From Leakage to Liability – Navigating Employer Liability for Employees Drunken Behaviour

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In the recent appeal case of CCIG Investments Pty Limited v Schokman [2023] HCA 21 (CCIG Investments Pty Limited v Schokman), the Australian High Court shed light on the complexities of employer liability and set clear guidelines for when an employer can be held liable for an employee’s wrongful act occurring outside of work hours.

The case revolved around Mr Schokman, an employee of a resort in the Whitsunday Islands off the coast of Queensland. As Mr Schokman slept, he was unexpectedly awakened by Mr Hewett, who was in a semi-conscious state, urinating on him. This unexpected act caused Mr Schokman to choke and suffer a subsequent cataplectic attack, characterised by sudden muscle weakness triggered by the distressing situation.

The central question was whether the employer could be held responsible for the actions of their employee.

What is ‘vicarious liability’

Vicarious liability is a legal concept that holds employers responsible for their employee’s wrongful acts, whether they occur within the workplace or are connected to the employee’s job. This can include incidents at work functions like Christmas parties, work-related conferences, and even during work-related travel. In such cases, the employer can be held accountable for the actions of their employees.

The Decision

The High Court overturned the previous ruling and held that CCIG Investments Pty Ltd, the employer, could not be held vicariously liable for Mr Hewett’s actions. They stressed the importance of a strong connection between Mr Hewett’s wrongful act and his employment is needed for vicarious liability to apply.

Different Perspectives

While all the judges agreed on the outcome, they provided different perspectives on the reasoning and factors to consider in determining employer liability. These are summarised below:

  • (i). Kiefel CJ, Gageler, Gordon, and Jagot JJ: The majority opinion focused on the need for a close link between the employee’s wrongful act and their job responsibilities for vicarious liability to apply.
  • (ii). Edelman and Steward JJ: These judges highlighted the historical confusion surrounding the concept of vicarious liability and called for a coherent understanding of its different applications.
  • (iii). Gleeson J: Gleeson J. agreed with the majority, emphasising the importance of the course of employment and the distinction between an “occasion” and an “opportunity” in determining employer liability.

Key takeaways

 The test for vicarious liability, as established in the case of Prince Alfred College Inc v ADC [2016] HCA 37, has been upheld. This means that for an employer to be held liable for an employee’s wrongful act, the act must have occurred within the course and/or scope of the employee’s employment.

  • Establishing vicarious liability goes beyond the mere fact that the employment provided an opportunity for the incident to occur. The employer’s liability is contingent on a stronger connection between the employee’s wrongful act and the scope of their employment.
  • Significant emphasis is to be placed on identifying the specific tasks an employee was hired to perform and how those tasks were represented to others. This plays a central role in determining whether an act falls within the course and/or scope of employment” for the purpose of vicarious liability.
  • To establish an act as falling within the course and/or scope of employment, certain factors must be considered, such as the employee’s authority, power, trust, control, and the potential to establish intimacy with the victim. These elements play a crucial role in determining the scope of an employee’s actions for the purpose of vicarious liability.

 How does this impact your business?

CCIG Investments Pty Ltd v Schokman offers valuable lessons for both employers and employees. For employers, it emphasises the importance of having clear employment contracts and guidelines in place. Employers should make sure that their employees understand what is expected of them during work hours and what actions are not permitted.

Whereas employees should be aware of their responsibilities and act responsibly both on and off the job. While employers are generally not held liable for an employee’s actions outside of work, it is always important to maintain professionalism and uphold the values of the workplace.

What should you do, and how can we help?

Practical tips for employers to reduce their liability:

  • Clear Policies: Develop comprehensive policies that outline expected behaviour and conduct both during work hours and in employer-provided accommodations. Make sure all employees are aware of these policies.
  • Training Sessions: Conduct regular training sessions to educate employees about the policies and the potential consequences of violating them.
  • Alcohol and Substance Use Policies: Implement and enforce clear policies regarding alcohol and substance use during work hours and in company-provided accommodations.
  • Accommodation Agreements: Include specific terms in accommodation agreements outlining expected conduct and use of provided facilities.

CCIG Investments Pty v. Schokman serves as a navigational beacon for employers and when they may be held vicariously liable for the actions of an employee. The Court will have regard to an employee’s role and scope of employment to determine liability. Moreover, in certain cases, the court may also consider any special role assigned to the employee. This ruling provides clarity on the factors that influence employer liability and highlights the importance of a thorough assessment of the employment context when determining accountability for employee actions.

