Boylan Nominees Pty Ltd t/as Quirks Refrigeration v Sweeney

CATCHWORDS: NEGLIGENCE - Vicarious liability - Employer/employee relationship - Test for determining whether a person is an employee - Factors regarded as relevant to the issue - Independent contractor - Whether a principal is vicariously liable for the actions of an independent contractor - NEGLIGENCE - Vicarious liability - representative - principal is not vicariously liable for the actions of a person who is neither an independent contractor nor an agent but is a representative of that principal. D

LEGISLATION CITED: Workplace Injury Management and Workers Compensation Act 1998 (NSW), cl 2(1), Schedule 1

Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 Colonial Mutual Life Assurance Society Ltd v Producers & Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 Commissioner of Payroll Tax (Vic) v Mary Kay Cosmetics Pty Ltd (1982) VR 871 Hall (Inspector of Taxes) v Lorimer (1992) 1 WLR 939 Hollis v Vabu Ltd (2001) 207 CLR 21 J A and B M Bowden & Sons Pty Ltd v Chief Commissioner of State Revenue [2001] NSWCA 125 Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 CASES CITED: Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 Quarman v Burnett (1840) 6 M & W 499 Scott v Davis (2000) 204 CLR 333 Starks v RSM Security Pty Ltd [2004] NSWCA 351 Stevens v Brodribb Sawmillilng Company Pty Ltd (1986) 160 CLR 16 Suttor v Gundowda Pty Limited (1950) 81 CLR 418 Torett House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537

Boylan Nominees Pty Ltd t/as Quirks Refrigeration (Appellant) PARTIES: Maria Sweeney (Respondent)

J E Maconachie QC/N Chen (Appellant) COUNSEL: M L Williams SC/M Ward (Respondent)

Holman Webb (Appellant) SOLICITORS: McLachlan Chilton (Respondent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40212/04 DC 1350/02

GILES JA IPP JA BROWNIE AJA

Friday, 18 February 2005 BOYLAN NOMINEES PTY LTD t/as QUIRKS REFRIGERATION v MARIA SWEENEY

FACTS On 2 August 2000 Mrs Sweeney was injured in the convenience store of a BP service station when a refrigerator door fell on her. Boylan had supplied the refrigerator and was responsible for its maintenance and service. The owner of the convenience store, on 2 August 2000, complained to Boylan that the refrigerator's door was not closing properly and requested Boylan to attend to it. Boylan thereupon arranged for Mr Comninos to go to the service station and service the refrigerator. Mr Comninos did just that. The door fell on Mrs Sweeney shortly after Mr Comninos completed working on it. Mrs Sweeney brought an action in negligence against Boylan. Robison DCJ granted judgement and a verdict in her favour after having found that Mr Comninos carried out the servicing of the refrigerator negligently and that Boylan was vicariously liable for his negligence. Boylan now appeals against Robison DCJ's finding that it was vicariously liable for Mr Comninos's negligence.

HELD per Ipp JA (Giles JA and Brownie AJA agreeing):

1. The mere fact that a person represents a principal does not necessarily make him/her an employee. Due regard must be had to the factors that have been long regarded as relevant to the question.
2. When determining whether a person is an employee, the overall effect of all the relevant factors must be taken into account.
3. The existence or absence of control by an alleged employer of a person is an important, albeit not conclusive, factor relevant to the question whether that person is an employee. The absence of control is a very strong sign that a person is not an employee.
4. The absence of an obligation upon an alleged employer to provide work for an agreed period, together with the absence of an obligation upon a person to perform work for an agreed period, is an important factor indicating that the person is not an employee.
5. The proposition that a principal might be vicariously liable in negligence for a person who is neither an independent contractor nor an agent but is, instead, a representative of that principal is not the current law in Australia.

6. In the present case, the following factors are relevant to the question: Boylan exercised no control over the work carried out by Mr Comninos; the absence of mutuality of obligation to provide work for a particular period and to work for that period; Mr Comninos carried out work under his own business name; he provided his own equipment and tools; sometimes bought spare parts from other suppliers; was paid on a piece work basis; provided his own workers compensation, public liability insurance and superannuation; did not wear a Boylan uniform; conducted his own business; drove his own van with his business name displayed on it.

