Australia: High Court provides guidance on when employers will be held liable for offences committed by their employees

Last Updated: 14 June 2017
Article by Michael Bishop, Amelita Hensman and Jonathan B Slade

The recent decision of the High Court of Australia ('the HCA') in Prince Alfred College Incorporated v ADC [2016] HCA 37 has shed some light on when employers will be held vicariously liable for the criminal acts of their employees and, in particular, acts involving sexual assault.

Background

The victim was a boarder at Prince Alfred College ('the PAC') when in 1962 he was sexually abused for some months by Dean Bain, a housemaster at the school. Bain would supervise the students during shower times and after "lights out", although it is likely that this was not within his official duties at the PAC.

The sexual abuse occurred in the boys' dormitory after the students had gone to bed, on numerous occasions in Bain's private room at the boarding house, and on one occasion at a house to which Bain had taken the victim. The sexual abuse left deep psychological wounds on the victim that would remain with him for the rest of his life and intensify over time.

Bain was dismissed from his employment very shortly after the PAC came to hear of the abuse. The students were told not to talk about the dismissal outside of the school although the school chaplain told the victim that he could talk to him if he needed help.

In 1997, the victim advised the PAC that he did not intend to sue the school but that he was seeking its acceptance of what happened as well as financial assistance. The PAC subsequently agreed to pay the victim's medical and legal fees up to that point, as well as to meet his son's school fees of about $10,000 per year for the following three years.

By 2009, however, the victim's physical and financial condition had deteriorated considerably and, after failing to obtain further financial assistance from the PAC, he decided to issue proceedings in the Supreme Court of South Australia (SASC). By this stage, Bain had been convicted of offences against the victim and two other boarders at the PAC. The victim had also sued Bain personally and managed to extract $15,000 from him by way of settlement.

The proceedings

The primary judge dismissed the victim's claims. Her Honour found that no case for the PAC's liability had been established on any of the bases asserted.

The victim appealed to the Full Court of the SASC, where it was unanimously decided that the PAC was vicariously liable for Bain's sexual abuse of the victim.

The PAC subsequently appealed to the HCA.

Timing of the proceedings

By unanimous judgment, the HCA reversed the decision of the Full Court on the basis that the relevant limitation period had expired and determined that the victim should not have been granted an extension of time within which to bring the proceedings against the PAC.

Whilst the HCA declined to state whether it would have found the PAC liable, it nonetheless offered some important guidance regarding the application of the doctrine of vicarious liability to crimes involving sexual abuse.

Vicarious liability under Australian law

The doctrine of vicarious liability effectively serves to render employers liable for the wrongful acts of their employees in so far as those acts are committed in the course or scope of their employment. Generally, if it can be said that the employment relationship created both the "opportunity" and the "occasion" for a wrongful act to take place, the employer will be held liable.

Previous cases have also been decided by reference to the sufficiency of connection between the wrongdoing and the responsibilities of the employee and by the identification of material circumstances or "features" common to certain kinds of cases.

Needless to say, the courts' focus has generally been to look at the extent to which the employment relationship enabled or facilitated the commission of the wrongdoing.

The "relevant approach"

Drawing from previous judgments, the HCA prescribed the adoption of what it described as "the relevant approach". According to the relevant approach, the court must consider any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim. The HCA then went on to state that in determining whether the apparent performance of such a role may be said to give the occasion for the wrongful act, particular features may be taken into account. Clearly contemplating crimes of a sexual nature, it asserted that such features include authority, power, trust, control and the ability to achieve intimacy with the victim.

Applying the relevant approach to the case before it, the HCA stated the appropriate enquiry was whether Bain's role as housemaster placed him in a position of power and intimacy in relation to the victim, 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.

Given the considerable amount of time that had passed before the case was brought to court, it was not entirely clear on the evidence what Bain's duties were as a housemaster at the PAC – for instance, whether he was expected to supervise the children after they had gone to bed – and this was important to the question of whether the sexual abuse had taken place within the scope of Bain's employment. It also partially explains why an extension of time was not granted.

Significance of the case

This case offers a crucial lesson to employers who might not otherwise realise that they may be held liable for the unlawful acts of their employees, even where they themselves are not at fault.

As can be seen from the above, this remains a nebulous area of law, the various facets of which are difficult to dissect and pin down. The HCA has affirmed that each case must be determined on its individual facts and merits. The corollary of this is that considerable uncertainty and expensive litigation is bound to ensue wherever cases of this kind arise.

In the meantime, employers should ensure that the parameters of their employees' roles are well defined to minimise the risk of liability arising for acts said to occur in the course of an employee's duties.

The types of scenarios where employers may be particularly vulnerable to a claim of vicarious liability include schools (and especially boarding houses), hospitals, care facilities, disability clinics and many more (keeping in mind the fact that such claims are not limited to circumstances involving sexual assault or even criminal activity in general).

In order to try and minimise their risk, employers should check:

  1. whether their business insurance provides any valid cover;
  2. that their policies and employment agreements, including codes of conduct, specifically prohibit sexual harassment; and
  3. whether appropriate refresher and/or induction training is required.

Pointon Partners is able to assist in drafting and/or review of policies and employment agreements.

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Authors
Michael Bishop
Jonathan B Slade
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