Australia: Employer's vicarious liability - no laughing matter for pranksters

Focus: Blake v JR Perry Nominees Pty Ltd [2012] VSCA 122
Services: Employee & Industrial Relations, Insurance
Industry Focus: Insurance

Blake v JR Perry Nominees Pty Ltd [2012] VSCA 122

Introduction

A decision made last month by the Victorian Court of Appeal highlighted the largely uncertain area of law concerning an employer's vicarious liability for the unauthorised acts of their employees. The case reiterates that an employer is not liable for the unauthorised actions of its employees, within the workplace, which are beyond its reasonable control.

The facts

The incident took place on 16 October 2001 at the Portland Dockyards. The plaintiff, Blake, was a truck driver who had arrived the previous night to refuel a tanker early in the morning of 16 October 2011. For unknown reasons the tanker in question was delayed. As a result, Blake and his fellow truck drivers including a man called Jones, an employee of JR Perry, were left waiting. For 18 hours, the drivers had little to occupy themselves with and were unable to leave their trucks for prolonged periods.

At some stage in the afternoon on 16 October 2001, without warning, Jones struck Blake hard on the back of the knees, causing Blake to fall and severely injure his back. It was Blake's submission that JR Perry was vicariously liable for the damage he suffered at the hands of Jones, because Jones was motivated out of boredom. The submission from Blake centred around the proposition that the injury would never had occurred but for the boredom suffered by Jones prior to the incident, therefore causing him to play a practical joke on Blake.

The Trial Judge found that it was common for truck drivers to play the seasonal sport, and pull various practical jokes on each other during prolonged periods of inaction. Employers such as JR Perry had no express prohibition against such behaviour; merely requiring the drivers to remain with their vehicles. However, the Judge dismissed the notion that the employer should have arranged entertainment to prevent employee boredom as "absurd". Furthermore, the assumption of "boredom" as the driving factor for Jones' actions could not be insinuated on the balance of probabilities.

Decision

In the leading judgement of Harper JA on appeal, several different tests were discussed to determine whether vicarious liability applied. Applying four different tests to the facts of the case, Harper JA found that Blake had failed to prove that JR Perry ought to be held vicariously liable for Jones' conduct.

The first test is provided by McLachlin J in Bazley v Curry (1999) 174 DLR (4th) 45 in the Canadian Supreme Court. In her judgment, McLachlin J found that the wrongful act committed must be sufficiently related to the conduct authorised by the employer to justify the imposition of vicarious liability. She noted that this is generally appropriate where the risk of a wrong occurring is created by the position the employee is placed in. Blake was unable to prove that the mode of employment Jones was subject to enhanced the risk of him being exposed to a prank from another individual.

The second test discussed comes from Lord Steyn's judgment in Lister v Hesley Hall Ltd [2002] 1 AC 215. His Lordship found that for vicarious liability to arise, the wrong committed must be so closely connected with the employment, that it would be "fair and just to hold the employer vicariously liable." Harper JA found that it would not be fair or just to hold JR Perry liable for the damages caused by Jones' attempt at humour, because of the weak connection between the wrong and his employment.

The third test was expressed by Gaudron J in The State of New South Wales v Lepore [2003] HCA 4. Justice Gaudron applied the principle of estoppel, stating that vicarious liability can be imposed for deliberate wrongs if the person against whom the liability is asserted, is prevented by law from denying that the person who committed the wrongs was acting as their servant, agent or representative, when the acts occurred. It was found, although there was no express prohibition on pranks, and nothing to suggest the employer had condoned such behaviour, the person against whom liability is asserted is not estopped from asserting that the said employee was not acting as their 'servant, agent or representative'. In addition, the link between a prank and a cricket or football game within the trucking yard was seen by the Court as too weak for a link, or indeed liability, to be established.

The final test was expressed in the same case by Gummow and Hayne JJ. Their Honours stated that for vicarious liability to exist, the wrongful act committed must have been intentionally performed in the interests of the employer. It was held that the action of Jones had not been expressly or ostensibly pursued in the execution of the interest of JR Perry's business.

One important determination made in this case is the irrelevance of the employee's state of mind while committing the wrong. Harper JA noted the decision of Deatons Pty Ltd v Flew (1949) 79 CLR 370 where it was held that spite was irrelevant in determining whether an employer was liable or not for the actions of an employee; the fact that Jones was bored was held to be equivalent.

His Honour was of the view that the original analysis of both the law and facts was correct and that an employer was not liable for workplace incidents arising out of unauthorised acts of its employees which are beyond its reasonable control.

Policy factors

The Court highlighted that in order to establish vicarious liability, the act must be committed:

1. by an employee both in the course of employment and within their scope of authority; and
2. as an act the employee was employed to carry out or an act which was regarded as within the scope of his employment (associated to his employment).

Therefore, vicarious liability will established where the act of the employee:

• was expressly or impliedly authorised by the employer; or
• was subsidiary to the duties/responsibilities of the employee (associated to his employment therefore within the scope of employment); or
• was executed for the employer's interests.

This case does not suggest that one test is to be preferred over another. The case dissects three considerations in relation to the policy goals which vicarious liability seeks to achieve. Firstly, a business stands to gain through their operations and should therefore also bear the risks their endeavours cause. Secondly, vicarious liability encourages employers to design better and safer systems of work for their employees, and motivates them to enforce such polices. Thirdly, and most practically, as discussed by Kirby J in The State of New South Wales v Lepore¹ vicarious liability is a 'loss distribution device' available to victims who have suffered wrongs.

The vastly different policy reasons behind an employer's vicariously liability help explain the existence of the multitude of tests. Lord Steyn's tests relate to a desire to right a wrong suffered by an individual, whereas, Justices McLachlin, Gummow and Hayne seem to focus more on allocating risk due to the benefit an employer can gain from their business pursuits.

In any defence of a vicarious liability claim it is important to address all the discussed tests in the context of the policy motivations.

Footnote:

¹[2003] HCA 4

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