An unauthorised mode of an authorised act? No

Do employers assume a (non-delegable) duty that care will be taken of employees outside of work hours? No

What a tortured mess.

R

Dear Colleagues;

The High Court of Australia has today handed down an important decision on the law of vicarious liability: CCIG Investments Pty Ltd v Schokman [2023] HCA 21 (2 August 2023) http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA//2023/21.html . The outcome was one in which all of the members of the court agreed, though with slightly differing reasons; a majority decision from Kiefel CJ, Gageler, Gordon and Jagot JJ; a joint judgment from Edelman and Steward JJ; and a concurrence from Gleeson J.

The case involved a bizarre sequence of events where Mr Schokman, who was employed at Daydream Island Resort and Spa as a food and beverage supervisor, was required to share accommodation with a Mr Hewett. At 3:30 am one morning, Mr Schokman was rudely awakened by a drunken Mr Hewett urinating on him. This led to Mr S suffering a cataplectic attack due to an underlying condition. He sued his and Mr Hewett’s employer, CCIG, and the ground relevant here was that the Queensland Court of Appeal had ruled that CCIG were vicariously liable for the actions of Mr Hewett.

Given that it was clear that Mr Hewett was an employee of CCIG, there was no discussion of what has come to be called the “Stage 1” issue in VL; it was clear that employment was a relevant relationship establishing possible VL (although Edelman J does note in passing at [51] that, in contrast to the UK, “This Court has not extended vicarious liability in this sense beyond employees”.) The key issue was the Stage 2 question, whether this act was within “the course or scope of employment.”

The majority reviewed the current law on VL in Australia and stressed that it was important to refer to decided cases on the issue when considering what the test was- see [17]. While reference is made to “close connection” of the act with the employment as a relevant issue, they stress that “connection” alone is not enough (and certainly that a mere causal connection does not establish VL.) Eg see:

[33] Where no more can be pointed to than that the employment provides an opportunity for the employee's wrongful act to take place, the connection with the employment is tenuous. Such a circumstance is to be distinguished from that where an employee is placed in a special position by reason of the employment so that the act in question may be seen as one to which the ostensible performance of the employer's work by the employee "gives occasion", to adopt the words of Dixon J in Deatons Pty Ltd v Flew. In such a circumstance the requisite connection would be present.

This analysis adopts and reinforces the distinction made in Prince Alfred v ADC (the previous leading case on the issues) between mere “opportunity” and “occasion”. At [34], following the previous case: “Features of the employment such as authority, power, trust, control and the ability to achieve intimacy should be considered.”

Here the majority are clear that these features were not present. Mr Hewett had no particular role that gave him power or created “intimacy”. (Being put into the same accommodation was not enough.) They considered the possible analogy of Bugge v Browne, where a stockman was sent out and told not to cook lunch in a particular spot, and did so anyway, causing a fire which damaged a neighbouring property. But in that case the stockman had been clearly in his working day, where he was paid to be. Here, while Mr H was on the spot because of his work, he was not being paid to get drunk or sleep or use the bathroom in the middle of the night. So, his act was not in the course of employment.

[46] Nothing in the present case points to the drunken act in question being authorised, being in any way required by, or being incidental to, the employment. In truth, it had no real connection to it.

The joint judgment of Edelman and Steward JJ comes to the same conclusion, but contains a very interesting analysis of what their Honours call the three senses of the phrase “vicarious liability”, which need to be distinguished. These passages will repay more careful analysis, but in broad terms the three senses are (see [50]-[53] for a summary):

1. Vicarious liability based on agency principles, where the principal is liable because they have authorised the act of the wrongdoer.
2. “True” VL, which involves transferred liability.
3. VL as a label for what is properly called “non-delegable duty”.

In effect sense (1) involves those decisions where there is liability because the conduct of the wrongdoer is attributed to the principal (what is sometimes called the “master’s tort” theory of VL, which is explicitly linked to the decision of Kitto J in Darling Island Stevedoring and Lighterage Co Ltd v Long). Sense (2) involves what has usually been called the “servant’s tort” theory, linked to the decision of Fullagar J in Darling Island Stevedoring, and which is described as the true meaning of VL. Although [67]: “In truth, both co-exist. They just need different labels”. And then of course it is noted that (3) sometimes the phrase VL is applied to what is more correctly described as non-delegable duty. I found this passage particularly helpful, noting that some of the factors that have been adopted in some of the VL cases are really more applicable to an NDD analysis- see para [81].

Having pointed to the need to untangle these concepts, the joint judgment says:

[84] The issue is therefore whether Mr Hewett's employment powers or duties were sufficiently and closely connected with his wrongful act that the act could be said to have occurred in the course of Mr Hewett's employment and Mr Hewett's liability attributed to his employer. They were not. 

Gleeson J gives a judgment which agrees with the outcome. I did find it odd, however, that her Honour seemed to argue that the “opportunity”/”occasion” dichotomy was not suitable:

[96] Mr Hewett's employment created neither an "opportunity" nor an "occasion" for his drunken accident of the kind that has been identified in determining whether there should be vicarious liability for intentional misconduct such as criminal acts. Mr Hewett's employment in the restaurant was merely the reason why he needed a place to live on the Island when not performing the duties he was employed to perform. Neither the employment nor the accommodation created anything more than the context or the location in which the tort was committed. (emphasis added).

I am not sure whether creating a third category of “context” is all that helpful.

There is much that can be said here, but a few concluding points.

• It is interesting that the court seems to accept without much discussion that the Prince Alfred tests are applicable to cases of intentional torts generally, not solely to cases of institutional child sexual abuse (there was some ambiguity on this point in the original decision.)
• One could (and I think in some of the lower courts this was argued) have classified Mr Hewett’s actions as negligent rather than intentional. But nothing seems to have been made of this in the High Court decision.
• Despite the general criticism of “close connection” (from the UK authorities) made in Prince Alfred, there are certainly passages here which use this language. So it seems that this concept will continue to be relevant, but qualified by any limits arising from the Prince Alfred decision.

The court refers to the work of a number of ODG colleagues.

Regards

Neil