At Hitch Advisory, we’re here to help employers stay ahead of the curve. We offer comprehensive support, from reviewing current employment agreements and policies to preparing future contracts and internal documents that incorporate the new changes. By partnering with us, employers can feel confident that they’re creating a fair and compliant workplace that prioritises the needs of their employees.


Exercising Lease Options: Landlords and Tenants must exercise caution to ensure it is done correctly!

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In July, the NSW Court of Appeal delivered judgement in Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSCA 158 in which the Court upheld Willis Australia Ltd (Willis) appeal against the initial Supreme Court decision in favour of AMP Capital Investors Ltd (AMP).

The Supreme Court had initially held that Willis was liable for the losses incurred by AMP on the basis that an option to renew was a conditional contract and AMP had validly waived the performance of the other conditions not fulfilled by Willis on the basis that they were for the sole benefit of AMP.


Willis entered a Lease with AMP with an initial Term of six (6) years expiring on 30 September 2020.  The Lease contained two (2) further Options to Renew as follows:

  1. An Option to Renew the existing Lease for the premises for a further four (4) year term (First Option); and
  2. An additional option for the Tenant to take a lease for the remainder of the level the premises was located on for a four (4) year term (Second Option).

In late 2019, Willis served AMP with two notices in writing (satisfying some, but not all contractual conditions outlined in the Lease) advising that they intended to exercise both options.

In August 2020, Willis sought to withdraw its notice for the Second Option to which AMP responded stating that the exercise of the Second Option was an irrevocable offer, and Willis therefore could not withdraw their notice.


  1. Whether, on the proper construction of the Lease, an option to renew the Lease with the expanded space was exercised only when all five conditions specified in the clause were satisfied or alternatively, whether the option to renew was exercised (and a binding agreement to proceed to a formal lease arose) when there was compliance with merely three of the five conditions outlined in the relevant clause.
  2. Whether the option to renew should be characterised as an irrevocable offer or, alternatively, as a conditional contract.


In rendering its decision, the Court held in favour of Willis, overturning the initial decision of the Supreme Court in favour of AMP. The Court’s primary reasoning for their decision being that when ‘exercising’ the Second Option, Willis had only satisfied three of the five stipulated conditions in the clause. Despite AMP’s assertion that they could waive some of the conditions, the Court found that the language of both the clause and the Lease did not support AMP’s interpretation, and the conditions needed to be met for the exercise of the option to be valid.

Regarding the issue of whether an option to renew should be characterised as an irrevocable offer or a conditional contract, the Court decided it was not necessary to make a definitive ruling on this matter in this case. This was on the basis that the reading of the clause and the Lease were sufficient to demonstrate that Willis did not properly exercise the Second Option and therefore were not bound to proceed with the Lease.

So, what does this mean?

Overall, the case highlights the importance of carefully interpreting and fulfilling the conditions specified in the Lease when exercising an option to renew for both landlords and tenants, as in the event of any dispute the Court will consider the specific language and context of the Lease when determining the validity of any exercise of an option.

Specifically, the case highlights the importance for landlords to ensure that when they accept a tenants notice to exercise that they also review the terms of the Lease to ensure that they receive every other condition outlined in the clause. Otherwise, there may be the ability for the tenant to withdraw their notice in the same manner as Willis in this case. Equally, tenants need to exercise caution when it comes to exercising their option to renew to ensure that they have not missed a condition specified in the relevant clause, which would give the landlord the potential ability to invalidate the exercising of the option.

Enhanced Transparency: New foreign ownership register, are you impacted?

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In connection with ongoing changes to Australia’s foreign investment regime under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (the Act), a new register of foreign ownership of Australian assets (the Register) has been introduced. The new Register is administered by the Commissioner of Taxation (the Registrar).

The Register came into effect on 1 July 2023.

The Register requires foreign investors and Australian entities that qualify as “foreign persons”, to notify the Registrar within 30 days of acquiring specific investments held in Australian land, entities, and businesses. These reporting requirements are in addition to the existing approval processes and reporting requirements outlined in the Act.

It is important to note that the term ‘foreign person’ is broadly defined and includes Australian companies and trusts with foreign interests as low as 20% and Australian subsidiaries of foreign entities.