7. Mr Comninos was not an employee of Boylan and Boylan is not vicariously liable for his conduct.

8. ORDERS (a) The application for leave to appeal is granted. (b) The appeal is upheld. (c) The judgment and verdict in favour of Mrs Sweeney are set aside, and in lieu thereof there shall be judgment and a verdict in favour of Boylan. (d) Mrs Sweeney to pay Boylan's costs of the trial, the costs of the application for leave to appeal and the appeal. (e) Mrs Sweeney to have a certificate under the Suitors Fund Act 1951 (NSW) if otherwise entitled.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40212/04 DC 1350/02

GILES JA IPP JA BROWNIE AJA

Friday, 18 February 2005 BOYLAN NOMINEES PTY LTD t/as QUIRKS REFRIGERATION v MARIA SWEENEY

The decision of the trial judge and the grounds of appeal 3 This concurrent application for leave to appeal and appeal are in respect of a judgment by Robison DCJ whereby he upheld the claim in negligence of the opponent (Mrs Sweeney) against the applicant ("Boylan"). 4 Mrs Sweeney was injured on 2 August 2000 when a refrigerator door fell on her in the premises of a convenience store within a BP service station in West Pymble. She was opening the door at the time, intending to remove a carton of milk from the refrigerator. 5 Boylan's business was the supply, maintenance and servicing of refrigeration equipment. It had supplied the refrigerator to the BP service station and, on the very day of the incident, had serviced the door which fell on Mrs Sweeney. 6 Boylan initially had supplied the refrigerator in question to Dairy Farmers under a lease. In July 2000, at the request of Dairy Farmers, Boylan shipped the refrigerator to the BP service station. For about a month, from the time the refrigerator was taken from Dairy Farmers to its delivery to the BP service station, the refrigerator was stored at Boylan's warehouse. There, Boylan inspected it and carried out services to it. 7 On 2 August 2000 the BP service station complained to Boylan that the door of the refrigerator was not closing properly and requested that Boylan attend to it. Boylan arranged for a man by the name of Nick Comninos to go the BP service station and carry out the work on its behalf. At about 2.30 pm that day, Mr Comninos arrived at the service station, "partially" dismantled the door, tested it, and tightened the door screws. At about 4.00 pm, Mrs Sweeney was injured when the refrigerator door fell on her. 8 Robison DCJ found that Mr Comninos carried out the work negligently and Boylan was vicariously responsible for his negligence. He found that Boylan had breached the duty of care it owed Mrs Sweeney. His Honour assessed Mrs Sweeny's damages at $43,932 and granted judgment and a verdict in her favour for that amount. 9 The finding that Boylan was vicariously liable for the negligence of Mr Comninos is the principal ground of appeal. Boylan asserts that the trial judge erred in failing to find that Mr Comninos was an independent contractor. Boylan also contends that his Honour erred when determining the question of costs.

Did Boylan breach its duty of care other than vicariously? 10 Mr Williams SC who, together with Mr Ward, appeared for Mrs Sweeney argued that Boylan was liable to Mrs Sweeney for breach of the duty of care it owed her irrespective of any vicarious liability it might have for negligent conduct on the part of Mr Comninos. 11 The door of the refrigerator fell because there was a loss of engagement between the top hinge pin and a nylon pivot guide. That loss of engagement was caused by damage to the lower hinge support plate that deflected it downwards and decreased the engagement of the upper hinge pin. Mr Williams submitted that the damage to the lower hinge support plate should have been observed and repaired by Boylan. He submitted that Boylan's omission to ascertain the damage to the lower hinge support plate and to repair it constituted negligence on its part (which was entirely separate from any negligence on the part of Mr Comninos). 12 It was put to Mr Duckworth (Boylan's service manager) in cross-examination that, when the refrigerator was inspected by Boylan approximately a month before Mrs Sweeney was injured, the lower support plate was already bent downwards and, had Boylan carried out the inspection with due care, the damaged plate would have been detected. Mr Duckworth replied that he found it "extremely hard to believe" that, had the plate been bent at the time of the inspection, the refrigerator would have been allowed to "pass". He said: "[T]hat plate is about five millimetres thick and they would notice if it was bent". 13 It was then put to Mr Duckworth that "[he] would say" the "observable damage to the machine" occurred "after the machine had left [his] premises". Mr Duckworth replied that that was "often the case". 14 Mr Duckworth was asked: "So the thing which you say is more likely is that the damage occurred whilst it was at the customer's premises?"

He replied: "Through my experience [that] is more often the case, correct." 15 There was no other evidence on the issue and the trial judge made no finding as to whether the damage to the refrigerator existed at the time Boylan carried out its inspection. He made no relevant comment in relation to that inspection and made no finding that Boylan should have detected the damage during its inspection. 16 Mr Williams submitted that this Court should find that the damage existed when Boylan undertook its inspections but, on the unchallenged evidence of Mr Duckworth, that is not open to the Court. 17 Mr Williams then submitted that the trial judge, in any event, had found that Boylan had breached its duty of care to Mrs Sweeney independently of its vicarious liability for Mr Comninos's conduct. Mr Williams relied on the following passage in the judge's reasons: "[Counsel for Boylan] is correct when he submits that the only sensible finding in the matter as to causation is the way the door was removed and replaced by the contractor. He is correct to that end but there is also a further element to that and I have already referred to that in this judgment and that is the need for the door to be attended to - in other words it was a door which was apparently a problem insofar as the hinge was concerned and that, coupled with the involvement of Mr Comninos, led to the events of that day." 18 Mr Williams also drew attention to the judge's finding that: "[T]he particulars of negligence insofar as [Boylan] is concerned have been made out to the extent that there was a failure to ensure that the door which fell and struck [Mrs Sweeney] was in a good and safe condition; that there was a failure to properly carry out a repair to ensure that the fridge was in a good and safe condition and at the end of the day [Mrs Sweeney] was clearly exposed to a risk of injury which could have been avoided by reasonable care on [Boylan's] part and I make that finding accordingly." 19 As Mr Williams properly accepted, however, the only way in which Boylan could have been negligent, otherwise than vicariously, is if the refrigerator was damaged when Boylan inspected it prior to July and if Boylan carried out that inspection negligently. But the judge made no findings as to these matters and the evidence does not support the making of such findings. 20 The judge said: "[A]t the end of the day Mr Comninos was acting as a servant or agent of [Boylan] with the authority and the approval of [Boylan] to undertake the work that he did; [Boylan] in my view is therefore vicariously liable for any actions undertaken by Mr Comninos for those reasons."

