LEGAL INFORMATION

AND UPDATE

Will Hong Kong courts extend businesses’ liability for tortious acts of independent contractors?

Extension of vicarious liability in Hong Kong?

In conducting risk assessment, employers are often concerned with their exposure to liability for tortious acts committed by their employees or independent contractors. In the recent case of Tsoi Wing Yuk v Perfect Marble Co Ltd & Anor [2016] HKCU 830, the Hong Kong Court of First Instance sought to extend the scope of such liability by drawing on a recent UK case.

 

The Hong Kong position on vicarious liability

In Hong Kong, employers are generally only liable for employees and not independent contractors. Whether someone is an employee or an independent contractor depends on various factors, such as the parties’ view of their relationship, and the degree of control of the employer over the individual. Prior to the recent Hong Kong case, employers are only liable for tortious acts of employees committed in the course of his/her employment. This is taken to mean that there must be a sufficiently close connection between the employee’s act and his/her employment to render it fair and just to hold the employer vicariously liable.

 

Extension of vicarious liability in the UK

However, the recent UK Supreme Court case of Cox v Ministry of Justice [2016] UKSC 10, extends the scope of vicarious liability, exposing “employers” to liability for tortious acts of independent contractors as well as their employees. The court held that it would be fair, just and reasonable for a defendant to be vicariously liable in tort for the harm caused by the wrongful act or omission of another individual (regardless of whether there is an employment relationship/contract) if:

 

  1. The tortious act would have been committed as a result of activity being taken by the individual on behalf of the defendant;

  2. The individual’s activity is likely to be part of the business activity of the defendant; and

  3. Such wrongful act or omission was a risk induced or created by the defendant by assigning those activities to the individual in question.

 

Application of the UK case in Hong Kong

In Tsoi Wing Yuk v Perfect Marble Co Ltd & Anor, the Hong Kong courts applied the test set out above in determining whether an employer was vicariously liable for the tortious acts of an independent contractor. However, the Court of First Instance recently held in Talat Zahid v Cheung Fat Metal Trading Co Ltd and Others [2017] HKCU 1602 that unless the tortfeasor was engaging in an activity undertaken by him “on behalf of” the defendant employer, the employer would not be vicariously liable. In that case, the court stated that the Cox principles should not apply to cause a principal contractor to be liable for the torts committed by an employee of its sub-contractor. It therefore appears that despite the initial potential for expansion of the scope of vicarious liability in Hong Kong, the courts remain cautious in the application of the Cox test. Nevertheless, businesses should be aware of this UK legal principle and take it into account in risk assessments.

Key takeaways - what this means for “employers” and businesses

  • Businesses in Hong Kong should be aware of the above development in Hong Kong law, particularly when making risk assessments.

  • Although it is unlikely that businesses, would be liable for the tortious acts committed by the employees of its

sub-contractors in Hong Kong, it is uncertain how the principle would apply to the tortious acts of independent contractors.

  • It may be prudent for businesses to take this extension of liability into account when purchasing third party liability insurance.

  • More comprehensive and stringent work safety measures may be implemented to lower risk of liability.

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© Adrian Lau & Yim Lawyers (in association with King and Company)

September 2017 - Legal update