IN Prince Alfred College Incorporated v ADC [2016] HCA 37, the High Court of Australia (HCA) has once again considered the appropriate test for establishing vicarious liability of employers for the wrongful acts of their employees. The decision will be of interest to tort lawyers in the common-law world for at least four reasons. First, the Court looked afresh at the test for vicarious liability in the context of intentional wrongdoing and has accordingly clarified the confusion arising from its earlier decision in New South Wales v Lepore [2003] HCA 4; (2003) 212 C.L.R. 511. Secondly, the Court expressed very strong disagreement with the decision of the UK Supreme Court handed down just months earlier in Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11; [2016] A.C. 677. The Court apparently regarded Mohamud as having in effect abandoned the Lister qualification that mere opportunity was not enough to satisfy the close connection test (Lister v Hesley Hall Ltd. [2001] UKHL 22; [2002] 1 A.C. 215). Thirdly, the Court appears to have interpreted the relevant English authorities as espousing a Caparo-like criterion of fairness and justice as a separate stage of the close connection test (Caparo Industries plc v Dickman [1990] 2 A.C. 605). That interpretation is questionable. Finally, the Court has articulated a new test in Australian law for vicarious liability reasoning based on whether the employment provided the “occasion” for the wrongdoing to be committed. This prompts a reflection on the difference between “occasion” and “opportunity”, and how this new test is to be applied in practice.
The claimant was a former pupil of the defendant boarding school who had been sexually abused by a housemaster. A preliminary issue in the case was whether the claim was statute-barred. The High Court agreed with the original decision of the trial judge on this point and held that the relevant limitation period should not be extended, and ultimately therefore did not determine the liability issue in the case. But, because the precise basis of potential liability was a relevant factor in determining whether or not the time should be extended, the majority – there is a brief concurring opinion by Gageler and Gordon JJ. – gave a detailed examination of the law on vicarious liability.
There were two other bases on which liability could potentially have been imposed. One was primary liability in negligence, which was rejected on the basis that it had not been established on the evidence. The second was breach of the non-delegable duty of care – but this would have required a revisiting of the non-delegable duty reasoning in Lepore, which the majority declined to do on the basis that a sufficiently clear case had not been presented for reconsidering a previous High Court decision (citing Queensland v The Commonwealth (1977) 139 C.L.R. 585 and subsequent case law).
One particularly noteworthy feature of the majority's analysis of the law on vicarious liability is its reading of the Canadian and UK case law since Bazley v Curry [1999] 2 S.C.R. 534 and Lister, respectively. In a telling passage, the majority commented (at [43]): “In recent decisions of the courts of Canada and the United Kingdom [the Salmond test] appears to have provided a springboard for the development of tests which have regard, more generally, to the connection between the wrongful act and the employment and, in the United Kingdom, to what a judge determines to be fair and just.”
It does not seem right to conclude that the test in the UK case law involves a separate stage of asking what a judge considers to be fair and just. In arriving at that conclusion, the majority said (at [67]): “The question ultimately posed in Lister v Hesley Hall Ltd. contained the means by which the requisite ‘closeness’ of the connection was to be assessed. It was ‘whether the warden's torts were so closely connected with his employment that it would be fair and just to hold the employers vicariously liable’” (emphasis added).
The adding of these italics by the majority places the wording of Lister under unsustainable strain. The references to fairness and justice in Lister only occurred because the close connection test had been satisfied. This is manifestly not the same inquiry as the Caparo stand-alone third limb of inquiring whether in all the circumstances it is fair, just and reasonable to impose a duty of care in negligence. Consider, then, the High Court's return to the cautionary note sounded in its earlier decision in Sullivan v Moody [2001] HCA 51; (2001) 207 C.L.R. 562, at [49], that the question of what is fair, just and reasonable can be misunderstood as an invitation to formulate policy rather than to search for principle. Whilst the Court does acknowledge that this warning was issued “in a different context”, it is difficult to escape the conclusion that the High Court regards Lister and subsequent case law as effectively conflating vicarious liability analysis with that contained in the third limb of Caparo.
