Drawing a line in the sand on vicarious liability

Introduction

It is fair to characterise the principle of vicarious liability as an intricate and dynamic concept. Although common law practitioners have the benefit of a myriad of case law and commentary to understand its limits and how it applies in every day practice, those very sources have historically acknowledged the principle is complex, often misunderstood and mischaracterised, and perhaps even incapable of plain delineation.

The High Court of Australia’s judgment in CCIG Investment Pty Ltd v Schokman [2023] HCA 21 (Schokman) guides practitioners toward clarity in respect of the doctrine of vicarious liability. In this article, we refresh practitioners’ understanding of the High Court’s seminal decision on vicarious liability in Prince Alfred College Incorporated v ADC [2016] 28 CLR 134 (Prince Alfred), we outline a recent application of the principles enunciated therein, and we turn to the practical implications of the High Court’s most recent statement of principle in Schokman. We conclude by offering our key takeaways for practitioners in personal injuries litigation.

Prince Alfred College Incorporated v ADC [2016] 258 CLR 134

In Prince Alfred, the High Court ultimately did not determine the question of vicarious liability due to unanimously refusing an extension of time on the facts of the respondent’s case. However, the Court considered the correct approach to determining the question of vicarious liability generally, particularly in cases involving intentional or criminal wrongdoing or other tortious conduct. Prior to the decision in Prince Alfred in 2016, the law as to an employer’s vicarious liability for the wrongful acts of its employees was unclear.

The majority in Prince Alfred considered preceding authorities including New South Wales v Lepore.¹In Lepore, the majority held vicarious liability was open to be established in circumstances where a student was abused by his teacher, but failed to agree on a common approach vis-à-vis the precise application of the principle.

Prince Alfred cited and approved the “orthodox approach” when deciding the question of vicarious liability – that is, to consider whether the approach(es) taken in decided cases furnish a solution to the present case, in the sense they offer an approach “relevant” to the facts at hand. The overarching inquiry, it was said, was whether the alleged wrongdoing was connected to the alleged wrongdoer’s employment such that a sufficient nexus was established and called for the imposition of vicarious liability. Comparable cases may involve, and therefore call for consideration of, actions undertaken otherwise than in furtherance of the employer’s interests or otherwise than with the employer’s express or implied authority.

The majority in Prince Alfred went on to articulate and approve the “relevant approach”² when undertaking the nexus analysis in cases involving institutional sexual abuse of the kind alleged on the facts before it. That approach called for consideration as to whether the wrongdoer was, at all relevant times, assigned any special role or placed in any special position vis-à-vis the victim,³ such that the wrongdoer was afforded a sense of authority, power, trust, control or some other ability to achieve intimacy with the victim.⁴

The High Court emphasised the importance of having particular regard to whether the nature and terms of the subject employment afforded the wrongdoer the occasion for committing the wrongful act (c.f. a mere opportunity). The Court confirmed where employment merely creates an opportunity for the wrongdoing, a sufficient nexus will not be established. On the facts of Prince Alfred, the enquiry was accordingly whether the role of housemaster had placed the alleged wrongdoer in a position of power and intimacy vis-à-vis his alleged victim(s), such that the performance of his role effectively presented him with the “occasion” to commit the wrongful acts in question.

As noted above, the High Court ultimately did not determine the question of vicarious liability given it was not required to do so. Though, in undertaking the exercise of considering the authorities before it and emphasising the importance of the ‘occasion versus opportunity’ analysis, the High Court provided useful direction as to the salient factors required to establish vicarious liability for intentional torts and criminal wrongdoing.

Garrett v VWA [2023] VSCA 144

The Supreme Court of Victoria, Court of Appeal’s recent decision in Garrett offers a useful application of the analyses endorsed by the High Court in Prince Alfred. It is of obvious and particular relevance to those practicing in the context of workplace injuries, and significant in having closely preceded the High Court’s judgment in Schokman.

