Introduction
It is well established that an employer may be held liable for the tort of an employee, when the tortious act of the employee is committed in the course or scope of the employment (i.e. vicarious liability). However, in practice, it can be difficult to establish vicarious liability in certain circumstances.
In recent months, various appellate courts in Australia have been examining the vicarious liability of employers in situations where an employee has committed an intentional and/or unlawful act arising out of the employee’s employment. We have examined these decisions in recent publications.
The most anticipated recent decision is the High Court decision of CCIG Investments Pty Ltd v Schokman [2023] HCA 21. It was handed down on 2 August 2023.
Facts
The respondent to the High Court Appeal, Mr Schokman (Plaintiff) was an employee of the appellant, CCIG Investments Pty Ltd (Employer), at Daydream Island Resort.
The Plaintiff’s employment contract required him to live on Daydream Island. A tenancy agreement was signed and the Plaintiff agreed to live in shared accommodation. The Plaintiff eventually ended up sharing a room with a co-worker, Mr Hewett.
Both Mr Hewett and the Plaintiff were employed by the Employer. The Plaintiff, as a supervisor, was considered to hold a superior role to Mr Hewett, a team leader.
Very late on the evening of 6 November 2016, the Plaintiff observed Mr Hewett drinking at the Employer’s bar. Both men retired to their shared room early on the morning of 7 November. Mr Hewett, who was intoxicated, was visibly upset and was complaining about work. The Plaintiff preferred to sleep and requested they discuss the complaints later that day.
At about 3.30am on 7 November 2016, the Plaintiff was woken in a distressed condition and unable to breathe as Mr Hewett was standing over the Plaintiff’s bed and urinating on him (Incident). Mr Hewett apologised to the Plaintiff as he tried to leave the room.
The Plaintiff allegedly sustained injuries in the form of PTSD, cataplexy and narcolepsy. The cataplectic attack was described as a sudden and ordinarily brief loss of voluntary muscle tone triggered by emotional distress.
Claim
The Plaintiff brought proceedings against the Employer, relevantly claiming that the Employer was vicariously liable as an employer for the negligent act of Mr Hewett because that act was done in the course or scope of his employment.
Initial Decision – Supreme Court of Rockhampton
The Plaintiff’s claim against the Employer did not succeed.
The trial judge did not accept that the actions of Mr Hewett were committed in the course of his employment with the Employer.
The trial judge held that even if a policy was in place with respect to alcohol consumption, the Plaintiff was unable to prove that such a policy would have prevented the incident.
Furthermore, as there were no prior incidents involving Mr Hewett and his alcohol consumption, the trial judge held it would not be appropriate to hold the Employer liable for Mr Hewett’s actions.
Whilst trial judge accepted that the occasion for the tort committed by Mr Hewett arose out of the requirement of shared accommodation with the Plaintiff, the trial judge did not find that it was a fair allocation of the consequences of the risk arising to impose vicarious liability on the Employer for Mr Hewett’s intoxicated conduct.
Appeal Decision – Court of Appeal
The Court allowed the Plaintiff’s appeal.
The Court referenced the terms of the Plaintiff’s employment contract and his shared accommodation with Mr Hewett. It was found that the Employer required employees to share accommodation and the Employer controlled the allocation of rooms. Therefore, the Court determined that Mr Hewett was required to occupy the room as an employee under his employment contract, not as a stranger.
As a result, it followed that there was the requisite connection between Mr Hewett’s employment and his actions during the Incident and, therefore, the Employer was vicariously liable for Mr Hewett’s actions.
Appeal Decision – High Court
The High Court allowed the Employer’s appeal with costs.
The High Court examined previous decisions in order to discuss the decided cases pertaining to vicarious liability and “connection with the employment”. In doing so, the High Court made reference to the following issues which ultimately allow a claimant to establish vicarious liability:
- The particular facts of the claim.
- Properly understanding the culpable employee’s role and tasks as an employee.
- Clearly identifying the connection between the employee’s wrongful act and the employee’s role.
- Ascertaining whether the employee’s role afforded the employee an “opportunity” to commit a wrongful act.
Ultimately, the High Court determined that the Employer never authorised Mr Hewett’s intoxicated act and neither was the unauthorised act incidental to Mr Hewett’s employment.
Furthermore, the shared accommodation between the Plaintiff and Mr Hewett did not further Mr Hewett’s claim to establish there was any real connection between the Incident and his employment.
Take Aways
This High Court decision has been highly anticipated because lawyers and the community at large have been awaiting a panacea which addresses vicarious liability for an array of claims arranging from unauthorised activities in the work place to sexual predators operating in the workplace. The decision is helpful but, as trite as it may sound, the facts of any claim ultimately determine how the law may apply and what a court may determine.
The High Court judgment does provide useful commentary in respect of concepts such as powers of employment, “closely connected” and “scope of employment”. However, as indicated above, a thorough examination of the facts and the parties’ roles is required before sound counsel may be sought in respect of whether an employer is vicariously liable, especially for intentional or unlawful acts.
As aptly stated by Justices Edelman and Steward:
“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. The area of vicarious liability with which this appeal is concerned is those acts of an employee that are closely connected with the course or scope of the employee’s authorised employment. Mr Hewett’s acts were not so closely connected”.
If you have any queries or would like further information about this article, please contact:
Mat Wilkins
Principal
M: 0419 106 417
E: mwilkins@pageseager.com.au
David Giacomantonio
Consultant
M: 0418 154 138
E: dgiacomantonio@pageseager.com.au