His Honour then posed the question whether Boylan " therefore , breached its duty of care by virtue of what occurred?" His Honour answered this question by saying: "[G]iven the circumstances to which I have already referred in this judgment, I am indeed satisfied there was a breach". 21 The inference is that the breach of duty to which the judge was referring was the breach of duty constituted by Boylan's vicarious liability for Mr Comninos' actions. 22 As to the causative effect of Mr Comninos' conduct, the judge said: "[Counsel for Boylan] is correct when he submits that the only sensible finding in the matter as to causation is the way the door was removed and replaced by the contractor [that is, Mr Comninos]". 23 Thus, the trial judge found negligence on the part of Mr Comninos, he found that Boylan was vicariously responsible for that negligence, and found that there was a causative link between that negligence and Mrs Sweeney's injuries. While the judge also found that there was an earlier problem with the door (with regard to the hinge), his Honour did not find that that problem was caused by negligence on the part of Boylan. 24 Accordingly, the judge must be taken to have found Boylan to be liable solely by reason of its vicarious responsibility for the conduct of Mr Comninos. In the circumstances, I would not uphold the argument that Boylan was liable other than vicariously.

The facts relating to Boylan's engagement of Mr Comninos 25 Robison DCJ said that there was "a close working relationship to say the least" between Boylan and Mr Comninos and that their relationship was "significant", but did not explain what he understood the consequence of such a relationship to be. Eventually, the judge found that "at the end of the day Mr Comninos was acting as a servant or agent of [Boylan] with the authority and the approval of [Boylan] to undertake the work that he did". Senior counsel for both Boylan and Mrs Sweeney accepted that this was intended to be a finding that Mr Comninos was an employee of Boylan. Boylan challenged the validity of this finding. 26 Boylan's premises, at the relevant time, comprised at least a warehouse (where refrigeration equipment was stored) and a service department, including a workshop. The service department was staffed by six employees (who worked within Boylan's plant) and three "field service" employees (who carried out work principally at the premises of Boylan's customers). In addition, Boylan engaged two men who it termed "contractors". The contractors did not work within the Boylan plant. They did the same kind of work as the field service employees but were only requested to work when the three field service employees were fully occupied. Mr Comninos was one of those two contractors. In practice, he carried out work for Boylan on a daily basis. 27 Mr Comninos held a trade certificate as a refrigeration mechanic and a contractor's licence issued by the Department of Fair Trading. Boylan regarded him as an independent contractor. Robison DCJ found that "Mr Comninos had his own business". 28 There was no formal or general contract between Boylan and Mr Comninos. Whenever Boylan needed him to do work for a customer, he would be requested to do so. In other words, Boylan was not obliged to provide work for Mr Comninos on a continuing basis or for any specific period, and Mr Comninos was not obliged to work for Boylan on a continuing basis or for any specific period. 29 Boylan did not supply Mr Comninos with equipment or tools, did not pay him superannuation and did not provide him with a work van. He took out his own workers compensation and public liability insurance. 30 Mr Comninos supplied his own van for the purposes of his work. The van, the judge found, "had his own corporate identity displayed on it". His "corporate identity" was a company called Cool Runnings Refrigeration and Airconditioning Pty Ltd, of which he was a director. His van had the words "Cool Runnings" displayed on it. The evidence does not reveal whether Boylan, in law, engaged Mr Comninos or his company. 31 Mr Comninos was not paid a salary, but invoiced Boylan for the hours of work he performed, that is, on a piecework basis. At times, he purchased spare parts from a manufacturer of refrigeration equipment (not Boylan). On his own initiative he used these spare parts when servicing equipment at Boylan's request. He would then invoice Boylan for those spare parts. Sometimes he would obtain the spare parts from Boylan itself. 32 The practical arrangements by which the contractors worked for Boylan appear from the following exchange that occurred during the course of the cross-examination of Mr Duckworth [T83]: "Q. The proposition that I put to you is an accurate one, that in terms of maintenance as servicing you would make the decision on a periodic basis as to whether you would use the [Boylan's] servicemen or a contracted servicemen. A. It would depend on workload was what would determine that. Q. So if the [Boylan's] servicemen were able to handle the workload they would do it? A. Correct. Q. And if you were particularly busy you would bring in the contracted servicemen? A. Correct." 33 None of the work carried out by Mr Comninos was undertaken at Boylan's premises and he was not stationed at its premises. 34 Boylan did not give Mr Comninos any specific instructions as to how he was to carry out any particular repairs or services. Boylan exercised no control whatever over the work he performed. It was left to his judgment as to what work should be done at a customer's premises and how it should be done. On the evidence, Boylan, in fact, did not exercise any control over the work done by Mr Comninos and his manner of doing it; further, Boylan had no entitlement to control the work done by Mr Comninos or the manner in which he executed that work. 35 During the course of Mr Duckworth's evidence in chief he was asked: "So far as you knew did [Mr Comninos] work for anybody else other than, or perform work on behalf of any other company?"

