CCIG Investments Pty Ltd v Schokman [2023] HCA 21

In CCIG Investments Pty Ltd v Schokman,¹ the High Court unanimously held that the employer was not vicariously liable for its employee’s drunken act of urinating on another employee in shared accommodation, as it was not within the ‘course or scope of employment’. The High Court overturned the Queensland Court of Appeal’s decision.

COURT: High Court of Australia (Kiefel CJ, Gageler, Gordon, Edelman, Steward, Gleeson and Jagot JJ).

PARTIES: CCIG Investments Pty Ltd (‘CCIG’) (Appellant); Schokman (Respondent).

PROCEDURAL HISTORY: On appeal from the Queensland Court of Appeal.

• In the Supreme Court of Queensland, Schokman sued his employer CCIG, firstly, for breach of duty of care owed to him as an employee, and secondly, vicarious liability for the negligent act of its employee (Hewett) for urinating on him.² Trial judge (Crow J) dismissed both claims. While Hewett’s actions were tortious there was an insufficient connection between employment and act.³
• The Court of Appeal allowed the appeal on the issue of vicarious liability.⁴ Per McMurdo JA (Fraser and Mullins JJA agreeing), the circumstances were analogous to Bugge v Brown (1919) 26 CLR 110.⁵ Hewett was required to live in staff accommodation under his employment terms,⁶ occupying the room not as a stranger, as referred to in Bugge v Brown.⁷ This established the required connection between employment and the wrongful act.

FACTS:

1. Schokman and Hewett were employed by CCIG at Daydream Island Resort and Spa.⁸
2. Both men were contracted to live together in shared accommodation.⁹
3. In November 2016, Schokman observed Hewett drinking at the staff bar.
4. Schokman went to bed but woke up in distress and unable to breathe. Hewett stood over Schokman’s bed urinating on his face, causing him to choke.¹⁰
5. Schokman suffered a cataplectic attack,¹¹ exacerbating his pre-existing conditions of narcolepsy and cataplexy.¹²

GROUND FOR APPEAL:

The employer CCIG appealed on the grounds of vicarious liability.

ISSUES:

Whether the employer is vicariously liable for its employee’s tortious act, specifically, whether the employee’s wrongful act occurred within the ‘course or scope of employment’, given the employer required the employee to reside in shared accommodation under the terms of their employment contract.

LEGAL PRINCIPLES:

VICARIOUS LIABILITY: COURSE OR SCOPE OF EMPLOYMENT

In common law, an employer can only be held liable for an employee’s tort if the tortious act is committed within the course or scope of employment.¹³ In Prince Alfred College Inc v ADC (2016) 258 CLR 134,¹⁴ this was described as an essential requirement of the common law.¹⁵ In Bugge v Brown (1919) 26 CLR 110 (‘Bugge‘), Isaacs J referred to it as a rule of the law.¹⁶

The High Court cited a body of cases, including Bugge,¹⁷ that point to a logical enquiry.¹⁸ An enquiry as to the connection between the wrongful act and the employment was first proposed by Sir John Salmond,¹⁹ as a test to be utilised.²⁰ An employer may be liable not only for authorised acts but also for unauthorised acts, provided they are so connected with authorised acts that they may be regarded as modes, albeit improper modes, of doing them.²¹

In Prince Alfred College,²² it was explained that in determining whether vicarious liability arises for child sexual abuse in institutions depends on the employee’s ‘special role’ assigned.²³ Features like authority, trust, and control may establish a strong connection between the employment and the wrongful act, providing more than a ‘mere opportunity but the very occasion for it’.²⁴

In Bugge,²⁵ Isaacs J explained at 118, that the limit of the rule expressed by phrases such as ‘in the course of’ or ‘scope of employment’ is: ‘… when the servant so acts as to be in effect a stranger in relation to [their] employer with respect to the act [they have] committed, so that the act is in law the unauthorized act of a stranger’.²⁶

COURT’S REASONING:

KIEFEL CJ, GAGELER, GORDON AND JAGOT JJ:

Trial judgment

The Court affirmed that the trial judge considered the relevant enquiry was whether there was a connection or nexus between the employment enterprise and the wrong that justified the imposition of vicarious liability on the employer for the wrong.²⁷

Court of Appeal decision

Their Honours acknowledged that the Court of Appeal allowed Schokman’s appeal finding a requisite connection between employment and Hewett’s actions, due to the contractual requirement, analogous with Bugge.²⁸

Prince Alfred College Inc v ADC (2016) 258 CLR 134

Schokman attempted to draw an analogy between Prince Alfred College²⁹ and his case, arguing that his compulsory shared accommodation with Hewett rendered him vulnerable due to its intimate setting.³⁰ However, the High Court determined this analogy misinterprets Prince Alfred College,³¹ where the inquiry centered on whether the housemaster’s ‘special role’ created a position of power and intimacy sufficient to establish vicarious liability.³² In contrast, Hewett had no such assigned role, and his employment duties did not extend to their shared accommodation.³³

At most, their proximity provided the opportunity for Hewett’s drunken actions to impact Schokman, but mere opportunity does not establish vicarious liability.³⁴

