Where other employee negligently urinated on respondent while he was sleeping causing cataplectic attack, was appellant vicariously liable for negligent act of other employee?

CCIG Investments Pty Ltd v Schokman [2023] HCA 21 (2 August 2023)

Intro:-

This is an appeal from the Supreme Court of Queensland

Facts:-

In late 2016 the respondent, Mr Schokman, commenced employment with the appellant at Daydream Island Resort and Spa as a food and beverage supervisor. The island is part of the Whitsunday Islands, which are situated off the coast of Queensland. His employment contract contained a clause which stated "[a]s 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 while you are engaged in this position at a cost of $70 per week".

The contract also referred to a tenancy agreement and a number of other documents, such as an employee handbook, policies, practices and procedures, and Staff Village Regulations. Other than the contract itself, none of these documents were put into evidence, although the trial judge, Crow J, accepted that they had existed. It would seem that many documents were lost as a result of a cyclone which later affected the island.

Initially Mr Schokman was provided with a room to himself, but shortly thereafter a new worker, Mr Hewett, moved in and shared the accommodation with Mr Schokman. Mr Hewett's contract of employment was not in evidence. The case was conducted on the basis that Mr Hewett's contract of employment, so far as it related to accommodation, was in the same terms as Mr Schokman's contract. Both men worked at a restaurant within the resort. Mr Schokman held the superior position as supervisor; Mr Hewett was a team leader.

In the late evening of 6 November 2016, Mr Schokman spent some time at the staff bar. Mr Hewett came to the bar after finishing work at the restaurant. Mr Schokman observed Mr Hewett have a few drinks, but Mr Hewett did not seem overly intoxicated. Mr Schokman left the bar at approximately 1:00 am and returned to his room. Mr Hewett followed shortly afterwards. Mr Hewett was visibly upset and began complaining about his work environment and told Mr Schokman that he had issues with the management team. Mr Schokman said that he did not wish to discuss work issues at home and that they could talk about them at work the following day. Mr Hewett said that he would let Mr Schokman get some sleep and he left the unit, taking some drinks with him.

Mr Hewett returned at about 3:00 am. Mr Schokman heard him vomiting in the bathroom and then walking around whilst hiccupping. Mr Schokman went back to sleep. He was woken about 30 minutes later in a distressed condition and unable to breathe. Mr Hewett was standing over Mr Schokman's bed with his shorts pulled down and his penis exposed. He was urinating on Mr Schokman, who was inhaling the urine and choking. Mr Schokman yelled at Mr Hewett, who continued urinating on him for a short period of time and then stepped away. Mr Hewett went into the bathroom, and then came out and apologised to Mr Schokman. When Mr Schokman attempted to leave the room, Mr Hewett stood in front of him and apologised again.

Mr Schokman brought proceedings against the appellant. He claimed damages on two alternative bases. In the first place, he claimed damages based on a breach of the appellant's duty of care owed to him as an employee. The alternative claim was that the appellant was vicariously liable as employer for the negligent act of its employee, Mr Hewett. Both claims failed.

The claim for vicarious liability was the subject of an appeal to the Court of Appeal, and is the subject of this appeal. In some respects, however, the argument for Mr Schokman reflects a case of a duty of care owed by his employer to him. This may be seen especially in its focus on the position in which Mr Schokman was placed by the employment, rather than attention being directed to the position of Mr Hewett, and the connection between Mr Hewett's employment and his tortious act as relevant to vicarious liability.

The judgments below

The trial judge did not accept that the actions of Mr Hewett were committed in the course of his employment with the appellant[1]. His Honour considered that the relevant enquiry was as to whether there was a connection or nexus between the employment enterprise and the wrong that justified the imposition of vicarious liability on the employer for the wrong. Whilst his Honour accepted that the occasion for the tort committed by Mr Hewett arose out of the requirement of shared accommodation, his Honour did not consider that it was a fair allocation of the consequences of the risk arising to impose vicarious liability on the employer for the drunken misadventure of Mr Hewett with respect to his toileting. There was no history of Mr Hewett becoming intoxicated and nothing which would have put the employer on notice that Mr Hewett may have engaged in what was bizarre conduct[2].

The Court of Appeal allowed Mr Schokman's appeal[3]. McMurdo JA (Fraser and Mullins JJA agreeing) considered that the circumstances of this case were analogous to those in Bugge v Brown[4], where the employer had been held vicariously liable for the acts of the employee by reference to the terms of his employment. It was a term of Mr Hewett's employment that he reside in the staff accommodation and more particularly in the room assigned to him. He was occupying that room as an employee pursuant to, and under the obligations of, his employment contract, not as a stranger as referred to in Bugge v Brown[5]. It followed that there was the requisite connection between the employment and the employee's actions[6].

Issue:-

Was Mr. Hewett's wrongful act in course or scope of employment?

