Question

In 2019, Lariza was on her way to holiday on the Mornington Peninsula in Victoria. She had booked the holiday with Fun Travel Vic PTY.LTD (FTV). While travelling by bus from Melbourne to the Peninsula, Lariza undid her seat belt to get something from the overhead shelf. The bus driver approached a bend in the road at fast speed then had to brake suddenly, causing Lariza to fall and break both her arms. Lariza now wishes to sue FTV for $60,000 damages.

Explain the principle of Vicarious Liability and how it is relevant to Lariza’s case.

Discuss the two defences FTV may raise to reduce or avoid paying Lariza compensation.

Answer 1

A. The legal principle of vicarious liability applies to hold one person liable for the actions of another when engaged in some form of joint or collective activity.

Imposition of vicarious liability in these circumstances has been justified on the following grounds:

· Exercise of control: If penalties are serious enough, it is assumed that rational employers will take steps to ensure that employees avoid injuring third parties. On the other hand, rational employers may choose to rely on independent contractors for risky operations and processes.

· Risk spreading: Many consider it socially preferable to impose the cost of an action on a person connected to it, even if a degree removed, rather than on the person who suffered injury or loss. This principle is also sometimes known as the "deep pocket" justification.

· Internalizing the social costs of activities: The employer usually (though not always) passes on the cost of compensating injury or loss to the customers and clients. As a result, the private cost of the product or service will better reflect its social cost.

The principle of Vicarious Liability is is relevant to Lariza’s case as the accident caused to her resulting in Lariza loosing both her arms was a prime responsible of the bus driver as if he would have not speedup in the road bends and it would have been slower then by applying brakes it wouldn’t have resulted in the accident but due to speed at the bend and sudden brake application the accident occurred. Moreover, as the bus was a part of the trip of the Fun Travel Vic PTY.LTD (FTV). Therefore, they are to be held responsible and have to pay up the accident penalty fee of $60000 as accidental insurance policies.

B. The following are exceptions to the vicarious liability rule:

1. The agent committed an intentional act under the express or implied authorization from the Principal to perform the act (ie, a bouncer at a bar who injures a patron while throwing he/she out);

2. The agent was an independent contractor where the duty assumed is nondelegable due to public policy considerations.

The two defences that the FTV may raise to reduce or avoid paying Lariza compensation are:

· During a journey it is mandatory to wear the seat belt and if you are loosening for some reason then he/she should have a strong hold on the bus seat or holding equipment but she was not doing it. So, it lead to the accident. She should have been wearing the seat belt or hold something for her safety.

· Moreover, the FTV or Fun Travel Vic PTY.LTD may claim that it was only responsible for the trip and holiday booking and moreover they can put the blame on the Bus Operator Service who was the traveling in-charge and therefore the bus operating services would have to bear the accident insurance.