vicarious liability

Vicarious liability arises when a person is considered to be legally responsible for the wrongful acts of another person, although the person who is vicariously responsible is himself free from blame. Accordingly, if an agent misleads a customer, the principal is liable for the misleading the customer as a joint tortfeasor if the requirements for vicarious liability are satisfied, although the principal had no knowledge of the misleading conduct.

A principal is liable for the acts of their agents (such as employees as agents of employers) if the agent acts within their authority. Vicarious responsibility is not limited to employment relationships. There are no fixed categories for vicarious responsibility.

Employment Context

The liability of an employer derives from their voluntary assumption of the relationship for tortious conduct of employees and the duties that arise from that relationship and their choosing to entrust the performance of those duties to their employees. Liability for an employee's tort does not depend on any contribution to it by the employer.

The wrongful act is deemed to be done by an employee in the course of his employment if it is either:

1. a wrongful act authorised by the employer, or
2. a wrongful and unauthorised mode of doing some act authorised by the employer.

In Lister v Hesley Hall, Lord Steyn confirmed that the relevant test in an employer/employee relationship is whether the torts of the employee were so closely connected with his employment that it would be fair and just to hold the employers vicariously liable.
In the event that liability is established, the employer is a joint tortfeasor with the employee for the wrongful acts and attracts strict liability on the part of the employer. This is not to say that the employer is culpable with the employee and personally at fault, but nevertheless liable for the conduct of its employees.

Rationale for Vicarious Liability

One of the underlying rationales for the form of liability is that persons who employ others to advance their own economic interests should be placed under a corresponding liability for losses incurred in the course of the business. Where the employer's objectives cannot be reached in the absence of a serious risk of the employee committing torts which he has committed, Courts attribute liability to the employer as well. The fact that employment gave the employee the opportunity to commit the wrong is not enough to render the employer liable. The employer is vicariously liable where the risk is inherent in the nature of the business as it is conducted. Real risk of liability arises with the tort is so connected with the employment that it can be said that the employer has introduced the risk of the wrong, and is thereby fairly and usefully charged with its management and minimisation: Bazley v Curry (1999), per McLachlin J, or where it can fairly be regarded as reasonably incidental risks to the type of business the employer carried on.

Context for Liability

What is or is not included within the scope of the employment is very much a matter which depends on the circumstances of each case. The relevant background includes:

1. The nature of the business of the employer, such as the type of commercial enterprise, or hospital, prison, or school;
2. The scope of the employment contract and the duties of the employee;
3. The nature of the act or omission of the act complained of by the claimant;
4. The location of the employee at the time of the act complained of.

Vicarious liability may arise in the context of partnerships, consultancy agreements and other types of legal relationships, such as partnerships. The categories of cases or circumstances in which it may arise are not limited.

Close Connection

To establish a vicarious liability there must be some close connection between the tortious act of the employee and the circumstances of his employment rather than merely having an opportunity to commit the act which has been provided by the access to the premises which the employment has afforded.

The close connection does not provide any particular precision to decide when liability exists. Any particular case is likely to be decided by reference to previous case law. Courts have been less ready to find vicarious liability in cases of employee dishonesty than in cases of negligence. Liability is not imposed unless all the acts or omissions which are necessary to make the employee personally liable took place within the course of the employment contract.

Lord Clyde described the context of liability for employers in employment relationships and contracts in Lister v Hesley Hall Ltd:

"[T]hese cases […] in truth illustrate is a situation where the employer has assumed a relationship to the claimant which imposes specific duties in tort upon the employer and the role of the employee […] is that he is the person to whom the employer has entrusted the performance of those duties. These cases are examples of that class where the employer, by reason of assuming a relationship to the plaintiff, owes to the plaintiff duties which are more extensive than those owed by the public at large and, accordingly, are to be contrasted with the situation where a defendant is simply in proximity to the plaintiff so that it is foreseeable that his acts may injure the plaintiff or his property and a reasonable person would have taken care to avoid causing such injury[…].
The classes of persons or institutions that are in this type of special relationship to another human being include schools, prisons, hospitals and even, in relation to their visitors, occupiers of land. They are liable if they themselves fail to perform the duty which they consequently owe. If they entrust the performance of that duty to an employee and that employee fails to perform the duty they are still liable. The employee, because he has, through his obligations to his employers, adopted the same relationship towards and come under the same duties to the plaintiff, is also liable to the plaintiff for his own breach of duty. The liability of the employers is a vicarious liability because the actual breach of duty is that of the employee. The employee is a tortfeasor. The employers are liable for the employee's tortious act or omission because it is to him that the employers have entrusted the performance of their duty. The employers' liability to the plaintiff is also that of a tortfeasor. I use the word "entrusted" in preference to the word "delegated" which is commonly, but perhaps less accurately, used. Vicarious liability is sometimes described as a "strict" liability. The use of this term is misleading unless it is used just to explain that there has been no actual fault on the part of the employers. The liability of the employers derives from that relationship and their choosing to entrust the performance of those duties to their servant. Where these conditions are satisfied, the motive of the employee and the fact that he is doing something expressly forbidden and is serving only his own ends does not negative the vicarious liability for his breach of the "delegated" duty.

Principals may be entitled to recover contribution from agents for wrong acts.

Examples of Vicarious Liability

Cases where vicarious liability has been established include:

1. Theft of goods by employees: Lloyd v Grace, Smith & Co (1912);
2. Bribery by an partner to obtain confidential information: Hamlyn v John Houston & Co (1903);
3. Negligent valuations of property: Kooragang Investments Pty Ltd v Richardson & Wrench Ltd (1982);
4. Fraudulent conduct of partners in a partnership: Dubai Aluminium Company Limited v. Salaam (2002);
5. Bullying of other employees where the practice was condoned by the employer: Majrowski v Guy’s and St Thomas’s NHS Trust [2006];
6. Stabbing of a guest by a bouncer outside a nightclub, where the employer: Mattis v Pollock [2003].