Consideration:-

In the course or scope of employment

For an employer to be held liable for the tort of an employee the common law requires that the tortious act of the employee be committed in the course or scope of the employment. In Prince Alfred College Inc v ADC this was described as an essential requirement of the common law. In Bugge v Brown, Isaacs J referred to it as a rule of the law. The necessity for it, as providing the parameters or outer limits of vicarious liability, has never been doubted. The principle upon which the rule is based is that it is just to make the employer, whose business the employee is carrying out, responsible for injury caused to another by the employee in the course of so acting, rather than to require that the other, innocent, party bear their loss or have only the remedy of suing the individual employee.

The common law of Australia adheres to the rule that the employee's wrongful act be done in the course or scope of employment in order for liability to attach to the employer. The rule has the advantage of being objective and rational, which probably explains why it has endured.

The question whether a tortious or other wrongful act was committed in the course or scope of employment depends on the circumstances of the particular case. Although this may be stated in simple terms, the reality is that in many cases the resolution of that question can prove difficult. As the principal joint judgment said in Prince Alfred College, the course or scope of employment "is to some extent conclusionary and offers little guidance as to how to approach novel cases". This is not a novel case: "[i]t is the nature of that which the employee is employed to do on behalf of the employer that determines whether the wrongdoing is within the scope of the employment". That is, "[i]t is the identification of what the employee was actually employed to do and held out as being employed to do that is central to any inquiry about course of employment". This enquiry requires consideration of "the conduct of the parties subsequent to the contract that establishes their relationship, especially the conduct of the person whose actions have caused the injury". Aspects of the course or scope of employment may be functional, geographical or temporal.

Whether an act was committed in the course or scope of employment is not determined by reference to whether the tortious employee's act can be said to have been authorised by the employer. An unauthorised, intentional or even criminal act may be committed in the course or scope of employment, and therefore render the employer liable. In that sense, the rule may have a broad operation. On the other hand, the law also recognises that it would be unjust to make the employer responsible for every act which the employee chooses to do, as Isaacs J said in Bugge v Brown. Most relevantly, an act done when the employee was on a "frolic of [their] own" will not attract liability. Consistently with the policy of the law, an employer should not be held liable for acts totally unconnected with the employment.

Where no more can be pointed to than that the employment provides an opportunity for the employee's wrongful act to take place, the connection with the employment is tenuous. Such a circumstance is to be distinguished from that where an employee is placed in a special position by reason of the employment so that the act in question may be seen as one to which the ostensible performance of the employer's work by the employee "gives occasion", to adopt the words of Dixon J in Deatons Pty Ltd v Flew. In such a circumstance the requisite connection would be present.

In Prince Alfred College, it was explained that in determining whether vicarious liability arises for an act of sexual abuse of a child that took place in a school or other institution, regard may be had to any special role the employer has assigned to the employee. Features of the employment such as authority, power, trust, control and the ability to achieve intimacy should be considered. Clearly a role embodying features of this kind may point to a strong connection between the employment and the wrongful act. The employment may be seen to provide more than a mere opportunity for the act to take place; it may provide the very occasion for it.

An analogy with Prince Alfred College?

Mr Schokman sought to draw an analogy between the circumstances in Prince Alfred College and those arising from the shared accommodation in his case. He contended that his compulsory housing with Mr Hewett made him vulnerable because he was required to sleep in a setting which was intimate.

The argument put for Mr Schokman misapprehends what was said in Prince Alfred College. In the passage from that case on which the argument relies, it was said that the appropriate enquiry concerning the sexual abuser was whether his role as a housemaster placed him in such a position of power and intimacy that the performance of his role could be said to give the occasion for his wrongful acts such that they could be said to have been committed in the course or scope of the employment. No such enquiry is presented by the circumstances of this case. 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.

An analogy with Bugge v Brown?

Mr Schokman also contended that an analogy might be drawn between this case and the case of Bugge v Brown. The two circumstances which he identifies as common to both cases are that the tortious act of the employee occurred whilst he was on a break from his employment and that each employee was fulfilling the requirements of his employment when carrying out the tortious act.

In the present case, Mr Hewett was at leisure and not at his place of work when he committed the tortious act. He was on a "break" only in the sense that it occurred outside the carrying out of his duties or in the period between carrying them out. The functional, geographical and temporal aspects of Mr Hewett's course or scope of employment were absent. In Bugge v Brown, 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. These comparisons may be put to one side.

Central to the case in Bugge v Brown was that the act of lighting the fire was itself a requirement of, and authorised by, the employment. By contrast in this 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.

Isaacs J held it to be beyond question that the cooking of the meal was "intimately connected" with the performance of the day's task. The cooking of the meal by the employee was done "in the line of [his] employment". He was not on a "frolic of his own" in cooking the meal and that act was not so remote from the employment as directed that the employee could be regarded as a stranger in doing so. The most that could be said was that he lit the open fire in the paddock in disregard of an instruction.

Conclusion:-

The appeal should be allowed with costs.