July 2007 page 38
Is this a new frontier in vicarious liability?
By ALEX NEWTON
Alex Newton is a senior lawyer at the Human Rights and Equal Opportunity Commission, email AlexNewton@humanrights.gov.au.
The recent decision of the Federal Magistrates Court in Lee v Smith & Ors [2007] FMCA 59 confirms the broad scope of vicarious liability under federal discrimination laws of an employer for acts by employees outside the workplace. The case is particularly significant given the nature of the act for which the employer was held vicariously responsible (a crime – rape) and the context in which the act occurred (a private, social function).
Lee demonstrates that the vicarious liability provisions of the Sex Discrimination Act 1984 (Cth) (SDA) are much wider than those at common law. Accordingly, in cases of sexual harassment and discrimination, a lower standard will establish a connection between an employee’s actions and their employment.
Section 106 of the SDA
Sections 28A and 28B of the SDA make sexual harassment in employment unlawful, including sexual harassment of one employee by a fellow employee (s.28B(2)). Sex discrimination is also prohibited under s.5 of the SDA..
Section 106 of the SDA makes employers vicariously liable for the actions of their employees in certain circumstances.1 Under s.106(1), employers are liable for the unlawful actions of an employee carried out “in connection with the employment of the employee”. Employers can avoid liability if they are able to establish that they had taken “all reasonable steps to prevent the employee ... from doing acts of the kind referred to”.2
The decision in Lee
In Lee, Federal Magistrate Connolly found the Commonwealth (through the agency of the Department of Defence) vicariously liable under the SDA for the rape, sexual discrimination, harassment and victimisation of Cassandra Lee, a civilian administration officer at a Cairns naval base.
Over a period of several months, Lee was sexually harassed by naval officer Austin Smith. Smith repeatedly asked Lee for sex, intimidated her with inappropriate and offensive comments, and made attempts to grope her. After Lee demanded that these activities cease, Smith stopped harassing her for about two weeks.
Around this time, Lee and Smith attended an after-work dinner party at the home of two colleagues also employed by the Australian Defence Force (ADF). Lee became intoxicated at the dinner and passed out. When she woke up the next day, she was in Smith’s house and he was raping her.
The court’s finding, that the dinner itself would not have occurred but for the collusion with Smith of his ADF colleagues, was also significant to its conclusion that the rape occurred “in connection with” Lee’s employment and, accordingly, that the Commonwealth was vicariously liable.
While the Commonwealth attempted to rely on the defence under s.106(2), that it “took all reasonable steps to prevent” Smith’s conduct, this defence failed. The court found that while the ADF had comprehensive equity and diversity guidelines in place, these were not followed.
In addition, the ADF’s gross mismanagement of Lee’s complaint, and the fact that she had not received any equal opportunity training during the period of her employment, were factors considered by the court in rejecting this defence.
Vicarious liability
Common law
A general principle of torts is that an employer is only responsible for actions of an employee which occur during the course of their employment. Accordingly, to establish vicarious liability, there must be a sufficiently strong nexus between the act and the employment to prove that the employee was not merely off “on a frolic of their own”.3
The SDA
In South Pacific Hotels Pty Ltd v Trainor,4 a case which also involved sexual harassment, the common law doctrine of vicarious liability was contrasted with the provisions under the SDA (see “Where does the workplace end?”, LSJ, November 2005, p.47).
In this case, the court adopted an expansive interpretation of the phrase in s.106(1) of the SDA “in connection with the employment of the employee”.
While both employees were off-duty, one employee sexually harassed the other late at night in accommodation provided and controlled by the employer. Finding that there was sufficient connection between the acts of the harasser and his employment, the court held the employer liable for the employee’s actions.
Similarly, in McAlister v SEQ Aboriginal Corporation,5 the court held that the words “in connection with” in s.106(1) should be given a more expansive meaning than that given to phrases such as ‘in the course of’ or ‘in the scope of’.6
In this case, Violet McAlister was sexually harassed by lawyer Christopher Lamb when he went to her home to provide legal services for her divorce. Even though Lamb was a lawyer with an Aboriginal legal service and McAlister, being non-Aboriginal, was not eligible to receive the organisation’s assistance, the court found that Lamb’s acts were sufficiently connected to his employment to bring them within the ambit of s.106(1). However, after making out a defence under s.106(2), the employer was not held vicariously liable in this case.
Applying the common law test of vicarious liability, it seems highly unlikely that the Commonwealth would have been held liable for the rape in Lee. However, applying the much broader provisions set out in the SDA, the court reached the opposite conclusion.
Implications for employers
Lee provides guidance on the extent to which an employer may be held vicariously liable for the sexual discrimination and/or harassment of one employee by another, occurring beyond the workplace. The broad operation of s.106(1) of the SDA means that employers must be vigilant in preventing and policing such conduct wherever it has the potential to arise.
Endnotes
[1]. Section 106 also applies to relationships of principals and agents.
[2]. Section 106(2) SDA.
[3]. F. Trindale and P. Cane, The Law of Torts in Australia, 3rd ed, Oxford University Press, Oxford, 1999, p.735.
[4]. (2005) FCAFC 130.
[5]. [2002] FMCA 109.
[6]. McAlister v SEQ Aboriginal Corporation [2002] FMCA 109 at 135.