What are the key functions of the Register?

The Register:

  • replaces and amalgamates existing foreign investment registers relating to agriculture, residential land, water and business interests (where applicable) and mining, production and exploration tenements);
  • expands on the types of assets that must be registered;
  • streamlines the management of foreign investors’ investments, and
  • enhances government viability.

The Register is not public and will be subject to the same rules as those that apply to other information relating to foreign investment under the Act.

What are the reporting requirements?

The Register is a post-acquisition recording system, and foreign persons are required to register their direct investments within 30 days of acquisition, rather than proposed acquisitions.

Penalties for failure to notify?

Failure to notify the Registrar within 30 days may result in a civil penalty of 250 penalty units, currently amounting to a hefty $68,750.

What should you do, and how can we help?

Division 3 of Part 7A of the Act outlines when a foreign person is required to notify a transaction or a relevant change in circumstances to the Registrar.

Please get in touch with our office if you are unsure whether your foreign investment is the kind of acquisition that must be notified to the Registrar or where you or your entity experience a change in circumstance, and you become or cease to be a foreign person.

Important Dates

17 – 25 June 2023

The ATO Land and Water Registration Form was retired on 17 June 2023, and other FIRB forms will be removed as the ATO transitions to the new FIRB platform.

26 June 2023

The new FIRB platform was made available to foreign investors on 26 June 2023.

1 July 2023

The Register commenced on 1 July 2023.

Childcare providers beware: ACCC is looking at you

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Why is the ACCC looking at the childcare sector?

Following on from last year’s election, the Albanese Government has focused their attention on trying to address the rising cost of childcare in Australia. The Treasurer has tasked the Australian Competition & Consumer Commission (ACCC) to inquire into 4 different childcare services – centre-based day care, family day care, outside school hours care and in home care. Relevantly, the recipients of all these services are eligible for the government’s childcare subsidy.

The ACCC has released their interim report which found that centre-based day care and outside school hours care make up 97% of all childcare services in Australia. The number of these services has increased since 2018, while the numbers of family day care and in home care services have decreased.

Further, the number of approved childcare places has increased by 17% between 2018 and 2022 however this has not been consistent across all service types nor all geographic regions.

Importantly, ACCC preliminary findings suggest that “The positive association between areas of socio-economic advantage and price…suggest that prices are often set by providers having regard to the parent and guardian cohort’s capacity (or willingness) to pay rather than the level of competition.”

What does this mean?

In short, the report suggests that one will pay more on average if they send their children to childcare centres located in more affluent suburbs than those that aren’t. Surprisingly, between 2018 and 2022, childcare fees increased across all services between 20% to 32%. In nominal terms, this represents an increase for centre-based day care of about $21 per day and family day care $16 per day.

The rate of childcare fee increases has been faster than inflation and wage increases.

After taking into account government subsidies, the report found that out-of-pocket expenses still increased by 7% when using centre-based day care services, 15.8% for family day care and 12.3% for outside school hours care. In home care experienced a decrease of 10.5% due to a change in subsidy entitlements in early 2019 but increased 15.7% from September 2019 to December 2022.

What’s next?

The ACCC continues to consult with childcare providers “to obtain detailed cost information to better understand the drivers of childcare prices and how the local markets for childcare services operate.” It is expected that the ACCC will issue a consultation paper in September 2023 which will include draft findings and recommendations and will call on all parties to put forward submissions in response to it. Once the ACCC has considered all submissions then they will provide their final report to the Treasurer by 31 December 2023.

If you are considering or are interested in putting forward a submission to the ACCC on this subject but don’t know how then please contact us and we can assist.

For more information you can refer to the Childcare inquiry interim report June 2023 by clicking here.

Employment Law Update – What has changed, what will change and how does it affect your business?

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Employment Law Update – What has changed, what will change and how does it affect your business?

As we take our first steps into 2023, it is prudent for employers to take stock of the key developments that took place in the Australian workplace law landscape in 2022. Notably, the introduction of the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022 and the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Act 2022.

We outline the key provisions below, as well as recommend actions for your business to consider:

Key Changes When and what is changing Recommended Actions
Prohibition of secrecy contract terms.


From 7 December 2022, employment contracts, written agreements or company policies must not contain provisions requiring employees to keep secret information about their pay, employment terms and other conditions. Review template employment contracts, written agreements or company policies and remove clauses that require secrecy, or to confirm that such clauses do not exist.

