Morrison, Andrew --- "Vicarious liability - recent common law and legislative changes in NSW" [2019] PrecedentAULA 44; (2019) 153 Precedent 18

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VICARIOUS LIABILITY – RECENT COMMON LAW AND LEGISLATIVE CHANGES IN NSW

By Dr Andrew Morrison RFD SC

This article reviews recent NSW legislation and common law cases.

REVIEW OF CIVIL LIABILITY AMENDMENT (ORGANISATIONAL CHILD ABUSE LIABILITY) ACT 2018 (NSW)

The Attorney-General’s Second Reading Speech

The Attorney General (AG) said ‘The Bill enacts three significant reforms that remove legal barriers identified by the Royal Commission and that provide clear pathways to justice for survivors of child abuse in institutional settings.’ He subsequently noted that the ‘Royal Commission also concluded that reforms to civil litigation are required to provide justice more effectively to survivors in the future.’

He said that the Bill imposes a statutory duty to exercise care, supervision or authority, using reasonable precautions to prevent abuse and that the onus of proof in this regard is reversed.

He said that the Bill codifies the common law approach to vicarious liability.

He noted that it extends vicarious liability to include child abuse perpetrated by non-employees doing the organisation’s work.

He also noted that the Bill implements the Royal Commission’s recommendation to enable survivors to identify a proper defendant to sue, to deal with what is commonly known as the ‘Ellis defence’. He subsequently noted that ‘the proper defendant reform in the bill applies prospectively and retrospectively. This is important because it means that no matter when the abuse occurred survivors will now be able to sue a proper defendant with sufficient assets to satisfy a claim.’

The cases covered in this article test the accuracy of those remarks.

THE ELLIS DEFENCE

The Ellis defence had three elements, as detailed in Trustees of the Roman Catholic Church for the Diocese of Sydney and Pell v John Ellis [2007] NSWCA 117, [2007] HCA 697. The first was that the Catholic Church is not a legal entity and that although at common law a suit can be brought against an unincorporated association, the Church’s membership is too uncertain to permit a court to grant leave to do this. The second element is that all the assets of the Catholic Church are held by trustees, who do not operate its activities and, accordingly, cannot be sued. The third element is that Catholic priests were said not to be strictly employees and, accordingly, there was no vicarious liability.

THE LEGISLATION

The Civil Liability Amendment (Organisational Child Abuse Liability) Act 2018 (NSW) provides that individuals who are not employees but are associated with organisations do give rise to vicarious liability, including priests and volunteers. See ss6E and 6G. However, schedule 1 says that this change is only prospective.

Section 6F in negligence actions reverses the onus of proof. This was recommended by the Commonwealth Royal Commission, and means that the legal onus remains on the defendant. However, all a defendant has to do is call some evidence asserting it took reasonable care for the effective evidentiary onus to be shifted back to the plaintiff. Given that the victim usually lacks resources and the organisation being sued is usually resource-rich, the organisation’s ability to drive a hard bargain or stretch a plaintiff’s resources to breaking point is self-evident. This reform is of little value.

In any event, the reversal of onus applies to actions in negligence. The change is only prospective under schedule 1. It does nothing for current survivors of child abuse.

Moreover, claims in negligence are overtaken by the right of action in vicarious liability on a no-fault basis. Section 6H provides that where an organisation placed its employee (including priests and volunteers) in a position to commit child abuse, regard is to be had to whether the organisation gave the person:

‘(a) authority, power or control over the child’ or

‘(b) the trust of the child’; or

‘(c) the ability to achieve intimacy with the child.’

Under schedule 1, this vicarious liability provision is expressly prospective.

However, the High Court in Prince Alfred College Inc v ADC [2016] HCA 37 said:

‘... 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.’^[1]

It follows that the terms of s6H are identical and consistent with what the High Court has laid down as having always been the common law of Australia retrospectively. It adds nothing. That is not to say that there is any error in it or that it diminishes rights. It just does not do anything for past or future victims that the common law does not already provide. Section 6H(3) preserves the common law in relation to vicarious liability.

