The High Court, in allowing the appeal in CCIG Investments Pty Ltd v Schokman [2023] HCA 21, refused to extend the application of vicarious liability for harm due to an unfortunate incident in employee accommodation. In this summary, we take a close look at the circumstances surrounding the case and what the potential implications of the High Court’s rulings are for employers.
Background
Mr Schokman was employed by Daydream Island Resort and Spa. His employment contract included a clause requiring him to live on the island and provided shared accommodation. Another worker, Mr Hewett, subsequently joined him in the accommodation.
Both men worked at a Resort restaurant. Late one evening Schokman was at a staff bar and Hewett arrived after his work. At around 1.00am Schokman returned to his room. An upset Hewett arrived shortly after and wanted to talk about work. With Schokman refusing to discuss work, Hewett left the room with some drinks.
Hewett returned at around 3.00am and was heard vomiting and hiccupping. Falling back asleep, Schokman was later woken distressed and unable to breath as Hewett was urinating on him and he was inhaling the urine. Schokman suffered a cataplectic attack (a loss of voluntary muscle tone triggered by emotional distress). Hewett was found to be in a semi-conscious state from intoxication and urinated on Schokman by mistake.
The Queensland Court of Appeal identified the requisite connection between Hewett’s employment and his wrongful action to hold the Resort vicariously liable. Importantly for the Court, Hewett occupied the room as an employee pursuant to his employment contract.
High Court’s findings
Vicarious liability is a difficult area of the law as it holds a party (an employer) liable for the wrongful acts of another party (an employee) whether those acts were authorised or not.
The test that “the employee's wrongful act be done in the course or scope of employment in order for liability to attach to the employer” can be difficult to apply. Whether a wrongful act occurs in the course or scope of employment involves considering the connection between the wrongful act and the employment. In line with relevant authorities, the High Court assessed features of the employment and whether the employment provided the “occasion” or mere “opportunity” for the wrongful act.
In rejecting the applicability of vicarious liability for Hewett’s negligent act of urinating on Schokman, the High Court concluded there was “no real connection” between the act and Hewett’s employment. In finding that Hewett’s act was not in the course of his employment, the Court noted the wrongful act had occurred outside Hewett’s workplace and work hours. The Court found that Hewett’s employment and living arrangements created nothing more “than the context or the location in which the tort was committed.”
Interesting observations
There was an interesting discussion by Edelman and Steward JJ from paragraph 50ff regarding three types of “vicarious liability”, of which only the second is true vicarious liability:
Agency, involving attributed acts, which is actually primary (not vicarious) liability, as the acts are authorised and/or part of a joint enterprise (par 50, with further detail at 55-58).
Vicarious liability in the true sense, involving attributed liability (not acts). The acts may not have been authorised but were “sufficiently or closely connected to the employee's duties or powers of employment so that they could be said to have been performed in the ‘course of their employment’. This Court has not extended vicarious liability in this sense beyond employees” (paragraph 51, with further detail at 59-69 including an interesting historical perspective of how the law moves to accommodate commerce becoming more remote).
Non-delegable duty, where someone delegates authority but “could not ‘cast off this duty by handing over the performance of it’ to another” and this area is ‘not confined to employers’ (paragraph 53, with further detail at 70-81).
In the present case, the question was whether the other employee’s (Hewett’s) “act of negligent urination was so closely connected with Mr Hewett's employment duties that the act could be said to have occurred in the course of Mr Hewett's employment”, which was answered in the negative. Paragraph 87-88 assesses the facts as follows:
“Mr Hewett did not perform the negligent act of urination during his hours of work. He did so around 3.30 am after he had been drinking at the staff bar on his leisure time. Mr Hewett did not perform the negligent act at the place at which he was employed to perform work, as a team leader at the ‘Mermaids’ restaurant. He did not perform the negligent act at a time and place where his employer was permitted to be present or to monitor him. His employer's power, set out in the Letter of Appointment provided to employees, to ‘monitor its offices and employees’ did not extend to surveillance of Mr Hewett on his leisure time or in his personal accommodation. Mr Hewett's employment duties to take reasonable care that his ‘acts or omissions do not adversely affect the health and safety of other persons’ and not to ‘attend work having consumed alcohol or drugs’ were concerned only with his duties while working for his employer as a restaurant team leader, not with his conduct during his leisure time. Mr Hewett's negligent actions were not closely connected with any of his duties or powers of employment. The actions were not in Mr Hewett's course of employment. The appellant, as his employer, cannot be attributed with Mr Hewett's liability for negligence.”
Implications
Although the law of vicarious liability has evolved to hold employers liable for wrongful, unauthorised acts, the High Court held Hewett’s wrongful negligent acts fell outside the limits of vicarious liability. Despite this decision, vicarious liability remains a powerful avenue to hold an employer liable for damage caused by the wrongful acts of an employee.
Where you are injured due to the wrongful acts of another, being able to attribute liability to the wrongdoer’s employer through vicarious liability enhances the prospects of receiving compensation.
As discussed by the High Court, employer liability is a complicated area. In addition to vicarious liability, an employer may be held liable under the laws of principal/agent and/or a non-delegable duty of care.
Our team is experienced in navigating this area of the law and we will maximise your likelihood of receiving compensation for damage due to another’s wrongdoing.
How can I learn more?
Harry Gill.
Founding Principal.
Harry’s extensive career in Injury Law highlights his dedication to successful and fair outcomes for his clients.
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