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

A duty to prevent a person from harming others? The latest from the High Court

On 12 November 2014 the High Court handed down judgment in Hunter and New England Local Health District v McKenna, unanimously allowing an appeal against an award of damages arising out of the deliberate killing of a man by his severely psychiatrically disturbed friend. While the Court's judgment only directly concerns the liability in tort of medical practitioners who exercise statutory functions relating to the involuntary hospitalisation of psychiatric patients, it is likely to have significant implications for statutory bodies charged with the exercise of public functions.

The Facts

Early in the morning of 20 July 2004, Mr Stephen Rose became concerned about the mental state of his friend Mr Phillip Pettigrove, who suffered from schizophrenia. Mr Rose took Mr Pettigrove to Manning Base Hospital in Taree. Upon his arrival at the hospital, Mr Pettigrove was admitted as an involuntary patient under the former Mental Health Act 1990 (NSW).

During the afternoon of 20 July 2004, hospital staff examined Mr Pettigrove and discussed his condition with Mr Rose. It was determined that Mr Pettigrove would be discharged into the care of Mr Rose, who would take him by car to his mother's home in Echuca. On the morning of 21 July 2004, Mr Pettigrove and Mr Rose departed Taree for Echuca. That night, while in a delusional state, Mr Pettigrove strangled Mr Rose to death.

Mr Rose's mother and his two sisters alleged that they had sustained psychiatric injury as a result of Mr Rose's death and commenced proceedings for damages against the hospital authority. They alleged that hospital staff had been negligent in failing to order the continued involuntary treatment of Mr Pettigrove and that this negligence had been a cause of Mr Rose's death and of their subsequent psychiatric injuries. At trial, the plaintiffs were unsuccessful. However, they successfully appealed to the New South Wales Court of Appeal. The hospital authority then appealed to the High Court.

The NSW Act

Central to the case were the provisions of the NSW Act. Section 21 provided for the involuntary detention of a person in a hospital if a medical practitioner certified that he or she was mentally ill. However, the Act contained numerous safeguards to protect the rights of patients. In particular, it provided that a decision to involuntarily admit a patient was subject to multiple stages of internal review by specialist medical practitioners and that the involuntary admission of a patient pursuant to the order of a medical practitioner could not exceed three days' duration. Thus the Act manifested a strong bias against involuntary detention. This policy was reflected in the express terms of section 20 of the Act, which provided that involuntary admission was not to be ordered where a less restrictive treatment option was reasonably available.

Judgment

The High Court held that staff at the hospital owed no duty to take reasonable care in determining whether or not to order the continued involuntary treatment of Mr Pettigrove. The Court considered that this conclusion was mandated by the express terms of s 20 of the NSW Act and by other provisions which 'reinforced' the policy enunciated in s 20. The Court determined that to impose upon hospital staff a common law duty to take reasonable care in determining whether to order the continued involuntary treatment of Mr Pettigrove would be inconsistent with the strong presumption against involuntary treatment manifested in the Act.

Implications for Decision Makers

While the judgment of the Court directly concerns only the specific provisions of the (now repealed) NSW Act, it will be welcomed by parole boards, quarantine authorities and other decision makers whose powers require them to balance the interests of individuals against the interests of the wider community. The imposition of a duty to take reasonable care in the exercise of such powers has the potential to act as a potent incentive to a decision maker to make the decision that he or she considers least likely to result in an award of damages, rather than the one he or she considers to be correct or preferable. It thus may place a decision maker in an impossible situation in which the proper performance of a statutory function carries with it a risk of incurring liability in damages, while minimising the risk of liability entails neglecting the performance of a statutory duty. The judgment of the High Court contributes to a body of authority, which includes such cases as Sullivan v Moody, Regent Holdings v State of Victoria and X v State of South Australia, that holds that a duty of care will not be found to exist in such circumstances.

If you are in the Victorian Government and would like further guidance on decision-making, risk and liability, we can help.

Jonathan Bayly
t 8684 0223
jonathan.bayly@vgso.vic.gov.au