He replied in the affirmative. Shortly thereafter, trial counsel for Mrs Sweeney objected to the answer on the grounds of hearsay and the question was disallowed. 36 In his judgment, Robison DCJ said: "No doubt Mr Comninos undertook work on his own behalf; perhaps he undertook work for others but there is a clear body of evidence which reveals that he undertook a significant amount of work for [Boylan]". 37 There was no evidence that Mr Comninos did not undertake work for others. The fact that Mr Comninos only worked for Boylan on a piecework basis (and would undertake each piece of work only when asked), the absence of any control by Boylan over the work he did and his manner of doing it, the fact that he carried on his own business under a business name, used a van with that name, was not required to be at Boylan's premises at any particular time or for any particular period, did not work at Boylan's premises, used his own tools and equipment and purchased spare parts from other sources, are, together, capable of giving rise to an inference that he was entitled to work for others. 38 There were differences between the way Boylan treated its field service employees and the "contractors".

Unlike Mr Comninos (whose business was not carried on from Boylan's warehouse or offices), the field service employees were stationed at Boylan's premises from where they were directed to go to customers.

Whenever Boylan required its field service employees to attend at customers' premises, they were obliged to comply; Mr Comninos, on the other hand, was free to accept or reject a request to carry out the work.

After the field service employees completed their work at a particular customer's premises, they would return to Boylan's service office and give a completed service report to Boylan. The contractors, on the other hand, although provided with a book of service report forms, would only provide Boylan with a completed service report when submitting an invoice after having carried out "a week's worth of work". The completed service report forms would be attached to the weekly invoice.

When the field service employees called on customers they wore a Boylan's shirt. In contrast, the contractors did not wear a uniform. When each field service employee attended on a customer there would be no need to explain who he was as he would be wearing a Boylan's shirt. According to the evidence, "a contractor would announce himself to whoever the proprietor was and say 'I'm here to fix your Dairy Farmers' or whoever's fridge on behalf of [Boylan's]". 39 Finally, in regard to the character of Mr Comninos's relationship with Boylan, account must be taken of two forms that became exhibits at the trial. Robison DCJ attached much importance to these forms. 40 The first form, "Exhibit D", was a Personal and Public Liability Claim Report completed by Boylan. This form contained a description of the incident that referred to work done by "our mechanic", namely, Mr Comninos. 41 The second form, "Exhibit F", was a service report form completed by Mr Comninos in regard to the refrigerator door that fell on Mrs Sweeney. The service report form had Boylan's name on the top and contained details to be completed relating to the customer, the job and the work done. At the bottom of the form the following appeared: "1. This authorises you to service my/our refrigerator and I/we agree to pay cash for work done and material used. 2. I/we hereby instruct your mechanic to work overtime for which I/we agree to pay the rates set out in the Arbitration Award … 3. … Terms: Cash on completion of work. Our mechanic is authorised to collect the amount due."

A space was left on the form for the amount charged for the work. Underneath that space were spaces for the mechanic and the customer to sign. In the case of the BP service station where Mrs Sweeney was injured, both Mr Comninos and a representative of the service station signed the completed form. 42 The judge regarded the references to "our mechanic" on the two forms as highly significant. For my part, I would regard the use of this phrase as relevant but by no means conclusive. It is, of course, inherently ambiguous.

The legal principles applicable in determining whether there is a contract of employment 43 The legal principles applicable in determining whether a contract of employment exists were considered in Hollis v Vabu Pty Ltd (2001) 207 CLR 21. Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ delivered the majority judgment in that case. Their Honours noted (at 36 [32]): "It has long been accepted, as a general rule, that an employer is vicariously liable for the tortious acts of an employee but that a principal is not liable for the tortious acts of an independent contractor."