The elision of these two concepts must be avoided. Whether one agrees with Mohamud or not, it is because of the finding of a close connection in Mohamud that the Supreme Court decided that it was fair and just to impose liability. Certainly, the language of “fair and just” or “fair, just and reasonable” when used separately to a consideration of the close connection test appears, at best, tautologous and confusing. And it is true that references to what is “fair, just and reasonable” in an entirely different vicarious liability context (namely the type of relationship between the defendant and the wrongdoer, which should be capable of attracting vicarious liability) do appear in, inter alia, the judgment of Lord Phillips in Catholic Child Welfare Society v Various Claimants and Institute of the Brothers of the Christian Schools [2012] UKSC 56; [2013] 2 A.C. 1, at [94]. But Lord Reed in Cox v Ministry of Justice [2016] UKSC 10; [2016] A.C. 660, clearly stated (at [41]) that having recourse to a separate inquiry as to what is fair, just and reasonable was not only unnecessarily duplicative, but also apt to give rise to uncertainty and inconsistency. That note of caution applies with at least equal force to the close connection test itself at issue in Mohamud, as it does to the nature of the relationship capable of attracting vicarious liability under consideration in Cox. Attempts at elevating those two (or three) epithets to the status of an additional prong in the Lister test are, accordingly, undesirable. No such additional prong exists. If the connection is sufficiently close, then it will be fair and just to impose vicarious liability. Evidence for this is abundantly clear from Lister itself. Thus, Lord Steyn at [20] stated of Salmond's test that “[i]n reality it is simply a practical test serving as a dividing line between cases where it is or is not just to impose vicarious liability” (my emphasis).
Further support for questioning the HCA's interpretation of Lister and Mohamud is to be discerned from Mohamud where Lord Dyson, pre-empting objections to the close connection test on the basis of imprecision, specifically gave the example (at [54]) of the “fair, just and reasonable” test, which he described as “central” in negligence, as an example of imprecision from other areas in tort law – thereby clearly indicating that this test does not apply in the context of vicarious liability. In explaining that fairness and justice are not a separate criterion but are in fact integral to the close connection test identified in Lister and Bazley, Lord Dyson described (at [58]) those decisions as achieving the “simple expedient of explicitly incorporating the concept of justice into the close connection test”.
Having rejected both the Canadian and the UK approaches, the majority in Prince Alfred College concluded that the question to be asked when considering the imposition of vicarious liability for intentional wrongdoing is whether the employment provided the “occasion” for the wrongful act. In so doing, the majority invoked the language of Dixon J. in Deatons Pty. Ltd. v Flew (1949) 79 C.L.R. 370. In analysing Mohamud, the High Court explained why the “occasion” test was not met on those facts: there were no special features of the villainous Mr. Khan's employment that would be associated with the wrongdoing; and his lack of authority, power or control over customers was confirmed by the fact that he was clearly subject to supervision. The High Court elaborated on its “occasion test” by explaining (at [81]) that, in determining whether the test is met, particular features of the employee's role may be taken into account, including authority, power, trust, control and the ability to achieve intimacy with the victim (a factor of potentially special importance). Where the employee takes advantage of his or her position vis-à-vis the victim, that may suffice to trigger vicarious liability.
It is not at all easy to discern any meaningful difference between the employment providing the occasion for the wrongdoing and the opportunity for it. Even in ordinary parlance, the two terms are frequently used interchangeably: each is a matter of degree; and each could be said to be entirely open-ended. In this respect, it is noteworthy that the majority in Prince Alfred College propounded the “occasion test” at such length with the express aim of providing clarity to lower courts and thus minimising future appeals. Consider, then, the ominous comment of Gageler and Gordon JJ. in their short concurring opinion (at [131]) when their Honours state that “[t]he Court cannot and does not mark out the exact boundaries of any principle of vicarious liability in this case”.
After Prince Alfred College, the distinction between occasion and opportunity in vicarious liability may be elusive, but the prospect of future appellate litigation in this context in Australia and elsewhere seems absolutely clear.
