Schokman v CCIG Investments Pty Ltd

At first instance the employer had not been found vicariously liable since the tort which had been committed against the employee had not occurred in the course of his employment. The Court of Appeal differed, making an award of damages in the appellant’s favour as provisionally assessed by the trial judge. In doing so the Court has arguably expanded the scope of vicarious liability, on the basis that its decision means an employer can be liable for misconduct which takes place outside of work hours where there is a connection between the injured employee’s employment and a colleague’s actions.

Fraser and McMurdo and Mullins JJA

18 March 2022

The incident which resulted in the appellant’s personal injury was unsavoury. He was asleep in staff accommodation which he shared with a colleague. He woke up “with a distressing sensation of being unable to breathe” due to the fact that his colleague, highly intoxicated, was urinating on him. [2]. The incident triggered a cataplectic attack [3] and has caused post traumatic stress disorder. [4].

Relevantly the appellant’s employment contract contained a term which stated:

“As your position requires you to live on the island, furnished shared accommodation located at Daydream Island Resort and Spa will be made available to you when engaged in this position at a cost of $70 per week.” [30].

The reasoning at first instance

Justice Crow did not accept that the actions of the appellant’s colleague were committed in the course of his employment. He also held that there was an insufficient connection between the employment enterprise and the incident to warrant the imposition of vicarious liability on the defendant for the wrong caused to the appellant. He pithily stated:

“I do not consider it a fair allocation of the consequence of the risk to impose vicarious liability upon the defendant employer for the drunken misadventure of Mr Hewett in respect of his toileting.” [28].

Citing Bazley v Curry [1999] 2 SCR 534, his Honour’s view was that it was unfair to impose a vicarious liability on the respondent, as a “fair allocation of the consequences of the risk created by [the respondent’s] business.” The Court of Appeal considered that a misapplication of the test. [28].

Vicarious liability: consideration on appeal

The Court noted that in Prince Alfred College Inc v ADC (2016) 258 CLR 134 the High Court observed that often the issue as to whether an act falls within the course or scope of employment is not straightforward. In that regard the court cited the remarks of Sir John Salmond who proposed tests for determining whether an act was in the course of employment, namely (a) whether it is authorised by the employer; or (b) whether it is an unauthorised mode of doing some other act authorised by the employer. Importantly his Honour went on to state that “an employer would also be liable for unauthorised acts provided that they are ‘so connected’ with authorised acts that they may be regarded as modes, although improper modes, of doing them.” (See Prince Alfred College Inc v ADC (2016) 258 CLR 134 at 41–42).

Here, the Court reasoned that the current matter was analogous to Bugge v Brown (1919) 26 CLR 110, albeit the act in that case occurred in the provision of sustenance to the employee instead of accommodation. In that case, an employer was deemed vicariously liable for the negligence of its employee on a grazing property who lit a fire which spread and damaged an adjoining farm. The court in that matter said:

“The limit of the rule — expressed in the widest form by the phrase ‘the course of the employment’ or ‘the sphere of the employment’ — is when the servant so acts as to be in effect a stranger in relation to his employer with respect to the act he has committed, so that the act is in law the unauthorized act of a stranger … This is the root of the matter … The act of the servant complained of is regarded as outside the relation, and as that of a stranger: (a) if he did not assume to act within the scope of his employment … or (b) if what he did was a thing so remote from his duty as to be altogether outside of, and unconnected with, his employment …” ((1919) 26 CLR 110 at 117–118)

Noting that the appellant’s colleague was contractually obliged to reside in the staff accommodation on the island, and within the room specifically assigned to him; that the terms of his employment required him to take reasonable care that his acts did not adversely affect the health and safety of other persons; and that he was not occupying the room as a stranger, but instead as an employee, pursuant to and under the obligations of his employment contract, accordingly the court held that in this novel case the requisite connection between his employment and the employee’s actions existed. In its view, it was appropriate that the employer be held to be vicariously liable for his negligence and the loss which it caused. [42]

Disposition

In the result, the appeal was successful. [207].

A Jarro