Sections 6I, 6J, 6K, 6L, 6M and 6N, together with 6O and 6P enable proceedings to be brought against an unincorporated association and for those proceedings to be enforced against assets of an associated trust. Under schedule 1 and as set out in the Second Reading Speech, these provisions are expressly retrospective as well as prospective.

It has been suggested that because s6O(b) is retrospective, survivors of historical abuse in unincorporated organisations such as churches can now pursue common law claims directly against the unincorporated organisation. Section 6O(b):

‘anything done by the unincorporated organisation is taken to have been done by the proper defendant and a duty or obligation of the unincorporated organisation in relation to the proceedings is a duty or obligation owed by the proper defendant ...’

It is argued that this creates vicarious liability for priests and volunteers who are not employees of the organisation. However, s6O(e) says:

‘the proper defendant incurs any liability from the claim in the proceedings on behalf of the organisation that the organisation would have incurred if the organisation had legal personality (including any costs awarded) ...’

The issue being addressed here is the ability to sue the organisation. It does not extend vicarious liability. Indeed, if it did, there would be no requirement for ss6G and 6H, which are only prospective. One would have thought the section would have to be construed ‘expressio unius est exclusio alterius’.^[2]

Section 6O only makes an unincorporated association liable for that which an incorporated organisation would have been liable for. It does not extend vicarious liability to priests and volunteers. Accordingly, the assurance given in the Second Reading Speech in respect of present victims is, I regret to say, incorrect. Of course, if the intention of s6O was to make organisations vicariously liable for priests and volunteers who are not strictly employees, then there can be no conceivable objection to making ss6G and 6H in Division 3 expressly retrospective. I remain of the view that s6O fails to achieve this aim.

So, incidentally, does the Catholic Archdiocese of Sydney. Its website has published comments saying that there is no such thing as the Ellis defence and that the Church is entitled to rely upon any defence available in law, including a claim that it is not liable for its priests. That is despite an express undertaking given by the Archbishops of Melbourne and Sydney on behalf of all bishops in Australia to the contrary. It is also reflected in the fact that the Bishop of Ballarat, in defences to more than 30 claims against priests, has expressly pleaded that there is no liability for the Catholic Church’s priests. The Archbishops of Melbourne and Sydney, Archbishop Denis Hart and Archbishop Anthony Fisher, were announced by the Hon. Justice Peter McClellan AM on 15 July 2015 to have stated publicly that it is the:

‘... agreed position of every bishop and every leader of a religious congregation in Australia that we will not be seeking to protect our assets by avoiding responsibility in these matters ...’

and that:

‘... anyone suing should be told who is the appropriate person to sue and ensure that they are indemnified or insured so that people will get their damages and get their settlements.’

It appears that not all bishops and leaders of religious congregations in the Catholic Church adhere to the undertaking to which they apparently agreed.

It follows that two of the elements of the Ellis defence are retrospectively overcome. One is the ability to sue an unincorporated association and the other is the ability to access the assets of associated trustees. However, that leaves the defence that only employees give rise to vicarious liability and, accordingly, the Ellis defence (until the NSWCA is overturned) remains intact.

That means, in turn, that current survivors of child abuse in institutional settings are not given an effective remedy and the AG’s statement that ‘no matter when the abuse occurred survivors will now be able to sue a proper defendant with sufficient assets to satisfy a claim’ is incorrect because abuse by priests or volunteers may not give rise to vicarious liability.

This also means that the Second Reading Speech reference to ‘justice for survivors of child abuse in institutional settings’ should actually say ‘future victims of child abuse’. The Act does little or nothing for past victims.

THE WAY FORWARD

In the UK, in Catholic Child Welfare Society v Various Claimants [2012] UKSC 56^[3] and elsewhere, Lord Phillips (for the court) laid down a close connection test, saying that multiple parties could be vicariously liable for the conduct of an individual and that the individual did not have to be an employee but merely acting for the organisation. That case confirmed a series of earlier decisions.^[4]

The High Court has not yet clearly addressed the issue of employment-like claims giving rise to vicarious liability. It is unclear what view the High Court will take. See, for example, Scott v Davis [2000] HCA 52, where Gleeson CJ says that temporary management can give rise to vicarious liability without employment^[5] but Hayne J says this is so only if the person delegating the task stipulates that he or she will have the right to control the way in which it is performed.^[6] Until either there is legislation or the High Court rules that employment-like relationships give rise to vicarious liability, the uncertainty of the extent of common law relief for survivors of child abuse in respect of vicarious liability will continue.

