To be sure, it is not a substantive reason that is incorporated into the Salmond test, but an analogy from which a substantive reason might be extrapolated. The process of reasoning by analogy has been criticised.Footnote ⁷⁵ It is argued that its effectiveness as a legal reasoning process is limited to the extent that a legal decision maker can have confidence that she is drawing the analogy by reference to the specific attributes in the source material that are relevant for the purposes of addressing the particular legal issue at hand.Footnote ⁷⁶ The absence of a substantive reason explaining why the analogy is being drawn can sometimes make determining the relevance of different attributes within the source material more difficult. It follows that the results produced at the limits of an analogy are at greater risk of challenge than those results produced within the core areas of its operation. The criticism attracted by the approach of the English courts to legal reasoning under the Salmond test corresponds directly to the concerns that are raised with the process of reasoning by analogy more generally. In most cases of vicarious liability, the Salmond test has been effective in limiting the risk that application of the test might produce results that are either under or over-inclusive in terms of any substantive reason that might be identified as the basis for introducing that test due to the explicit analogy made within the test with agency. The results produced from applying the test were largely consistent and coherent when viewed across the period of its use, particularly in circumstances in which the tort engaged in by the employee was negligent.Footnote ⁷⁷ Towards the limits of the analogy, however, there were some difficulties.

The general effectiveness of the analogy incorporated by the Salmond test can be seen in cases such as Williams v A W Hemphill Ltd,Footnote ⁷⁸ the case in which the Salmond test was formally adopted by the House of Lords. The case involved a lorry driver instructed by his employer to drive a party from Benderloch to Glasgow. At the request of some of the members of the party, the driver took a more circuitous route. During the journey, the lorry was involved in an accident caused by the employee's negligence. The House of Lords held the employer vicariously liable for the injuries caused by the employee's negligence, notwithstanding the deviation from the employer's instructions. After stating the Salmond test, Lord Pearce (with whom the other Lords agreed) identified what it was the employee was authorised to do. He then compared what the employee was authorised to do with what the employee actually did do. The extent to which the analogy shaped Lord Pearce's reasoning can be clearly seen in the following extract from his judgment:

A similar process was repeated time after time in cases involving negligence by an employee with considerable success.Footnote ⁸⁰

Less successful were cases in which an employee had committed a tort deliberately. Consider Harrison v Michelin Tyre Co. Ltd.Footnote ⁸¹ An employee played a practical joke on a second employee whilst at work by deliberately steering an empty two-wheeled hand truck out of the designated route marking so that a duck board would tip and cause the second employee to fall. A review of the cases led the judge to express considerable frustration. He noted that there had been previous cases in which employers had not been held vicariously liable for the consequences of practical jokes,Footnote ⁸² but found them difficult to reconcile with cases such as Williams v A W Hemphill Ltd. in which an otherwise deliberate deviation from what had been authorised by the employer was insufficient to deny the imposition of vicarious liability.Footnote ⁸³ Nor did the judge find it particularly useful to consider whether the employee was on a “frolic of his own” such that the tort engaged in by the employee could not be considered an “unauthorised mode of doing some act authorised by his master”, variously interchanging “frolic” with terms such as “joke”, “wickedness” and “madness”.Footnote ⁸⁴

In an effort to remove himself from such difficulties, the judge in Harrison opted to devise his own test for determining vicarious liability:

Applying this test, the judge found the employer vicariously liable.

The judge in Harrison evidently had some sympathy for the injured plaintiff. Rather than be limited by the process of reasoning by analogy inherent in the Salmond test, the judge opted to devise his own test which was unconstrained by such a reasoning process. Notwithstanding the criticisms that had been made of the Salmond test at the time, the superior courts in England gave the proposed new test short shrift and moved to quickly reinstate the process of reasoning by analogy incorporated by the Salmond test. The Master of the Rolls in Aldred v Nacanco Ltd., another case concerning a practical joke in the workplace, could not have made the position clearer when he said:

In reinstating the Salmond test, the Master of the Rolls reinstated the process of reasoning by analogy incorporated by the Salmond test (which he then used to determine the outcome of the case).

Despite the difficulties associated with the Salmond test, it seems reasonable to suggest that the English courts were conscious of, and deliberately sought to retain, a process of reasoning by analogy when determining whether to impose vicarious liability under that test. It can therefore be argued that, notwithstanding the failure of the English courts to adopt a substantive reason for the Salmond test, the results produced by application of the test were generally not under or over-conclusive in terms of any substantive reason that might be derived from that analogy. It follows that the degree of content formality present within the approach of the English courts to legal reasoning under the Salmond test can be described as relatively low in the sense that the results produced from applying that test were generally not arbitrary.

