Limitations on Vicarious Liability of Employers

For an employer to be held liable for the negligence of an employee and responsible for the loss and damage caused by the employee, the employee’s acts or omissions must be committed in the course or scope of their employment.

Whether a wrongful act was committed in the course or scope of employment depends on the circumstances of the particular case.

It is the identification of what the employee was actually employed to do and held out as being employed to do that is central to any inquiry about course of employment.

Aspects of the course or scope of employment may be functional, geographical or temporal.

An unauthorised, intentional or criminal act may be committed in the course or scope of employment, and therefore render the employer liable.

However, there is a limit to the potential liability of an employer as an act done when the employee was on a “frolic of [their] own” will not attract liability.

The recent decision of the High Court in CCIG Investments Pty Ltd v Schokman [2023] HCA 21 has shed light on what is required for an employer to be vicariously liable for the acts of an employee and there must be a connection to the course or scope of employment to trigger the employer’s liability. Providing the occasion for the damage or harm to occur will not be enough.

Mr Schokman commenced employment with CCIG at a resort in the Whitsunday Islands off. It was a requirement of his employment that he live on the island in furnished, shared accommodation at a cost to Mr Schokman of $70 a week.

Mr Schokman shared his room with another employee, Mr Hewett. In the early morning of 7 November 2016, Mr Hewett returned to the shared accommodation in an intoxicated state from the staff bar. Around 3.30 am, Mr Schokman was woken in a distressed condition and unable to breathe as Mr Hewett was urinating on him. Mr Schokman suffered a cataplectic attack as a result of the incident, which was described as a sudden and ordinarily brief loss of voluntary muscle tone triggered by emotional distress.

Mr Schokman brought proceedings against CCIG 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.

The trial judge on the evidence determined the likelihood was that Mr Hewett intended to urinate into the toilet but, due to his state of intoxication and the late hour, he urinated on Mr Schokman by mistake. The evidence was insufficient for a finding that the act of Mr Hewett was committed intentionally. The trial judge concluded there was not sufficient connection or nexus between the employment enterprise and the wrong to justify the imposition of vicarious liability on the employer for the wrong.

The case went on to the Court of Appeal who found the employer was vicariously liable as the employment presented the opportunity for the harm as the employer was required to live with the co-worker who caused the harm.

The case went on to the High Court which overturned the finding of vicarious liability concluding there was no connection between the act that caused the harm and the employment.

The majority of the High Court observed:

“The most that could be said to arise from the circumstance of shared accommodation was that it created physical proximity between the two men. It therefore provided the opportunity for Mr Hewett’s drunken actions to affect Mr Schokman. But, as has been seen, the cases hold that mere opportunity provides an insufficiently strong connection with the employment to establish vicarious liability.”

The High Court observed the act of the employee must be connected to employment to attract a finding of vicarious liability and noted:

“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.”

The employer was not vicariously liable for the acts of Mr Hewitt. They had no connection with the scope of employment.

Whilst vicarious liability for an employer can arise where an employee is placed in a position of power and intimacy over a person and the performance of that role can be said to give the occasion to harm to a person, as in a sexual abuse incident where a housemaster harms a student (decided by the High Court in Prince Alfred College Inc v ADC ), in Mr Schokman’s situation Mr Hewett was not assigned any special role concerning Mr Schokman and no part of what Mr Hewett was employed to do was required to be done in the accommodation. Vicarious liability could not extend simply because there was temporal and geographical nexus between the employment and the act of Mr Hewitt.

There will be a line drawn when there are considerations about the vicarious liability of an employer where the act of an employee has no connection with the scope of the employment.

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