ABC v Huntercombe (no.12) Limited and others
| Court | Court of Appeal (Civil Division) |
| Judges | Lord Justice Bean, Vice President of the Court of Appeal (Civil Division), Lord Justice Coulson and Sir Launcelot Henderson |
| Hearing | 22 July 2026 |
| Judgment | 8 September 2026 |
| Appellant | ABC, placed at Huntercombe Hospital, Maidenhead, in 2018 and 2019 |
| Respondents | Huntercombe (no.12) Limited, the former operator of the hospital, in liquidation; Active Young People Limited, the transferee; and two consultant psychiatrists employed by each in turn |
| Appeal from | The King's Bench Division, Manchester District Registry, His Honour Judge Bird sitting as a High Court Judge, [2025] EWHC 1000 (KB), judgment of 24 April 2025, on preliminary issues |
| Case reference | CA-2025-002878 |
| Matter | Whether Regulation 4(2)(a) of the 2006 Transfer of Undertakings (Protection of Employment) Regulations transfers to the transferee the transferor's vicarious liability to a third party for the acts and omissions of employees before the transfer |
| Outcome | Appeal dismissed. Vicarious liability to a third party does not pass on a TUPE transfer |
Summary
ABC was placed at a privately run psychiatric hospital for four months in 2018 and 2019. She says she was abused by staff and restrained on over 200 occasions. In about March 2021 the hospital business passed from Huntercombe to Active Young People Limited under a TUPE transfer. Huntercombe is now in liquidation with a deductible of £250,000 a claim on its public liability cover. More than fifty similar claims wait behind this one.
ABC said Huntercombe's vicarious liability for the doctors' conduct was a liability in connection with their contracts of employment and so passed to the transferee under Regulation 4(2)(a). The transferee said the Regulations protect employees' rights, and a third party's claim is not one of them. The judge agreed, and the Court of Appeal has dismissed the appeal.
Background and facts
Parliament chose not to make transferor and transferee jointly and severally liable under the 2006 Regulations, so a liability either passes and leaves the transferor, or stays and never reaches the transferee. Regulation 4(2)(a) transfers all the transferor's rights, powers, duties and liabilities under or in connection with the contract of employment.
His Honour Judge Bird held on preliminary issues that vicarious liability for the employees' alleged torts and human rights breaches did not pass. Had it passed, he would have held that Huntercombe's right to indemnity from its insurers went with it. Huntercombe and the two doctors took no side on appeal.
The issue
Whether the words in connection with any such contract in Regulation 4(2)(a), read with the Directive, reach an employer's secondary liability to an outsider for the pre-transfer acts and omissions of its staff.
The decision
Lord Justice Coulson gave the only reasoned judgment. He started with the Acquired Rights Directive, because legislation implementing a Directive is construed to achieve its purpose, and that purpose is to safeguard the rights of employees when their employer changes. ABC's counsel accepted that an employee has no right against the transferor in respect of the transferor's vicarious liability to an outsider.
An employee has no right to his employer being vicariously liable for his acts and omissions. The vicarious liability of an employer to a third party (who suffers loss and damage as a result of the acts and omissions of the employee) is a secondary liability, parasitic always on the direct liability of the employee to the third party.Lord Justice Coulson, paragraph 44
Nor does vicarious liability protect the employee in practice. Under Lister v Romford Ice the employer can recover a full indemnity from the negligent employee, a principle the Supreme Court restated in Lifestyle Equities v Ahmed. The one county court decision the other way, Doane v Wimbledon FC, never grappled with that.
The phrase in connection with is one of the widest import, as the Court of Appeal said of an arbitration clause in Ashville Investments v Elmer Contractors, but it takes its reach from the purpose of the scheme. Regulation 11 obliges the transferor to hand over employee liability information, including claims brought or threatened by employees, with sanctions under Regulation 12 if it does not. Neither the Directive nor the Regulations mention claims by outsiders.
If Parliament had intended that a transferee would be liable for third party claims for vicarious liability, the same or similar provisions to Regulations 11 and 12 would have been necessary in order to protect the transferee. Otherwise the transferee has no idea what it is taking on.Lord Justice Coulson, paragraph 53
The transferee had no right to know that fifty-odd claims, possibly worth millions, existed when it agreed to the transfer. Fixing it with them would need clear words. There are none. Baker v British Gas and Bernadone v Pall Mall transferred liabilities the employer owed to its own injured employees, which is what Regulation 11 catches. The judge had framed the test as a direct liability owed to an employee; the court restated the holding without that word.
In my view, it is better simply to say that the liabilities referred to in Regulation 4(2)(a) do not extend to the transferor's vicarious liability to third parties for the acts and omissions of employees prior to transfer.Lord Justice Coulson, paragraph 73
Lord Justice Bean and Sir Launcelot Henderson agreed and the appeal was dismissed. Because the insurance question did not arise on appeal, the judge's view that an insurance right would follow a transferred liability stands only as his view below. In the court's words the claim was opportunistic: without a transfer she never asked for, there was no route to the transferee.
Practical implications
Contractor insolvency is where this bites. When an administrator sells a contractor's business as a going concern, or a client re-lets a maintenance contract and the workforce moves across, the buyer takes the staff and what those staff could claim against the old employer, such as an unsafe system of work or an injury caused by a colleague. It does not take the old employer's exposure to outsiders for what the staff did before the transfer.
The same reasoning cuts against the claimant. If the only solvent target is the company that bought the insolvent contractor's business, a vicarious liability claim founded on TUPE will not get there. Liability stays with the shell and its insurers, and a large deductible can swallow the claim. Anything the buyer agrees to take on in the sale contract is a different question, which this decision does not address.
Practice points
- On a TUPE transfer the transferee inherits liabilities the transferor owed to the transferring employees. It does not inherit the transferor's vicarious liability to outsiders for the employees' earlier acts and omissions.
- Do not build a claim against a solvent successor on Regulation 4(2)(a) alone. If the wrongdoer's old employer is insolvent, the vicarious liability route ends there.
- Claims by employees, such as an unsafe system of work or an injury caused by a colleague, do transfer. Ask for the Regulation 11 employee liability information and read it before completion.
- The phrase in connection with is wide but not unlimited. Its reach is fixed by the purpose of the instrument it sits in, a point the court drew from earlier cases on an arbitration clause and on other statutes.
- The insurance question was not decided on appeal. Had the liability transferred, the judge below would have transferred the transferor's right against its insurers too; the Court of Appeal did not need to reach it.
- A claim that only works because of a transfer unconnected with the claimant will be treated as opportunistic. Plead the direct claim against the individual employee and the old employer, and check the old employer's insurance position early.