The above analysis has implications when it comes to assessing the degree of interpretive formality present within the approach of the English courts to legal reasoning under the Salmond test. There is evidence to suggest, as indicated by the comments of the judge in Harrison, that the English courts could adopt a quite literal approach to interpreting terms such as “unauthorised mode” and “frolic of their own”. Indeed, such interplay of terms led Atiyah himself to describe the reasoning process under the Salmond test as “largely a semantic one”.Footnote ⁸⁶ Such interpretive techniques were, however, generally only engaged when the process of reasoning by analogy incorporated by the Salmond test had reached its limits. As explained above, this was in a proportionately small number of cases, such as those involving torts committed deliberately by an employee. It follows that whilst the English courts sometimes adopted a literal approach to interpretation under the Salmond test, they did not always do so. For this reason, the degree of interpretive formality present within the approach of the English courts to legal reasoning under the Salmond test can be described as middling; not particularly low, as there were instances of terms being interpreted literally, but not particularly high, as those instances were not extensive.

The final attribute of formality identified by Atiyah and Summers for assessing the degree of formality within a legal reasoning process was mandatory formality. There were no recognised exceptions or defences to the Salmond test. If the test was satisfied, it followed that the employer would be held vicariously liable. To this extent, the degree of mandatory formality within the approach of the English courts to legal reasoning under the Salmond test might be described as quite high. As has already been noted, however, the process of reasoning by analogy incorporated by the Salmond test had its limits. The degree of mandatory formality is consequently necessarily reduced to account for the degree of uncertainty that could arise as to whether the different elements of the Salmond test might be satisfied.

In overview, the approach of the English courts to legal reasoning under the Salmond test can be described as having relatively high authoritative and mandatory formality, middling interpretive formality and relatively low content formality. It will be recalled that Atiyah and Summers did not approach the assessment of overall “formality” formulaically. They also noted that it was not unusual for “form” in the English legal system to have a relatively low degree of content formality where the substantive reason for that “form” had been incorporated into the manner in which the “form” was expressed. It therefore does not seem out of line to suggest that the approach of the English courts to legal reasoning under the Salmond test could be described as relatively “formal”. Furthermore, the analysis suggests that the risk of the Salmond test producing arbitrary results was relatively low, existing only at the margins of its application and pertaining specifically to the deliberate misconduct by an employee.

A. Historical Development

Courts throughout the common law world have been faced with an unprecedented number of claims for historic sexual abuse. The abuse involved children being cared for in a range of institutions including schools, churches and residential homes and was typically perpetrated by adults employed by or associated with those institutions. The likely impecunity of the perpetrators and standard insurance exclusions for criminal acts meant that most claims were brought against the institution responsible for the care of the child, rather than the individual perpetrator.

The Supreme Court of Canada was the first common law apex courtFootnote ⁸⁸ to hear a claim for vicarious liability brought by a child sexually abused by an employee of an institution charged with their care. The defendant institution in Bazley v Curry Footnote ⁸⁹ operated “two residential care facilities for the treatment of emotionally troubled children”.Footnote ⁹⁰ The plaintiff had been placed into full-time care at one of those facilities as a young boy.Footnote ⁹¹ Whilst at the facility, the plaintiff was sexually abused repeatedly by Leslie Curry.Footnote ⁹² Curry had been employed by the institution as a childcare counsellor.Footnote ⁹³ His role was to act as a surrogate parent to the children in the facility.Footnote ⁹⁴ The Supreme Court of Canada found the defendant institution vicariously liable for the sexual abuse.

The difficulties in applying the Salmond test in cases of torts committed deliberately have already been noted. The prospect of extending the concept of an “unauthorised mode” of an act otherwise authorised by an employer to such self-serving deliberate conduct as sexual abuse would have been to stretch the analogy incorporated by the Salmond test to breaking-point.Footnote ⁹⁵ As the judge in Harrison had done before her, McLachlin J. (giving judgment for the majority) found it necessary to change the test in order to impose vicarious liability on the defendant institution. Significantly, she did not do this by abandoning the Salmond test altogether. Nor did she abandon the cases that had been decided under it. Instead, McLachlin J. recognised the limits of the analogy incorporated by the Salmond test and held that the only way to determine the boundary of the liability beyond the limits of the analogy was to openly resort to the substantive reasons for imposing vicarious liability:

After reviewing the possible substantive reasons for imposing vicarious liability, McLachlin J. devised the following test:

Note the caveats at the beginning of the test; it only applies in respect of torts committed deliberately by an employee when the analogy incorporated by the Salmond test, as represented by established cases, has been exhausted. The analysis in the previous section as to the general effectiveness of the Salmond test within the limits of the analogy with “agency” is therefore confirmed. Note further the starting point for applying the test; as with the Salmond test, judges are to consider what conduct has been authorised by the employer and whether the conduct engaged in by the employee is “sufficiently related” to “justify the imposition of vicarious liability”. Where the test differs from the Salmond test is that it sets the outer limits of vicarious liability for torts deliberately committed by reference to various substantive concerns, namely enterprise liability, rather than resting on a process of reasoning by analogy.

Not long after Bazley v Curry was decided, the House of Lords was given the opportunity to consider the prospect of vicarious liability for historic sexual abuse in Lister.Footnote ⁹⁸ The defendant institution in that case operated a school and boarding annex for boys. A number of boys were sexually abused at the boarding annex by Dennis Grain, who was employed as warden and housemaster of the boarding annex. The House of Lords followed the Supreme Court of Canada and imposed vicarious liability on the defendant institution. The House of Lords did not, however, adopt the reasoning of the Supreme Court of Canada.

Apart from Lord Hutton who agreed with the reasoning of Lord Steyn, each of the Lords in Lister delivered a separate judgment. Although there are differences across the judgments, the approach of each of the Lords is largely similar. For this reason, it is convenient to focus on the judgment of Lord Steyn, although differences in approach will be highlighted where relevant.

Lord Steyn started by noting that vicarious liability had been imposed by the English courts on at least some occasions for torts committed deliberately by an employee. He found, however, that the language used in the Salmond test was unhelpful in determining the outer limits of that liability. After discussing Lloyd v Grace Smith & Co., a case in which a bank had been held vicariously liable for the fraud of an employee, Lord Steyn commented:

The reason for replacing the Salmond test was therefore the potential for absurd results at the outer limits of its application. It will be recalled that Atiyah and Summers had noted that one of the reasons judges might look to substantive reasons in a “formal” legal system, without affecting the overall “formality” of that legal system, is in response to use of a particular legal “form” producing absurd results. Unlike the Supreme Court of Canada, the House of Lords did not consider it appropriate to incorporate substantive reasons into the new test for vicarious liability. Various reasons were given.

Lord Steyn noted the inconsistencies between some of the substantive reasons given for vicarious liability; specifically, the need to compensate the injured claimant as against the risk of imposing an undue burden on business.Footnote ¹⁰⁰ Unable to resolve such inconsistencies, Lord Steyn found that was it unnecessary to express any views on the policy considerations examined by the Supreme Court of Canada.Footnote ¹⁰¹ Lord Clyde noted the various substantive reasons outlined by the Supreme Court of Canada, but preferred to search for a principle underlying those substantive reasons.Footnote ¹⁰² Lord Hobhouse went the furthest in denouncing the appropriateness of the English courts adopting a legal reasoning process based upon the identification of any such substantive reasons:

Lord Millett did spend some time in his judgment exploring the underlying substantive reasons for vicarious liability. His willingness to examine those substantive reasons did not extend to incorporating any of those substantive reasons within the formulation of the test for vicarious liability.Footnote ¹⁰⁴

Having ruled out the incorporation of substantive reasons, the new test for vicarious liability was put in relatively straightforward terms by Lord Steyn: “The question is whether the warden's torts were so closely connected with his employment that it would be fair and just to hold the employers vicariously liable. On the facts of the case the answer is yes.”Footnote ¹⁰⁵

Similar references to the need for a close connection were made by the other Lords, hence the label being applied to the new test. The language of “connection” had been previously used both by the Supreme Court of Canada and by Salmond in his textbook when attempting to further clarify the operation of his initial test.Footnote ¹⁰⁶

A number of points can be made in respect of how the close-connection test adopted by the House of Lords is formulated in contrast to the test adopted by the Supreme Court of Canada. First, there is no attempt under the close-connection test to retain a role for either the Salmond test itself, or the analogy with “agency” (in a broad, non-contractual sense) upon which the Salmond test was based. Second, the relevance of existing precedent created under the Salmond test is somewhat unclear given the stated intention to move away from the test entirely, not just alter the legal reasoning process at the limits of the test. Finally, the language used in the close-connection test is relatively open-textured. At least on Lord Steyn's formulation, it offers little in way of guidance to legal decision makers other than it must be “fair and just” to impose vicarious liability. In each of these respects, the close-connection test is not dissimilar to the test proposed by the judge in Harrison which was subsequently rejected by the Court of Appeal in Aldred v Nananco Ltd.Footnote ¹⁰⁷

