Although employers owe a duty of care to their employees in the event of an incident that causes them harm, the employee has to show that it was foreseeable (among other things) for the employer to be liable. In Benyatov v Credit Suisse (Securities) Europe Ltd, the Court of Appeal held that the duty did not extend to a situation where the employee was convicted of a criminal offence in the course of carrying out their duties.

 

Basic facts

Mr Benyatov, a high-flying employee at Credit Suisse, was involved from 2005 to 2006 in a project advising a company called Enel SpA (Enel) about purchasing a state-owned electricity company in Romania. During a visit to the country in November 2006, he was charged with obtaining confidential information for Enel and kept under house arrest until he was allowed to return to England in August 2007.

Although the bank agreed that he had done nothing wrong and paid for his defence, he was found guilty of the charges in December 2013 and sentenced to ten years imprisonment in absentia.

In October 2013, he was provisionally selected for redundancy and placed on garden leave. In accordance with its regulatory obligations the bank notified the Financial Conduct Authority (FCA) of his conviction. As a result, he was unable to work as a regulated financial professional anywhere.

He lodged proceedings against the bank in early 2018 for loss of earnings suffered as a result of his conviction on two grounds. Firstly, he argued that the bank was in breach of its duty of care towards him by failing to protect him from being convicted in Romania and subsequently failing to ensure he did not incur financial losses as a result (the negligence claim). Secondly, he argued that it was an implied term of his contract that the bank would indemnify him against losses of the kind he had suffered (the indemnity claim).

 

High Court decision

Dismissing the claims, the High Court held that Romania was not regarded as a high-risk country during the relevant period and that the bank could not, therefore, have foreseen what had happened to Mr Benyatov.

Although it was agreed between the parties that there was an implied term in Mr Benyatov’s contract that the bank would indemnify him against some forms of harm suffered in doing his job, this did not extend to a loss of earnings following the acts of a third party and without the need to establish any fault on the part of the bank.

 

Decision of Court of Appeal

Having reviewed the relevant case law, the Court of Appeal held that in order to decide whether the bank had assumed the responsibility of taking care of Mr Benyatov so that he did not incur financial losses, courts needed to take into account several factors, including foreseeability, proximity, fairness, justice and reasonableness. In this case, the crucial factor was foreseeability. As the bank could not have assumed responsibility for a series of events that were not foreseeable, they could not be liable in negligence for his losses.

As for the indemnity claim, the Court rejected the argument that there was a general principle in English law to support the contention that if a person acts on the instruction of another, they are entitled to be indemnified against all losses of any kind as a result of carrying out those actions. It, therefore, also dismissed the second part of his claim.