STATUTE AND THEORIES OF VICARIOUS LIABILITY.

• Date: 01 December 2019
• Author: Dietrich, Joachim

I Introduction II A Brief Explanation of Terminology III When Does the Theory Matter? IV Background to the Competing Theories V Employee Immunities Based on Status VI Employer Immunity: The 'Independent Duty Rule' VII Changes in Policy: Statutory Conduct-Based Employee Defences and Transferred Liability or Transferred Immunity VIII The Interaction between Statute and Common Law IX Considering the Arguments Supporting the Master's Tort Theory X Conclusion I INTRODUCTION

Vicarious liability, at its core, imposes strict liability on employers for wrongs committed by employees in the course of employment. The precise boundaries of that liability, and the tests that ought properly to be applied in determining it, are contested questions. (1) For example, what is the nature of the relationship that activates liability, and ought relationships 'akin to employment' suffice? (2) What are the appropriate tests to establish whether conduct is 'in the course of employment', especially where intentional wrongdoing is at issue? (3) It is fair to say that courts have 'struggled' to explain the law, (4) and are in an 'uncertain position about the approach which should be taken. (5) That uncertainty may be explained, in part, by the absence of any single theory, or clearly articulated policy, (6) which justifies vicarious liability. Instead, vicarious liability is said to flow from multiple and differing policy justifications, and various theories have been employed to explain its operation. (7) This article is not directly concerned with the ongoing controversies as to the content and ambit of vicarious liability. It focuses instead on an intermittently pursued debate, namely the competition between two theories as to the 'legal basis for' vicarious liability: the master's tort theory ('MTT') and servant's tort theory ('STT'). (8) The MTT holds that an employer is liable because the acts of an employee ('servants' in the older cases) are attributed to the employer ('master'), whereas the STT holds that the liability of the employee is attributed to the employer. (9) Of these two competing theories, it is the STT that is said to hold sway in modern common law, at least in the UK (10) and Australia. (11) That said, recent statements at the highest judicial level in Australia suggest that the STT might not be as dominant as might appear and that, perhaps, vicarious liability is about the attribution of acts, and not the attribution of liability, after all. (12) For example, in a recent case raising the question of whether vicarious liability could arise for equitable wrongs, members of the High Court described vicarious liability as 'attributing to one person the wrongful acts of another'. (13)

This debate might seem largely irrelevant to the operation of the law and current controversies because the bearing, if any, of the two theories upon the appropriate scope of vicarious liability is seldom explored or articulated. Certainly, discussions about these theories seem removed from difficult and important questions such as whether, and in which circumstances, a government agency or non-profit institution should be held vicariously liable for sexual assaults committed against children in their care, by 'employees' or others. And, in most cases, it makes no difference which theory is applied. On either theory, an employer will be liable if the twin criteria of relationship and scope are satisfied. (14) Perhaps unsurprisingly, therefore, mainstream judicial and academic commentary typically focuses on where the boundaries of liability should be drawn, and rarely engages in any detailed discussion of the merits or otherwise of the competing theories, (15) with the exception of an ongoing and robust defence of the MTT by Robert Stevens. (16)

The purpose of this article is not to advocate for the superiority of one or other of the MTT or STT. Rather, our purpose is to assess the utility of the debate itself and the role, if any, that these theories play in answering contemporary cases. As such, our focus is on situations where the choice of theories might matter--where that choice could have practical consequences for litigants and the success or otherwise of their claims. Significantly, many of these situations arise in statutory contexts and the outcomes of cases are thus closely associated with the interpretation of statutory duties and, more so, protections. (17) A close consideration of the statutory contexts demonstrates a fundamental point not previously highlighted in debates about the MTT and STT: statutory interpretation and associated policy drive the outcomes of the cases, with the theory generally used to support those outcomes. Put another way, the courts are engaged in a process of what might be termed 'bottom-up reasoning': in order to determine whether vicarious liability is appropriate, the courts first consider the individual circumstances, statutory context and reasons for an employee's special duty, immunity or defence, and whether the employer should be liable in those circumstances, and then adopt one theory or the other to further support those conclusions. Courts do not generally consider the merits of each theory, certainly not as part of a holistic overarching view on private law. What unfolds is a nuanced and interesting story of a complex interaction between statute and common law, (18) including the interpretation of statutory protections and their impact on determining the liability of individuals and of their employers. The MTT and STT form but one part of this complex interaction.

