Vicarious Liability Post-Bird v DP [2024] HCA 41 (By: Carys)

 

  Do you know what does vicarious liability means? In my shoes, I don’t know. That is why I searched it yesterday. After that, I understood that it is a form of strict, secondary liability that arises under the ordinary law doctrine of agency, respondeat superior, the responsibility of any third party that had the “right, power, or duty to navigate” the activities of a violator. It can be identified from contributory liability, that is, another form of secondary liability, rooted in the tort theory of enterprise liability as, unlike contributory infringement, knowledge is not an attribute of vicarious liability. The law has established the view that some bonds by their nature require the individual who engages others to accept responsibility for the wrongdoing of those others. The most prominent such bond for practical aims is that of employer and employee.

  To talk about employer’s liability first, employers are vicariously liable, under the respondeat superior doctrine, for negligent acts or omissions by their employees in the course of employment (sometimes referred to as ‘scope and course of employment’). To determine whether the employer is liable, the difference between an independent contractor and an employee is to be drawn. To be vicariously liable, there must be a requisite bond between the defendant and the tortfeasor, which could be investigated by 3 tests, which are control test, organisation test, and sufficient relationship test. An employer may be held liable under principles of vicarious liability if an employee does an authorized act in an unauthorized method. Employers may also be held liable under principles of vicarious liability if an employee does an authorized act in an unauthorized manner. Employers may also be liable under the normal law principle represented in the Latin phrase, qui facit per alium facit per se, that is, an individual who acts via other acts in one’s own interests. That is a parallel perspective to vicarious liability and strict liability, in which one individual is held liable in criminal law or tort for the acts or omissions of another. In Australia, the "sufficient bond" test, entailing the balancing of several reasons such as flair levels needed in the career, pay schemes, and degree of navigation granted to the labourer, has been the favoured approach. For an act to be considered within the course of employment, it must either be authorized or be so connected with an authorized act that it can be considered a mode, via an improper mode, of performing it. Courts sometimes identify between an employee’s “detour” vs. “a frolic of their own” For example, an employer will be held liable if it is shown that the employee had gone on a mere detour in carrying out their duties, such as hindering from purchasing a beverage or use an automated teller machine (ATM) while running a work-related errand, whereas an employee acting in their own right rather than on the employer’s business is undertaking a “frolic” and will not subject the employer to liability.

  Next, I am going to mention about the principals’ liability. The owner of an automobile can be held vicariously liable for negligence committed by an individual to whom the car has been lent, as if the owner was a principal and the driver their agent is utilizing the car primarily for the aim of performing a task for the owner. Courts have been reluctant to extend this liability to the owners of other kinds of chattel. For instance, the owner of a plane will not be vicariously liable for the actions of a pilot to whom he or she has lent it to perform the owner’s purpose. In the United States, vicarious liability for automobiles has since been abolished with courtesy to car leasing and rental in all 50 states. One example is in the situation of a bank, finance company or other lienholder performing a repossession of an automobile from the registered owner for non-payment, the lienholder has a non-delegable duty not to cause a breach of the harmony in performing repossession, or it will be liable for damages even if the repossession is performed by an agent. This requirement means that whether a repossession is performed by the lienholder or by an agent, the repossessor must not cause a breach of the harmony of the lienholder will be held responsible. This requirement not to breach the harmony is held upon the lienholder even if the breach is caused by, say, the debtor’s objecting to the repossession or resisting the repossession. In the court case of MBank El Paso v. Sanchez, 836 S.W.2d 151, where a hired repossessor towed away a car even after the registered owner locked herself in it, the court decided that this was an unlawful breach of the harmony and announced the repossession invalid. The debtor was also awarded $1,200,000 in damages from the bank. However, notably, a breach of harmony will invariably constitute a criminal misdemeanour. Criminal law imparts split and distinct liability upon each actor considered a person under the law, and therefore a corporation and the corporation’s employee may both be charged with having committed the same crime, in addition to any civil liability for which the law imposes.

