Vicarious liability exposed

A new High Court decision has clarified the law on vicarious liability for wrongdoings by employees, Adelaide barrister Mark Livesey QC told the AILA conference.

A, DC v Prince Alfred College (PAC) considered vicarious liability for unauthorised predatory sexual abuse by a boarding school house master in 1962.

In the SA Supreme Court, Justice Vanstone had dismissed the plaintiff’s claim. The Full Court overruled her, giving judgement for damages to be assessed. The High Court allowed the appeal, dismissing the plaintiff’s claim.

Although the court did not determine vicarious liability, restoring the judgement for the defendant on the ground there should have been no extension of time, the majority set down what it described as "the relevant approach" for determining vicarious liability for intentional wrongdoing in Australia.

The decision emphasised policy considerations against extensions of time. Mr Livesey said it would be particularly relevant to cases involving historical allegations where evidence was sparse, even if a limitation statute was not in force.

Until 2003, the leading Australian judgement on vicarious liability was Deatons Pty Ltd v Flew.

An inebriated patron made derogatory remarks about and to a barmaid. Scorned, she threw a full glass of beer in the patron’s face and then threw the glass. The patron lost an eye.

An argument the barmaid was responsible for keeping order in the bar and throwing the glass was a form of facilitating order was rejected. The glass was not thrown to restore order or enforce discipline. And that was the senior barmaid’s job.

The assault was personal and a retributive act of "passion and resentment".

From Deatons, two situations where an employer could be held vicariously liable for an employee’s intentional wrongdoing emerged. Mr Livesey defined them as:

• The general and somewhat indefinite position that the barmaid was there to deal with customers and situations and that was how she dealt with the plaintiff and the situation he caused. It was not a negligent or improper act, due to error or ill judgement, but done “in the supposed furtherance of the master's interests”.

• “Nor is it a wrongful act done for the servant's own benefit for which the master is liable when they are acts to which the ostensible performance of his master's work gives occasion or which are committed under cover of the authority the servant is held out as possessing or of the position in which he is placed as a representative of his master,” Mr Livesey said.

Those categories provided the foundation for the vicarious liability doctrine in Australia.

In 2003 the High Court handed down the first judgement on vicarious liability for criminal wrongdoing since Deatons.

But New South Wales v Lepore provided no clear or settled statement of the law on employers’ vicarious liability for intentional wrongdoings of employees.

Lepore’s case dealt with three separate instances of sexual abuse committed by a teacher. In each, the plaintiffs alleged their respective states should be held liable for the conduct of their employed teachers. Although all three cases were initially decided applying the principle of non-delegable duty, the court was resolute that vicarious liability was the appropriate legal principle.

Disparate approaches were taken by the court, which proved problematic for judges of state courts tasked with having to determine vicarious liability on the authority of Lepore.

In PAC, A was 12 years old when he was enrolled as a boarder at Prince Alfred College. During that year, a teacher and assistant boarding housemaster sexually assaulted him in the dormitory, at the school and elsewhere over some months. Immediately after the abuse was reported the housemaster was dismissed.

For many years A experienced a range of difficulties and in 1996 his symptoms intensified and he was diagnosed with post-traumatic stress disorder. He continued to experience difficulties that pervaded relationships and his ability to run his business. In 1997 he attended meetings with the school. Lawyers were engaged on both sides.

Eventually it was agreed the school would cover A’s medical and legal expenses, and the remaining education expenses of his son who was attending Prince Alfred College. His legal advice, paid for by the school, was to not sue the school because he would lose. The plaintiff said he had no intention of suing.

Over the next year the plaintiff settled an action against the housemaster. At that stage he was content. However his life was soon plagued by anxiety, depression and suicidal thoughts, and a mounting financial debt.

Eleven years after agreeing terms with the school he instituted proceedings on 4 December 2008.

Under the Limitation of Actions Act (SA) he was required to institute proceedings in 1973, within three years of attaining the age of 21 years. The claim against the school was put on three bases: negligence, breach of a non-delegable duty, and vicarious liability for the wrongdoing of the housemaster.

It was never in issue A was assaulted; the housemaster was convicted in 2007 on two accounts of indecent assault.

However witnesses who would have been expected to give evidence at the trial were dead and the senior boarding housemaster who supervised the housemaster was unable to give evidence. The psychologist’s notes of early consultations with A in 1996 and 1997 had been destroyed.

 The trial judge rejected the claims in negligence and based on non-delegable duty, and found the school was not vicariously liable. She did not consider an extension of time should be granted. She said there was ‘actual prejudice’ suffered by PAC by the delay, in particular, the loss of significant evidence and witnesses.

The appeal against negligence failed, by a majority, and against non-delegable duty, unanimously. However the Full Court unanimously allowed the appeal on the questions of vicarious liability and an extension of time, albeit for very different reasons.

Every member of the Full Court considered an extension of time was justified.

"In the High Court neither party suggested overruling Deatons v Flew. It was argued the relevant issue for determining this exceptional form of liability was the degree of connection between the duties allocated by the employer and the wrongdoing," Mr Livesey said.

The crux of the vicarious liability argument, and the suggested error in the Full Court’s decision, lay in determining the housemaster’s duties.

Speculation or assumption about the duties of a housemaster over half a century after the relevant events was said to be inappropriate. Critically, there was no evidence to support the assertion boarders required settling by masters after lights out, or that was an instructed or authorised duty of boarding housemasters.

The argument put to the High Court was the Australian approach required that the actual duties of the employee be analysed with specificity. In that sense, before considering whether intimacy, such as sitting on the beds after lights out, was explicitly authorised, one must first analyse whether entry into the dormitories was explicitly directed or authorised.

The High Court unanimously allowed the appeal on 5 October and a majority of the court took the opportunity to thoroughly examine vicarious liability.

Acknowledging the uncertainty Lepore generated, the court reaffirmed intentional criminal conduct by an employee did not exclude a potential finding of vicarious liability. However they cautioned that, where the employment gave only the opportunity for wrongdoing, that would not warrant a finding of vicarious liability.

Ultimately, the Court considered the correct approach was to assess any special role assigned to the employee by the employer where the employee was placed ‘vis-à-vis the victim’.

Drawing from CJ Gleeson’s judgement in Lepore, the court said factors such as authority, power, control, trust and ability to achieve intimacy with the victim would all assist in determining whether an employee’s role gave occasion for the act.

Despite clarifying the test, the court considered neither the trial judge, the Full Court nor the High Court could decide liability because of the loss of evidence due to the passage of time.

The court emphasised that an extension of time was not a presumptive right, simply because an individual met the statutory criteria.

Prejudice was not remedied by awarding lower damages. That offended the right of a party to a fair trial. The fact A had made a conscious decision not to pursue a claim earlier, and had notified PAC accordingly, also weighed heavily.

That fact alone was regarded by Justices Gageler and Gordon as sufficient to refuse the extension of time.

"Although many jurisdictions have enacted provisions that remove time limitations for injury resulting from child abuse, the principles outlined by the High Court are relevant to other limitation cases," Mr Livesey said.