Vicarious liability is a complex area of law to navigate as it imposes liability upon a party for a wrong committed by another. The rationale behind this principle was explained by Isaacs J in Bugge v Bugge as follows:-[1]
“The principle upon which the responsibility rests is that it is more just to make the person who has entrusted his servant with the power of acting in his business responsible for the injury occasioned to another in the course of so acting, than that the other and entirely innocent party should be left to bear the loss.”
Essentially, if vicarious liability can be established, it permits a plaintiff to bring a claim against another defendant who has “deeper pockets”.
Recently, the legal fraternity was left in confusion after the Queensland Court of Appeal’s decision in Shockman v CCIG Investments Pty Ltd held that an employer was liable for the conduct of an employee who had urinated on a co-worker in shared accommodation, in the middle of the night and outside of work hours.[2] The case was the subject of an appeal to the High Court, which unanimously overturned the decision, and fortunately restored a degree of certainty in this complex area of law.
In the High Court’s judgment, it was said:-[3]
“By sinking into the “dogmatic slumber” of using vicarious liability as a broad concept that extends to various different areas of law where liability arises “despite the employer not itself being at fault”, courts have created in vicarious liability an “unstable principle”. Unless the different areas of law with which “vicarious liability” is concerned are identified and kept distinct, courts may be driven to absurd and distorted reasoning.”
With significant contention around how this principle “works in practice”, it is important for practitioners in the personal injuries field to understand the various situations when vicarious liability may apply and which distinct area of vicarious liability the situation falls within. This article will attempt to get into the “weeds” of vicarious liability and help lawyers make some sense of the principle.
Developments in the Law
One of the earliest cases which considered vicarious liability was Deatons Pty Ltd v Flew,[4] which involved a claim arising out of an incident where a bartender had thrown a glass at a patron, causing injury. The issue for the Court was whether the employer should be liable for the conduct of the bartender. In those circumstances, Dixon J held that the employer should not be liable for the bartender’s act, because the employee was acting for her own purposes and outside of the authority in which was placed on her as a representative of the employer.
Since then, there have been significant developments in the law.
In Sweeney v Boylan Nominees Pty Ltd,[5] the High Court set out some basis propositions where it was said:-[6]
“First, there is the distinction between employees (for whose conduct the employer will generally be vicariously liable) and independent contractors (for whose conduct the person engaging the contractor will generally not be vicariously liable). Secondly, there is the importance which is attached to the course of employment.”
This decision established two key elements that are required in order for vicarious liability to be found:-
- That the negligent person was, in substance, an employee of the defendant; and
- The tort was committed in the course of the employment or with a sufficient connection to the employment.
Whether the “at-fault” person is an independent contractor or an employee was considered in Hollis v Vabu.[7] In this case, the defendant had engaged a bicycle courier on what was purported to be an independent contractor basis. A person had stepped onto a footpath and was struck by the bicycle courier. The plaintiff suffered permanent injury and submitted the employer should be vicariously liable for the conduct of the bicycle courier. The Court considered (when viewed “as a practical matter”):[8]
- Was the courier running their own business or enterprise; and
- Did the courier have independence in the conduct of their operations.
As a result, despite being said to be an independent contractor, the Court found that the courier was in fact an employee of the defendant for the following reasons:-[9]
- A bike courier needed no skill or qualification and would have been unable to make an independent career as a freelancer;
- The couriers have little control over the manner they performed their work;
- Their hours were fixed;
- They could not refuse work;
- They couldn’t delegate their tasks;
- They couldn’t have worked for other courier companies;
- The defendant’s couriers all wore identifying clothing;
- The defendant controlled all aspects of the courier’s remuneration and their annual leave;
- The only tool provided by the courier was their bike;
- The defendant maintained control over incidental and collateral matters.
This case demonstrates that employers may still be held liable for the actions of independent contractors in particular circumstances. Having said that, more recent judicial decisions indicate that the terms in the employment contract will usually prevail, so long as it is not illegal and can be applied without ambiguity.[10] As a result, it seems the Court’s should not interfere and substitute a construct of how the relationship has seemed to evolve (in the absence of estoppel or waiver).[11] This is an important reminder for lawyers in practice to read the terms within a contractual arrangement to determine whether vicarious liability may be attributed to an employer – particularly when someone is working as an independent contractor ( according to contractual terms).
Criminal Cases
As a general proposition, courts have been reluctant to find that an employer can be liable for the criminal conduct of an employee. There have, however, been circumstances in which that has arisen.
For example, in Prince Alfred College Incorporated v ADC,[12] the plaintiff was the victim of sexual abuse in 1962 at his school. The abuse occurred at the hands of his boarding master. The relevant limitation period expired when the victim was 24 years old. It was not until the 1990’s when the victim’s son began attending the same school that he began to suffer from worsening PTSD symptoms. By 1997 he had a meeting with the school at which the prospect of litigation was raised but he took a small financial offer of assistance. After that time his condition worsened.
The plaintiff’s claim was dismissed at first instance on the basis that liability had not been established and that the defendant was too greatly prejudiced in being able to defend the claim. The plaintiff appealed and the Supreme Court of South Australia upheld an appeal both as to liability and in extending the limitation period. This decision was then appealed to the High Court.
