When nature calls: recent High Court decision clarifies the scope of vicarious liability

Vicarious liability is an important doctrine that holds employers responsible for wrongful actions of employees that are committed within the scope of their employment. It often arises in situations such as when an employee engages in sexual harassment or unlawful discrimination against another employee, or injures another employee in the workplace. It is therefore important to understand the scope of vicarious liability.

In CCIG Investments Pty Ltd v Schokman [2023] HCA 21, the High Court found that the employer, CCIG Investments, was not vicariously liable for the actions of an employee who aggravated a colleague's pre-existing psychological conditions following an incident in their shared accommodation.

Two employees in shared accommodation

Mr Schokman and Mr Hewett were both employees of CCIG Investments on Daydream Island and were required by their employer to live in shared, employer supplied accommodation. On early 7 November 2016, while Mr Schokman was asleep, he awoke to find Mr Hewett urinating on his face. Mr Hewett was intoxicated, having been drinking at the staff bar.

Mr Schokman had previously been diagnosed with cataplexy (a condition causing a brief loss of voluntary muscle movement that is triggered by strong emotions) and narcolepsy, which were well managed. As a result of Mr Hewett's action, Mr Schokman's medical conditions were exacerbated, and he suffered post-traumatic stress disorder which left him with an adjustment disorder – resulting in whole person impairment in the range of 10% to 20%.

High Court: look to the scope of the employment

The High Court confirmed that in Australia, for an employer to be vicariously liable for the wrongful conduct of an employee, the employee's wrongful act must be done in the course or scope of the employee's employment and what the scope of an employee's employment is depends on the circumstances of the case.

The High Court outlined that while an employer's express authorisation of an employee's action is not needed for the action to be within the scope of employment, a greater connection is needed than the employment providing an opportunity for the conduct to take place.

The Queensland Court of Appeal determined the requisite connection arose from the employer requiring Mr Hewett to live in the shared accommodation, and the terms of his employment which required him "to take reasonable care that his acts did not adversely affect the health and safety of other persons". He therefore lived in the accommodation as an employee subject to the obligations of his contract of employment.

The High Court disagreed. What Mr Hewett did had nothing to do with what he was employed to do. While Mr Schokman argued that being required to share accommodation with Mr Hewett made him vulnerable because he was required to sleep in a setting that was intimate, Mr Hewett had not been assigned any "special role" that placed him in a position of power over Mr Schokman. Rather, the High Court found that the most the shared accommodation did was create physical proximity between Mr Hewett and Mr Schokman, and provided Mr Hewett the opportunity for his actions to impact Mr Schokman.

As a result, the High Court set aside the Court of Appeal's decision.