Foundational Principles
Vicarious liability is the established legal doctrine used to determine the liability of an employer for torts committed by its employees. This liability is established through proof of two essential elements:
- The primary wrongdoer was in a “recognised relationship” with the defendant, and
- The wrongdoer committed the wrong within the “course” of the relationship.
It is important to note the distinction between vicarious liability and vicarious conduct. The doctrine of vicarious liability, in particular, primarily applies to an employer’s responsibility for an employee’s wrongs as dictated by policy rather than through direct authorisation of conduct. This distinction was articulated in CCIG Investments 490 [49] (Edelman and Steward JJ).
Recent Judicial Development
In Anderson v Canaccord Genuity Financial Ltd (‘Anderson’) [2023], Ward CJ reached a significant conclusion that vicarious liability could apply to “equitable wrongdoing” and proceeded to determine the plaintiff’s claim on this basis.
In Bird v DP [2023], the Victorian Supreme Court held the Catholic Church vicariously liable for abuse carried out by one of its priests. While the Catholic Church does not involve its ministers in traditional employment contracts, the Victorian Supreme Court reasoned that since the priest held a position of authority and trust, the Catholic Church was still liable. Yet the Church successfully appealed to the High Court of Australia, with the High Court insisting that an employment relationship is a ‘”necessary precursor” to finding vicarious liability.
These two cases represent a continually changing interpretation of the doctrine.
Australian Case Precedents
The issue of recognition of vicarious liability for equitable wrongdoing has been considered in five Australian cases:
- Coulthard v South Australia (1995) 63 SASR 531
- Illuzzi
- Lifeplan Trial
- Oliver Hume South East Queensland Pty Ltd v Investa Residential Group Pty Ltd (2017)
- Hraiki v Hraiki [2011] NSWSC 656
Comparative Jurisdiction
The principle of vicarious liability for equitable wrongdoing is well-recognised in the United Kingdom, providing comparative jurisprudence on this matter. In Catholic Child Welfare Society [2013], the United Kingdom (UK) Supreme Court recognized that individual Brothers’ relationships with its organization was “akin to employment” , making the Brothers liable.
Policy Foundations
More broadly, vicarious liability can be accepted on four policy grounds:
1. Enterprise Liability
This policy ground rests on the belief that persons that employ others with a view to prospective gains should be liable for potential losses incurred by the enterprise.
2. Deterrence
Vicarious liability incentivises an employer to apply adequate supervision to prevent employees from causing harm and discipline employees where needed.
3. The “Deep Pocket” Principle
This principle supports that liabilities should be imposed on defendants who can pay, ensuring compensation for harmed parties.
4. Loss Distribution
Employers are, in theory, able to spread losses across society through various mechanisms, distributing the financial impact more broadly.
Conclusion
The application of vicarious liability principles to equitable wrongdoing represents a logical extension of established legal doctrine. This development aligns with the fundamental policy objectives underpinning vicarious liability and promotes consistency in the treatment of wrongful conduct regardless of its technical classification. As courts continue to develop this jurisprudence, parties on both sides of the employer-employee relationship must adapt to this evolving liability landscape. Institutional Abuse is still such a commonplace issue, so if you would like to learn more about our services, contact one of Ryan Carlisle Thomas’ team of expert lawyers today!
