Dear Colleagues;
The decision in Erlich v Leifer & Anor [2015] VSC 499 (16 September 2015) http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2015/499.html ,
while only at the trial level, has such an interesting set of facts and implications for general tort liability that it is worth mentioning here, I think.
The case involves a sexual abuse claim involving abuse of a female student by the female Principal of a conservative, religiously focused, Jewish school. The evidence was that the
school was part of a very closely knit religious community, and the Principal ran it very much as the primary decision maker and was highly respected in the local community. While there was some conflicting evidence about the power of the Principal, in the
end the trial judge, Rush J in the Victorian Supreme Court, accepted that she had and was seen to have ultimate power. After allegations of the abuse came out, the School Board had a late night committee meeting, following which the Principal and her family
were put on a plane to Israel in the early hours of the morning and have not returned to Australia since. There are ongoing efforts to extradite her to face criminal charges in Victoria.
The School was found to be liable for the abuse and its consequent psychological effects on the plaintiff. What is interesting is the basis of the liability.
In effect the first basis was that the School was
directly liable for the batteries. This view was taken because in effect the Principal when acting was “directing mind” of the School, its “embodiment” as it is put at one stage- see [79]. This reasonably novel use of doctrines which have usually been
applied in the area of criminal liability of corporations, to civil liability, was not completely new: Rush J refers to the earlier decision of the NSW CA in
Nationwlde News v Naidu (2007) 71 NSWLR 471. There an abusive security officer employed by NN had a high level of responsibility within the firm, and in his commission of a
Wilkinson v Downton tort against an employee of another firm he was acting as NN.
His Honour also refers to the decision of the Victorian Court of Appeal in
Christian Youth Camps v Cobaw (2014) 308 ALR 615, [2014] VSCA 75 for further support. (This is a case I am quite familiar with for other purposes- those who are interested can see a case
note I wrote on it shortly after it came out at http://works.bepress.com/neil_foster/78/ ). There the issue was statutory civil liability for
sexual orientation discrimination, and as Rush J in Erlich points out at [84], Maxwell P and Neave JA in the
CYC case held that a corporation could be “directly” liable under
Tesco and/or
Meridian principles for an act of discrimination perpetrated by a senior employee. (However, what Rush J does not mention is that in
CYC there was a difference of opinion between Maxwell P and Neave JA about the consequences of this finding for the personal liability of the employee. Maxwell P, it has to be said without
much discussion, held that if the company were liable then the employee could
not be, at [123] in CYC. Neave JA, however, said that even if the company were directly liable, the employee could also be liable- see
CYC at (2014) 308 ALR at [379]. If Maxwell P were followed here, of course, then finding the School directly liable would exonerate the Principal from personal liability, which Rush J clearly
did not want to do- later his Honour awarded a different amount of exemplary damages against the Principal at [223].)
So at [91] the School is found directly liable; see also the summing up on this point at [118].
Having found the School directly liable for the battery, Rush J also went on to find the School
vicariously liable. (His Honour at [119] rejected a submission that he should have found the School liable on the basis of non-delegable duty; this ruling was clearly correct on the current
state of Australian law, where NSW v Lepore holds that NDD cannot be applied to intentional torts. But see my paper here http://works.bepress.com/neil_foster/92/ for
an argument that this view of the High Court’s should be revisited, especially in light of the reformulation of NDD by the UKSC in
Woodland v Essex in 2013.)
But to find vicarious liability for the intentional tort of battery requires application of
Lepore, and as his Honour notes at [123] ascertaining the
ratio of that decision is not easy. To cut a long story a bit short, his Honour has to choose from among the 3 possible ratios of the members
of the High Court who found that vicarious liability for intentional torts was possible, and he finds that two are satisfied. He rules that there was a relevant “close connection” between the duties of the Principal and opportunities for sexual activity with
the girls- [128], and also that Gaudron J’s suggestion of “estoppel” was satisified- [130]. He acknowledges that if the narrower “Deatons” ratio put forward by Gummow and Hayne JJ were adopted, that would not be satisfied here- see [134]. But he chooses
to use mainly the “close connection” test and finds vicarious liability.
Finally, his Honour considered a third possible basis for liability,
negligence of the School, which he says was a possible basis- but perhaps somewhat oddly concludes that the plaintiff had not clearly established exactly what the School should have done, and hence that he could not find a breach of duty- see eg [144].
To conclude, a brief comment on some curious features of the award for
exemplary damages. To my mind the discussion is curious because, at [211] ff, it is devoted to considering the behaviour of the Board, and in particular their “deplorable" behaviour in facilitating a quick exit from the jurisdiction- see [217]. An exemplary
damages award of $100,000 was made at [220]. But surely, if the basis of the School’s liability was that they were “directly” liable for the Principal’s actions, or even vicariously so, then damages should have been calculated, not on the basis of the Board’s
behaviour, but on the basis of the Principal’s behaviour? So it is arguable that the award of $150,000 of exemplary damages against the Principal personally, at [223], should have been made against the School. (There is some ambiguity in the High Court decision
in New South Wales v Ibbett [2006] HCA 57; (2006) 231 ALR 485 about whether the culpability
of the actual wrongdoer can be attributed to the person vicariously liable in considering an award of exemplary damages, but surely this should be so if the theory of “direct” liability is adopted?)
Regards
Neil
neil foster
T: +61 2 49217430
E: neil.foster@newcastle.edu.au
MC177 (McMullin Building)
The University of Newcastle (UON)
University Drive
Callaghan NSW 2308
Australia
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Associate Professor
Newcastle Law School
Faculty of Business and Law
Faculty of Business and Law
T: +61 2 49217430
E: neil.foster@newcastle.edu.au
Further details: http://www.newcastle.edu.au/profile/neil-foster
My publications: http://works.bepress.com/neil_foster/ , http://ssrn.com/author=504828
The University of Newcastle (UON)
University Drive
Callaghan NSW 2308
Australia
CRICOS Provider 00109J
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