NB: Any contract entered into prior to 7 December 2022 with existing secrecy provisions will no longer have an effect (the balance of the contract will remain in force, however).

No policing of secrecy obligations From 7 December 2022, employers are prohibited from attempting to maintain secrecy around their employees’ pay. This means that employees have full autonomy to decide whether or not to disclose information about their employment terms, conditions, and pay. Employers are not permitted to monitor or control the sharing of this information by their employees. Review internal policies and practices and remove any right you may have to investigate, enquire or police employees for sharing information relating to their employment terms, conditions, and pay.
Flexible work arrangements From 6 June 2023, the right to request flexible work arrangements will be extended to include employees who experiencing family and domestic violence (FDV), and pregnant employees. The right will also extend to those employees if a member of their immediate family or household is experiencing FDV.

New employer obligations include:

(i).         discussing the request with the employee;

(ii).         consider the effect if the request is refused;

(iii).         the employer making a genuine efforts to offer alternate arrangements to accommodate the employee.

Employers must respond to a flexible working arrangement request within 21 days of the request being made.

Strict and defined conditions are noted in the event the employer is considering refusing the request.

Establish a clear internal policy and procedure for flexible work arrangements, taking into consideration the updated obligations as an employer.

If you already have an internal policy on flexible working arrangements based on the current legislative framework, please consider whether this policy requires updating.

Prohibition of fixed term contracts.


From 6 December 2023, employers will no longer be able to employ employees on a fixed-term contract for a term of two or more years (including extensions), or a fixed term contract which can be extended more than once.

Employers must not re-engage an employee on a new contract that is substantially similar to the role, nature and employment relationship of a previous contract entered into by the parties.

Employers should carefully review their current employment contracts to ensure compliance with these new standards and incorporate the Fixed Term Contract Information Statement.

Consideration should be given to the nature of the role and whether fixed-term contracts are the appropriate mechanism or whether alternative arrangements should be considered.

Positive duty to eliminate sexual harassment A positive duty is now imposed on employers to take reasonable and proportionate measures to eliminate workplace sexual harassment, victimisation and sex discrimination.


Employers should implement robust measures to prevent instances of unlawful sex discrimination or sexual harassment, such as collecting and monitoring data, providing appropriate support to employees, and providing regular training and education on the subject.

NB: Simply updating policies and procedures will not be sufficient.

Threshold established for ‘harassment on the ground of sex’ From 13 December 2022, the ‘seriously demeaning’ threshold was amended to align with existing legal standards and other offences under the Sex Discrimination Act 1984 (Cth). Employers should review their existing internal sexual harassment policies and consider updating scope and definitions to align with the update.

If you do not have in place an internal sexual harassment policy (or a broader anti-discrimination policy), we would recommend having regard to preparing and implementing such a policy to ensure better oversight over compliance.

Paid family and domestic violence leave From 1 February 2023, all employees, including casuals, will be entitled to 10 days of paid family and domestic violence leave. Employers should update any relevant policies or procedures, effective from 1 February 2023.

Employers should be mindful that the scheme appears that it will operate similarly to the sick leave entitlements in that the employee may be able to claim domestic violence leave retrospectively, provided the employer is comfortable with the evidence supplied and other conditions required to be met.

NB: for confidentiality and sensitivity reasons, the accrual of this leave must not be shown on the employees’ pay slips.


Employers have the opportunity to make positive changes to ensure compliance with updated employment laws. While some of these changes may not be mandatory yet, it’s important to proactively consider them.

At Hitch Advisory, we’re here to help employers stay ahead of the curve. We offer comprehensive support, from reviewing current employment agreements and policies to preparing future contracts and internal documents that incorporate the new changes. By partnering with us, employers can feel confident that they’re creating a fair and compliant workplace that prioritises the needs of their employees.

3 April 2023

Lazar Krstic, Principal, Hitch Advisory

Aston Chee, Associate, Hitch Advisory

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Important Disclaimer: The material contained in this publication is of general nature only and is based on the law as of the date of publication. It is not, nor is intended to be legal advice. If you wish to take any action based on the content of this publication, we recommend that you seek professional advice.

