Vicarious liability - when will an employer be liable for the wrongful acts of an employee?

The recent High Court decision of Prince Alfred College Incorporated v ADC [2016] HCA 37 (PAC) provides guidance on the approach to be taken by courts in determining whether an employer is liable for the wrongful (criminal) acts of an employee. The previous leading case, New South Wales v Lepore [2003] HCA 4 (Lepore), provided no majority view in respect of this issue.

PAC is highly relevant to government departments and agencies, as it specifically concerns the approach to be applied in cases dealing with the abuse of vulnerable persons in educational, residential or care facilities, by persons employed in special positions with respect to these vulnerable persons.

Background

In 1962, ADC was a 12-year-old boarder at Prince Alfred College in Adelaide (College). A senior housemaster and three housemasters, including Dean Bain (Bain), were in charge of the dormitories. Although the housemasters were present during meal times, prefects supervised the day-to-day activities of the junior boys, including showering and lights out. Bain was rostered on a few times a week, was often around during shower time, and told stories to the boys in the dormitory after lights out. The other housemasters did not supervise lights out and did not come into the dormitory. ADC alleged that Bain first molested him when Bain was telling a story during lights out, progressing to being molested in Bain's room, and on one occasion when Bain took him to a house where they spent the night together.

Primary proceeding 

ADC sued the College, arguing (among other things) that it was vicariously liable for Bain's abuse, which had caused him to suffer psychological injury. It was not in dispute that ADC had been abused by Bain, as he had been previously convicted of two counts of indecent assault against ADC. The primary judge dismissed the proceeding, declining to extend the time for ADC to bring proceedings. In respect of the vicarious liability claim, Vanstone J concluded that the sexual abuse was 'so far from being connected to Bain's proper role that it could neither be seen as being an unauthorised mode of performing an authorised act, nor in pursuit of the employer's business, nor in any sense within the course of Bain's employment'.

Appeal to Full Court

ADC appealed to the Full Court of the Supreme Court of South Australia, and was granted an extension of time to bring the proceeding. Each member of the Full Court also found the College to have been vicariously liable, but the approaches taken by the judges differed from that taken by the primary judge and differed as between themselves. Factors considered by the judges included the 'spectrum' of intimacy (in this case, ADC being a 12-year-old boarder with a housemaster exercising quasi-parental authority in respect of 'intimate' matters such as showering and bed), that the College enhanced the risk by allowing Bain access to the children without supervision, and that Bain was in a position of power over ADC, with respect to matters of order and discipline.

Appeal to High Court 

The High Court allowed the appeal by the College on the basis that an extension of time to commence the proceeding should not have been granted by the Full Court, and that the issue of liability should not have been considered by the primary judge (ie after the judge had determined the proceeding was out of time). However, the High Court acknowledged that, since Lepore, lower courts have been left in an uncertain position about the approach that should be taken in vicarious liability cases of this kind, and that there was a need for guidance to reduce the risk of unnecessary appellate processes arising out of the existing uncertainties.

The relevant approach 

The majority judgment held that the fact that a wrongful act is a criminal offence does not preclude the possibility of vicarious liability, it being possible that in the commission of that act, the employee used or took advantage of the position in which the employment placed the employee in relation to the victim.

Their Honours considered therefore that the relevant approach in determining vicarious liability is to consider any special role that the employer has assigned to the employee, and the subsequent relationship between the employee and the victim, with particular regard to the following features:

• Authority;
• Power;
• Trust;
• Control; and
• The ability to achieve intimacy with the victim. 

It was noted that the latter feature may be especially important, it being conceivable that where an employee takes advantage of his or her position in these circumstances, that may suffice to determine that the wrongful act should be regarded as being committed in the course or scope of employment, and as such render the employer vicariously liable. However, their Honours also noted that it was conceivable that while unlawful acts committed in a workplace would attract vicariously liability, some or all of such other unlawful acts committed outside the workplace would not (for example, the offending by Bain which occurred in a house).

The minority judgment accepted that the relevant approach described in the majority judgment will now be applied in Australia, but noted that it does not and cannot prescribe an absolute rule, and that applications of the approach must and will develop case by case.

Andrea Robinson
Principal Solicitor

Anna English
Managing Principal Solicitor

As a landlord, do I have to comply with the Retail Leases Act 2003?

As a general rule, landlords, particularly landlords of commercial properties, enjoy superior bargaining power when it comes to leasing their properties.  The terms and conditions of leases are set by the landlord and, subject to market conditions and the bargaining power of a potential tenant, are often non-negotiable.  In these circumstances, the only option for a potential tenant may be to walk away from the transaction.

The Retail Leases Act 2003 (Act) addresses this imbalance in bargaining power for leases of retail premises in a number of ways, for example by providing that:

• a landlord cannot pass on to a tenant the cost of preparing and negotiating the lease; 
• a landlord must consent to a tenant's request for assignment of the lease except in limited circumstances;
• a tenant has a right to a minimum term of 5 years, even if the lease provides for a shorter term.  However, a tenant can contract of out this right if the tenant obtains a certificate from the Small Business Commissioner under s 21(5) of the Act and gives the landlord a copy of the certificate; and
• a landlord is responsible for undertaking certain repairs and maintaining the premises in certain ways.

What are 'retail premises'?

The Act applies to leases of 'retail premises' entered into or renewed after 1 May 2003.
'Retail premises' are premises that, under the terms of the lease, are used wholly or predominantly for:

• the retail sale or hire of goods;
• the retail provision of services; or
• the carrying on of a specified business or specified kind of business as determined by the Minister.