B. Attributes of “Formality”

The evidence of the legal reasoning process engaged in by the English courts when applying the close-connection test is more limited due to the shorter period in which it has been in operation. Examined in terms of Atiyah and Summers’ four attributes of formality, the evidence to hand suggests that the nature of the legal reasoning process conducted by the English courts under the close-connection test has changed in certain respects from that utilised under the Salmond test.

The position with respect to authoritative formality is very similar under both the close-connection and the Salmond tests. Having been formulated and implemented by the House of Lords, the close-connection test has relatively high validity formality notwithstanding the origins of the test can be traced not only to Salmond's textbook, but developments in the Canadian courts. The legal reasoning process encapsulated by the close-connection test also has relatively high rank validity, there being no current legislation which affects its sphere of operation.

The first significant difference between the close-connection and Salmond tests is found when assessing the degree of content formality. It cannot be said that the close-connection test is shaped any more by fiat than the Salmond test. The Lords in Lister did attempt to derive a principle from the existing cases and, whether they succeeded or not, that attempt is sufficient to discount any claim that the close-connection test was shaped by fiat. There is, however, arguably the potential for the close-connection test to produce results that are under or over-inclusive in terms of any substantive reason that might be identified as the basis for introducing that test.

The refusal of the English courts to identify or incorporate substantive reasons underpinning the close-connection test does not, of itself, produce under or over-inclusive results. The refusal is consistent with the English legal system being classified as a “formal” legal system more generally. It does though place the onus on the English courts to find some other way to address the potential for arbitrary results that might arise in the absence of such substantive reasons. As Atiyah and Summers noted, persistent failure to do so puts the English legal system at risk of becoming “formalistic”.Footnote ¹⁰⁸

A similar deficiency in the Salmond test was overcome by expressly incorporating within the operation of the test an analogy with “agency”. Unlike the Salmond test, the close-connection test does not prescribe a process of legal reasoning (reasoning by analogy), but a rule. The rule stipulates that vicarious liability can be imposed where the connection between the employee's conduct and their employment is sufficiently close that it is “fair and just” to impose vicarious liability. It was this stipulation that enabled the Lords in Lister to overcome the limitations of the Salmond test. The advantages of such an open-ended resort to justice were subsequently noted by Lord Dyson in Morrison I:

The potential for such an open-ended resort to justice to produce under or over-inclusive results in terms of any substantive reason identified as the basis for introducing the close-connection test has subsequently been recognised by the Supreme Court. It was this potential that led Lord Reed in Morrison II to refine the approach to be taken by lower courts when applying the test.Footnote ¹¹⁰ Specifically, Lord Reed sought to encourage lower courts to move from a rule-based legal reasoning process to a process of developing the law by analogy with existing cases to ensure that future determinations of the second stage of vicarious liability would be “decided on a basis which is principled and consistent”.Footnote ¹¹¹

Whether introducing a process of reasoning by analogy into the close-connection test can, on its own, reduce the risk of the test producing under or over-inclusive results is doubtful. The process of analogical reasoning suggested by Lord Reed in Morrison II is significantly different to the process of analogical reasoning incorporated into the Salmond test. Under the Salmond test, the broader vicarious liability imposed by reason of an employment relationship is to be determined by analogy with the vicarious liability imposed on a principal who authorises an “agent” (in the broader, non-contractual sense) to commit a tort. No similar basis for drawing an analogy is recognised by Lord Reed in Morrison II. It is therefore more difficult for judges to ascertain which features of the existing precedents might be relevant for the purposes of drawing an analogy when using Lord Reed's revised approach.