II A BRIEF EXPLANATION OF TERMINOLOGY

Before proceeding further, it is necessary to clarify what we mean by the terms 'defence, 'immunity' and 'protection'. These terms are potentially problematic, and a growing body of literature exists from which a range of possible meanings might be gleaned.

The term 'defence' is problematic because tort law scholars disagree as to whether a distinction can be maintained between 'defences' on the one hand and 'denials' of wrongdoing--that is to say, 'pleas by the defendant that one or more of the elements of the tort in which the claimant sues is missing' (19)--on the other. (20) This question is interesting, but it need not be resolved here. In this article, we use the term 'defence' to refer to any exculpatory rule that is 'external to the elements of the claimant's action'. (21) A defence therefore provides an answer to a prima facie wrong. (22) The vast majority of so-called statutory 'good faith' protections would appear to operate as defences according to this definition; (23) to avoid unnecessary complexity we proceed on the assumption that this is universally true (that there is, in other words, no such thing as a good faith denial). (24)

The term 'immunity' is more problematic, for at least two reasons. First, despite apparent agreement among scholars that immunities do not deny wrongdoing, (25) nevertheless that term is occasionally employed in precisely this way. Advocates, for example, are sometimes said to be immune from liability because they owe 'no duty' to clients in respect of conduct that occurs during, or which is intimately connected with, the trial process. (26) If this is correct, then the immunity afforded to advocates operates as a denial of wrongdoing, as opposed to a defence to wrongdoing. Whether an immunity operates as a defence or a denial might be a question of statutory interpretation or, if the immunity in question is based in the common law, it might simply reflect judicial preference for one conceptual approach over the other.

The second reason that the term 'immunity' is problematic is that it is sometimes used, confusingly, to include good faith defences (27) (and, indeed, other species of conduct-based protection such as qualified or partial privileges). (28) We do not embrace this broad definition of immunity. For present purposes, we adopt Goudkamp's view that immunities are 'insensitive to the rational defensibility of the defendant's conduct'. (29) In contrast, good faith (and other similar) defences turn on proof that the defendant's conduct, though negligent or intentional (as the case might be), nevertheless satisfies some minimum standard of conduct (such as good faith).

To summarise, we use the term 'immunity' wherever that immunity stems from the status of the defendant (rather than the quality of their conduct) so that it can potentially encompass both defences and denials. This approach is consistent with the use of that term by courts. We do not, however, include good faith defences within that term's ambit (even though courts also, at times, loosely use 'immunity' to describe such defences).

Finally, we use the word 'protection' as an umbrella term for any exculpatory rule, regardless of whether it is (1) a defence or a denial, or (2) sensitive or insensitive to the quality of the defendant's conduct.

III WHEN DOES THE THEORY MATTER?

We start with some simplified factual examples in which the choice of theory could have a significant impact on the outcome of cases. In all these examples, we assume that an employee ('E') commits a prima facie wrongful act in the course of their employment that injures a claimant ('C'). The question is whether C can sue the employer ('D').

Example 1: E, a firefighter, is protected from liability by a statutory defence that applies to her because she acted in good faith (that is, the defence is enlivened because of the quality of her conduct). The statute makes no reference to the impact of this defence on the (vicarious) liability of D. Is D liable?

Example 2: D is subject to a duty to C; E is C's husband and is not subject to a duty to C because his status as her spouse renders him immune. (30) Is D liable and does this depend on whether the 'immunity' is characterised as substantive or procedural? (31)

Example 3: E, a supervisor in charge of unloading a ship, is subject to a statutory duty...