Their Honours observed (at 36 [32]) that this general rule had not been challenged in the appeal and they would not explore the circumstances under which the "current doctrine" might be extended. 44 Mr Williams drew attention to the following passage in the judgment of the majority (at 40 [42]): "In general, under contemporary Australian conditions, the conduct by the defendant of an enterprise in which persons are identified as representing that enterprise should carry an obligation to third persons to bear the cost of injury or damage to them which may fairly be said to be characteristic of the conduct of that enterprise." 45 In the light of their Honours' statement that the case was not suitable "to explore the larger question", these remarks are to be understood as relevant to the question actually decided by the majority, namely, whether a person is to be regarded as an employee or an independent contractor. 46 It is apparent from other remarks made by the majority and their treatment, generally, of the issue, that the factor discussed at [42] (to which I shall refer as the "representation factor"), while a relevant consideration, is not conclusive. 47 Firstly, their Honours drew attention (at 31-32 [22]) to the fact that the courier, in respect of whom Vabu was held to be vicariously liable, was a bicycle courier. The majority indicated that in Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537 (a decision where the facts relating to whether the courier was an employee or independent contractor were virtually the same as those in Hollis v Vabu Pty Ltd) "a different result might properly have been reached" had the courier been a motor vehicle or motorcycle courier (that is, a courier who bore the considerable expense of maintaining and insuring his own vehicle). Had the representation factor been conclusive, it would have been immaterial whether the courier was a bicycle courier or a motor vehicle or motorcycle courier. 48 Secondly, in resolving whether there was a relationship of employer and employee, their Honours were at pains to weigh in the balance the various factors that have, traditionally, been regarded as relevant in the determination of this question. Their Honours said (at 41 [45]): "So it is that, in the present case, guidance for the outcome is provided by various matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability. These include, but are not confined to, what is now is considered 'control'." 49 Their Honours thereupon discussed and took into account factors such as whether the couriers were running their own enterprise, the degree of control the couriers had over the manner of performing their work, whether the couriers "were presented to the public and to those using the courier service as emanations of Vabu", the fact that Vabu superintended the couriers' finances, the situation in respect of tools and equipment and the scope for the actual exercise of control. These factors would not have been relevant had their Honours regarded the representation factor as conclusive. 50 There can be no doubt that in one sense the bicycle courier was representing Vabu. After all, the courier was undertaking work for and on behalf of Vabu. But the majority did not regard that alone as establishing that the courier was an employee. The entire picture had to be examined according to the method long established by authority. 51 I conclude, therefore, from Hollis v Vabu Pty Ltd, that a person will not be regarded as an employee unless he or she is identified as representing (in the broad sense) the enterprise of the putative employer. But the fact that a person so represents an enterprise does not necessarily make that person an employee.

Was Mr Comninos an employee of Boylan? 52 In J A and B M Bowden & Sons Pty Ltd v Chief Commissioner of State Revenue [2001] NSWCA 125 I referred to the authorities that set out the approach to be adopted when determining the nature of the relationship between employer and alleged employee. Inherent in the established principles "is the need to assess all the facts and have regard to the whole picture". It is not a mechanical exercise of listing and running through items held to be relevant in other cases. As was said by Mummery J in Hall (Inspector of Taxes) v Lorimer (1992) 1 WLR 939 (at 944): "The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details." 53 I have set out above the facts that, in the present case, are relevant. Some are more important than others. I shall again refer to these, bearing in mind continually that it is the overall picture that counts. 54 The control test remains important and it is appropriate, in the first instance, to have regard to it (albeit that it is by no means conclusive) because, as Wilson and Dawson JJ said in Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 (at 36): "[I]t remains the surest guide to whether a person is contracting independently or serving as an employee." 55 It is highly significant that Boylan exercised no control at all over the work carried out by Mr Comninos. The absence of control (neither entitlement in law nor in fact) is a very strong sign that he was not an employee. The absence of control means that the very essence of the employer/employee relationship is missing. It would be a very strange kind of employee over whom the supposed employer can exercise no authority. 56 Another important factor is the absence of mutuality of obligation to provide work for a particular period (even if it be only a reasonable period) and to work for that period. Such a mutuality of obligation is a usual ingredient of the employer/employee relationship: Commissioner of Payroll Tax (Vic) v Mary Kay Cosmetics Pty Ltd (1982) VR 871. The fact that Mr Comninos was free to accept or decline work is a strong indication that he was not an employee. 57 Apart from the absence of control and mutuality of obligation to provide work and to work for a period, the independence of Mr Comninos is manifest from the fact that he carried out work under his own business name, provided his own equipment and tools, sometimes bought his own spare parts from other suppliers, was paid on a piece work basis, and provided his own workers compensation, public liability insurance and superannuation. 58 In my view, Mr Comninos was independent of Boylan's enterprise to such a degree that, despite the references to "our mechanic" in the two forms relied on by the primary judge, he could not properly be regarded as an employee. He was, in essence, carrying on a trade or business of his own. 59 During the course of argument in the appeal, Mrs Sweeney sought leave to advance an argument that Mr Comninos was a "deemed worker" by reason of cl 2(1) of Schedule I to the Workplace Injury Management and Workers Compensation Act 1998 (NSW). Clause 2 provides: "(1) Where a contract: (a) to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor's own name, or under a business or firm name), or (b) to perform any work as an outworker, is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor." 60 In order to place any reliance on cl 2, Mrs Sweeney would have had to establish that there was a contract between Boylan and Mr Comninos. This was an open question as it was not clear from the evidence whether Boylan instructed Mr Comninos personally to do the work or whether it requested Mr Comninos's company to do so. 61 Mrs Sweeney would also have had to establish that the work in question was not "work incidental to a trade or business regularly carried on by the contractor in the contractor's own name, or under a business or firm name". While there was some evidence that bore on this issue, had Mrs Sweeney relied on cl 2 of Schedule 1 at the trial, Boylan might have conducted its case differently and led additional evidence relevant to the issue. 62 Finally, Mrs Sweeney would have had to establish that Mr Comninos did not employ "any worker" within the meaning of cl 2(1). This she did not do. 63 In the light of the need for additional evidence on the point in question, and the fact that Boylan might have conducted the case differently had the point been taken at the trial, this Court refused leave to Mrs Sweeney to advance the argument for the first time on appeal (see Suttor v Gundowda Pty Limted (1950) 81 CLR 418).