  When it goes to parental liability, in the United States, the question of parental responsibility generally follows the common law principle that a parent is not civilly liable for injuries resulting from a child’s negligence merely due to parent-child relationships. When a child causes an injury, parents may be held liable for their own negligent acts, such as failure to properly supervise a child, or failure to keep a treacherous instrument like handgun outside the approach of their children. Many states have also passed laws that impose some liability on parents for the intentional wrongful acts committed by their minor children.

  Here is the liability of corporations in tort. In English law, a corporation can only act via its employees and agents so it is necessary to decide in which scenariossituations the law of agency or vicarious liability will apply to hold the corporation liable in tort for the frauds of its directors or senior officers. If liability for the particular tort needs a state of mind, then to be liable, the directors or senior officers must have that state of mind and it must be attributed to the company. In Meridian Global Funds Management Asia Ltd v securities Commission [1995] 2 AC 500, 2 employees of the company, acting within the scope of their authority but unknown to the directors, used company funds to acquire some shares. The question was whether the company knew, or ought to have known that it had acquired those shares. The Privy Council held that it did. Whether by virtue of their actual or ostensible authority as agents acting within their authority or as employees acting in the course of their employment, their acts and omissions and their knowledge could be attributed to the company, and this could give rise to liability as joint tortfeasors where the directors have assumed responsibility on their own behalf and not just on behalf of the company. So, if a director or senior officer is expressly authorized to represent a particular class on behalf of the company and makes a fraudulent representation that causes loss to a Third Party, the company is liable, despite the representation was an improper method of doing what he was authorized to do. The extent authority is a question fact and is significantly more than the fact of an employment that provided the employee the chance to carry out the fraud. In Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711, a company secretary fraudulently hired cars for his own use without the managing director knowing. A company secretary routinely enters contracts in the company’s name and has administrative responsibilities that would give apparent authority to hire cars. Hence, the company was liable.

  Here it comes to employee’s continued liability and indemnity. A common misconception involves the liability of the employee for tortious acts committed within the scope and authority of their employment. Even though the employer is liable under respondeat superior for the employee’s conduct, the employee, too, maintains jointly liable for the harm caused. As the American Law Institute’s Restatement of the Law of the Agency, third § 7.01 states, an agent is subject to liability to a third party harmed by the agent’s tortious conduct. Unless an applicable statue offers otherwise, an actor maintains subject to liability notwithstanding of the actor acts as an agent or an employee, with actual or apparent authority, or within the scope of employment. Every American state abides this similar rule. The doubt of indemnification arises when either solely the employee or solely the employer is sued. If only the employee is sued, then that employee may seek indemnification from the employer if the conduct was within the course and scope of their employment. If only the employer is sued, then the employer can attempt to avoid liability by claiming the employee’s conduct was outside of the scope of the employee’s authority, but the employer generally cannot sue the employee to recover indemnification for the employee’s torts. For instance, a court confirms an employer’s right to sue an employee for indemnification, see the case of Lister v Romford Ice and Cold Storage Co. Ltd. For ecclesiastical corporations, in the 2003 decision Doe v. Bennett, the Supreme Court of Canada ruled that in cases of abuse scandals intervening Catholic priests, liability derives from the power and authority over parishioners that the Church offered to its clergymen.

