Gutman v McFall

Court of Appeal (NSW)|2004-09-10|Before: Mason P, Giles JA, McColl JA, Coll JA

CITATION : Gutman v McFall [2004] NSWCA 378 revised - 3/11/2004 HEARING DATE(S) : 10 September 2004 JUDGMENT DATE : 22 October 2004

JUDGMENT OF : Mason P at 1; Giles JA at 2; McColl JA at 71 DECISION : (1) Appeal allowed; (2) Set aside the plaintiff's judgment and order for costs against the first defendant and in lieu thereof order that there be judgment for the first defendant and that the plaintiff pay the first defendant's costs; (3) Set aside any judgment and order for costs in favour of the first defendant as cross-claimant against the second defendant as cross-defendant and in lieu thereof order that the cross-claim be dismissed and that the cross-claimant pay the cross-defendant's costs of the cross-claim; (4) Direct that within 21 days the appellant inform Mr Neumann by letter sent to his last known address of the result of the appeal and the orders in 3; (5) Liberty to apply within 14 days for any variation of or addition to the orders in 3 and 4; (6) Respondent pay the appellant's costs of the appeal and have a certificate under the Suitors Fund Act if otherwise qualified.

CATCHWORDS : Vicarious liability - principle in Soblusky v Egan (1960) 103 CLR 215 - whether confined to motor vehicles - whether dinghy with outboard motor is motor vehicle for the purposes of the principle - reference to agency as basis for vicarious liability - consideration of Scott v Davis (2001) 204 CLR 33 - held yes and no. D Booth v Mister (1835) 7 Car & P 66; 173 ER 30; Chandler v Broughton (1832) 1 C & M 29; 149 ER 301; Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317; Davis v Scott (1998) 71 SASR 361; Equipment Investment Pty Ltd v M J Downthwaite & Co Pty Ltd (1969) 16 FLR 23; Hewitt v Bonvin (1940) 1 KB 188; Jacobs v London County Council (1950) AC 363; Lake v Quinton (1973) 1 NSWLR 111; CASES CITED : Morgans v Launchbury (1973) AC 127; Moynihan v Moynihan (1975) IR 192; Ormrod v Crosville Motor Services Ltd (1953) 2 WLR 1120; Pawlak v Doucette (1985) 2 WWR 588; R v Thornton (1949) 96 Can Cr Cas 323; Samson v Aitchison (1912) AC 844; Scott v Davis (2001) 204 CLR 333; Soblusky v Egan (1960) 103 CLR 215; "Thelma" (Owners) v University College School (1953) 2 Ll L Rep 513; Wheatley v Patrick (1837) 2 M & W 650; 150 ER 917. PARTIES : Evian Gutman - Appellant James Anthony McFall - Respondent FILE NUMBER(S) : CA 40897/03 COUNSEL : J Glissan QC & A Reoch - Appellant I Harrison SC & T Hughes - Respondent SOLICITORS : Teakle Ormsby Conn - Appellant Stacks Goodchamp - Respondent

LOWER COURT District Court JURISDICTION : LOWER COURT DC 534/01 FILE NUMBER(S) : LOWER COURT Walmsley DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40897/03 DC 5340/01

MASON P GILES JA McCOLL JA

Friday 22 October 2004 McFALL v GUTMAN Judgment 1 MASON P: I agree with Giles JA. 2 GILES JA: On 13 January 2001 five young men, school friends aged 16 or 17, hired an aluminium dinghy with an outboard motor for use for a few hours on Sydney Harbour. Each paid one-fifth of the hiring charge. A hiring form was filled out. Mr Evian Gutman wrote his name, address and telephone number in the spaces which, although not designated as such, were intended to identify the hirer. Mr Jeremy Neumann held a learner's permit, and his name, address and the permit number were filled in in the space provided for some identification. Mr Gutman signed the form beneath the words, "I have read & understand the 'Conditions of Hire' and agree to abide by them". 3 The dinghy was navigated around the harbour, with the five occupants taking turns at the controls. They arrived at Camp Cove and tied up at the eastern side of a jetty. Some of the occupants went ashore. When they returned, Mr Neumann took the controls. He started the motor, the dinghy was untied, and he put the motor in reverse. Mr Gutman was sitting on one of the sides of the dinghy. None of the occupants looked behind the dinghy, in the direction in which it would travel, as it left the jetty. 4 Mr James McFall and a friend were scuba diving at Camp Cove. A dive flag about forty metres to the east of the jetty indicated the presence of divers. Their course took them along the coastline in the vicinity of the jetty. As the dinghy moved away from the jetty, Mr McFall was struck by the propeller of the outboard motor and was injured. 5 Mr McFall brought proceedings against Mr Gutman and Mr Neumann, claiming damages for negligence. 6 Walmsley DCJ found that, had the occupants of the dinghy been looking, they would have seen a stream of bubbles from the diving equipment of Mr McFall and his friend and would have been alerted to avoid them. He held that Mr Neumann had acted in breach of a duty of care owed to Mr McFall. He said, "I do not see [Mr Gutman] having any direct liability to [Mr McFall]". But he held that Mr Gutman was vicariously liable for Mr Neumann's negligence on the application of the principle stated by the High Court in Soblusky v Egan (1960) 103 CLR 215 at 231. 7 His Honour declined to find any contributory negligence on the part of Mr McFall. He assessed damages of $70,825.40. Judgment for that sum was given against Mr Gutman and Mr Neumann. 8 Mr Gutman applied for leave to appeal, leave being necessary because the judgment was for less than $100,000. The application was heard on full submissions so that, if leave were granted, the appeal could be decided without a further hearing. At the close of the hearing, leave to appeal was granted. 9 There was no appeal as to quantum. Mr Gutman did not challenge the finding of negligence on the part of Mr Neumann. His primary submission was that the Soblusky v Egan principle had been confined to motor vehicles in the later High Court decision of Scott v Davis (2001) 204 CLR 333, and did not extend to the hiring and operation of the dinghy. If that were not accepted, he submitted that the principle did not apply because on a realistic appreciation the dinghy was hired jointly and used in a social setting, so that its hiring and operation did not fall within the statement of the principle. 10 Mr McFall opposed these submissions, and as to the primary submission essayed that in any event the dinghy was a motor vehicle for the purposes of the principle. He did not submit, under a notice of contention, that Mr Gutman had himself acted in breach of a duty of care owed to him. Nor did he submit that a principle of vicarious liability other than that stated in Soblusky v Egan was available and should be applied. 11 For the reasons which follow, in my opinion in Scott v Davis the High Court confined the Soblusky v Egan principle to motor vehicles and the dinghy was not a motor vehicle. It is not necessary to explore the application of the principle, apart from its confinement to motor vehicles, to the hiring and operation of the dinghy. The appeal should be upheld and the judgment against Mr Gutman should be set aside.