Vicarious liability for an agent 64 By notice of contention, Mrs Sweeney argued that the decision of the trial judge should be upheld on the ground that, even if Mr Comninos was not an employee, Boylan was vicariously liable for his negligence. 65 In advancing this argument Mr Williams relied on the judgment of McHugh J in Hollis v Vabu Pty Ltd and certain remarks made by Dixon J in Colonial Mutual Life Assurance Society Ltd v Producers & Citizens Co-operative Assurance Co of Australia Ltd ("CML") (1931) 46 CLR 41. 66 In CML Dixon J said (at 48): "The independent contractor carries out his work, not as a representative but as a principal. But a difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity … [I]n performing these services for the Company, he does not act independently, but as a representative of the Company… " 67 McHugh J, in Hollis v Vabu Pty Ltd, in commenting on these remarks, said (at 59[98]): "Dixon J thought that there was no extension of principle in holding the insurer liable for the tort of its agent in that case." 68 McHugh J's comments in Hollis v Vabu Pty Ltd were consistent with an approach first enunciated by him in Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 (at 366), where his Honour said: "At common law, a person is not generally liable for the negligence of an independent contractor ( Quarman v Burnett (1840) 6 M & W 499; Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at 43) unless the person has 'directly authorised the doing of the act which amounts to a tort' ( CML at 48, per Dixon J). The rationale for excluding liability for independent contractors is that the work which the contractor has agreed to do is not done as the representative of the employer. As Dixon J pointed out in [ CML ] at 48: '[T]he independent contractor carries out his work, not as a representative but as a principal'."

Here, his Honour accepts that vicarious liability only arises for acts done by an independent contractor where the principal has directly authorised the doing of the acts. Where an independent contractor does not carry out work as the "representative" of the employer, the employer is not vicariously liable. 69 McHugh J returned to this theme in Scott v Davis (2000) 204 CLR 333 and said (at 346 [34]): "In my view, however, an analysis of the authorities justifies the conclusion that a principal is also liable for the wrongful acts of an agent where the agent is performing a task which the principal has agreed to perform or a duty which the principal is obliged to perform and the principal has delegated that task or duty to the agent, provided that the agent is not an independent contractor. The principal is also liable for the wrongful acts of a person who is acting on the principal's behalf as a representative and not as an independent principal and within the scope of the authority conferred by the principal."

Here, his Honour accepts, generally, that a principal is liable for the wrongful acts of an agent but excludes from this proposition an agent who performs the acts as an independent contractor (not as a "representative"). 70 Later in his reasons in Scott v Davis McHugh J (particularly at 355 [61]) distinguished between the acts of a "non-servant" who is not an independent contractor and not an agent "per se", on the one hand, and a "non-servant" who is an independent contractor, on the other. His Honour expressed the view that in CML Dixon J "was saying no more than a principal is not liable for the wrongs of an independent contractor which the principal had not directly authorised". His Honour then said (at 357 [67]): "In my opinion, the ratio decidendi of CML is that a principal is liable for the wrongful act of an agent causing damage to a third party when that act occurred while the agent was carrying out some activity as the principal's authorised representative in a dealing with a third party."

