High Court declares the “relevant approach” regarding vicarious liability for criminal conduct | Moores
Employees who commit wrongful acts rarely have pockets that are as deep as their employer’s. By suing the innocent employer on the basis of vicarious liability, an applicant has the potential to recover more in damages than if they simply sued an individual employee.
However, an employer won’t always be vicariously liable for the wrongful act of an employee. After years of uncertainty, the High Court’s decision in Prince Alfred College Incorporated v ADC [2016] HCA 37 (“PAC“) has clarified the correct approach to be taken to the question of an employer’s vicarious liability for the criminal acts of an employee. Vicarious liability is a form of legal liability which can be imposed despite the employer not itself being at fault[1].
In the seminal High Court decision of New South Wales v Lepore [2003] HCA 4 (“Lepore“), the judgements expressed diverging views on the correct approach to apply to the question of vicarious liability, and no majority emerged as to whether the employer was vicariously liable for the intentional criminal conduct “in the course of employment”. Consequently, the scope of vicarious liability in Australia has been shrouded by a cloud of uncertainty.
In PAC, the majority of the High Court held that the “relevant approach” to take when considering the issue of vicarious liability requires a careful examination of the actual role that the employer assigns to the employee and the position in which the employee was thereby placed vis-à-vis the victim.
Although the Court did not ultimately consider PAC’s liability in this case as it found that the extension of time sought by ADC should not be granted, the case does provide useful guidance for employers wanting to assess vicarious liability for criminal conduct by an employee, particularly in the context of child sexual abuse in educational institutions.
Background
In 1962 the respondent, ADC, was sexually abused on multiple occasions when he was 12 years old and living as a boarder at the Prince Alfred College (“the College“). The perpetrator, Mr Dean Bain, was employed by the College as a housemaster. Shortly after the College became aware of the abuse, Mr Bain was dismissed from his employment at the College.
In his adult life, the respondent was diagnosed with post-traumatic stress disorder, suffered alcoholism, attempted self-harm, and was admitted to a psychiatric clinic on a number of occasions.
In 1997 the respondent commenced civil proceedings against Mr Bain, but decided not to pursue legal action against the College. In September 1999, the respondent reached a settlement with Mr Bain pursuant to which Mr Bain agreed to pay $15,000 to the respondent.
In December 2008, the respondent brought proceedings against the College in the Supreme Court of South Australia[2] alleging that the College was liable for damages on the basis that:
(a) it breached its non-delegable duty of care that it owed him;
(b) it was negligent and breached its duty of care; and
(c) even if the College was not itself at fault, it was vicariously liable for the wrongful acts of Mr Bain.
Because the statutory time limitation had expired, the respondent had to apply for an extension of time to bring the proceedings.
At first instance, Justice Vanstone in the Supreme Court of South Australia dismissed the claim with regard to liability. Her Honour said that in any event she would have refused an extension of time because the effluxion of time was so great that the College would be prejudiced in its attempts to defend the claims.
On appeal, the Full Court of the South Australian Supreme Court disagreed with the primary judge, finding the College was vicariously liable for the criminal conduct of Mr Bain and that an extension of time should have been granted by the primary judge.
By grant of special leave, the College appealed to the High Court for the matters to be determined.
Limitation periods
In this case, the relevant limitation period had expired, so the first issue that the court was required to consider was whether the respondent should be granted an extension of time to actually bring the claim.
A limitation period (or “statute of limitations”) refers to the time limit within which legal proceedings must be commenced. They are set out in each state or territory in Australia.
Under the Limitations of Actions Act 1936 (SA) (“the Limitations Act“), the claim should have commenced within three years of attaining the age of 21 years (i.e. by 17 July 1973) in order to proceed[3]. However, under the Limitations Act, a court can exercise its discretion and extend the prescribed time to institute civil proceedings.
In order to secure an extension of time, ADC was required to show that it was just in all the circumstances for the court to extend the limitation period and that the College would not be significantly prejudiced if the discretion was exercised in his favour.
