When can an employer be held vicariously liable for an employee's wrongful act?
Vicarious liability is an important feature of law and policy which is based on the principle that it is fair to impose liability on an employer where an employee, in carrying out an employer’s business, causes loss to an innocent party.
An enquiry as to whether an employer should be held vicariously liable for an employee’s wrongful act has long been determined by considering whether the act falls within the course or scope of employment. However, the answer to this question is not always straightforward and is inherently fact-specific. In CCIG Investments Pty Ltd v Schokman  HCA 21, the High Court has provided further guidance as to the course of employment test which will be useful in both general liability and institutional sexual abuse matters.
Mr Schokman commenced employment with CCIG Investments Pty Ltd (CCIG) at a resort on Daydream Island in 2016. It was a requirement of his employment that he reside on the Island and so CCIG provided furnished, shared accommodation for its staff. Mr Schokman shared his room with another employee of CCIG, 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 woke to Mr Hewett urinating on his face. It was common ground that the urination event was an accident. Mr Schokman was distressed and unable to breathe and suffered a cataplectic attack as a result of the incident. Mr Schokman alleged that he experienced ongoing exacerbations of his narcolepsy and his cataplexy, as well as PTSD and an adjustment disorder, as a result of the incident. Mr Schokman brought proceedings against CCIG, relevantly claiming that CCIG was vicariously liable as an employer for the negligent act of Mr Hewett because that act was done in the course or scope of Mr Hewett’s employment.
Lower Court decisions
As well as rejecting Mr Schokman’s claim of negligence, the Supreme Court of QLD did not accept that CCIG was vicariously liable for Mr Hewett’s actions on the basis that they were not committed in the course of his employment. While the Court accepted that the occasion for the act arose out of the requirement of shared accommodation, the Court did not consider that it was a fair allocation of risk to impose vicarious liability on CCIG for Mr Hewett’s actions while intoxicated.
Mr Schokman appealed to the QLD Court of Appeal in relation to the vicarious liability finding. The Court of Appeal allowed the appeal, finding that CCIG was vicariously liable on the basis of a sufficient connection between Mr Hewett’s actions and his employment, given that it was a requirement of their employment that Mr Hewett and Mr Schokman share accommodation.
The High Court decision
The High Court allowed the appeal and decided that CCIG was not vicariously liable for Mr Hewett’s drunken act. The Court acknowledged, as previous authority has done, that the question of whether an act occurs in the course or scope of employment is essential to vicarious liability and depends on the facts and circumstances of the particular case, including what the employee was actually employed to do and being held out as being employed to do. The Court found that Mr Hewett’s act of urination was not in any way authorised, required by or incidental to his employment. The Court noted that the shared accommodation created physical proximity between the two men and provided the opportunity for Mr Hewett’s actions to impact Mr Schokman, but that this was not a sufficiently strong connection with Mr Hewett’s employment to attract vicarious liability.
The Court drew a distinction between cases such as Prince Alfred College Inc v ADC, an institutional sexual abuse case involving allegations of sexual abuse of a boarding student by the school’s employed housemaster, whose role included supervising boarders outside of school hours and overnight. In such cases, the employment of the perpetrator provides the very occasion for the wrongful act and factors such as authority, power, trust, control and intimacy become relevant. However, in this case there was no special role as between Mr Hewett and Mr Schokman and no part of what Mr Hewett was employed to do was required to be done in the shared accommodation.
The High Court’s decision has cemented the requirement that acts be committed in the course or scope of employment in order for employers to be vicariously liable. The Court has made clear that more than a tenuous connection to employment is required, such that the employment must provide more than just the opportunity for the wrongful act, but also the occasion for it. Noting that each case will necessarily turn on its own facts, the decision will provide some comfort to employers who provide accommodation for their employees outside of their contracted hours.
For institutional sexual abuse cases, which Maddocks frequently advises on, the decision confirms previous authority that in determining whether the ‘occasion’ for the wrongful act is present, Courts will consider whether the perpetrator was assigned any special role as against the victim. The Court will look at factors such as authority, power, trust, control and intimacy in order to determine the enquiry and if such factors are present then there is likely to be a strong connection to the perpetrator’s employment sufficient to attract vicarious liability.
 (2016) 258 CLR 134
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