In Garrett, the Court of Appeal found an employer was not vicariously liable for the criminal wrongdoing of its employee, who was alleged to have raised a gun at the appellant in the course of their employment as armed security officers. Despite the possession of a loaded firearm falling squarely within the scope of their employment, the Court determined there was an insufficient nexus between the wrongdoer’s act of raising a gun at the appellant and the agreed terms of his and the appellant’s employment.

At [68], their Honours helpfully summarised the principles relevant to determining the question of vicarious liability as it relates to criminal wrongdoing of an employee. Importantly, their Honours characterised the ‘opportunity versus occasion’ question as a critical test relevant to the determination, and their Honours were careful to note that question derived originally from the judgment of Dixon J in Deatons v Flew.⁵ Given Deatons preceded Prince Alfred and did not concern a comparable scenario of institutional abuse, their Honours confirmed the relevance of that question ought not to be confined to matters involving institutional abuse and other sexual assaults.

Whilst the Court of Appeal in Garrett accepted the relevant terms and nature of the employment did indeed give rise to a relationship involving trust, mutual reliance and a degree of intimacy/power between the wrongdoer and appellant, the Court distinguished that relationship from relationships of the kind evident in Prince Alfred. Their Honours characterised the wrongdoing as having been “entirely disconnected from the role that [the wrongdoer] was required to perform as a security guard”,⁶ in the sense the wrongdoing lacked a real connection with the duties entrusted in him.

Following Garret, the High Court of Australia offered its first determination and statement of principle on vicarious liability since Prince Alfred.

CCIG Investments Pty Ltd v Schokman [2023] HCA 21

Background

The respondent, Mr Schokman (the worker) was employed as a Food and Beverage Supervisor and Restaurant Manager by the appellant, trading as Daydream Island Resort and Spa (the employer). He performed his duties at the employer’s premises on Whitsunday Islands.

The worker’s contract of employment (the employment contract) relevantly contained a clause providing for his accommodation on the Whitsunday Islands. It was agreed between the parties, pursuant to the employment contract, accommodation would be “made available” to the worker at an ostensibly fixed and weekly rental fee. Importantly, the contract of employment stated the worker’s accommodation would be shared with a co-worker similarly engaged by the employer. There was no dispute the worker executed and agreed to the terms contained in the employment contract.

Following the worker’s shift on 6 November 2016, he attended a staff bar attended by other co-workers for a period of time. His flatmate, Mr Hewett, attended shortly thereafter. It was accepted neither the worker nor Mr Hewett were ‘on the clock’ at this time.

The worker left the bar at approximately 1:00am on 7 November 2016, and returned to his and Mr Hewett’s shared accommodation. Mr Hewett returned to their shared accommodation at approximately 3:00am. It was accepted Mr Hewett was intoxicated on his return. The worker was in bed, and was dipping in and out of sleep. In those early hours of 7 November 2016, the worker was awoken in a distressed state by Mr Hewett standing over his bed and urinating on him (the urination event). The worker claimed to suffer a cataplectic attack occasioning loss and damage as a result of the urination event. That causal link was accepted.

Decision at trial

The worker issued proceedings against the employer in the Supreme Court of Queensland. He relied on two alternative bases of liability. Namely:

That the employer breached its duty of care owed to him as an employee (i.e. direct liability); and
Further or alternatively, that the employer was vicariously liable for Mr Hewett’s negligent act, being the urination event.

Both bases of liability failed at first instance. The trial judge rejected the worker’s contentions as to direct liability, and held the urination event did not occur within the course of the worker’s employment such as to attract a finding of vicarious liability. The Supreme Court characterised the urination event as “bizarre conduct”,⁷ the risk of which the employer was not on notice, and otherwise found the subject employment could not be said to have given rise to anything more than an opportunity for Mr Hewett to engage in the impugned act.

