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Employer investigations

06 July 2015

In James Bowen & ors v The Commissioner of Police for the Metropolis [2015] EWHC 1249 (QB) 1 May 2015, the High Court ruled on the conflicting interests that arise during an employer's investigations into claims against it, where those allegations concern its employees. Although no duty of care towards the employees was made out on the facts in this case, the case highlights that employers need to be mindful of their employees' interests when conducting investigations into claims and/or deciding how to defend or settle litigation or regulatory matters. This is because the employer could be held to have breached its duty of care to its employees if it does not defend the claim in a manner consistent with the employees' interests.

The case concerned four police officers' claims against the Metropolitan Police Commissioner (the Commissioner) (their quasi-employer) for the way the Commissioner handled a claim by a suspected terrorist alleging police brutality by those four police officers. The principles are equally applicable in a commercial context.

The suspected terrorist claimed that the Commissioner was vicariously liable for the officers' torts. No separate claim was brought against the officers, nor did the Commissioner seek an indemnity or contribution from the officers.

At the outset of the suspected terrorist's claim, a meeting was held with the Commissioner and his legal advisers, which the officers attended as witnesses to the claim. The officers alleged that during this meeting they were informed that the claims would be "vigorously defended", that if "special measures" to protect the officers' identity were not forthcoming then they would not be required to give evidence and that the Commissioner's legal team was also acting for and in the officers' interests.

Later, the Commissioner's legal team informed the officers that they were no longer instructed to protect the
officers' interests. The Commissioner then proceeded to settle the claim with the suspected terrorist and also provided an admission of liability and an apology for the "gratuitous violence".

Disciplinary charges were brought against the officers near the time of the alleged event with the suspected terrorist, but these were dismissed. After the Commissioner settled the matter with the suspected terrorist, criminal charges were brought against the officers, but a jury acquitted the officers after video-footage came to light which largely supported the officers' version of events.

The officers' claim against the Commissioner

The officers sued the Commissioner for breach of contract and for negligence, alleging that the Commissioner had failed to conduct a competent defence to the suspected terrorist's claim and that he had failed to explain why his legal team had ceased to represent their interests. The officers alleged that a duty of care arose and it was foreseeable that, in the event of breach, the officers might suffer loss and damage to their health.

Jay J dismissed the claims.

Did the retainer between the Commissioner and his legal advisers extend to protecting the
officers' interests?

No, the judge held that a decisive factor here was that the officers were not parties to the underlying claim brought by the suspected terrorist and therefore this counted against the existence of an express or implied retainer. Also, the officers attended meetings with the legal team as witnesses, not as clients. Although the outcome of the claim by the suspected terrorist would impact on the officers' reputations, that in itself was not a reason for implying a contractual nexus between the officers and the Commissioner's legal team. In the absence of an express contract of retainer, no contractual nexus existed.

Was it fair, just and reasonable to impose a duty of care on the Commissioner?

No, it was not fair, just and reasonable to impose a duty of care on the Commissioner to the officers in respect of the way in which he pursued the litigation. The officers were not parties to the claim by the suspected terrorist, the Commissioner's lawyers owed a sole duty to the Commissioner, and the Commissioner himself had a "duty" to protect his own interests.

Further, the psychiatric injury alleged by the officers was not made out, in any case. It was foreseeable that anger and distress may have resulted from the manner in which the Commissioner conducted the claim (eg settling the claim, providing an admission of liability and an apology), but not psychiatric injury (as no special vulnerability was pleaded).

Had the officers relied on assurances that their interests would be protected?

No, the officers had no direct interest in the litigation and therefore the comment made in the first meeting that the legal team would protect the officers' interest was not enough to prove reliance. The officers claimed that if they had had a timely warning that their interests were no longer being protected by the Commissioner's legal team, they may have sought joinder as parties. The judge dismissed this as "quite fanciful".

COMMENT

This case serves as a caution to other employers conducting investigations, such as into alleged fraud or regulatory investigations. Although the officers' claims were dismissed, it is clear that employers need to be mindful of their employees' interests when conducting investigations and litigation into claims concerning their employees. This is because the employer could be held to have breached its duty of care to its employees if they do not defend the claim in a manner consistent with the employees' interests. This will be particularly so if the employee is specifically named in the litigation claims (such as a colleague's discrimination claim) or by the FCA in a regulatory investigation.

Companies are advised that "Upjohn" (or Corporate Miranda) warnings should be given at the start of interviews with employees in connection with investigations. Upjohn warnings are where the legal advisers make it clear that they are representing the company and its interests and not the employee or their interests. However, this type of formal warning at the outset of an interview risks unsettling the employee and he or she may decide to withhold information or minimise disclosure.

The Upjohn warning often leads to employees seeking to protect their own interests, such as requesting separate representation, and asking for them to be present at interviews and meetings held in connection with an investigation. However, mindful of the points raised in this case, an employee may also seek to protect their interests further before proceeding with the investigation. This could include employees trying to agree an indemnity agreement with the employer, requiring it to search for evidence in support of the employee's version of events or to reach agreement on the form of any public statement made about the matter.‚Äč