The High Court of Australia has provided insights into what constitutes ‘in the course or scope of employment’ in regards to vicarious liability.
A recent 2 August 2023 High Court of Australia (High Court) ruling in the matter of CCIG Investments Pty Ltd v Schokman (HCA case) provides a landmark “principled approach for the imposition of vicarious liability on… non-guilty employer[s].”
In practical terms, the High Court has clarified the scope for the ‘course or scope of employment’ test, which is the relevant test for discerning whether vicarious liability applies. The recent judgment clarifies that vicarious liability cannot be imposed where the employer did nothing more than merely provide shared staff accommodation. The HCA case has given employers a clearer direction on how to best equip themselves to prevent situations that may expose them to vicarious liability.
What is Vicarious Liability?
Vicarious liability is a legal concept which holds one party accountable for the actions of another, regardless of whether there is fault or not. This type of strict liability is most often linked to employer and employee relationships, with employers liable for an employee’s negligence if it took place within their duties. An employer can be liable for negligent acts or omissions by an employee “in the course of employment”, regardless of whether there is permission for the action.
Background to the HCA Case
Mr Aaron Schokman was a Food and Beverage Supervisor. He was the supervisor of Mr Sean Hewett, who was a Team Leader. The employer was CCIG Investments Pty Ltd (CCIG), who did nothing more than require the two men share staff accommodation.
In the early hours of 7 November 2016, an intoxicated Mr Hewett, negligently urinated into the mouth of Mr Schokman, the injured employee (who had pre-existing cataplexy and narcolepsy), whilst Mr Schokman slept in staff accommodation shared with Mr Hewett.
Narcolepsy is “a sleep disorder characterised by overwhelming daytime drowsiness and sudden attacks of sleep,” and cataplexy is “a sudden and ordinarily brief loss of voluntary muscle tone triggered by strong emotions, such as laughter or emotional stress.” CCIG did not, among other things, ascertain the suitability of the two employees sharing accommodation. However, this was found to not be instrumental to finding the meaning of ‘during the course or scope of employment.’
Moments after the tortious act, Mr Schokman experienced a cataplectic attack and ultimately suffered an adjustment disorder which resulted in impairment. It was found that the tortious act exacerbated Mr Schokman’s conditions.
Cause of action
Mr Schokman’s primary claim was that CCIG breached its duty of care by “failing to instruct Hewett appropriately or at all with respect to appropriate levels of conduct within the accommodation.” His alternative claim was that Mr Hewett committed a tort for which CCIG was vicariously liable.
In conceding that it was necessary to abandon the claim that CCIG breached its duty of care in his first court outcome, Mr Schokman appealed the decision on the strength of the alternative claim, being that CCIG was vicariously liable because the tort was committed in the course of Mr Hewett’s employment.
What the case law says
The seminal matter of Prince Alfred College v ADC(Prince Alfred College) was argued by Mr Schokman as being analogous. The HCA case upheld Prince Alfred College, which states, relevantly:
“… [the] relevant approach is to consider any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim. In determining whether the apparent performance of such a role may be said to give the “occasion” for the wrongful act, particular features may be taken into account. They include authority, power, trust, control and the ability to achieve intimacy with the victim. The latter feature may be especially important. Where, in such circumstances, the employee takes advantage of his or her position with respect to the victim, that may suffice to determine that the wrongful act should be regarded as committed in the course or scope of employment and as such render the employer vicariously liable.”
[our emphasis added]
CCIG submitted that that test was “… perhaps productive of more questions than answers.” Unsurprisingly, the Prince Alfred test was applied per contra (i.e. oppositely) in the two preceding judgments. Whilst Prince Alfred College remains valid case law, the High Court rejected the case as being entirely analogous and clarified its interpretation of the meaning of ‘in the course or scope of employment.’ To do this, the High Court found that the shared accommodation only created physical proximity between the two men, but this did nothing more than provide a mere opportunity:
“Mr Hewett was not assigned any special role concerning Mr Schokman and no part of what Mr Hewett was employed to do was required to be done in the accommodation.