  Here is a doubt, where Bird v DP leaves the law of vicarious liability in Australia? The High Court of Australia's decision in Bird v DP, that is, a pseudonym [2024] HCA 41 has significantly clarified and restricted the scope of vicarious liability in Australia. The majority, who are Gageler CJ, Gordon, Edelman, Steward, Beech-Jones, and Jagot JJ, held that vicarious liability is confined strictly to employer-employee bonds, opposing its extension to relationships "akin to employment." This overturned the decisions of the Victorian Supreme Court and Court of Appeal, which had found the Catholic Diocese of Ballarat vicariously liable for the actions of a priest, Father Bryan Coffey, who sexually abused the plaintiff, DP, in 1971. The High Court emphasized that vicarious liability is about the attribution of liability, not fault, and requires a clear employment relationship, determined by whether the tortfeasor was an employee and whether the tort occurred in the course of employment. In the aspect of employment relationship requirements, The Court reaffirmed that only an authentic employer-employee relationship can provide rise to vicarious liability, opposing cosmic tests like the "totality of the bond" or "akin to employment" used by lower courts. This stance aligns with prior cases like Hollis v Vabu [2001] HCA 44 and Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19 but explicitly narrows the interpretation of "employee" to exclude non-employees such as priests or volunteers. When it comes to rejection of non-delegable duty argument, the Court denied considering whether the Diocese owed a non-delegable duty of care, as this was not pleaded in the lower courts, leaving uncertainty about its application to multinational torts by non-employees. For legislative domain, the majority claimed that any expansion of vicarious liability beyond employment relationships is a matter for the legislature, not the judiciary, noting the "harsh" outcome but emphasizing doctrinal consistency. This ruling has significant implications, particularly for survivors of historical institutional abuse, as it limits the ability to hold institutions liable for the actions of non-employees, such as religious clergy or volunteers, unless a formal employment contract exists.

  The comparison of it with other common law jurisdictions are as shown here: The Bird decision forms a stark divergence between Australian law and other common law jurisdictions, notably the United Kingdom and Canada, which have adopted more expansive approaches to vicarious liability. In the United Kingdom, it has extended vicarious liability beyond strict employment relationships to those "akin to employment." In cases like Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 and Barclays Bank plc v Various Claimants [2020] UKSC 13, the UK Supreme Court established a two-stage test, whether the relationship between the tortfeasor and the defendant is capable of giving rise to vicarious liability (comprising of the relationships akin to employment) and, whether the tort is sufficiently correlated to the tortfeasor's role. This permits institutions like religious organizations to be held liable for the actions of individuals who perform roles integral to their operations, even without a formal employment contract. The UK approach considers factors like navigation, integration, and the conferral of authority, making it more flexible and responsive to modern, non-traditional working arrangements. In Canada, similarly, it has expanded vicarious liability to non-employment relationships. In Bazley v Curry [1999] 2 SCR 534, the Supreme Court of Canada held that vicarious liability could apply where the relationship is enough close to employment and the tort is connected to the risk created by the defendant's enterprise. This "enterprise risk" approach was further developed in cases like John Doe v Bennett [2004] 1 SCR 436, where a diocese was held liable for a priest's actions due to the authority and opportunity provided by the role. Canada's framework prioritizes policy considerations, such as offering remedies for victims and deterring institutional negligence. Here is the key difference: Australia’s strict adherence to the employment relationship requirement contrasts with the UK and Canada’s wider tests, which accommodate relationships where the defendant exercises significant control or confers authority, even absent a formal contract. The Australian High Court explicitly declined the UK and Canadian approaches, citing concerns about uncertainty and indeterminacy. This leaves Australia as an outlier, particularly in cases of institutional abuse, where perpetrators are often not formal employees but hold positions of ability and trust.

  Another question is approaching……. should there be a legislative response to Bird, and what should be its scope? The Bird decision has been criticized for its restrictive approach, particularly for its influence on survivors of historical institutional abuse, who may now face significant barriers to holding institutions accountable. A legislative response is warranted to address this gap, especially given the majority’s explicit deference to the legislature for any reformulation of vicarious liability. Here are the arguments, considerations, and recommendations for the scope of a potential legislative response. Firstly, to talk about its arguments, let me dig into access to justice for survivors first and foremost. The Bird ruling limits remedies for survivors of non-recent institutional abuse, particularly where perpetrators are not employees. For examples, priests and volunteers. This is particularly significant given the findings of the Royal Commission into Institutional Responses to Child Sexual Abuse from the year 2013 to 2017, which highlighted the scale of such abuse and the need for accessible legal remedies. Apart from that, in the alignment with social conditions, as noted by Gleeson J in her dissent, the decision misses an opportunity to adapt the common law to modern social conditions, including non-traditional working relationships. For instance, gig economy, religious roles. Legislative reform could align Australia with jurisdictions like the UK and Canada, which better address contemporary realities. When it goes to existing legislative precedents, some Australian states have already introduced reforms. For example, New South Wales’ Civil Liability Amendment (Organisational Child Abuse Liability) Act 2018 (section 6G, Civil Liability Act 2002) expands vicarious liability to individuals "akin to employees" for child abuse claims. Tasmania has similar provisions. These laws demonstrate that legislative intervention is feasible and efficient. For public sentiment and advocacy, posts on X by figures like @DavidShoebridge highlight public and political dissatisfaction with Bird, calling for law reform to make sure institutions like churches can be held liable for the actions of their representatives.