As far as I am aware, only one organisation is so structured as to hold its assets with trustees and to claim that its priests are not its employees. It is reasonable to structure the legislation to apply generally but the reality is that the Ellis defence cannot be overturned until at least the provisions in respect of employee-like situations are covered. The English Supreme Court has repeatedly spoken on this, not least in a non-child abuse case in Cox (Respondent) v Ministry of Justice (Appellant) [2016] UKSC 10. So have the Canadian courts. See John Doe v Bennett [2004] 1 SCR 436 at 446 and EB v Order of the Oblates of Mary Immaculate in the Province of British Columbia [2005] 3 SCR 45. It is to be hoped that either by clarification in the High Court or by state legislation, this deficiency is overcome.

In the meantime, however, the assurances given to ‘survivors of child abuse in institutional settings’ and the suggestion that the Ellis defence is overcome retrospectively are simply wrong because one element of it remains an effective defence under the decision in Ellis in respect of abuse by priests and volunteers for existing survivors of child abuse.

That deficiency in the legislation should be rectified as a matter of priority.

OTHER CASES

The Royal Commission seemed to prefer non-delegable duty to vicarious liability. Since NSW v Lepore [2003] HCA 4; (2003) 212 CLR 511, it is clear that a non-delegable duty of care is in fact delegable in some circumstances, which is why in that case three of the four in the majority preferred vicarious liability as a cause of action.

In Armes v Nottinghamshire County Council [2017] UKSC 60, the English Supreme Court considered its leading non-delegable duty case of Woodland v Essex County Council [2013] UKSC 66 and considered it inappropriate but provided a remedy in vicarious liability to those abused in foster care against the County Council, which appointed the foster parents. See also Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11, where an employer was found liable for an assault by an employee on a customer. The remedy lay in vicarious liability. Lord Toulson (with whom Lord Neuberger, Lady Hale, Lord Dyson and Lord Reed agreed) poured scorn on the High Court decision in Deatons Pty Ltd v Flew [1949] HCA 60; (1949) 79 CLR 370 in respect of an unprovoked attack by a barmaid on a customer, where the action failed. Lord Toulson said:

‘... it surely cannot be right that the measure of the company’s responsibility should depend on whether she was the head barmaid or an assistant. The customer would have no knowledge of what were the exact limits of her responsibility.’^[7]

It is not clear whether the High Court will review its decision in Deatons Pty Ltd v Flew in the light of the leading English and Canadian authorities.

CONCLUSION

NSW legislation with respect to vicarious liability is the most advanced in Australia but, as has already been suggested, it is flawed and leaves much to the common law which, on vicarious liability, is far less advanced than in the UK and Canada.

Dr Andrew Morrison RFD SC is a barrister at Wardell Chambers, Sydney and is the ALA’s spokesperson on institutional responses to abuse and the Royal Commission. PHONE [phone] EMAIL [e-mail].

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^[1] Prince Alfred College Inc v ADC [2016] HCA 37, [81].

^[2] Translated as ‘the explicit mention of one (thing) is the exclusion of another’.

^[3] At [86].

^[4] See also Armes (Appellant) v Nottinghamshire County Council (Respondent) [2017] UKSC 60; Maga v The Trustees of the Birmingham Archdiocese of the Roman Catholic Church [2010] EWCA Civ 256; JGE v The English Province of Our Lady of Charity and the Trustees of the Portsmouth Roman Catholic Diocesan Trust [2011] EWHC 2871 (QB).

^[5] Scott v Davis [2000] HCA 52, [6].

^[6] Ibid, [301].

^[7] Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11, [29]-[30].