Dead in the water is how one lawyer described the future of vicarious liability claims over institutional child sex abuse, after this week's controversial High Court ruling that a priest is not an employee of the church.

For many survivors and their supporters, the ruling came as a shock and it prompted calls for governments around the country to step up and change the law.

Vicarious liability is the responsibility you have for the wrongdoing of others, if you are an employer.

So four years ago a Victorian man went to court arguing the Catholic Church was vicariously liable for sexual abuse he suffered at the hands of Father Bryan Coffey at two family events in 1971, when he was only five.

Father Coffey was convicted of child sex offences against other children in the 1990s and has since died.

The Victorian court found the church was vicariously liable, and the decision was upheld even after the church appealed.

But the devil was in the detail.

In both decisions the courts agreed Father Coffey was not an employee of the church, but occupied a special place within the hierarchy of the church, which the rulings found gave rise to vicarious liability.

Most priests, it seems, are holders of religious office. They are neither an employee, nor a self-employed contractor, and as a court ruling from long ago established, it is a relationship that is pre-eminently of a spiritual character.

'Retrograde step'

This week the High Court found, despite appearances, with the church directing and controlling Father Coffey's activities in the parish, he was not an employee.

And in the High Court's view, vicarious liability is confined to employees.

Lawyer Judy Courtin declared it a day of mourning.

"It's such a retrograde step, and the High Court actually had the choice to extend the principles of vicarious liability," Ms Courtin said.

Andrew Morrison from the Australian Lawyers Association said the ruling was out of step with overseas practices where there was a wider interpretation of vicarious liability.

"I am shocked because amongst the common law world, Australia is now on its own in not recognising activities akin to employment as giving rise to vicarious liability," Dr Morrison said.

"This is someone who is doing the work of the bishop and the diocese, and in those circumstances, why shouldn't there be vicarious liability? And why should the church escape responsibility on a highly technical argument?"

Dr Morrison said the issue largely affected Catholic clergy, with other major churches employing their clergy.

But he warned the ruling left other organisations dealing with children off the hook as well.

"For example, people who are volunteers working for organisations and who are not technically employed by them," Dr Morrison said.

That includes organisations like the Scouts, sports coaches and other groups, which would not be subject to vicarious liability.

A 'tortured history'

Vicarious liability has long been a thorny issue in the High Court.

As this week's judgement noted, it "has had a tortured history" which has included declining to extend the law of vicarious liability beyond employees despite examples overseas.

The majority judgement suggested it was a matter not for it, but rather one that should be placed "squarely in the hands of legislatures".

And that was exactly where Judy Courtin said she was headed as she put every attorney-general on notice this week.

Dr Morrison said after the Royal Commission into Institutional Responses to Child Sexual Abuse, the research showed people took about 20 years to come forward.

He said that meant there were a large number of people who benefited from the lifting of the time limitations on cases, only to be denied their ability to make a claim on an organisation which says it does not employ its clergy.

And it will be in the states and territories where that lobbying will have to be done.

The man at the heart of the case will now not get his compensation of just over $200,000.

But he said although he was disappointed in the High Court ruling, he was hopeful change was afoot.