Decision on appeal

The worker appealed the trial judge’s decision on the issue of vicarious liability. The Supreme Court of Queensland, Court of Appeal reversed the trial judge’s decision and found in the worker’s favour on the further or alternative ground. McMurdo JA, with whom Fraser and Mullins JJA agreed, found inter alia:

The circumstances of the worker’s case, and in particular the nature of the impugned conduct and its relationship with the subject employment, were sufficiently analogous to Bugge v Brown,⁸and
Accordingly, Mr Hewett could not be characterised as a “stranger”⁹ to his employment at the time of the impugned conduct. This created the requisite connection between the subject employment and the conduct calling for imposition of liability.

In essence, the Court of Appeal found a requisite nexus between Mr Hewett’s tortious act and his and the worker’s employment by focusing primarily on the fact of their shared accommodation.

Appeal to the High Court of Australia

The High Court of Australia granted the employer special leave to appeal the Supreme Court of Queensland, Court of Appeal’s findings. The hearing proceeded before the full bench in April 2023.

The High Court unanimously found in the employer’s favour by way of three separate judgments delivered on 2 August 2023. The majority judgment was delivered by Kiefel CJ, Gageler, Gordon and Jagot JJ. Their Honours found:

The most that could be said to arise from the shared accommodation was physical proximity between the worker and Mr Hewett. That proximity provided an opportunity for Mr Hewett’s “drunken actions”. But, the fact of mere opportunity arising from the employment at hand was insufficient to establish the required connection with employment.¹⁰
Contrary to the worker’s submissions, the facts and circumstances were not analogous to those in Bugge. In that connection, their Honours noted nothing in the case before it pointed to the “drunken act” in question being authorised, required by, or otherwise incidental to the employment of the worker and Mr Hewett. In truth, the urination event had no real connection to the nature and terms of their employment, which employment could not be said to encompass every human and bodily act such as urination, breathing, and the like simply by reason of the accommodation being employer-authorised.¹¹

The joint judgment of their Honours Edelman and Gordon JJ delineated the various and distinguishable circumstances in which the principle of vicarious liability have historically been, and ought properly to be, applied.¹²Their Honours noted, inter alia:

The use of vicarious liability as a broad concept extending to various areas of law where liability arises, “despite the employer not itself being at fault”, has led to vicarious liability becoming an “unstable principle”. Unless the different areas of law with which “vicarious liability” are concerned are identified and kept distinct, courts may be driven to absurd and distorted reasoning.
In that connection, vicarious liability is a term commonly employed in workplace injury contexts to describe (a) scenarios where a person is, in broad terms, acting as an apparent or ostensible agent for an employer; (b) scenarios where the liability of an employer is sought to be attributed to their employer, on the basis the employee’s acts were authorised by the employer; and (c) scenarios where it is contended an employer impermissibly delegated its duty of care to an employee, such that the employee’s own breach of duty is sheeted home to the employer.
The scenario described at (a) is properly characterised as concerning “vicarious acts”, rather than the question of vicarious responsibility or “liability”.Thus, only the scenarios described at (b) and (c) are those in which the phrase and principle of “vicarious liability” are truly apposite and squarely applicable.
The facts of the present case fall within the category of scenario (b).The critical enquiry was the identification of the relevant act(s), at the appropriate level of generality, contended to have been the subject of the express or implied authorisation of the employer and contended to have thereby given rise to a relevant “occasion” and employment nexus.
Here, the relevant act was that of urination.The relevant act was not, as contended by the worker, the act of residing in shared accommodation.The relevant act was not authorised by the employer or employment, and accordingly the employment did not provide Mr Hewett with the occasion (c.f. a mere opportunity) to engage in the urination event.
The employer’s power to monitor employees “did not extend to surveillance of Mr Hewett during his leisure time or in his personal accommodation”.His employment duties included to take reasonable care that his “acts or omissions do not adversely affect the health and safety of other persons” and not to “attend work having consumed alcohol or drugs”.Those duties were only engaged during established hours of employment; not within employees’ leisure time.

