Drunken misadventure or scope of employment?

By Paul Baxter and Hannah Peddie

Schokman v CCIG Investments Pty Ltd

The High Court restores reason

The High Court recently handed down the much-awaited decision in CCIG Investments Pty Ltd v Schokman^[1], overturning the Queensland Court of Appeal decision that an employer was vicariously liable for the drunken act of its employee urinating on a co-worker in shared accommodation.

Vicarious liability arises where an employee’s wrongful acts are sufficiently closely connected to the employee’s duties or powers of employment so that they could be said to have been performed in the ‘course of their employment‘.^[2]

The High Court, in allowing the appeal, found the employee’s act of negligent urination was not so closely connected with his employment duties that it could be said to have occurred in the course of employment.

The High Court’s decision is both a relief to employers and insurers and provides important clarity on the limitations on vicarious liability for unauthorised acts.

Background: what happened on Daydream Island

The claimant, Mr Schokman worked for CCIG Investments Pty Ltd (employer) at Daydream Island Resort and Spa as a supervisor. His employment contract required him to live on the island in shared accommodation with another employee, Mr Hewett. While sleeping, in the early hours of the morning, Mr Schokman was awoken by Mr Hewett, drunk and disorientated, urinating on him.

The incident caused various physical and psychiatric injuries, including triggering a bout of cataplexy, aggravation of narcolepsy and post-traumatic stress disorder. Mr Schokman sued his employer for damages on the basis that the employer breached its duty of care or alternatively was vicariously liable for the negligent act of its employee, Mr Hewett.

The claim for direct negligence of the employer failed. In order to determine if there was vicarious liability, the Court had to consider whether Mr Hewett’s actions constituted a tortious or wrongful act committed in the course or scope of his employment.

Original decision

The trial judge found Mr Hewett’s actions were not committed in the course of his employment. There was insufficient connection between the employment and the wrong committed to justify vicarious liability. While the trial judge accepted that the occasion of tort arose out of the requirement of shared accommodation, it was not a fair allocation of the consequences of the risk arising to impose vicarious liability on the employer for the drunken misadventure of Mr Hewett with respect to his toileting.

Court of Appeal decision

The Queensland Court of Appeal overturned the primary judgment on the basis that Mr Hewett was sharing the room with Mr Schokman as a necessary requirement of his employment. His unauthorised mode of carrying out that authorised act (cohabiting) sufficiently fell within the scope of employment to trigger vicarious liability.

High Court decision

The High Court unanimously reinstated the primary judge’s decision, finding the employer was not liable for the actions of Mr Hewett. The High Court looked carefully at what Mr Hewett was employed to do and what was merely peripheral to that employment. Ultimately, it was found there was nothing about Mr Hewett’s conduct on the night of this incident that was authorised, required or incidental to his employment.

The Court’s Reasoning

The majority judgment confirmed the test for vicarious liability of an employer; that the employee’s tortious act must occur within the scope of their employment. Thereby, an employer, whose business the employee is acting on behalf of, is responsible for harm caused by the employee’s actions.^[3]

The Prince Alfred College argument

The Court found Mr Schokman’s argument regarding Prince Alfred College^[4] was misguided. In Prince Alfred College, the critical issue was whether a sexual abuser’s role as a housemaster placed him in such a position of power, control, trust and intimacy that the performance of the role could be said to have given not only the opportunity, but the occasion for the wrongful acts, such that they could be said to have been committed in the course or scope of the employment.^[5]

Mr Schokman argued the shared accommodation put him in a position of vulnerability.

However, the Court found that the employees’ shared accommodation did not give rise to such a special relationship of intimacy and trust.

Although the circumstance of shared accommodation created physical proximity between the two men, that mere opportunity does not provide a strong enough connection with the employment to establish vicarious liability.^[6] Accommodation arrangements were merely ancillary to the requirements of each job. No part of what Mr Hewett was employed to do was required to be done in the accommodation.^[7] The focus must be on the position in which Mr Hewett was placed by the employment and what the employment entailed.^[8]

The Bugge v Brown argument

Their Honours also considered any analogy between Mr Schokman’s case and that of Bugge v Brown.^[9] The circumstances which Mr Schokman identified as common to both cases are that the tortious act of the employee occurred while he was on a break from his employment and that each employee was fulfilling the requirements of his employment when carrying out the tortious act.^[10]

In Bugge v Brown, an employee lit a fire to cook their midday meal while remotely mustering cattle.^[11] The fire escaped, causing damage for which the employer was held vicariously liable. The Court of Appeal had accepted Mr Schokman’s argument that this was analogous to the job requirement to live in shared accommodation. Mr Hewett – by drunkenly misdirecting his toileting – had carried out the authorised act of cohabiting in an unauthorised way, but still within the scope of his employment.

However, the High Court noted that in Bugge v Brown the central act was lighting the fire which itself was a requirement of, and authorised by, the employment. By contrast, in this case the central act was negligent urination. Mr Hewett could only be said to be acting in accordance with his employment contract by sharing the accommodation provided and being present in it. Mr Hewett did not perform the negligent act of urination during his hours of work, or at the place at which he worked, being the restaurant.

He did not perform the negligent act at a time and place where his employer was permitted to be present or to monitor him. His employer’s power, set out in the Letter of Appointment provided to employees, to ‘monitor its offices and employees‘ did not extend to surveillance of Mr Hewett on his leisure time or in his personal accommodation.

Mr Hewett’s employment duties to take reasonable care that his ‘acts or omissions do not adversely affect the health and safety of other persons‘ and not to ‘attend work having consumed alcohol or drugs‘ were concerned only with his duties while working for his employer as a restaurant team leader, not with his conduct during his leisure time. Mr Hewett’s negligent actions were not closely connected with any of his duties or powers of employment. The actions which caused Mr Schokman’s injuries were therefore not in Mr Hewett’s course of employment.

The central act of urination not being performed during work hours, nor at his place of work, nor at a time and place where his employer was permitted to be present to monitor him, did not provide a proper connection to the employment.^[12] Their Honours concluded that the circumstances in Bugge v Brown were in no way analogous. No evidence pointed to the drunken act being authorised, being in any way required by, or being incidental to, Mr Hewett’s employment.

Their Honours considered Mr Hewett’s act of negligent urination was not so closely connected with Mr Hewett’s employment duties that the act could be said to have occurred in the course of his employment, and the appeal must be allowed.

Where to from here

The High Court’s decision provides some comfort for employers on the limitations of what will be considered within the scope of an employee’s employment duties. It is important to focus on the central act giving rise to the harm and consider what connection it has to the employment role. Acts which are clearly unconnected to the employment and the employer’s business venture are likely to fall outside of the employee’s scope of employment and therefore the vicarious responsibility of the employer.

In the face of ever-increasing efforts to expand the scope of vicarious liability to find an insured or pecunious defendant, the High Court’s judgment provides helpful guidance on the fundamental issues at play and their sensible application.

[1] CCIG Investments Pty Ltd v Aaron Shane Schokman [2023] HCA 21.
[2] Paragraph [51].
[3] Paragraph [12].
[4] Prince Alfred College Inc v ADC (2016) 258 CLR 134 at 148 – 149 [40] – [41].
[5] Paragraph [36].
[6] Paragraph [37].
[7] Paragraph [36].
[8] Paragraph [38].
[9] (1919) 26 CLR 110.
[10] Paragraph [39].
[11] Paragraph [40].
[12] Paragraph [41].