Employer vicarious liability court case

In this article Special Counsel Jacqi Marshall and Law Graduate Chantel Leadbeater from HopgoodGanim’s Insurance practice examine the recent High Court decision of CCIG Investments Pty Ltd v Schokman [2023] HCA 21 and its clarification of the principle of vicarious liability of employers for the actions of their employees.

In CCIG Investments Pty Ltd v Schokman, the High Court unanimously overturned the earlier decision of the Queensland Court of Appeal that an employer was vicariously liable for the wrongful act of an intoxicated employee who had urinated on a colleague sleeping in staff accommodation. In this much anticipated decision, the High Court reaffirms the principle that an employer will not be liable for every wrongful act committed by its employees.

The facts

Mr Schokman was employed as a food and beverage supervisor by the Appellant, CCIG Investments Pty Ltd, at the Daydream Island Resort and Spa. The terms of Mr Schokman’s employment required him to live in shared accommodation at the resort, also occupied by Mr Hewett, a co-worker.

After completing his shift and a night of drinking at the resort bar on 6 November 2016, Mr Schokman returned to his accommodation and went to sleep. He was awoken in the early hours of the morning of 7 November 2016, unable to breathe, as Mr Hewett was urinating into his open mouth. It is generally accepted that at this time, Mr Hewett was in a state of semi-consciousness due to his level of intoxication and mistakenly urinated onto Mr Schokman instead of into their shared toilet. Mr Schokman subsequently suffered a cataplectic attack triggered by his emotional distress from the incident.

Mr Schokman brought a claim in negligence against the Appellant on the basis that it breached its duty of care owed to him as an employee or, in the alternative, was vicariously liable for the negligent actions of its employee, Mr Hewett. Both claims failed at first instance before the Supreme Court of Queensland.

The claim for vicarious liability was the subject of an appeal to the Queensland Court of Appeal, which unanimously found in favour of Mr Schokman and awarded damages in the sum of $431,738.88. In reaching its decision, the Court of Appeal gave significant weight to the fact Mr Hewett was required by the terms of his employment to reside in on-site staff accommodation, particularly in the room assigned to him and Mr Schokman. This formed the requisite connection between the employment and the employee’s actions.

The High Court decision

On appeal, the High Court acknowledged there was a thin line to walk between upholding the existing common law position that liability will attach to an employer for the unauthorised, intentional, or criminal acts committed by its employees in the course of their employment, and the injustice that would ensue if an employer were to be held responsible for every act of its employees.

In that regard, extensive consideration was given to the decisions in Bugge v Brown (1919) 26 CLR 110 and Prince Alfred College v ADC (2016) 258 CLR 134 for the purpose of illustrating the intensity of the connection with employment required to ground a finding of vicarious liability. The first case involved a jackaroo who had negligently lit a fire to make his meal which subsequently spread to neighbouring properties. The second matter involved the sexual abuse of a child in a school.

The connection will be tenuous if the employee has done something so remote from their duties such that the act is altogether outside of, and unconnected with, their employment. In other words, employment must provide more than the opportunity for the employee’s wrongful act to take place. By way of illustration, in Bugge v Brown, a finding of vicariously liable ensued where an employer had authorised the performance of the act itself, not the wrongful place where it was done, and it was committed whilst the employee was carrying out their work.

The connection will also be present if the employee was placed in a special position by reason of their employment so that a wrongful act can be seen as one ostensibly done in the performance of their duties. The appropriate enquiry in those cases, as explained in Prince Alfred College, is whether the employee’s role placed them in a position of power and intimacy such that their employment could be said to have given rise to the occasion for the wrongful act.

The High Court found the circumstances of Mr Schokman’s claim were in no way analogous to the above cases. Mr Hewett did not perform the wrongful act of urination during his hours of work or at a time or place where he was required to perform work. Nor was Mr Hewett assigned any special role or authoritative powers concerning Mr Schokman.

The most that could be said to arise from the circumstance of the shared accommodation was that it created physical proximity between Mr Schokman and Mr Hewett and thus provided the opportunity for Mr Hewett’s drunken actions to affect Mr Schokman. But, as previously illustrated, this is insufficient to establish a sufficient connection between Mr Hewett’s wrongful acts and his employment with the Appellant such as to form the basis of a finding of vicarious liability.

Key takeaways

Employers’ vicarious liability for wrongful acts is an area of the law of torts that sits in shades of grey. While this decision has not removed the concept of vicarious liability of employers, it provides new clarification as to the closeness of the connection between an employee’s wrongful conduct and their authorised employment required to make a finding of vicarious liability.

This decision is particularly relevant to any employer who provides shared or camp-style accommodation for employees during continuous periods of employment. While the direct tortious liability of employers remains unchanged, this decision clarifies their exposure to liability for the actions of their employees.

Source: Lexology

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