14 May 2020

Employer liability for an employee illegally dumping waste – despite express instructions

By the Environment and Planning and Workplace, Employment and Safety teams

Employers must give serious consideration to the need for systems and procedures that ensure task completion can only be done within the law.

In a recent appeal decision, the Supreme Court of Western Australia held that a company, and in turn its sole director, were vicariously liable for the acts of its employee who illegally dumped building rubble despite express instructions not to do so.

The decision in Cowie v Perth Demolition Company Pty Ltd [No 2] [2020] WASC 136 puts employers on notice of potential environmental liability even where an employee disregards express instructions from an employer and engages in unlawful conduct. This is because irrespective of whether the task was done legally or illegally, in this case, the task of disposing of waste materials was within the employee's scope of employment.

The demolition and the disposal

The first respondent, Perth Demolition Company Pty Ltd (now in liquidation), was retained to demolish a number of properties and remove the resulting rubble. Its sole director, the second respondent, engaged a driver to dispose of the building rubble.

The second respondent gave the driver "tip money" and instructed him to dispose of the rubble at a recycling facility. In contravention of those instructions, and without the respondents' knowledge or consent, the driver illegally dumped the material and pocketed the money.

Charges are laid

The first respondent was charged with three offences of discharging or abandoning the rubble in breach of the Environmental Protection Act 1986 (WA) (EP Act), on the basis that it was vicariously liable for the acts of the driver. An alternative charge was that the first respondent caused or allowed the rubble to be discharged or abandoned. The second respondent's liability arose as a consequence of being a director.

Who is liable for the driver's acts?

At first instance in the Magistrates Court, the respondents were acquitted of all charges. This decision was reversed on appeal.

The appeal decision focused on three questions:

  • the correct legal test to determine vicarious liability for the acts of an employee;
  • whether the first respondent was vicariously criminally liable for the acts of its employee; and
  • whether the respondents allowed or caused waste to be discharged or abandoned.

Her Honour firstly found that an employer could be vicariously liable for the acts of its employees under section 49A(3) of the EP Act, which is a criminal offence provision.

The test

Her Honour clarified that the focus of the legal test of vicarious liability must be on:

  • what the employee is employed to do; and
  • whether the task being undertaken is within the nature of the task the employee was employed to undertake, even if they are acting in contravention of express instructions.

To answer that test, the relevant question was whether the instruction to take the waste to the recycling tip limited the scope of the driver's employment OR whether it only dealt with how the driver should perform a task that fell within the scope of his employment.

It was not disputed that the driver departed from his instructions. However, her Honour noted that a complete departure from the expected process for completing a task did not mean that the employee acted outside the scope of their employment. Rather, consideration must be given to whether the employee used an unauthorised or improper mode to do something they were employed to do.

Was the employer vicariously criminally liable?

The court accepted that the driver departed completely from his instructions, and did so intentionally and criminally, solely for his own benefit so that he could steal the money he had been given.

However, the driver was employed to dispose of building waste from the properties. Her Honour found that the instructions given by the second respondent did not limit the scope of this task. The instructions only sought to regulate how the driver should perform the task.

As such, even though the driver contravened his express instructions by illegally disposing of the waste, and disposing of the waste in this way was an unauthorised and improper method of undertaking his responsibilities, her Honour found the driver was acting within the scope of his employment and undertaking the task he was employed to do. Consequently, the employer was vicariously liable for the acts of the driver.

Did the respondents allow or cause the waste to be discharged or abandoned?

Her Honour went on to consider whether the respondents, regardless of vicarious liability, were guilty of an offence under section 49A(3) of the EP Act for ‘causing’ or ‘allowing’ the waste to be discharged. She found that even if the employer was not vicariously liable for the acts of the driver, it caused the waste to be discharged or abandoned.

Significance of the decision for waste disposal

The decision is significant for companies involved in waste disposal, or any activity that may impact the environment.

Clearly, employers must ensure their employees are carrying out their duties within the law. However, this extends not only to instructions concerning how to carry out a task, but the very scope of the task. As a result, employers must give serious consideration to the need for systems and procedures that ensure task completion can only be done within the law.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.