Here, his Honour reiterates that a principal is vicariously liable for the acts of an authorised "representative". 71 I come now to McHugh J's judgment in Hollis v Vabu Pty Ltd. An unusual aspect of this judgment is that his Honour held that, according to the "classical tests", the courier was neither an employee (see at 49-50 [69] - [73]) nor an independent contractor "in the sense of someone who acts as an independent principal, exercising an independent discretion in carrying out a task for his own business interest and who is retained simply to produce a result" (48 [68]); nevertheless, his Honour held that Vabu was vicariously liable for the acts of the courier. 72 His Honour explained (at 57 [93]): "It is true that the couriers employed by Vabu are neither employees nor independent contractors in the strict sense. But there is no reason in policy for upholding the strict classification of employees and non-employees in the law of vicarious liability and depriving Mr Hollis of compensation. Rather than expanding the definition of employee or accepting the employee/independent contractor dichotomy, the preferable course is to hold that employers can be vicariously liable for the tortious conduct of agents who are neither employees nor independent contractors." 73 McHugh J reiterated (at 58 [94]) what he had said in Scott v Davis (at 346 [34] - see [68] above) and observed (at 59 [99]): " CML decides, therefore, that a principal is liable for the wrongful act of an agent causing damage to a third party when that act occurred while the agent was carrying out some activity as the principal's authorised representative in a dealing with a third party. This principle is not limited to any particular types of wrongful acts. There is no reason in precedent, principle or policy to suggest that it is not as applicable to tortious acts as it is to tortious statements."

Again, this is a reiteration of the proposition that a principal is vicariously liable for acts carried out by an authorised representative. 74 In the light of McHugh J's previous observations on this issue, I infer that his Honour would hold that a principal is not vicariously liable for acts carried out by a "true" independent contractor (that is, in the sense described in Hollis v Vabu Pty Ltd at 48 [68]) who carries out work not as a representative but as a principal. 75 McHugh J (at 60 [101]) proceeded to apply the principle he drew from the remarks of Dixon J in CML (at 48) and concluded that Vabu was liable for the negligence of the courier. He said: "(1) The courier was performing for Vabu its duty to make deliveries to or on behalf of its clients. (2) The courier performed the duty for the economic benefit of Vabu. (3) The courier was the representative of Vabu. So much was apparent to the public and clear as between Vabu and the couriers. Vabu issued all bicycle couriers with several documents when they commenced work. One was entitled 'Contract for Service' which incorporated a 'Document 792'. Document 792 was headed 'General Rules for All Drivers' (this covered bicycle couriers). At the top appeared the following emphatic passage: 'DRIVERS SHOULD BE ALWAYS BE AWARE THAT THEY ARE A DIRECT REPRESENTATION OF THE COMPANY. THEIR ATTITUDE AND APPEARANCE CAN ONLY BE SEEN AS A DIRECT REFLECTION OF OUR ORGANISATION'. This 'direct representation of the company' described in its internal documents also manifested itself to customers and the public. The uniform bearing the Crisis Couriers name and logo across front and back was readily identifiable and served to promote Vabu's business interests. In the present case it was the only means by which Mr Hollis could identify the courier. … (4) The courier was not acting as an independent functionary who ordinarily contracted with members of the public or a section of it. He was contracted to work for Vabu and was subject to Vabu's general direction and control. Document 792 spelt out dress regulations, which required couriers to wear uniforms and to be presentable at all times. … It reminded the couriers of deadlines and the priorities for deliveries. There were general and specific instructions about dealings with clients. There were also detailed directions setting out the procedures to be followed when using the radio communication system. The couriers were also required to contribute a certain amount each week for marine and public liability insurance. They were also required to keep their vehicles in a clean and roadworthy condition. Vabu allocated the work, and a courier could not refuse to do what was allocated to him or her. … (5) When the accident to Mr Hollis occurred, the courier was acting within the scope of the authority conferred on him by Vabu. … " 76 It is apparent from the way McHugh J sought to apply the principle in CML that his Honour did not consider that vicarious liability arose merely because the courier was an agent of Vabu and the work he performed fell within his mandate. McHugh J found that Vabu was vicariously liable because the courier was the representative of Vabu. 77 His Honour plainly considered the "direct representation" of the couriers to be significant in determining that the courier in question was a representative, as were factors such as the physical identification of the couriers with the enterprise of Vabu, the fact that the courier was not acting "as an independent functionary who ordinarily contracted with members of the public or a section of it", the fact that the courier was subject to Vabu's general direction and control as to what work had to be done and the manner in which the work had to be executed, and that, when Vabu allocated work, a courier could not refuse to do that work. All these factors, which his Honour took into account in determining that Vabu was vicariously liable for the courier, show that McHugh J had in mind that a "representative" was much more than a mere agent. 78 It remains to consider whether the approach propounded by McHugh J is binding on this Court. 79 In Northern Sandblasting Pty Ltd v Harris McHugh J was alone in expressing the views that he did. In Scott v Davis his Honour was in dissent. 80 In Hollis v Vabu Pty Ltd the majority commented on the remarks of Dixon J (at 48) in CML (relied on by McHugh J) and said (at 39 [40]): "This statement merits close attention. It indicates that employees and independent contractors perform work for the benefit of their employers and principals respectively. Thus, by itself, the circumstance that the business enterprise of a party said to be an employer is benefited by the activities of the person in question cannot be a sufficient indication that this person is an employee. However, Dixon J fixed upon the absence of representation and of identification with the alleged employer as indicative of a relationship of principal and independent contractor. These notions later were expressed positively by Windeyer J in Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 (at 217). His Honour said that the distinction between an employee and an independent contractor is 'rooted fundamentally in the difference between a person who serves his employer in his, the employer's, business, and a person who carried on a trade or business of his own'."

