How Far Can An Employer Be Held Liable For Wrongdoings Of His Employees?

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The issue of an employer’s liability for acts done by the employees (namely, vicarious liability) can be traced way back to ancient times. One instance is during the 19th century, when English judges faced themselves the risk of injuring passersby where their coachmen rode coaches on their own frolic.

This alert discusses the Federal Court’s recent decision on the issue of vicarious liability in GMP Kaisar Security (M) Sdn Bhd v Mohamad Amirul Amin Mohamed Amir [2022] 10 CLJ 669.

Facts

GMP Kaisar Security (M) Sdn Bhd (GMP) was in the business of providing service of armed bodyguards. Jaafar was GMP’s employee. On an assignment, Jaafar was tasked to act as one of the bodyguards to M while carrying a firearm provided by GMP. M was a client of GMP. During the course of his duty, Jaafar fired the firearm randomly at the public, injuring a number of others, including the Amirul, the Respondent. Amirul subsequently claimed against Jaafar, as well as GMP for vicarious liability over Jaafar’s action.

Whilst the High Court and the Court of Appeal by majority allowed Amirul’s claim, there was a dissenting judgment by the Court of Appeal holding that the decision to hold GMP vicariously liable was plainly wrong.

Appeal Before The Federal Court

GMP filed an appeal to the Federal Court, where the apex court was asked to decide on the question of whether an employer can be held liable for an intentional wrong committed by the employee where no fault can be attributed to the employer.

Relying heavily on the minority judgment of the Court of Appeal, GMP argued that Jaafar’s act neither falls under the sphere of his duties nor is connected with his authorised acts in the course of employment. It cannot also be logically considered as clothed with the implied authority by GMP. Thus, it was a clear case of Jaafar having gone far on his own frolic.

Nonetheless, the Federal Court rejected the argument and maintained the High Court’s decision in finding GMP vicariously liable.

Conventional Salmond Test

The law stated if the coachman was going out of his way against his master’s implied commands and when riding on his master’s business, he will make his master liable; but if he was going on a frolic of his own, without being at all on his master’s business, the master will not be liable.

The Federal Court noted that the test has undergone a fair bit of evolution after decades of development. Under the classical Salmond test, an act is considered as done in the course of the employment where:

(i) The act is a wrongful act authorised by the master.

(ii) The act is a wrongful mode of doing an authorised act.

Under this conventional approach, intentional criminal wrongdoing would more likely be seen as an independent act. Thus, GMP will not likely be vicariously liable for Jaafar’s shooting of Amirul as:

(i) The shooting of Amirul as a wrongful act was not authorised by GMP.

(ii) The shooting of Amirul was an intentional criminal wrongdoing and thus, independent of the authorised act of providing the bodyguard service, rather than a wrongful mode of doing the authorised act (namely providing the bodyguard service).

This was notwithstanding that but for GMP, Jaafar will not have access to the gun. Applying to the conventional approach, such a connection was too weak to warrant liability on the employer who has done no fault.

The New Close Connection Test

The Salmond test stood for about a century until the House of Lords case of Lister v Hesley Hall Ltd [2002] AC 215. There, the court opined that the Salmond test did not work well in the cases of intentional wrongdoing. Instead, the court upon the influence of the Canadian court’s decisions expanded the Salmond test. Based on Lister, an employee will be acting in the course of his employment if his unauthorised act was so closely connected with his employment that it would be fair and just to hold the employer vicariously liable.

The Federal Court in GMP Kaiser Security approved this expanded test and opined that it proffers the necessary flexibility to accommodate inevitable changes in social development, employment relationships and workplace environment. According to the court, this was also consonant with the fair, just and reasonable requirement in the Caparo test before a duty of care can arise upon which the liability in negligence is founded.

Upon this close connection test, the Federal Court held that Jaafar’s shooting was closely connected with his employment as the bodyguard of GMP and that employment created the risk and afforded the opportunity for Jaafar to shoot Amirul. The court held that on the facts of the case, it was fair and just to impose vicarious liability on GMP.

Conclusion

It is observed that the modern close connection test which is reminiscent of the fair, just and reasonable test is likely to introduce a high degree of uncertainty into the law of vicarious liability, given its apparent open-endedness. What amounts to closely connected and just and fair are always subjective and sensitive to the factual matrix on a case-to-case basis.

It remains to be seen whether the greater flexibility under this test is worth the cost of legal uncertainty. While it is easy to see the reason why such greater flexibility can be appealing in GMP Kaisar Security, it is not as straightforward if one were to consider the wider impact on all employers. In view of GMP Kaisar Security, the role of public liability insurance may be even more significant and employers ought to exercise extra care when screening their potential employees and when supervising their existing employees.

Authored by Tan Jun Yu, a Pupil with the firm's dispute resolutions practice.

27 February 2023