Prince Alfred College Incorporated v ADC [2016] HCA 37

Judgment summary

French CJ, Kiefel, Bell, Gageler, Keane, Nettle and Gordon JJ

The respondent was sexually abused by a housemaster employed by the appellant, the Prince Alfred College (the “PAC”) in 1962. In 2008, the respondent brought proceedings against the respondent, inter alia, that it was vicariously liable for the wrongful acts of its employee, the housemaster. The respondent also required an extension of time in which to bring the proceedings. Dismissing the respondents claim, the primary judge held that PAC’s liability was not established and that the effluxion of time would prejudice the appellant’s defence. An appeal to the Full Court reversed the primary judge’s decision.

The primary issues for the High Court was whether the PAC was vicariously liable for the wrongful conduct of its employee and whether the limitation period should be extended.

Relevantly, the majority stated that any prejudice in extending the limitation period be considered before concluding any remaining issues:

Vicarious Liability

As to the correct approach in determining vicarious liability in cases where the employee is involved in criminal conduct, the majority said:

[38] The judgments of the courts below in this case reflect the divergent views about the approach to be taken to the question of vicarious liability both generally and in cases of the kind here in question. Differing views were also expressed in New South Wales v Lepore. New South Wales v Lepore itself was decided against the background of developments in Canada and the United Kingdom, the catalyst for which appears to have been cases of this kind – concerning the sexual abuse of children in educational, residential or care facilities by persons who were placed in special positions with respect to the children. Since New South Wales v Lepore there have been further developments in each of these jurisdictions. It is therefore understandable that trial courts and intermediate appellate courts in Australia are left in an uncertain position about the approach which should be taken.

A general basis for vicarious liability?

[39] Vicarious liability is imposed despite the employer not itself being at fault. Common law courts have struggled to identify a coherent basis for identifying the circumstances in which an employer should be held vicariously liable for negligent acts of an employee, let alone for intentional, criminal acts. There have been concerns about imposing an undue burden on employers who are not themselves at fault, and on their business enterprises. On the other hand, the circumstances of some cases have caused judges to exclaim that it would be “shocking” if the defendant employer were not held liable for the act of the employee[25]. No doubt largely because of these tensions vicarious liability has been regarded as an unstable principle, one for which a “fully satisfactory rationale for the imposition of vicarious liability” has been “slow to appear in the case law”[26].

[40] Vicarious liability has not to date been regarded as a form of absolute liability, although policy choices, and the questions posed for the determination of vicarious liability, can lead in that direction. The traditional method of the common law of confining liability, in order to reflect some balance between competing interests, is the requirement that the employee’s wrongful act be committed in the course or scope of employment[27]. At the least this provides an objective, rational basis for liability and for its parameters.

[41] Difficulties, however, often attend an enquiry as to whether an act can be said to be in the course or scope of employment. It is to some extent conclusionary and offers little guidance as to how to approach novel cases. It has the added disadvantage that it may be confused with its use in statutes, where it has a different operation. In statutes providing compensation for injury suffered by employees it operates as a limit upon a right to compensation[28]; in the common law it is an essential requirement for vicarious liability. But it has not yet been suggested that it should be rejected. It remains a touchstone for liability.

[45] Of course, if a general principle favours the imposition of liability it may be said to provide some level of certainty. And, if a general principle provides that liability is to depend upon a primary judge’s assessment of what is fair and just, the determination of liability may be rendered easier, even predictable. But principles of that kind depend upon policy choices and the allocation of risk, which are matters upon which minds may differ. They do not reflect the current state of the law in Australia and the balance sought to be achieved by it in the imposition of vicarious liability.

[46] Since the search for a more acceptable general basis for liability has thus far eluded the common law of Australia, it is as well for the present to continue with the orthodox route of considering whether the approach taken in decided cases furnishes a solution to further cases as they arise. This has the advantage of consistency in what might, at some time in the future, develop into principle. And it has the advantage of being likely to identify factors which point toward liability and by that means provide explanation and guidance for future litigation.

[47] Such a process commences with the identification of features of the employment role in decided cases which, although they may be dissimilar in many factual respects, explain why vicarious liability should or should not be imposed.

[81] … the relevant approach is to consider any special role that the employer has assigned to the employee and the position in which the employee is thereby placed vis-à-vis the victim. In determining whether the apparent performance of such a role may be said to give the “occasion” for the wrongful act, particular features may be taken into account. They include authority, power, trust, control and the ability to achieve intimacy with the victim … Where, in such circumstances, the employee takes advantage of his or her position with respect to the victim, that may suffice to determine that the wrongful act should be regarded as committed in the course or scope of employment and as such render the employer vicariously liable.

Limitation Period

When considering whether to grant the discretionary power to extend the limitation period, the respondent must have shown that:

[4] … it was just in all the circumstances for the court to extend the limitation period and that the PAC would not be significantly prejudiced if the discretion was exercised in his favour. (footnotes omitted)

Finding that the PAC would be prejudiced in several circumstances, the majority said:

[24] By the time the proceedings were commenced in December 2008 a number of persons who may have been witnesses in the proceedings had died … The senior housemaster was ill and unable to give evidence. The psychologist whom the respondent first consulted had destroyed his notes.

The exercise of the discretion

[99] In considering the exercise of the discretion under s 48(3) of the Limitations Act, two fundamental propositions established by this Court’s decision in Brisbane South Regional Health Authority v Taylor[104]must be borne in mind. First, an applicant for an extension of time must prove the facts which enliven the discretion to grant the extension and also show good reason for exercising the discretion in his or her favour[105]. An extension of time is not a presumptive entitlement which arises upon satisfaction of the pre-conditions that enliven the discretion[106]. The onus of persuasion is upon the applicant for an extension of time[107]. The exercise of the discretion to grant an extension of time must take account of the reasons for the limitation regime, and the discretionary nature of the decision to be made must be respected when conducting appellate review of a primary judge’s decision[108]. In Brisbane South Regional Health Authority v Taylor, McHugh J said[109]:

“The enactment of time limitations has been driven by the general perception that ‘[w]here there is delay the whole quality of justice deteriorates’[110].”

[100] Secondly, the purpose of the legislative conferral of the discretion is to ensure a fair trial on the merits of the case. The loss of evidence which will tend against the prospects of a fair trial will usually be a fatal deficit in an argument that good reason has been shown to exercise the discretion to grant an extension[111]. As McHugh J pointed out in Brisbane South Regional Health Authority v Taylor[112], the justice of a plaintiff’s claim is seldom likely to be strong enough to warrant a court reinstating a right of action against a defendant who, by reason of the delay, is unable fairly to defend itself or is otherwise prejudiced. His Honour had earlier observed[113] that, in cases of long delay, prejudice may exist without the parties or anyone else realising that it exists.

[112] … where there had been a very long delay in commencing proceedings and the defendant had raised questions of prejudice arising from its inability to obtain evidence – it was essential that those matters, as relevant to the question of extension, be first considered. It is the consideration of those matters which will point to the appropriateness or otherwise of determining any remaining issue in the action where an extension is not to be granted.

Accordingly, the majority found that there was insufficient evidence to determine liability. In stating this, the majority found that the primary judge was not able to decide liability and the Full Court should not have revisited it.

The appeal was dismissed with costs.

David Cormack – Brisbane Barrister & Mediator

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