High Court makes preference claims harder for liquidators

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In February the High Court of Australia delivered judgment in Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 in which the Court considered the application of the “peak indebtedness rule” under Part 5.7B of the Corporations Act 2001 (Act). In the result, the High Court upheld the decision of the Full Federal Court that Part 5.7B, particularly s 588FA(3), does not incorporate the peak indebtedness rule.

Section 588FA(1) of the Corporation Act 2001 (Act) provides that a transaction (most commonly a payment) is an unfair preference given by a company to a creditor which results in the creditor receiving more than the creditor would have received if the creditor had proved in the winding up of the company. The provision applies to payments made by a company to a creditor within 6-months of the relation-back day (most commonly the date the company entered liquidation). Payments of this kind are voidable, and therefore recoverable by the liquidator, if the company was insolvent at the time or became insolvent because of the payment.

Section 588FA(3) applies to circumstances where a company and a creditor have a continuing business relationship in which those transactions serve to increase and reduce the net indebtedness by the company to the creditor. The provision embodies what is commonly referred to as the running account principle which operates to treat all of the transactions as single transaction to determine whether or not the “transaction” is an unfair preference.

Following the decision in Rees v Bank of New South Wales (1964) 111 CLR 210, liquidators were, able to nominate the date and therefore the value at which the running account commenced. This greatly favoured liquidators in that it allowed the liquidator to nominate the date at which the debt owed by the company to the creditor was at its highest (“peak indebtedness”) and to thereafter recover all payments made to the creditor in that period between the peak indebtedness day to the relation-back day. If the payments made to the creditor reduced the indebtedness of the company to the creditor, the payments (or the transaction) would be unfair preferences and voidable at the suite of the liquidator.

At first instance the Federal Court found that the payments made by the company in liquidation within the 6-month prescribed period were unfair preferences by applying the peak indebtedness rule. The creditor appealed to the Full Court of the Federal Court, which overturned the decision and rejected the peak indebtedness rule.

Further the Full Court found (and the High Court subsequently agreed) that the peak indebtedness rule was inconsistent with:

  • the language of s 588FA(3) which requires all transaction to be treated as a single transactions;
  • the doctrine of the ultimate effect; and
  • running account principle.

The High Court held that the correct date was the first day of the prescribed 6-month period (if the company in liquidation satisfied the other criteria of s 588FE of the Act). The High Court rejected the argument that a liquidator is allowed, due to the function of their office, to choose the peak indebtedness date and disregard all prior transactions which rightfully form part of the ongoing business relationship between the creditor and company in liquidation.

The High Court noted that the purpose of the running account principle is not to maximise the potential for clawback of payments from creditors, but that was the effect of applying the peak indebtedness rule and therefore rejected the application of the rule. The determination in Rees was correct for the law at that time, but the legislature had purposefully removed this power from the liquidator and instead prescribed a date by virtue of the interaction of s 588FE and 588FA of the Act.

But what does this mean? This means that the net indebtedness, for the purposes of section 588FA, of a running account between a company in liquidation and a creditor is calculated as the difference level of indebtedness at the start of the 6-month relation-back day period (or a later date if the company in liquidation is deemed insolvent on a later day) and the date the cessation of the business relationship.

This will likely reduce the instances in which liquidators would otherwise seek to recover amounts by operation of s 588FA.

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Tips for Prospective Franchisees

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The franchise business model has many advantages for a prospective franchisee, including access to an established brand name, and business support from the franchisor. These advantages are assets to a business operator whether you are an existing business owner or looking to start your first venture.

If you are considering whether to start a new franchise, make sure you give some thought to the tips we have set out below.

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AHPRA Code of Conduct Update – Important Changes for Pharmacists

By | Pharmacy | No Comments

As of 29 June 2022 the Pharmacy Board of Australia (“Pharmacy Board”), along with eleven other National Boards, replaced the previous code of conduct (“Code”) (first put into effect on 17 March 2014) with a revised and updated Code. While these updates should be considered by all pharmacists, we note that some will be of particular significance for proprietor pharmacists.

We have detailed some of the key updates below. Read More

Franchise Compliance – the increased risk of getting it wrong!

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Hot on the tail of last year’s changes to the Franchising Code of Conduct aimed at improving transparency and protection to franchisees within the franchising industry, the Federal Government also passed the Treasury Laws Amendment (2021 Measures No.6) Bill 2021 which amongst other things results in significant increases in penalties for contraventions of the Franchising Code of Conduct.

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