Legal principles: vicarious liability
20 The case was run at trial (and on appeal) on the basis of general law principles with respect to vicarious liability, as explained in Deatons Pty Ltd v Flew (1949) 79 CLR 370, State of New South Wales v Lepore (2003) 212 CLR 511, applied in this Court, in Starks v RSM Security Pty Ltd [2004] NSWCA 351 at [12]-[24]; Sandstone DMC Pty Ltd v Trajkovski [2006] NSWCA 205 at [9]-[17] (Ipp JA, Handley and McColl JJA agreeing). In seeking to establish the relevant principle to apply, some attention was paid in the course of argument to the language used in these various authorities.
21 The underlying principle is not in doubt: an employer will be liable for the act of its employee "only if the act is shown to come within the scope of the servant's authority either as being an act which he was employed actually to perform or as being an act which was incidental to his employment": Deatons v Flew, at p 378 (Latham CJ). However, the precise application of that principle, so stated, can give rise to difficulties. Thus in Deatons v Flew, a barmaid in the employ of Deatons had assaulted a patron in the hotel by throwing the contents of a glass of beer and the glass itself, striking Mr Flew in the face. The jury found in his favour and the liability of the barmaid for the assault was not in issue on appeal. The question was whether her employer was liable for her action. Dixon J, at 381-382, categorised the facts in the following way:
"The truth is that it was an act of passion and resentment done neither in furtherance of the master's interests nor under his express or implied authority nor as an incident to or in consequence of anything the barmaid was employed to do. It was a spontaneous act of retributive justice. The occasion for administering it and the form it took may have arisen from the fact that she was a barmaid but retribution was not within the course of her employment as a barmaid."
22 It may be added that his Honour dismissed the suggestion, on the facts, that she acted "in the course of maintaining discipline or restoring order" or that that was part of her responsibility: at p 381. It is clear that a mere temporal connection between employment and the improper or unlawful act of the employee is insufficient to give rise to vicarious liability.
23 Lepore was a case involving a somewhat different factual situation, in which the State was sought to be held liable by a pupil of a State school for sexual abuse by a teacher. However, Deatons v Flew was identified as the leading Australian authority on the subject of vicarious responsibility for an assault by an employee by Gleeson CJ at [49]. His Honour summarised the Court's approach in the following passage (at [50]):
"The Court considered that, on either version of the facts, the employer was not vicariously liable for the trespass: on the plaintiff's version what the barmaid did was a gratuitous, unprovoked act; the only alternative view open was that it was an act of personal retribution. Either way, it was not incidental to the work she was employed to do. It was emphasised that it was not the duty of the barmaid to keep order in the bar. There were other people to do that. Her job was merely to serve drinks. Her conduct was not an excessive method of maintaining order. It was 'a spontaneous act of retributive justice'."
24 The Chief Justice referred to the formulation of the test in Salmond, Law of Torts, that "an employer is liable even for unauthorised acts if they are so connected with authorised acts that they may be regarded as modes - although improper modes - of doing them, but the employer is not responsible if the unauthorised and wrongful act is not so connected with the authorised act as to be a mode of doing it, but is an independent act": at [42]. At [51] his Honour continued:
"As has frequently been observed, the answer to a question whether certain conduct is an improper mode of performing an authorised act may depend upon the level of generality at which the authorised act is identified. If, on the facts, it had been possible to treat maintaining order in the bar as one of the barmaid's responsibilities, and if, on the facts, it had been open to regard her conduct as an inappropriate response to disorder, then the jury could properly have held the employer liable in trespass. However, the barmaid's only responsibility was to serve drinks, and throwing a glass of beer at a customer could not be regarded as an improper method of doing that. The level of generality at which it is proper to describe the nature of an employee's duties ought not to be pitched so high as to pre-empt the issue. The fact that an employer owes a common law duty of care to an injured person does not mean that it is appropriate to describe the employment duties of all the employees as including taking care of the person."
25 His Honour also stated, at [54]:
"Where acts of physical violence are concerned, the nature and seriousness of the criminal act may be relevant to a judgment as to whether it is to be regarded as a personal, independent act of the perpetrator, or whether it is within the scope of employment."