  This is the recommended scope of legislative reform. A legislative response should aim to balance clarity, fairness, and access to justice while cutting down undue uncertainty. There are elements should be considered. To start with, the extend of vicarious liability to “Akin to Employment” relationships. Legislation should explicitly allow vicarious liability for relationships where the defendant exercises significant navigation, authority, or integration over the tortfeasor, even absent a formal employment contract. This could follow the NSW model, defining “employee” to include individuals performing roles integral to the organization’s operations. For examples, priests, volunteers in religious or charitable institutions. The test could mirror the UK’s approach, focusing on factors like the degree of control, the tortfeasor’s role in the organization’s objectives, and the authority conferred by the institution. Besides that, focus on institutional abuse. The legislation should prioritize claims involving child sexual abuse or other serious torts committed in institutional settings, reflecting the findings of the Royal Commission. This targeted approach avoids over broadening vicarious liability while addressing the most pressing societal issue. What’s more, retrospective application. Given the historical nature of many abuse claims, the legislation should apply retrospectively to ensure survivors of non-recent abuse can seek redress. This would align with reforms in other areas, such as the removal of limitation periods for child abuse claims following the Royal Commission. In addition, non-delegable duty considerations. The legislation could clarify the scope of non-delegable duties in institutional settings, particularly for intentional torts. This would provide an alternative pathway for liability where vicarious liability does not apply, addressing the procedural limitation in Bird where the non-delegable duty argument was not considered. In the national consistency’s point of view, to hinder jurisdictional disparities, the reform should be implemented at the federal level or through uniform state legislation, ensuring consistent application across Australia. This could be modelled on the National Redress Scheme for institutional abuse survivors. Lastly, safeguards to prevent overreach. To address the High Court’s concerns about uncertainty, the legislation should include clear criteria for determining when a relationship is “akin to employment” (e.g., control, authority, integration) and limit liability to torts committed during the tortfeasor’s role. This ensures predictability for institutions while expanding access to justice.

  These are the challenges and considerations of vicarious liability post-Bird v DP [2024] HCA 41. First and foremost, doctrinal purity against practical justice. Critics of reform may argue that expanding vicarious liability undermines the doctrinal clarity emphasized in Bird. However, the social imperative to provide remedies for abuse survivors outweighs strict adherence to traditional principles, especially given the legislature’s ability to craft precise laws. Additionally, institutional resistance. Religious and other institutions may oppose reforms that increase their liability. Clear legislative guidelines and consultation with stakeholders can mitigate these concerns. Last but not least, the balance of retroactivity. Retrospective laws may face challenges regarding fairness to defendants. A balanced approach could limit retrospective liability to cases where the institution had reasonable knowledge or control over the tortfeasor’s actions.

  In a nutshell, The Bird v DP decision has entrenched a narrow approach to vicarious liability in Australia, limiting it to employer-employee relationships and creating a significant divergence from the more flexible frameworks in the UK and Canada. This restricts remedies for survivors of institutional abuse, particularly in cases involving non-employees like priests. A legislative response is necessary to align Australian law with social expectations and international standards. Proposed reforms should extend vicarious liability to relationships “akin to employment,” focus on institutional abuse, apply retrospectively, and ensure national consistency, while incorporating safeguards to maintain legal clarity. Such legislation would address the gaps highlighted by Bird and provide a fairer pathway for survivors to seek justice.