The full bench of the High Court unanimously allowed the appeal, and upheld the primary judge’s conclusion as to the extension application and said it could not determine liability question. Nonetheless, the Court set out the principles for establishing whether vicarious liability could be established in cases where an employee has committed a criminal offence.
The Court held that the mere fact that the employment provided the occasion or the opportunity to commit a wrong will be, of itself, insufficient to find vicarious liability but both together may. The Court said that the relevant approach would be:-[13]
- To consider any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim;
- In determining whether the apparent performance of such a role may be said to give the “occasion” for the wrongful act, particular features may be taken into account. They include:
- Authority;
- Power;
- Trust;
- Control;
- The ability to achieve intimacy with the victim.
In situations where the employer places an employee in a special role, which creates the opportunity for a criminal act to occur, vicarious liability may be established.
The controversial Schokman case
This case involved Mr Schokman (“the plaintiff”) who was required to stay with Mr Hewett in a worker’s accommodation at Daydream Island. Their employment contracts required them to share the accommodation.
In the early hours of 7 November 2016, outside of work hours, two workmates had been drinking at the staff bar. The plaintiff went home earlier but later in the early hours of the morning Mr Hewett returned. The plaintiff awoke to find Mr Hewett urinating on his face. As a result, the plaintiff suffered an exacerbation of his pre-existing sleep disorder and cataplexy (a brief loss of voluntary muscle tone triggered by emotional stress) and brought a claim based on vicarious liability.
At the trial, Crow J did not accept that vicarious liability could attach because there was an insufficient connection between the employment and the wrongful act. He acknowledged that the claim arose out of the requirement that the two workers share accommodation but did not consider it fair to impose vicarious liability on the employer, CGIQ, for the conduct.
There was an appeal to the Court of Appeal who overturned the decision at first instance. The Court of Appeal found that there was a requisite connection between the employment and Mr Hewett’s actions because of the contractual requirement to share accommodation. In doing so, the Court drew an analogy between this circumstance and that in Bugge v Brown.[14] In Bugge v Brown, the claim arose out of a situation in which an employee, while working on a grazing property, started an open fire to cook his midday meal. His job was to cut thistles, but it was expected that he would have to cook a meal in the middle of the day. It was found that the cooking of the meal was intimately connected with the performance of the day-to-day tasks and was authorized by the employer.
On appeal, the High Court confirmed that a finding of vicarious liability requires that the tort is an act of the employee committed in the course or scope of employment and that in making this determination, it will always depend upon the facts of each case.[15] The Court found that an employer will not be liable if the act was not connected to the employment.[16]
The Court distinguished this case from those where an employee is placed in a “special position” by virtue of their employment such that it provides the occasion for the impugned conduct. Mr Hewett was not given a special role and no part of what he was employed to do was required in the accommodation. At most, the shared accommodation created a physical proximity to the plaintiff, but this was insufficient to establish vicarious liability.[17]
Has certainty been restored?
In Schokman, the High Court clarified three distinct areas of law which are often termed “vicarious liability”. This includes:-
- Agency – This was referred to in Schokman as “vicarious liability describing attributed acts”. In this situation, the defendant will be liable because the acts of another person can be attributed to the defendant due to the defendant’s express, implied, or apparent authorisation of the acts.[18]
- True vicarious liability – This was referred to in Schokman as “vicarious describing attributed liability”. This area of vicarious liability is an extension of the principles of agency which developed at law to attribute liability to an employer where an employee’s liability arose in the course of employment. It is in this context that an employer will become liable for acts of the employee which are closely connected with the powers or duties of their employment.[19] To establish true vicarious liability, the Court will consider the powers and duties of employment, and the closeness of the connection between the employee’s wrongful act and those powers and duties of employment.[20]
- Non-delegable duty – This form of vicarious liability describes a non-delegable duty, which arises because of the nature of the relationship of proximity and gives rise to a duty of care of a special, more stringent kind.[21] As Professor Flemming said, it is a “disguised form of vicarious liability”.
Conclusion
Vicarious liability has developed significantly since it was first considered in Deatons Pty Ltd v Flew in 1949! Over 70 years later, this area of law continues to be the subject of judicial interpretation. Fortunately, the High Court’s recent commentary in Schokman has been helpful in settling this unstable area of law and serves as an important reminder that an employer will only bear the responsibility for the wrongdoing of an employee, if there is a sufficient connection between the act and the scope of employment.
[1] Bugge v Brown (1919) 26 CLR 110, at 117.
[2] Shockman v CCIG Investments Pty Ltd [2022] QCA 38.
[3] CCIG Investments Pty Ltd v Schokman [2023] HCA 21, at [89].
[4] Deatons Pty Ltd v Flew (1949) 79 CLR 370.
[5] Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161.
[6] Ibid, at [12].
[7] Hollis v Vabu [2001] 207 CLR 21.
[8] Ibid, at [47].
[9] Ibid, at [73], [78].
[10] ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2
[11] Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1.
[12] Prince Alfred College Incorporated v ADC [2016] HCA 37.
[13] Ibid, at [27].
[14] Bugge v Brown (1919) 26 CLR 110.
[15] CCIG Investments Pty Ltd v Schokman [2023] HCA 21, at [15].
[16] Ibid, at [51].
[17] Ibid, at [37].
[18] CCIG Investments Pty Ltd v Schokman [2023] HCA 21, at [55].
[19] Ibid, at [67]-[69].
[20] Ibid, at [64].
[21] Ibid, at [70].
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