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A recent decision of the High Court of Australia has clarified who may be held vicariously liable for the acts of others. In this update, we look at the workforce implications including the importance of clearly distinguishing between employee and non-employee relationships in contracts, and if those deemed to be “akin to employment” such as independent contractors, labour hire and gig workers can be held vicariously liable for a wrongful act.
What is vicarious liability?
Vicarious liability imposes liability on a person for the wrongful acts of others.
In Australia, an employer will be vicariously liable for the wrongful act of an employee where that act was performed within the course of their employment. The underlying policy is that it is fair to impose liability on an employer where an employee, in carrying out the employer’s business, causes loss to an innocent party.
Extension of vicarious liability to other relationship
With many employers now utilising the services of labour hires, independent contractors and gig workers, the distinction between an employee and non-employee has become increasingly blurred. This raises the question of whether a person can be, or should be, held vicariously liable for the wrongful act of a person who, while not strictly an employee, is in a relationship “akin to employment”.
If there is an extension beyond the employment relationship, then the increased scope of liability will have significant implications for business owners, community groups and insurers.
Bird v DP [2024] HCA 41 (Bird)
In Bird, the High Court clarified that the principles of vicarious liability are confined strictly to employment relationships, and do not extend to relationships “akin to employment”, including independent contractors.
In 1971, “DP”, then aged 5 years old, was assaulted and sexually abused by Father Bryan Coffey, a Catholic priest from St Patrick’s, the local parish church. The church was, and is, within the Roman Catholic Diocese of Ballarat (Diocese). Father Coffey was not an employee of the Diocese.
In 2020, DP commenced proceedings in the Supreme Court of Victoria claiming damages for psychological injuries sustained as a result of the assaults, and alleged that the Diocese was vicariously liable for the actions of Father Coffey. The primary judge held the Diocese was vicariously liable for the assaults, even though Father Coffey was not an employee of the Diocese and the assaults did not occur in the course of an agency relationship between Father Coffey and the Diocese. The Court of Appeal unanimously dismissed the Diocese’s appeal.
On appeal to the High Court, the central issue was whether vicarious liability applies where there is no employment relationship between a wrongdoer and a defendant.
The decision
The High Court (by majority 6-1) held that in Australia, a defendant is not vicariously liable for the acts of a wrongdoers who are not in an employment relationship but instead are, for example, independent contractors or in a relationship akin to employment. In other words, a relationship of employment is a “necessary precursor” to a finding of vicarious liability.
The Court acknowledged that insisting on a threshold requirement of an employment relationship for a finding of vicarious liability is “harsh”, but that to expand the doctrine of vicarious liability to include relationships akin to employment “would produce uncertainty and indeterminacy”.
The Court reiterated that to establish vicarious liability, the relevant inquiry is twofold: whether the wrongdoer was an employee of the defendant, and whether the relevant act or omission of the wrongdoer took place in the course or scope of that employment.
The Court did not consider whether the Diocese was liable under the “non-delegable duty” because it was not identified or pleaded at trial. A “non-delegable duty” is direct liability, not vicarious liability, and is a duty to ensure that somebody else’s duties, such as a duty to take reasonable care, is carried out. The list of circumstances where the duty applies is not exhaustive but has been recognised in relationships between school and pupil, and hospital and patient. If it had been argued at first instance, the Diocese could have been found liable to have breached the “non-delegable duty” but, as it was not argued, the position is unclear.
Key takeaways
For persons who engage other persons in relationships akin to employment, including independent contractors, the Court’s decision in Bird makes clear that they will not be vicariously liable for the wrongful acts committed by the persons they engage.
While this may be a relief to principals in independent contractor relationships and other non-employee relationships, it reinforces the importance of clearly distinguishing between an employee and non-employee in the contract and the way the contract is discharged. Careful consideration of each parties’ legal rights and obligations terms in the written contract will need to be given to ensure that they are consistent with the person effectively running their own business, a key feature of the independent contractor relationship.
Also, despite the absence of an employment relationship, consideration will still need to be gives as to whether the “non-delegable duty” applies in the circumstances to make the principal directly liable.
You can read our earlier article on the implications on the legal landscape for historical abuse claims here.
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