Guidance from the High Court on vicarious liability of employers

On 5 October 2016, the High Court handed down its decision in Prince Alfred College Incorporated v ADC1 and dismissed the respondent’s application to extend the limitation period within which to bring proceedings. It was dismissed on the basis that the delay would cause prejudice to Prince Alfred College (PAC). However, in doing so, the High Court also went on to provide a useful consideration of the correct approach to be taken to the question of the vicarious liability of an employer for the criminal acts of its employee.

In their decision, the majority of the High Court (French CJ, Kiefel, Bell, Keane and Nettle JJ) recognised that it needed to provide guidance (particularly to intermediate courts) on the principles governing the liability of an employer for the intentional criminal act of an employee, given the differing views by the High Court in New South Wales v Lepore & Anor2.

Background

In 1962 the respondent was sexually abused by a Dean (Bain) of PAC. The respondent was then 12 years old and a boarder at PAC.  Bain was employed by PAC as a Housemaster.  In December 2008, the respondent brought proceedings against PAC in the Supreme Court of South Australia.  The respondent alleged that PAC was liable in damages to him on three alternative bases: that it breached its non-delegable duty of care that it owed him; that it was negligent and breached its duty of care; and that even if PAC was not itself at fault, it was vicariously liable for the wrongful acts of its employee.

The respondent required an extension of time within which to bring the proceedings.  Section 48 of the Limitations of Actions Act 1936 (SA) (Act) permits a court to extend the time prescribed for instituting an action.  The respondent was required to show that it would be just for the High Court to extend the limitation period and that PAC would not be significantly prejudiced.

The primary judge dismissed the respondent’s action.  The Full Court of SA allowed the appeal from the primary judge’s decision as to liability on the basis that PAC was vicariously liable and an extension of time should have been granted.  The PAC appealed from that decision.

The Court’s Decision

Vicarious liability is imposed despite the employer not itself being at fault.  The traditional method of the common law of confining liability is the requirement that the employee’s wrongful act be committed in the course or scope of employment.  Although there are often difficulties in determining whether an act can be said to be in the course or scope of employment, the majority said that “… it has not yet been suggested that it should be rejected.  It remains a touchstone for liability.”.

The House of Lords case of Lloyd v Grace, Smith & Co [1912] UKHL 1 was considered to hold an important place in the development of the law relating to vicarious liability for, among other things, the features it identified in relation to the employee’s role.  These included whether an employee is put forward as a representative of the employer and the apparent authority by which the employee is able to commit the act.  The House of Lords also made it clear that “… for an act to be said to be in the course of employment something more was necessary than that the employment merely create an opportunity for the wrongful act to take place.”3.

Their Honours also considered the case of Deatons Pty Ltd v Flew4 where Dixon J held that the employee’s act was not one for which an employer may be liable because they were acts “to which the ostensible performance of his master’s work gives occasion or which are committed under cover of the authority the servant is held out as possessing or of the position in which he is placed as a representative of his master.”.  Their Honours then said that fundamentally, cases of that nature5 were decided by reference to the position in which the employer had placed the employee vis-à-vis the victim of the wrongful act.

The more recent approaches taken by both the Canadian and English Courts involving the sexual abuse of children at educational, residential or care facilities were then examined.  In Canada, the approach to vicarious liability emphasises features analogous to those in Lloyd v Grace, Smith & Co.  In the UK, in the case of Lister v Hesley Hall Ltd, Lord Steyn focused on the connection between the nature of the employment and the tort of the employee.  The question ultimately posed was “whether the warden’s torts were so closely connected with his employment that it would be fair and just to hold the employers vicariously liable.”.

After considering the authorities, the majority concluded that the fact that a wrongful act is a criminal offence does not preclude the possibility of vicarious liability.  On the other hand, the fact that employment affords an opportunity for the commission of a wrongful act is not of itself a sufficient reason to attract vicarious liability.  Even so, their Honours said the role given to the employee and the nature of the employee’s responsibilities may justify the conclusion that the employment not only provided an opportunity but also was the occasion for the commission of the wrongful act.

Ultimately, their Honours said that the relevant approach in cases of this kind is 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, including authority, power, trust, control and the ability to achieve intimacy with the victim.

Importance

This case and the commentary provided by their Honours has provided much needed guidance to the approach to be taken by courts to claims of vicarious liability for an employee’s intentional wrongful act, not only with respect to cases of this kind, but also to cases of intentional criminal acts more generally.

(Click here to view case).

If you have any queries or would like further information regarding this article, please contact:

Mat Wilkins
Joint Managing Partner
M: 0419 106 417
E: mwilkins@pageseager.com.au

Bridget Wall
Senior Associate
T: (03) 6235 5187
E: bwall@pageseager.com.au

Amy Tremayne
Lawyer
T: (03) 6235 5107
E: atremayne@pageseager.com.au

1 [2016] HCA 37.

2 (2003) 212 CLR 511.

3 [2016] HCA 37 at [52].

4 (1949) 79 CLR 370.

5 Lloyd v Grace, Smith & Co and Morris v C W Martin & Sons Ltd [1966] 1 QB 716.

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