High Court decision finds employer not vicariously liable for resort worker's offensive drunken action

This matter involved a claim by Mr Aaron Schokman (Mr Schokman) who at the time of the incident was working on Daydream Island for CCIG Investments Pty Ltd (Defendant).

Mr Schokman had applied for a position as food and beverage supervisor on Daydream Island and was successful in obtaining that position.

The employment contract signed by Mr Schokman included a clause that stated:

“As your position requires you to live on the island, furnished shared accommodation located at Daydream Island Resort and Spa will be made available to you when engaged in this position at a cost of $70 per week.”

From 25 October 2016 to 30 October 2016, Mr Schokman occupied a room by himself. On 1 November 2016, a new worker, Mr Hewett, moved into the double room occupied by Mr Schokman.

The incident

The incident occurred on 7 November 2016 and is described in Mr Schokman’s police statement as set out below:

"6. I left the staff bar at approximately 1am and went back to my room. I started getting myself prepared for work for the week by ironing my shirts etc.

7. At approximately 1.15am HEWETT returned back to our room and he was visable [sic] upset and began complaining about his work environment and stated that he had issues about the management team. I am HEWETT’s direct supervisor so he was basically having a go at me saying that he is being disrespected at work. I immediately told him that I didn’t want to discuss work at home and we can have a chat about this tomorrow at work.

8. HEWETT seemed fine and told me he would let me get some sleep. He then grabbed a couple more drinks and left our unit.

9. I then took my medication that basically knocks me out when I go to sleep. My medication is called Xyren [sic] and I take two 4.5mil doses before bed. I woke up for a short period of time when HEWETT has returned. I think it was about 3am and I heard HEWETT spewing in our bathroom and he was walking around with the hiccups. I didn’t say anything to him I just went back to sleep.

11. About 30 minutes later I woke up in complete distress and I was unable to breathe. I immediately realised that I was choking and inhaling HEWETT’s urine. I looked up and observed HEWETT standing over my bed with his shorts pulled down a short distance and his penis was exposed whilst in the act of urinating.”

It was noted when Mr Schokman attempted to leave the room, Mr Hewett stood in front of him and then apologised, however, Mr Schokman pushed past Mr Hewett into the corridor and began to have a cataplectic attack in the hallway.

This matter was heard at first instance by His Honour Justice Crow in the Supreme Court.

Duty of Care

His Honour Justice Crow concluded that the scope of the duty of care owed by the Defendant to Mr Schokman was a duty to take reasonable care to:

1. avoid exposing Mr Schokman to an unnecessary risk of injury
2. design, establish, maintain and enforce a safe system of accommodation, and
3. devise, establish and maintain a safe place of accommodation.

The foreseeable risk, that was not insignificant, was found to be the risk of Mr Schokman having a confrontation or an unpleasant personal interaction with his designated roommate, Mr Hewett, which could give rise to a risk of injury to Mr Schokman.

Breach of Duty of Care

As regards a breach of the Duty of Care, Crow J found that whilst the risk of such harm was plainly foreseeable, that must be weighed against the absence of any evidence to suggest that any similar incident or any incident involving a confrontation or unpleasant personal interaction between roommates at a staff accommodation facility had caused any harm.

As to the likely seriousness of the harm, it was Crow J’s view that even if there was an unpleasant interaction or confrontation between roommates, the likelihood is that no harm would occur or minimal harm may occur in terms of a physical confrontation between roommates.

Causation

Mr Schokman had argued that if the Defendant had in place an alcohol policy, the incident would not have occurred. However, Crow J concluded that Mr Schokman had not proven on the balance of probabilities that “but for” the provision of the alcohol policy, the urination event would not have occurred.

Crow J was of the view that given that it was not only a contractual requirement of employees to share accommodation but likely a necessary requirement for the conduct of the resort (as the staff accommodation was full), it was inappropriate that the Defendant be held responsible for the act of Mr Hewett.

Vicarious liability

Crow J accepted that Mr Hewett committed a tort against Mr Schokman however found that the evidence was insufficient to make a finding that it was committed intentionally. He also did not accept that the actions of Mr Hewett were committed in the course of his employment with the Defendant.

Crow J concluded that there was no connection or nexus between the employment enterprise and the wrong committed by Mr Hewett that could justify the imposition of vicarious liability on the Defendant for Mr Hewett’s wrong.

Court of Appeal

Mr Schokman appealed the decision of His Honour Justice Crow to the Court of Appeal on the issue of the vicarious liability of the Defendant.

The Court of Appeal referred to the decision in Bugge v Brown (1919) 26 CLR 110, where the Defendant’s employee on a grazing property was negligent in lighting a fire, which spread and destroyed property on an adjoining farm. The employee had food for his lunch provided by his employer and was instructed to cook it at a different place from where he lit the fire. By a majority, the employer was held to be vicariously liable for the employee’s negligence.

The Court of Appeal was of the view that the present case is analogous to Bugge v Brown, although the act in this case occurred in the course of the provision of shelter, rather than sustenance, to the employee.

The Court of Appeal stated that it was a term of Mr Hewett’s employment that he reside in the staff accommodation on the island, and more particularly in the room assigned to him. He was not occupying the room as a stranger, but instead as an employee, pursuant to and under the obligations of his employment contract.

The Court of Appeal therefore found that there was in this case the requisite connection between his employment and the employee’s actions, and the Defendant should have been held to be vicariously liable for Mr Hewitt’s negligence and the loss that it caused.

Judgment was awarded in Mr Schokman’s favour.

High Court of Australia

Unsurprisingly, the employer then appealed the matter to the High Court of Australia.

In their joint decision Kiefel CJ, Gageler, Gordon and Jagot JJ stated that the common law of Australia adheres to the rule that the employee's wrongful act be done in the course or scope of employment in order for liability to attach to the employer.

Their Honours were of the view that the argument put for Mr Schokman misapprehended what was said in Prince Alfred College Inc v ADC (2016) 258 CLR 134. Mr Hewett was not assigned any special role concerning Mr Schokman, and no part of what Mr Hewett was employed to do was required to be done in the accommodation. The most that could be said to arise from the circumstance of shared accommodation was that it created physical proximity between the two men. It therefore provided the opportunity for Mr Hewett's drunken actions to affect Mr Schokman. It was their Honours’ view that the cases hold that mere opportunity provides an insufficiently strong connection with the employment to establish vicarious liability.

Their Honours also noted that central to the case in Bugge v Brown was that the act of lighting the fire was itself a requirement of, and authorised by, the employment. By contrast, Mr Hewett could only be said to be acting in accordance with his employment contract by sharing the accommodation provided for and being present in it. That did not in their Honours’ view provide a proper connection to the employment.

Their Honours considered that nothing in this case pointed to the drunken act in question being authorised, being in any way required by, or being incidental to, the employment. Their Honours were of the view it had no real connection to it at all.

In a unanimous decision, the appeal was allowed with costs.

Conclusion

The High Court decision in this matter has confirmed what has long been settled law on the issue of vicarious liability of an employer for the actions of an employee.