The High Court unanimously held that an extension of time under the Limitations Act should not have been granted by the Full Court due to the length of the delay and consequent deficiencies in the evidence placed by the College, thereby prejudicing the College’s ability to defend its position. For instance a number of people who may have been witnesses in the proceedings had died and the psychologist whom the respondent first consulted had destroyed his notes. Furthermore, the High Court was persuaded by the fact that the respondent had made a deliberate decision not to pursue civil proceedings against the College (even though he could have done so) and later changed his mind.
As an aside, the Royal Commission into Institutional Responses to Child Sexual Abuse has expressed criticism about limitation periods especially given that the average time for a victim to disclose sexual abuse is 22 years. The Royal Commission has recommended all states and territories remove the time limitation so that more victims are eligible to claim compensation. The states and territories are slowly moving to implement this recommendation. For instance, following the Betrayal of Trust Inquiry in Victoria, limitation periods for child abuse claims were removed on 1 July 2015.
Vicarious liability
Even though the claim was statute barred, the High Court took the opportunity to consider the “divergent views” that have arisen from common law courts about how to approach the question of vicarious liability, particularly with regard to cases concerning the sexual abuse of children in educational, residential or care facilities by persons who were placed in special positions with respect to the children.
At first instance[4], Justice Vanstone was unable to make findings of fact relevant to the question of vicarious liability because there was insufficient evidence of a reliable nature about Mr Bain’s designated role upon which to base a conclusion that what he did was done in the course of employment. However, on the assumption that these activities were part of Mr Bain’s designated role, the primary judge concluded that the sexual abuse was not in the course of Mr Bain’s employment because it was “so far from being connected to Bain’s proper role”.
On appeal[5], each member of the Full Court of the South Australian Supreme Court, found the College was vicariously liable for Mr Bain’s criminal acts of abuse on the basis that the abuse was “so closely connected” to his employment. Evidence which led to this conclusion included:
- Mr Bain had discretion as to the best way to settle the boarders at night;
- There were insufficient checks and supervision with regard to Mr Bain’s activities;
- The College did not expressly prohibit its housemasters from talking to the children whilst sitting on their beds;
- The College did not restrict Mr Bain from being in the dormitory despite his frequent presence in the area;
- Mr Bain was a live-in master at the College and his living quarters were close to the dormitory where the respondent lived; and
- Mr Bain was the only adult apparently responsible for the care of the junior boarders, which included supervision of showering.
By grant of special leave, the High Court identified that the “relevant approach” is to consider whether the employer assigned to the employee any special role and the position in which the employee is thereby placed vis-à-vis the victim. To determine whether the employment may be said to give the “occasion” for the wrongful act, the High Court said that it was necessary to consider the role’s authority, power, trust, control and the ability to achieve intimacy with the victim.
The High Court asserted:
the appropriate enquiry is whether Bain’s role as housemaster placed him in a position of power and intimacy vis-à-vis the respondent, such that Bain’s apparent performance of his role as housemaster gave the occasion for the wrongful acts, and that because he misused or took advantage of his position, the wrongful acts could be regarded as having been committed in the course or scope of his employment.
TAKE-AWAY POINTS FOR EMPLOYERS
So what does this mean for employers? In the past, it has been difficult for employers to assess their potential liability with regard to an employee’s wrongful acts, particularly in relation to historical claims of child sexual abuse.
In light of the “relevant approach” espoused by the High Court, employers will be able to identify with greater certainty the extent to which they could be vicariously liable for the wrongful acts of employees.
To determine whether an employer is vicariously liable for an employee’s wrongful acts, it will be necessary to consider whether the employer assigned to the employee any special role and the position in which the employee is thereby placed vis-à-vis the victim.
Organisations that directly care for children in situations where employees exercise the ability to achieve intimacy with the children (including school boarding houses, sporting clubs, and youth camps) must implement rigorous mechanisms to protect the children’s safety and prevent the “occasion” for any wrongful act.
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(1) Prince Alfred College Incorporated v ADC [2016] HCA 37, [39]
(2) A, DC v Prince Alfred College Incorporated [2015] SASC 12
(3) Prince Alfred College Incorporated v ADC [2016] HCA 37, [86]
(4) A, DC v Prince Alfred College Incorporated [2015] SASC 12
(5) A, DC v Prince Alfred College Inc [2015] SASCFC 161