October 2016

Winners and losers: Guidelines for vicarious liability of employers for wrongful acts

The law regarding the extent to which employers are vicariously liable for wrongful acts by an employee has been historically unclear. 

The judgment delivered by the High Court in Prince Alfred College Incorporated v ADC on 5 October 2016 has gone some way to clarifying the point.  The High Court has provided a test, being the “relevant approach” test, for an analysis of vicarious liability in respect of an employee’s wrongful acts.

Facts           

In 1962, ADC was a pupil at Prince Alfred College in South Australia.  He was a boarder at the school and was sexually abused on numerous occasions by Bain, a boarding housemaster.

In December 2008, ADC brought proceedings against the College in the Supreme Court of South Australia.  He alleged that the College was liable for breach of a non-delegable duty of care and breach of its duty of care (such as failing to background-check Bain), and that it was vicariously liable for Bain’s wrongful acts.  Due to the passage of time, the respondent required an extension of time to bring proceedings under the South Australian Limitations Act.

Issues

The High Court considered two primary issues:

  1. Whether the College should be vicariously liable for the criminal conduct of its employee; and

  2. Whether the limitation period to bring a claim of this nature should be extended.

The appeal

The Supreme Court dismissed ADC’s claims.  The trial judge held, by reference to New South Wales v Lepore, that the non-delegable duty of care which the College owed to ADC did not extend to a duty to protect him against the intentional criminal conduct of Bain.  Her Honour refused to grant an extension of time due to the prejudice suffered by the College by reason of the "extraordinary" delay in commencing proceedings.

However, on ADC’s appeal, the South Australian Full Court held that the College was vicariously liable for the assaults committed by Bain because of the “close connection” between the boarding master and the opportunity to abuse, given the authority he had at the College.  The Full Court also held that an extension of the limitation period should be granted.

The High Court decision

On further appeal by the College, the High Court held that the trial judge was correct not to have granted an extension of time.  The plaintiff’s decision in 1997 not to commence proceedings was significant in this regard.  The Court also held the absence, either by death or ill health, of a number of critical witnesses and loss of documentary evidence made it no longer possible for there to be a fair trial.

This issue effectively determined the appeal. The High Court did, however, provide some useful guidelines as to the requirements of a finding of vicarious liability for intentional torts.

The High Court held the “relevant approach” is the appropriate test to be considered.  This test requires the court to consider the position an employer gives to an employee in relation to a victim i.e. positions of authority, power, trust, control and the ability to achieve intimacy with the victim. 

They concluded that taking this “relevant approach” will result in outcomes where some plaintiffs will win and some will lose, such that applications of the approach must be developed on a case by case basis.

Comment

The High Court readily acknowledged the longstanding problems in this area of the law. It summarised those difficulties by stating that (a) the mere fact that a wrongful act is a criminal offence does not preclude a finding that the employer is vicariously liable, while (b) the fact that the employment affords the opportunity for an employee to commit a wrongful act is not of itself sufficient to attract vicarious liability to the employer.

It seems to us that the guidelines set down above will make it very difficult for a school or church to successfully avoid findings of vicarious liability for sexual abuse, because in many of the cases, the employer will indeed have put the offender/employee in a position where he could be intimate with the victim.

However, in cases of assault (for instance, where an employee strikes a member of the public, who then seeks to hold the employer liable), one would think that the plaintiff would have some trouble getting himself under the guidelines set down by the High Court.

In terms of how this affects worker’s compensation claims, injuries which resulted from criminal acts by employees, may now be seen as arising out of or within the scope of employment, for which the employer can be made vicariously liable.

The effect of this decision brings the following questions to the forefront of this decision: Is it fair for employers to be held vicariously liable for the wrongful acts of its employees in situations where the employer has no knowledge of these acts? Secondly, just because an employer provides a position of authority to an employee, and that employee takes advantage of his position, should the employer then be vicariously liable? 

Taking a page out of the High Court’s book, the “relevant approach” to vicarious liability will create winners and losers, yes, but is anyone actually winning?  

Authors: David Greenhalgh and Aprille Lim

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