Written by Spencer Pascal and Jessica Woods
The High Court has handed down its anticipated decision of CCIG Investments Pty Ltd v Schokman [2023] HCA 21.
Vicarious Liability
Vicarious liability is the legal doctrine which holds one party responsible for the acts or omissions of another. The doctrine is strict and non-delegable liability, meaning liability without any proof of fault being required.
One of, if not, the most common form of vicarious liability is that between an employer and its employee. Determining when an employer will be held liable for the tortious or wrongful act of its employee has proven a difficult task for the Courts to resolve.
At the outset of their judgment, Justices Edelman and Steward lamented the lack of development over the past 60 years citing Lord Denning’s remarks that “the cases are baffling” to illustrate the difficulty in resolving such disputes. The High Court’s judgment represented an opportunity to provide clarity and guidance.
Facts
The relevant facts were as follows:
- In 2016, the respondent, Mr Schokman, commenced employment with the appellant, CCIG Investments, at Daydream Island Resort and Spa as a food and beverage supervisor.
- His employment contract contained the following clause:
“[a]s your position requires you to live on the island, furnished shared accommodation located at Daydream Island Resort and Spa will be made available to you while you are engaged in this position…”.
- Mr Schokman was in shared accommodation with a work colleague, Mr Hewett.
- Both men worked at a restaurant within the resort.
- In the evening of 6 November 2016, Mr Schokman and Mr Hewett spent some time at the staff bar after they finished work at the restaurant. Mr Schokman left the bar and returned to his room. Mr Hewett returned shortly after.
- In the early hours of 7 November 2016, Mr Schokman was awoken from his sleep to observe Mr Hewett heavily intoxicated, standing over his bed and urinating on him.
- Mr Schokman suffered a cataplectic attack as a result of the incident.
The Supreme Court Judgment
Mr Schokman initially commenced proceedings against CCIG Investments in the Queensland Supreme Court seeking damages on two alternative bases:
- he claimed damages based on a breach of CCIG Investment’s duty of care owed to him as an employee; and
- CCIG Investments was vicariously liable as employer for the negligent act of its employee, Mr Hewett.
Mr Schokman’s claim failed in the first instance with the trial judge finding the actions of Mr Hewett were not committed in the course of his employment with the appellant. In reaching this decision, the trial judge considered the relevant enquiry required determination of whether there was a connection or nexus between the employment enterprise and the wrong that justified the imposition of vicarious liability on the employer for the wrong. The trial judge did not consider it was a fair to impose vicarious liability on the employer for the drunken misadventure of Mr Hewitt.
The Queensland Court of Appeal Judgment
On appeal, the Court of Appeal overturned the trial judge’s decision. In reaching this decision, the Court of Appeal considered there was a requisite connection between the employment and the employee’s actions. In its decision, the Court of Appeal relied on, amongst other things, Mr Hewett occupying the room as an employee pursuant to, and under the obligations of, his employment contract, not as a stranger.
The High Court Judgment
CCIG appealed the Court of Appeal’s decision to the High Court and succeeded with its appeal.
In finding CCIG was not liable for the acts of Mr Hewett, the High Court helpfully provided a detailed analysis of the law. Some of the most pertinent points included:
- The tortious act of the employee must be committed in the course or scope of the employment.
- Determination of the above point will depend on circumstances of the particular case.
- Consideration should be given to whether the tortious act in question had a sufficiently strong connection with the employment, and what is entailed in it, so as to be said to have done in the course of that employment.
- In some cases, something more than the sufficiency of the connection between the wrongful act and the employment may be necessary.
- An employer may be liable not only for authorised acts but also for unauthorised acts, provided that they are “so connected” with authorised acts that they may be regarded as modes, albeit, improper modes, of doing them.
- When an employee acts on a “frolic of [their] own”, then the employee acts as a stranger and the employer will not be liable for such acts.
In applying the above considerations, the Court found “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”.
Implications
The High Court’s decision appears to limit the application of the vicarious liability doctrine, affording some comfort to employers in circumstances where an act is not in any way required by, or incidental to the wrongdoer’s employment. The decision also illustrates that in determining whether an employer will be held liable for the employee’s tortious or wrongful conduct requires a multifactorial analysis and will depend on the circumstances of each case.
Insurers frequently have the unenviable task of trying to make decisions on claims where vicarious liability is an issue. This task is regularly complicated by issues of indemnity.
Ligeti Partners are regularly asked to advise insurers on such claim circumstances. Should you wish to discuss the decision or any problematic claims you may currently have, please contact a member of our team on 03 9947 4500.