26 The difficulty in articulating a coherent basis for upholding vicarious liability of an employer was noted by Gaudron J in Lepore at [127]-[131]. Although it may be important to identify the acts of an employee by reference to his or her contractual duties, defined with some precision, that course will not always provide a ready answer. Nor is it sufficient to say that the act must be done in the intended pursuit of the employer's interests or in the intended performance of the contract. That test fails to explain the basis on which a solicitor might be found liable for the unauthorised fraud of a managing clerk, as in Lloyd v Grace, Smith & Co [1912] AC 716 or the basis on which an employer was found liable where its employee, having the duty to clean and return a fur coat, stole it: Morris v C. W. Martin & Sons Ltd [1966] 1 QB 716. These concerns led Gummow and Hayne JJ in Lepore to a carefully constrained statement of principle at [239]:
"For present purposes, it is enough to conclude that when an employer is alleged to be vicariously liable for the intentional tort of an employee, recovery against the employer on that basis should not be extended beyond the two kinds of case identified by Dixon J in Deatons : first, where the conduct of which complaint is made was done in the intended pursuit of the employer's interests or in the intended performance of the contract of employment or, secondly, where the conduct of which complaint is made was done in the ostensible pursuit of the employer's business or the apparent execution of the authority which the employer held out the employee as having."
27 There may be a legitimate distinction between taking property of a customer of one's employer and undertaking a violent assault in the course of one's employment. However, as Kirby J noted in Lepore, the cases are not readily rationalised according to any precise principle, which led his Honour to adopt a test of "close connection" between the act and the duty of the employee which, inevitably, involved matters of evaluative judgment: at [315]-[320]. This approach was expressly rejected by Callinan J at [345] as likely to throw the law into a state of uncertainty. His Honour was content not to articulate any broad principle, that being unnecessary to determine the liability of the State for sexual misconduct of a teacher.
28 As various courts, including this Court in the cases identified above, have held, an employer of security guards may be liable for unlawful assaults undertaken by them during the course of their employment. The distinction usually drawn between such cases and Deatons v Flew is that security officers (unlike a person who is merely employed to serve drinks) are expected to use force from time to time, in circumstances where the level of force required is left to their judgment. The use of excessive force may demonstrate an error of judgment or it may demonstrate something worse. That is why, in a case such as the present, it is necessary to bear in mind the comment of Gleeson CJ set out at [25] above that the nature and seriousness of the criminal act may well be relevant to its characterisation.
29 Before applying these principles to the present case, it is convenient to consider whether any different test is required by s 7 of the Vicarious Liability Act, which reads as follows:
" Vicarious liability of masters
7. Notwithstanding any law to the contrary, a master is vicariously liable in respect of a tort committed by his servant in the performance or purported performance by the servant of an independent function where the performance or purported performance of the function:
(a) is in the course of his service for his master or is an incident of his service (whether or not it was a term of his contract of service that he perform the function); or
(b) is directed to or is incidental to the carrying on of any business, enterprise, undertaking or activity of his master."
30 As noted by Smart AJ in Hughes v Law Society of New South Wales [2004] NSWSC 290 at [21], the Vicarious Liability Act found its origins in a report of the Law Reform Commission (NSW) on "Proceedings by and against the Crown" (1975). Although s 7 is directed to the position of employers generally, the reference to performance by a servant "of an independent function" would appear to be limited to a function conferred or imposed by law: Report, par 13.27. Perhaps curiously, the term "independent function" is defined in s 5(1), but only "in relation to a servant or a person in the service of the Crown", language which is apt to apply to the vicarious liability of the Crown under s 8. An example of a private employer being sued for the exercise of an independent function may be found in the case of the asserted liability of a port authority for the negligence of a pilot in Oceanic Crest Shipping Company v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626. Whilst the pilot was in the employ of Pilbara, and Pilbara was a private company incorporated for commercial purposes, it nevertheless enjoyed the general law immunity from vicarious liability for the acts of a public officer exercising independent responsibilities conferred by law, as noted by the Full Court of the Federal Court in Braverus Maritime Inc v Port Kembla Coal Terminal Ltd (2005) 148 FCR 68 at [97], a case in which s 7 of the Vicarious Liability Act was referred to but not applied, at [124]. (Section 7 was also referred to, but not applied, in Commissioner of Police v Estate of Russell (2002) 55 NSWLR 232 at [77] (Spigelman CJ).) In the present circumstances it would be necessary to show that the statutory powers and obligations under the Liquor Act 1982 (NSW), discussed at [37] below, perhaps in conjunction with the licensing regime for security guards under the Security Industry Act 1997 (NSW), conferred an independent function of a public nature on the security guards. That approach was not relied on by either party.
31 Assuming that s 7 does not apply in relation to the potential liability of a private employer in respect of employees undertaking security duties at a private hotel, there may be an issue as to whether, nevertheless, the statutory language invokes some different test to that found in the general law so that, as a matter of consistency, the statutory test should be taken into account in the present case. However, that matter not having been argued, it need not be pursued.