Date: Mon, 16 Jun 2008 07:03

From: Neil Foster

Subject: Douglas v Kinger

Dear Jason

I'm sure you mean at common law, not legislatively, but just thought I'd mention that in Australia the sort of situation which arose in Douglas v Kinger (where the insurance company of the employer, in the name of the employer, sued an employee for damage caused by the employee which the insurance company was obliged to cover) would be prevented by s 66 of the Federal Insurance Contracts Act 1984, viz -

INSURANCE CONTRACTS ACT 1984 - SECT 66

Subrogation to rights against employees

                   Where:

                     (a)  the rights of an insured under a contract of general insurance in respect of a loss are exercisable against a person who is the insured's employee; and

                     (b)  the conduct of the employee that gave rise to the loss occurred in the course of or arose out of the employment and was not serious or wilful misconduct;

the insurer does not have the right to be subrogated to the rights of the insured against the employee.

As you will note, it contains an exclusion for "serious or wilful misconduct", which has rarely been invoked - the only case I am aware of is Boral Resources (Qld) Pty Ltd v Pyke [1992] 2 Qd R 25 {employee was drunk behind wheel of prime mover, knew that he faced instant dismissal if he drove while under the influence, still did it}.

So we can say that as a matter of "legal policy" Parliament in Australia has decided that cases against employees are not good. In NSW in particular we also have the Employees Liability Act 1991 (NSW), s 3, which says that an employee cannot be sued by an employer for damages which the employer has had to pay out as a consequence of the doctrine of vicarious liability except, under s 5, where the employee has been guilty of "serious and wilful misconduct". (The State provision seems to achieve the same effect as the Commonwealth one in cases where the liability of the employer arose vicariously, except of course that it removes the liability of the employee directly as opposed to targeting the insurance company.)

Still, the High Court has so far not gone to the extent of over-ruling Lister, so in States of Australia where legislation like the NSW Act is not in force it is theoretically possible for an employer to seek contribution from an employee for harm for which the employer is found vicariously liable. And I guess all over Australia there is nothing stopping an employer (as opposed to an employer's insurance company) from directly suing their employee for harm the employee has caused to the employer. But it would be a brave employer who would sue a 13-year-old for over $200,000. (And then if the employer was insured they would no doubt have to pay it to the insurance company anyway.)

Regards  
Neil F

Neil Foster
Senior Lecturer, LLB Program Convenor
Newcastle Law School
Faculty of Business & Law
MC158, McMullin Building
University of Newcastle
Callaghan NSW 2308
AUSTRALIA  
ph 02 4921 7430
fax 02 4921 6931

>>> Jason Neyers 14/06/08 2:34 >>>

Colleagues:

Are there any UK or Australian equivalents to Douglas v Kinger — i.e. situations where employees have had a duty of care owed to an employer negated (for policy reasons)?

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