High Court of Australia – Reining in Vicarious Liability

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By David Slatyer, Partner, and Edward Cope, Associate

The High Court of Australia recently reviewed and clarified the law of vicarious liability, and in doing so overturned a decision of the Queensland Court of Appeal; CCIG Investments Pty Ltd v Schokman[1]

While the factual circumstances are likely to be uncommon, the High Court’s comments assist not only in applying the concept of vicarious liability in an employment setting, but in a broader context of distinguishing other legal concepts which are often conflated with vicarious liability.

In this case, the respondent, Mr Schokman, had been employed by the appellant, CCIG at Daydream Island Resort and Spa as a beverage supervisor.  Given the remoteness of the island, Mr Schokman’s employment contract required him to reside in shared accommodation organised by CCIG.  At some point in late 2016, a new CCIG employee, Mr Hewett, moved in and shared Ms Schokman’s accommodation with him.  The terms of Mr Hewet’s employment contract, in so far as they related to compulsory housing, were the same as Mr Schokman’s.

In the early morning of 7 November 2016, Mr Schokman woke to Mr Hewett, who had been out drinking and was heavily intoxicated, urinating on him, with Mr Schokman inhaling the urine and choking.  As a result of this incident, Mr Schokman suffered a cataplectic attack.

Mr Schokman brought proceedings against CCIG, at first instance on the basis of breach of a duty of care owed to him as an employee, or alternatively on the basis that CCIG was vicariously liable as employer for the negligence of its employee.  At trial, both claims failed.

The claim for vicarious liability was the subject of an appeal to the Court of Appeal (by Mr Schokman), and later to the High Court (by CCIG).  The Queensland Court of Appeal allowed Mr Schokman’s appeal on the basis that Mr Hewett was occupying the room with Mr Schokman as an employee pursuant to, and under the obligations of, his employment contract.  It followed that there was the requisite connection between the employment and the employee’s wrongful actions.  Unsurprisingly, CCIG appealed to the High Court.

The plurality judgment of the High Court, delivered by Kiefel CJ, and Galegar, Gordon and Jagot JJ, allowed the appeal and found that no vicarious liability attached to Mr Hewett’s actions.  In doing so, they distinguished between the scenario where employment provides no more than the “opportunity” for the employee’s wrongful act to take place, from the scenario where the employee is placed in a “special position” by reason of the employment so that the employment gives the “occasion” for the wrongful act.

In particular, their Honours distinguished Mr Schokman’s case from Prince Alfred College Inc v ADC[2] (Prince Alfred College), which related to vicarious liability of PAC for sexual abuse perpetrated by its employee housemaster against a boarder whom the housemaster had complete supervision and control of.  Unlike the housemaster, here Mr Hewett was not assigned any special role concerning Mr Schokman, and no part of what Mr Hewett was employed to do was required to be done in the accommodation.  The most that could be said to arise from the circumstance of shared accommodation was that it created physical proximity between the two men (i.e. the “opportunity” only, for the wrongful act).

Their Honours also distinguished between Mr Schokman’s case and an earlier decision of the High Court in Bugge v Brown (Bugge),[3] where the lighting of a fire by an employee to cook his midday meal (albeit in a different location than instructed) was itself a requirement of, and authorised by, his employment.  By contrast, Mr Hewett could only be said to be acting in accordance with his employment contract by sharing the accommodation with Mr Schokman.  Nothing in Mr Schokman’s case pointed towards the drunken act of Mr Hewett being authorised or in any way required by, or being incidental to, his employment; the act had no real connection to the employment.  Further, unlike the employee in Bugge, Hewett was not on a true “break” from his employment duties when the incident occurred.  The functional, geographical and temporal aspects of Mr Hewett’s course or scope of employment were absent from the incident.

There were also interesting observations made by Edelman and Steward JJ in a separate judgment.  Their Honours noted that three distinct areas of law have been conflated under the term “vicarious liability”, namely:

  • agency (primary) liability, where the acts of an employee/agent are attributed to the employer/principal on the basis that they were part of a joint enterprise, or procured, authorised (including ostensibly), or ratified by the employer/principal;
  • true” vicarious (secondary) liability, which is an attribution of liability to an employer in respect of wrongful acts of their employee, whether or not those acts were authorised. This type of liability requires the wrongful act to be sufficiently connected to the employee’s authorised duties or powers such that the act could be said to have been performed in the “course of employment”; and
  • breach of a non-delegable duty, where the nature of the relationship of proximity gives rise to a duty of care of a special and “more stringent” kind, namely a duty to ensure that reasonable care is taken by others.

As to the second and third categories, their Honours noted that common factors relied on in establishing a non-delegable duty, such as care, supervision and control, overlapped with some of the factors set out by the High Court in Prince Alfred College in supporting a finding of vicarious liability in respect of sexual abuse, including “authority, power, trust, control and the ability to achieve intimacy with the victim”.  In this regard, their Honours noted the comments of legal writers, Beuermann and Foster, that “it might now be argued that imposing liability for breach of a non-delegable duty of care in cases of child sexual abuse is more appropriate than vicarious liability”.  Their Honours did not, however, conclude on whether this statement was correct.  Their Honours ultimately held that Schokman’s appeal could only relate to the second category, “true” vicarious liability, and that the circumstances of Hewett’s wrongful act, being urination, were not sufficiently or closely connected with any authorised powers or duties of Hewett’s employment.

Otherwise, Gleeson J provided useful observations about the (sometimes difficult) distinction between employment as the “occasion” for an employee’s unauthorised act vs employment as a mere “opportunity” for an unauthorised act.  The former occurs where the employee’s wrongful act involves taking advantage of some aspect of their role to commit the wrongful act; whereas the latter might be more likely where a wrongful act is spontaneous.  However, a “but for” relationship between a person’s employment and their tortious conduct is not sufficient for vicarious liability.  In this regard, the act of a barmaid throwing a beer glass at a patron, has been found to be not incidental to the performance of her duties, and so was not within the course of her employment.[4]  Gleeson J found that Mr Hewett’s employment created neither an opportunity nor an occasion for his drunken accident.  Neither the employment nor the accommodation created anything more than the context or the location in which the tort was committed.

This decision confirms the need for a sufficient connection between the employment and the employee’s wrongful act, to establish vicarious liability.  There are often challenges in that analysis on the facts of a given case (but not on the facts of this case according to the High Court).

It also clarifies many misconceptions of vicarious liability, particularly as to the distinction between employment as the “occasion” vs the mere “opportunity” for the wrongful act; the relevant functional, geographical and temporal aspects of the employee’s course or scope of employment when determining vicarious liability; and the distinction between agency liability, “true” vicarious liability and non-delegable duties of care.

[1] [2023] HCA 21.

[2] (2016) 258 CLR 134 at 148-149 [40]-[41].

[3] (1919) 26 CLR 110, cited in Schokman v CCIG Investments Pty Ltd (2022) 10 QR 310 at 326-327 [42].

[4] See Deatons Pty Ltd v Flew (1949) 79 CLR 370 at 379-381.

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