Vicarious liability

Frederick v Positive Solutions (CA) [2018]

This case involved the law concerning when a business will be vicariously (strictly) liable for the acts of an agent. Most cases involving vicarious liability concern employees so in this respect the case was unusual. The decision in this case is particularly interesting given the previous judgement in the Morrison’s data protection case which we featured back in January [link]. Here the Court of Appeal took a more traditional approach to the scope of vicarious liability.


The claimants (‘C’) had invested in a property development scheme, by way of remortgaging their homes. The development scheme was being organised by W. The remortages were also arranged by W. W was an appointed agent of Positive, a financial services company regulated by the Financial Conduct Authority. Because of his position, W had access to an online portal operated by a bank. W used the portal to arrange the remortgages, based on false information. By so doing, W was able to gain access to funds that the bank would not otherwise have advanced. Some of the monies were used to pay off C's existing mortgages; the balance was advanced to W, misappropriated, and lost in the development scheme.

C sued Positive, claiming that Positive was vicariously liable for W's acts. The matter reached the Court of Appeal on the issue of whether Positive was vicariously liable for W's acts.

The legal policy underlying vicarious liability is based on a recognition that carrying on a business enterprise necessarily involves risks to others. Historically, however, the courts have been less ready to find vicarious liability in cases of employee dishonesty than in cases of simple negligence.


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