Finally, Gleeson J made particular note and confirmed the importance of analysing whether the wrongdoer took advantage of his employment position vis-à-vis the injured employee in commissioning the wrongdoing.¹³

Implications

Synthesising the High Court of Australia’s guidance in Prince Alfred with (a) judicial consideration and subsequent application of same; and (b) the High Court’s most recent statement of principle in Schokman, we consider there is now additional clarity - ‘a line drawn in the sand’ - with respect to vicarious liability. Our key takeaways follow:

Previously, vicarious liability was a concept often misunderstood. The combined effect of the authorities allow practitioners in this area to clarify the manner in which a connection between a criminal or intentional tort and employment can be established or refuted, as that connection relates to a finding of vicarious liability.
The “relevant approach” adopted by the High Court in Prince Alfred allows practitioners to identify whether employers are exposed to a finding of vicarious liability for the criminal or intentionally tortious acts of its employees. It remains necessary to consider whether a special role was assigned to the wrongdoer and to analyse the position in which that employee is thereby placed vis-à-vis the victim.Although each case is to be assessed on its own unique facts, Schokman suggests that mere physical proximity created by and inherent in employment is insufficient to create a relevant “occasion” for the impugned act.
The decision in Prince Alfred accordingly remains of special relevance to organisations that care for children and other vulnerable persons in situations where there is conferred an ability to achieve intimacy. Such organisations may include sporting clubs, youth camps and religious institutions. Reasonable mechanisms ought to be adopted to ameliorate the risk of an ‘occasion’ arising for the commissioning of a criminal or intentionally tortious act. Consider the reasonableness and effectiveness of appropriate supervision of those upon whom special power is conferred.
While in Garret the ‘opportunity’ for the wrongful act arose from employment, it did not provide the ‘occasion’ for the act.The security guard’s actions were of a kind completely disconnected from his role. Scope of employment duties and the foreseeability of risk must be considered in circumstances where the conduct in question was criminal or intentionally tortious and not tolerated or encouraged by the employer, even in circumstances where tools inherent in the role (e.g. a firearm) were critical to the commissioning of the wrongdoing.
Schokman confirms that whether a criminal or intentional tort was committed within the scope of employment will ultimately depend on the facts and circumstances of each case and whether the nature of employment has provided the wrongdoer with the occasion to commit the act.Schokman tells us that act ought to be defined at a rather precise level of generality.Bizarre and unexpected acts, appearing totally divorced from the nature and terms of employment, are unlikely to be considered connected to employment in the relevant sense.This analysis might be viewed as being of particular relevance to injuries alleged to have occurred in industries giving rise to employer-authorised accommodation and ‘free leisure’ time.

Endnotes

[2003] 212 CLR 511 (“Lepore”).
Prince Alfred Incorporated v ADC [2016] 258 CLR 134, 135.
Ibid.
Ibid.
(1949) 79 CLR 370 (“Deatons”).
Garrett v VWA [2023] VSCA 144 at [78].
Schokman v CCIG Investments Pty Ltd [2021] QSC 120 At [138].
(1919) 26 CLR 110 (“Bugge”). In Bugge, the respondent employer supplied an employee with uncooked meat. That employee cooked the meat close to where he was working, despite the respondent specifically instructing him not to. The employee was careless in tending to the fire, and as a result, the fire escaped and caused damage to a neighbour’s land. The court held the employer vicariously liable for the damage caused by the employee’s negligence, as the employee was acting within the course of his employment, particularly in the sense he had performed an authorised act in a merely improper mode.
Schokman v CCIG Investments Pty Ltd [2022] QCA 38 at [42].
CCIG Investments Pty Ltd v Schokman [2023] HCA 21 at [37].
Ibid at [46].
Ibid at [87-89].
Ibid at [95].