It is most likely for this reason that Lord Reed sought to give an example of the types of features present in the precedents that might be relevant for determining the second stage of vicarious liability. Specifically, he noted that the close-connection test had been applied differently in cases of child sexual abuse, the very cases that led to the test being introduced.Footnote ¹¹² In Lord Reed's view, there was a common feature of the child sexual abuse cases that resulted in the close-connection test being satisfied when applied to cases of child sexual abuse. That feature was a conferral of authority by the institution charged with the care of the child to the tortfeasor over the child given that there was the potential for that authority to have been exploited by the tortfeasor in order to engage in the sexual abuse.Footnote ¹¹³

Lord Reed's observation about the child sexual abuse cases is significant. It explains what it is about those cases that prompted the English courts to set aside the Salmond test and adopt the close-connection test, specifically in respect of the deliberate misconduct of an employee. The close-connection test does not, however, apply only to cases of child sexual abuse. It applies to all cases of vicarious liability in England. In most of those cases, such as those that would have previously been viewed as within the core of the Salmond test, there is no such conferral of authority. It cannot even be said that such a conferral of authority is present in all cases of vicarious liability imposed for deliberate misconduct (consider the facts of Morrison I, which has not been overturned and remains good law). It is consequently not clear how lower courts are meant to use this feature of the child sexual abuse cases to reason by analogy in determining whether the second stage of vicarious liability is satisfied in future cases.

It follows that Lord Reed's direction to lower courts to apply the close-connection test by analogy with existing cases does little to reduce the risk of the test producing under or over-inclusive results in terms of any substantive reason that might be identified as the basis for introducing that test. There is insufficient guidance to enable lower courts to ascertain which features of the existing precedents might be relevant for the purposes of drawing an appropriate analogy and in what circumstances. The degree of content formality in the approach of the English courts to legal reasoning under the close-connection test is therefore relatively high.

The high degree of content formality in the close-connection test necessarily impacts the degree of interpretive formality. There is little doubt that, at least initially, the test had a high degree of interpretive formality. It will be recalled that it was the literal interpretation of phrases such as “the principal of social justice” and an “unbroken sequence of events” that led Lord Reed to refine the close-connection test in Morrison II. In Lord Reed's view, such phrases had been treated as critical by the lower courts,Footnote ¹¹⁴ and elevated to a point where their application “would constitute a major change in the law”.Footnote ¹¹⁵ Lord Reed was adamant that no such change had been intended.Footnote ¹¹⁶ Such phrases had instead been taken out of context and interpreted too literally.Footnote ¹¹⁷

At the very least, by highlighting the problem of the close-connection test being interpreted literally and directing the lower courts to focus more on previous cases than pithy phrases, Lord Reed has reduced the chances of the close-connection test being interpreted literally in the future. It is very unlikely, however, in the absence of sufficient guidance being provided to assist lower court judges to make appropriate analogies from existing cases, that the risk has been removed. Consider the phrase “conferral of authority”. Does a hospital have authority over its patients which is then conferred on medical practitioners?Footnote ¹¹⁸ Does a football club confer authority on a scout when bringing junior players to the club's attention?Footnote ¹¹⁹ Without an explanation as to why such a conferral of authority is relevant for the purposes of determining the second stage of vicarious liability more generally, there is the potential for the phrase to be taken out of context. If this occurs, it may be applied to circumstances which cannot be supported by any substantive reasons that might have led to the feature initially being identified as key to the imposition of vicarious liability in the child sexual abuse cases. Without such difficulties being addressed, the degree of interpretive formality under the close-connection test might not be that dissimilar to that which existed at the limits of the Salmond test and ultimately resulted in the Salmond test being replaced.

The increased content formality associated with the close-connection test may also affect the degree of mandatory authority associated with the test. It will be recalled that Atiyah and Summers noted that a high degree of mandatory authority was required for not only an approach to legal reasoning to be considered “formal”, but also for the approach to legal reasoning to be considered “law”.Footnote ¹²⁰ The reduction in mandatory authority comes not from the availability of exclusions or defences to the imposition of vicarious liability, of which there are none, but from the resulting uncertainty surrounding which analogies might be drawn from the existing precedents by lower courts when determining the second stage of vicarious liability. This uncertainty gives lower courts a certain amount of discretion to select an appropriate analogy, thus increasing the capacity of the lower courts to override the close-connection test and impose liability in a way that might not be supported by any substantive reason that might be identified as the basis for introducing that test.

Analysing the approach of the English courts to legal reasoning under the close-connection test using Atiyah and Summer's four attributes of formality shows the approach to be significantly different from that previously adopted under the Salmond test. The freedom with which judges may identify relevant analogies under the close-connection test means that the approach of the English courts when applying the test has a higher degree of content formality and potentially a lower degree of mandatory formality. There is consequently a risk that the close-connection test will produce even more arbitrary results when used to determine the second stage of vicarious liability than the Salmond test which it replaced.