81 These remarks suggest that the majority considered that the remarks of Dixon J in CML are to be understood as being relevant to whether a "relationship of principal and independent contractor" exists; that is, whether, on the facts, there has been an "absence of representation and of identification with the alleged employer". The majority did not regard Dixon J's remarks as a basis for widening the presently recognised grounds on which a finding of vicarious liability could be made. Indeed, as I have noted, they expressly eschewed considering whether the law should be changed for the policy reasons expounded by McHugh J. 82 The majority referred to Quarman v Burnett 6 M & W 499 as "[t]he foundation case for the present authorities". In recent years (and prior to Hollis v Vabu Pty Ltd), Quarman v Burnett has been cited with approval by the High Court. For example, in Scott v Davis Gummow J said (at 406 [218]): "The judgment of Parke B, delivering the judgment of the Court of Exchequer in Quarman , is treated in this Court as the classic authority that at common law a person generally is not liable for the negligence of an independent contractor ( Stevens v Brodribb Sawmilling Company Pty Ltd at 43; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 577; Northern Sandblasting Pty Ltd v Harris at 366)".

And Hayne J (at 430[292]) quoted the following passage from the judgment of Parke B: "It is undoubtedly true, that there may be special circumstances which may render the hirer of job-horses and servants responsible for the neglect of a servant, though not liable by virtue of the general relation of master and servant. He may become so by his own conduct, as by taking the actual management of the horses, or ordering the servant to drive in a particular manner, which occasions the damage complained of, or to absent himself at one particular moment, and the like."

As Hayne J observed (at 431 [292]), Parke B rejected (at 514) the wider proposition that "a person is liable not only for the acts of his own servant, but for any injury which arises by the act of another person, in carrying into execution that which that other person has contracted to do for his benefit." 83 Moreover, in Hollis v Vabu Pty Ltd Callinan J said (at 70 [121]), that the case called for the application of the statement of Jordan CJ in Torett House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 (at 170) (which, his Honour pointed out, was approved by the High Court in Stevens v Brodribb Sawmilling Company Pty Ltd (at 30, per Mason J; at 41, per Wilson and Dawson JJ), namely: "But there is no general rule that if a person employs an independent contractor to do an inherently lawful act, he incurs liability for injury to others occasioned by the methods incidentally employed by the contractor in the course of its performance (these not being methods necessarily involved in the doing of the act and necessarily injurious), by reason only of the fact that the act is 'dangerous', 'hazardous', or 'extra hazardous'."

His Honour observed that Parliament has not chosen to intervene by legislation to create a liability of the kind sought to be imposed on agents generally, and said (at 69): "The questions that I have posed are ones for Parliament rather than the Courts". 84 In the circumstances, in my respectful opinion, the wider proposition in relation to vicarious responsibility propounded by McHugh J in Hollis v Vabu Pty Ltd, Scott v Davis and Northern Sandblasting Pty Ltd v Harris does not presently represent the law in Australia. In my respectful opinion, it should not be applied by this Court. 85 I would add that, in any event, when regard is had to the criteria that his Honour applied in Hollis v Vabu Pty Ltd in determining whether the courier was a "representative" of Vabu, the circumstances that I have set out above are such that, even on the basis of the wider approach, Mrs Sweeney's argument cannot be upheld (cf Starks v RSM Security Pty Ltd [2004] NSWCA 351). On the basis of the circumstances obtaining in the present case, Mr Comninos was a true independent contractor and a principal in the transaction. No vicarious liability can attach to Boylan for his conduct.

Conclusion 86 The issues raised in this matter concern important questions of law that are attended by some uncertainty. For that reason, I think that the application for leave to appeal should be upheld. Moreover, for the reasons set out above, I think that the judge was plainly wrong in his factual assessment of the matter and it would be an injustice were the judgment to be allowed to stand. 87 For the reasons I have given, I would uphold the appeal. Boylan challenged costs orders made by the trial judge but, in the light of the conclusion to which I have come, it is not necessary to consider the arguments raised in that connection. 88 I propose the following orders:

(1) The application for leave to appeal is granted.

(3) The judgment and verdict in favour of Mrs Sweeney are set aside, and in lieu thereof there shall be judgment and a verdict in favour of Boylan.

(4) Mrs Sweeney to pay Boylan's costs of the trial, the costs of the application for leave to appeal and the appeal.

(5) Mrs Sweeney to have a certificate under the Suitors Fund Act 1951 (NSW) if otherwise entitled. 89 BROWNIE AJA: I agree with Ipp JA. ********

23/02/2005 - Change reference to "Vabu" 2nd last line to read "Boylan" - Paragraph(s) 85

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