Exemptions to the Retail Leases Act 2003

Not all retail tenancies are leases of 'retail premises'.  Some types of leases are exempt from the application of the Act, and the Minister for Small Business, Innovation and Trade has the power to exempt further kinds of business, premises, tenant or leases.
In Government, some of the more commonly encountered categories of exempted leases are:

• Local council premises used wholly or predominantly for public or municipal purposes;
• Leases for premises used wholly or predominantly for public or municipal purposes with a rent of $10,000 or less;
• Premises where occupancy costs under the lease are more than $1,000,000 p/a;
• Premises where the tenant carries on the business as the landlord's employee or agent;
• Premises where the tenant is a listed corporation or its subsidiary;
• Premises located above the first three storeys in a building used for retail purposes; and
• Leases 15 years or longer in duration that impose substantial obligations on the tenant.

Why does it matter?

The Act alters the balance of power between tenants and landlords by imposing a number of obligations on landlords and creating various tenant rights.  In order to understand their rights and obligations, landlords and tenants must know whether their lease is governed by the Act.  Departments and Agencies proposing to grant a lease of retail premises should always check whether an exemption applies.
As property law experts within Government, the VGSO Property Team is well placed to assist you with land use arrangements and other property issues.  For further advice and assistance, please contact:

Anthony Leggiero
Managing Principal Solicitor
9947 1430

Elizabeth Wortley
Senior Solicitor
9947 1433

For their eyes only? When can an employer access and use information on an employee's Facebook page?

Supreme Court confirms public sector employer has privacy obligations with respect to personal information on an employee's Facebook page but may use that information where there's a legitimate reason to do so (such as reasonably conducting a legitimate employment misconduct investigation).

A recent decision of the Supreme Court of Victoria (Jurecek v Director, Transport Safety Victoria [2016] VSC 285) provides guidance about when a public sector employer may access an employee's social media publications without breaching privacy laws.
The proceeding was brought under the Information Privacy Act 2000 (the Act), but the Court's findings are relevant to the Privacy and Data Protection Act 2014  because the Information Privacy Principles (IPPs) under both Acts remain the same in all material respects.

The Facts

The employee engaged in various Facebook activity, including posts and messages that were abusive and critical of her employer and other employees.  The employee operated her Facebook page under a pseudonym with privacy settings, although these did not fully restrict access to the Facebook page.
The employer was made aware of the activity and initiated a disciplinary investigation.  For the purposes of that investigation the employer accessed the employee's Facebook page, initially without her knowledge, and took screenshots of the content.

The employee was disciplined following findings of misconduct.

The employee lodged a complaint with the Privacy Commissioner, alleging that the employer had breached the IPPs by accessing her Facebook page.  The Privacy Commissioner dismissed the complaint and the matter was referred to the Victorian Civil and Administrative Tribunal (VCAT).  VCAT also dismissed the complaint and the employee appealed VCAT's decision to the Supreme Court.

Social media posts may be 'personal information' for the IPPs

The employer contended that, because the employee’s Facebook posts were accessible by anyone, they possessed the character of a 'generally available publication' and were therefore exempt from the operation of the IPPs under the Act.

The Court disagreed, taking the view that the mere publication of information on Facebook or the Internet does not necessarily make it a ‘generally available publication’.
Whether such information is a 'generally available publication' will depend on the facts and circumstances as a whole, the nature of the information, the prominence of the site, the likelihood of the access and the steps needed to access the site.

In this case, the Court found that the employee's Facebook posts were not 'generally available' and, because the posts expressed her opinion, they satisfied the definition of ‘personal information’ for the purposes of the Act.  Accordingly, the IPPs applied and the Court needed to determine whether they had been breached.

Employers may access an employee's social media posts if reasonably necessary for an investigation

The employee claimed that the employer was not lawfully entitled to access and collect her personal information (ie her Facebook posts) because such collection was not 'necessary for one or more of the organisation's functions or activities'.

The Court agreed that the employer could only access and collect the employee's personal information if it was necessary for the organisation's functions or activities.  However, the Court found that the disciplinary investigation was a function of the employer’s organisation and that accessing the employee’s Facebook account for that purpose was legitimate and necessary and not unlawful, unfair or unnecessarily intrusive.

Employers need to inform employees when they collect personal information from social media, but not necessarily immediately

The employer delayed notifying the employee about its collection of her personal information.  The employee claimed that this delay constituted a breach of the IPP notification obligations.
The Court rejected that claim.  It held that the IPPs do not impose an obligation of immediate notification but rather an obligation to take such steps as early as practically possible.  In this case, it was reasonable for the employer not to notify the employee earlier because it could have jeopardised the integrity of the disciplinary investigation.

Key implications

• Public sector employers may collect personal information from an employee’s social media page, but only when it is necessary for one or more of the organisation’s functions.
• If access to an employee's social media page is reasonably necessary for a disciplinary investigation, accessing that page and collecting relevant information is unlikely to breach the IPPs.
• If an employee's personal information is collected, employers must take steps to notify the employee as early as is reasonable in the circumstances.  Employers do not need to notify an employee immediately if doing so would jeopardise a disciplinary investigation or other legitimate purpose.

As the Court noted, 'matters of fact and degree are involved' and it is necessary to balance, 'in a reasonably proportionate way', 'what is at stake for the individual' with the 'nature and importance of any legitimate purpose' and 'the extent of the interference'.  This means that each situation needs to be considered on its merits.

To discuss workplace relations further contact:

Rosemary Robins
Solicitor
Workplace Relations & Occupational Safety
9032 3036

Jacqueline Parker
Assistant Victorian Government Solicitor,
Workplace Relations & Occupational Safety

9032 3011