It’s the employer’s problem. Or is it?

By Geoff Atkins*

In civil liability circles the term ‘vicarious liability’ is often heard but perhaps not as well understood as it should be.

This article makes the case for a statutory codification of the relevant common law.

The topic has taken on much greater significance with historical abuse cases but is far from limited to those cases.

The subject has been crying out for a comprehensive High Court treatment. The court went tantalisingly close in a child sexual abuse case in 2016 (Prince Alfred College) but, having talked a lot about vicarious liability, said “no need to decide”.

In early August 2023, the High Court published a decision that covered vicarious liability in great detail. CCIG Investments Pty Ltd v Schokman [2023] HCA 21 is about a workforce situation.

Vicarious liability

When is one party (often an employer) legally responsible for the negligent acts of another person (often an employee)?

The short answer seems to be ‘if the act was committed in the course or scope of employment with the employer’. But, like lots of legal answers, it still has many nuances and inconsistent decisions.

The negligent act does not need to be authorised by the employer. It just needs to be ‘close enough’ to their employment to count. Naturally judges often say this is difficult to work out. The other extreme is often described as the employee being ‘on a frolic of their own’.

The Schokman decision

This case started in Queensland as Schokman v CCIG Investments. The plaintiff, Aaron Shane Schokman, worked in a restaurant at Daydream Island resort. He was supplied with accommodation at the resort in a shared unit with another worker.

The roommate, a Mr Hewett, who also worked in the restaurant, came home late one night, heavily inebriated. Half an hour later Mr Schokman was woken by Mr Hewett standing over him urinating on his face. He suffered a catapleptic attack, to which he was prone.

The Queensland Supreme Court judge said that:

The employer did not breach its duty of care, and
The act was not closely enough related to the employment to establish vicarious liability.

Mr Schokman appealed and the Court of Appeal overturned the decision (on the second argument – close connection with employment) and found the employer was vicariously liable. The employer then appealed to the High Court, which said (seven to nil) that the negligent act, while it occurred during employment, was not related to the employment and the employer was not liable.

The judges’ tutorial

Six of the seven judges, in two separate decisions, then embarked on a long analysis of the theories.

In my view, the difficulty is amply illustrated by the history of the precedent decisions that are followed. The leading Australian judgement was in 1919 (Bugge v Brown). Then there is a book written in 1907 (Salmond) and its 3rd edition in 1912, a 1916 article (Laski), and others from 1882 (Pollock), 1887 (Stephen), 1909 (Wigmore) and 1882 (Story).

To top it off there is the classic Commentaries on the Laws of England from 1765 (Blackstone).

Legal historians say the idea started in the 14th century with liability for acts an employer had commanded or assented to. In the 18th century the concept expanded to a ‘general commission to do a class of acts’.

Numerous judges have spent more than 150 years trying to sort through all this and find some sort of coherent theme, with limited success.

There are some beautiful quotes:

“in no branch of legal thought are the principles in such sad confusion” (1916)
“the cases are baffling” (Lord Denning 1966)
“not much has improved in the last 60 years” (Justices Edelman and Steward in Schokman 2023).

Stovepipe thinking

Justices Edelman and Steward gave their theories under the heading ‘stovepipe thinking’. They said there are three distinct types of case, all called (confusingly) vicarious liability. Lawyers and judges frequently take principles from one type and apply them to another type because they think they are the same.

Vicarious acts or vicarious conduct: Acts of an employee where they are essentially an agent of the employer. Activities that are procured, authorised or ratified by the employer (in fact it need not be an employer, it could be any other principal). They refer to having the ‘seal of approval’ of the principal. This is direct liability, not vicarious liability, say the judges.

Vicarious liability: Properly named say the judges. The law attributes liability to the employer for wrongful acts committed by an employee that were not ‘authorised’. This led to the ‘course of their employment’ criterion, requiring the acts to be sufficiently or closely connected to the employee’s duties. They say the High Court has not extended vicarious liability in this sense beyond employees. But they went close in Prince Alfred College and it is now happening a lot in child sexual abuse cases involving priests or volunteers.

Non-delegable duty of care: When an employer has a duty to take reasonable care in the performance of an employee or an independent contractor. This situation is also described as vicarious, but it is really failed delegation of a non-delegable duty of care.

The Schokman case was clearly only of the second type (although he had unsuccessfully also claimed the third type). Justices Edelman and Steward said the negligent act was not sufficiently or closely connected with the employment. The other five judges seemed to say essentially the same thing.

Relevance to historical child abuse

My impression is that historical child abuse is moving fairly quickly in the direction of vicarious liability:

We have moved past the point of ‘employees only’
We have also passed the theory of ‘no vicarious liability for criminal acts of an employee’
The ‘connection to work’ includes being at a location giving opportunity
The view that if you are doing something directly contrary to your role (which might be, for example, to look after the wellbeing of children), then the employer is vicariously liable
In child sexual abuse cases, regard may be had to “any special role the employer has assigned to the employee [which] may point to a strong connection between the employment and the wrongful act” (Chief Justice Kiefel and Justices Gageler, Gordon and Jagot, citing Prince Alfred College).

The case for codification

After 150 years, the common law has not developed a coherent and understandable statement of the principles of vicarious liability. According to Justices Edelman and Steward, there are three distinct types of case, all misleadingly referred to by the same label.

The issue is now much more important in Australian law, with the growth in civil litigation for historical child abuse.

In these circumstances, my question is: can and should we do better?

My view is that we can. I well remember the liability crisis at the time of the collapse of HIH, when the Ipp Committee was charged with codifying the laws of negligence. That was a great challenge, which the committee rose to with great credit, and was followed by civil liability legislation in each jurisdiction that, with minor but annoying exceptions, was consistent across the nation.

I argue that a similar process, specifically related to the various forms of vicarious liability, and included in civil liability acts, would be a vast improvement for our legal system and the plaintiffs and defendants for whom it is so important.

*Geoff Atkins is an actuary with Finity and has a long career involving liability laws in civil liability, workers’ compensation and motor accidents.