Bugge v Brown (1919) 26 CLR 110

Schokman also sought to draw an analogy to the 100+ year old case of Bugge,³⁵ citing two common factors: both cases involved employees committing tortious acts while on a break, and each act was allegedly tied to employment requirements. However, the Court noted that Hewett was merely at leisure, not engaged in his work duties when the incident occurred.³⁶

The employee’s act in Bugge³⁷ (lighting a fire) was an authorised requirement of his employment.³⁸ By contrast, Hewett could only be said to be acting according to his employment contract by sharing the accommodation provided for and being present in it.³⁹ It does not provide a proper connection to the employment.⁴⁰

In applying Bugge,⁴¹ their Honours determined the circumstances were not analogous to the present case (at 14). The Court stated that: ‘[n]othing in the present case points to the drunken act in question being authorised, being in any way required by, or being incidental to, the employment. In truth, it had no real connection to it’.⁴² Their Honours concluded the appeal should be allowed, with the orders set aside.⁴³

EDELMAN AND STEWARD JJ:

Their Honours agreed with the reasons and orders proposed by Kiefel CJ, Gageler, Gordon and Jagot JJ.⁴⁴

GLEESON J:

Her Honour agreed that the Court of Appeal erred in finding that the appellant employer is vicariously liable for the drunken accident of its employee, Hewett.⁴⁵

DECISION:

The High Court allowed the appeal unanimously (Kiefel CJ, Gageler, Gordon, Edelman, Steward, Gleeson and Jagot JJ), in favour of the employer CCIG Investments Pty Ltd. There was not a sufficient connection or nexus between the employment enterprise and the wrong committed by the employee to impose vicarious liability. The High Court allowed the appeal, setting aside the orders of the Court of Appeal of the Supreme Court of Queensland.

LEGAL IMPACT:

CCIG Investments Pty Ltd v Schokman [2023] HCA 21 is a significant decision for defining the limits of vicarious liability in Australia. The High Court affirmed that an employer is not vicariously liable for an employee’s wrongful act unless it occurs within the ‘course or scope of employment’. Vicarious liability requires a real and sufficient connection between the employee’s wrongful conduct and their employment duties, not mere opportunity or misadventure.

FOOTNOTES:

1. CCIG Investments Pty Ltd v Schokman [2023] HCA 21; 278 CLR 165 (‘CCIG‘). ↩︎
2. Schokman v CCIG Investments Pty Ltd [2021] QSC 120 (Crow J). ↩︎
3. Ibid. ↩︎
4. Schokman v CCIG Investments Pty Ltd [2022] QCA 38, [11] (Court of Appeal). ↩︎
5. Bugge v Brown [1919] HCA 5; 26 CLR 110 (‘Bugge‘); Schokman v CCIG Investments Pty Ltd (2022) 10 QR 310, 326–327 [42]. ↩︎
6. CCIG (n 1) 4 [11]. ↩︎
7. See CCIG (n 1); Schokman v CCIG Investments Pty Ltd [2021] QSC 120, 119. ↩︎
8. CCIG (n 1) 1 [1]–[2]. ↩︎
9. Ibid. ↩︎
10. Ibid 1 [5]. ↩︎
11. Ibid. Characterised by a sudden & brief loss of voluntary muscle tone triggered by emotional stress. ↩︎
12. Schokman v CCIG Investments Pty Ltd (2022) 10 QR 310, [4]. ↩︎
13. CCIG (n 1) 3 [12]. ↩︎
14. Prince Alfred College Inc v ADC (2016) 258 CLR 134, 148–149 [40]–[41] (‘Prince Alfred College‘). ↩︎
15. CCIG (n 1) 3 [12]. ↩︎
16. Bugge v Brown [1919] HCA 5; 26 CLR 110, 117. ↩︎
17. Ibid. ↩︎
18. CCIG (n 1) 7 [20]. ↩︎
19. John Salmond, The Law of Torts (Stevens and Haynes, 1907) 83–84; See Prince Alfred College (n 14) 149 [42]. ↩︎
20. Ibid (n 18). ↩︎
21. CCIG (n 1) 7 [21]. ↩︎
22. Prince Alfred College (n 14) 159–160 [80]–[81]. ↩︎
23. CCIG (n 1) 11 [34]. ↩︎
24. Ibid [35]. ↩︎
25. Bugge (n 5) 118. ↩︎
26. CCIG (n 1) 8 [24]. ↩︎
27. Ibid. ↩︎
28. Ibid 3 [11]; Bugge (n 5) cited in Schokman v CCIG Investments Pty Ltd (2022) 10 QR 310, 326–327 [42]. ↩︎
29. Prince Alfred College (n 14). ↩︎
30. CCIG (n 1) 12 [35]. ↩︎
31. Prince Alfred College (n 14). ↩︎
32. CCIG (n 1) 12 [36]. ↩︎
33. Ibid. ↩︎
34. Ibid [37]. ↩︎
35. See Bugge (n 5). ↩︎
36. CCIG (n 1) 13 [39]. ↩︎
37. Bugge (n 5). ↩︎
38. CCIG (n 1) 13 [40]. ↩︎
39. Ibid [41]. ↩︎
40. Ibid. ↩︎
41. See Bugge (n 5). ↩︎
42. CCIG (n 1) 14 [46]. ↩︎
43. Ibid 15 [47]. ↩︎
44. Ibid 35 [90]. ↩︎
45. Ibid 36 [91]. ↩︎