The most that could be said to arise from the circumstance of shared accommodation was that it created physical proximity between the two men. It therefore provided the opportunity for Mr Hewett’s drunken actions to affect Mr Schokman. But, as has been seen, the cases hold that mere opportunity provides an insufficiently strong connection with the employment to establish vicarious liability.”
[our emphasis added]
Another case that was argued by Mr Schokman as being analogous was Bugge v Brown in the context of the tortious act having occurred where the employee was on a ‘break’ and that the requirements of employment were being fulfilled by both employees. In that case, “the employee’s act, lighting a fire, was in preparation for the employee’s midday meal whilst working remotely. It occurred whilst he was carrying out his work.” Neither Mr Schokman nor Mr Hewett were carrying out work at the time of the act.
However, similarly to the High Court’s observations when considering Prince Alfred College, the High Court said in the HCA case:
“… Mr Hewett could only be said to be acting in accordance with his employment contract by sharing the accommodation provided for and being present in it. As has been explained, that does not provide a proper connection to the employment.”
[our emphasis added]
This is in accord with the established policy of the law that an employer ought not be held accountable for activities unrelated to their employment. Furthermore, any actions taken by an employee when they are acting independently and without authorisation from their employer will not lead to liability.
Takeaways from the High Court
It was submitted by CCIG at the Court of Appeal (where the case was lost) that the “tortious act was so remote from his duty as to be altogether outside of and unconnected with his employment.” The High Court has effectively adopted that contention, clarifying that the scope or course of employment is:
- firstly, whether the employee’s conduct is connected to what the employee was employed to do; and
- secondly, the presence and degree of control, trust, authority, power, and the ability to achieve intimacy with the victim.
The HCA case indicates that even if an employer only facilitates a potential tortious act, they could still be held responsible. For this reason, employers should be careful and proactive when mandating that their staff participate in off-work activities, including the sharing of living space. It is not sufficient to point to the fact that the misdemeanour occurred outside of working hours and away from the workplace; an employer can still be liable in these circumstances.
It is not easy to determine when a tortious or wrongful act has been committed or will be potentially committed in the course or scope of employment. The circumstances of each case must be analysed, yet this task can often prove challenging.
Consider the following:
- review policies and procedures for off-work activities and especially those where work colleagues are involved
- set down standards of behaviour both in writing (such as an employee handbook or code of conduct) and orally (such as management training)
- consider the implications of legal risk for the behaviour of employees and what steps should be taken to prevent and mitigate vicarious liability this may well mean a review of work and non work activities
About The Author
Jonathan Mamaril leads a team of handpicked experts in the area of employment law who focus on educating clients to avoid headaches, provide advice on issues before they fester and when action needs to be taken and there is a problem mitigate risk and liability. With a core value of helping first and providing practical advice, Jonathan is a sought after advisor to a number of Employers and as a speaker for forums and seminars where his expertise is invaluable as a leader in this area as a lawyer for employers.
Ben Bosworth is passionate about everything employment law, having worked the roles of Workplace Relations Officer, Industrial Advocate, and Employment Relations Adviser across 3.5 years. Ben takes great care and pride in the work he does for clients and applies a practical and future-thinking approach towards clients’ needs.
  HCA 21.
 CCIG Investments Pty Ltd v. Schokman, Appellant’s Submissions, 4 November 2022.
 Schokman v CCIG Investments Pty Ltd  QCA 38, 2.
 Schokman v CCIG Investments Pty Ltd  QSC 120, 2.
  QSC 120, 2.
  QSC 120, 45 .
  QSC 120, 30 and 86;  QCA 38, 5.
  QCA 38, 5.
 258 CLR 134. See generally paragraphs 41 and 81.
 CCIG Investments Pty Ltd v Aaron Shane Schokman  HCATrans 156.
 HCA case -.
 (1919) 26 CLR 110.
 HCA case .
 HCA case .
 Submissions 4 November 2022.