The Soblusky v Egan principle 12 Egan was injured when a car negligently driven by Lewis was involved in an accident. Soblusky was in possession of the car under an arrangement by which he took over the hire purchase instalments from the hire purchaser of the car. He treated the car as his own. He organised that he, Egan, Lewis and Anderson should go in his car to a lodge meeting, with Lewis driving because Soblusky preferred not to drive long distances. In the course of the journey Soblusky went to sleep. The car was involved in the accident while he was asleep. 13 The decision of the High Court was by a joint judgment of Dixon CJ and Kitto and Windeyer JJ. 14 Their Honours noted (at 228) that Soblusky had been held liable "on the ground that when Lewis negligently drove the Ford sedan he did so as the agent of Soblusky acting within the scope of his authority", and that Soblusky argued that "in principle there can be no ground for holding that as Lewis drove at the wheel Soblusky, lying back in the corner dozing, was driving the car by his agent for whose negligence he was responsible in damages". 15 Their Honours said (at 229) - "It is no doubt true that the development particularly in England of the branch of the law relating to the responsibility of the owner of a motor vehicle for the negligence of a person driving under his authority or consent has gone far. It is perhaps true also that it is easier to see the direction in which the branch grows than to understand the support it obtains from the main trunk of traditional doctrine governing vicarious responsibility. Perhaps the discovery of the true principle of the decisions will be ex post facto . … But when all is said and done, the present case does not involve any new doctrine or any new application of old doctrine. Motor cars from their very nature do not lend themselves in point of fact to analogies to the horse and buggy but it was in horse and buggy days that the law governing such a case as this was settled." 16 After referring to a number of cases (Chandler v Broughton (1832) 1 C & M 29; 149 ER 301; Booth v Mister (1835) 7 Car. & P 66; 173 ER 30; Wheatley v Patrick (1837) 2 M & W 650; 150 ER 917; Samson v Aitchison (1912) AC 844, the last of which was a motor vehicle case) their Honours stated the principle - "It means that the owner or bailee being in possession of the vehicle and with full legal authority to direct what is done with it appoints another to do the manual work of managing it and to do this on his behalf in circumstances where he can always assert his power of control. Thus it means in point of law that he is driving by his agent. It appears quite immaterial that Soblusky went to sleep. That meant no more than a complete delegation to his agent during his unconsciousness. The principle of the cases cited is simply that the management of the vehicle is done by the hands of another and is in fact and law subject to direction and control."

The judge's application of the principle 17 The judge considered that the principle applied in the present case in that Mr Gutman was the hirer of the dinghy, and thus the bailee, with legal authority to control its use; that Mr Gutman was present and so in possession of the dinghy and able to control its use; and that Mr Neumann was operating the dinghy "with [Mr Gutman's] authority and … for [his] enjoyment, along of course with the enjoyment of the other occupants". 18 The judge took account of Scott v Davis. So far as immediately relevant, he said: "Gummow J at 383 noted Soblusky as the starting point for Australian authority but found flaws in the foundation of the case, and with the majority below, Doyle CJ and Nyland J in the Supreme Court of South Australia would confine the operation of Soblusky to vicarious liability of the owner of a motor vehicle. I take a boat for the purposes of the argument as being a 'motor vehicle' and 'owner' to include a bailee, of which I am satisfied the first defendant was one. Hayne and Callinan JJ took a similar approach to that of Gummow J, Callinan J indeed using the expression 'chattels of conveyance' at paragraph 349." 19 It seems that his Honour considered that the Soblusky v Egan principle was confined to motor vehicles but that the dinghy was a motor vehicle for the purposes of the principle. The contest over both propositions may have been more prominent on appeal than at the trial.

Some context 20 My conclusion that the High Court confined the Soblusky v Egan principle to motor vehicles is founded upon what was said in Scott v Davis, and extensive discussion of other cases is neither required nor particularly useful. It is appropriate, however, to seek to give some context to the consideration the principle received in the judgments in Scott v Davis. 21 Liability in the law of tort is generally fault-based. The defendant is not liable unless he has intentionally or negligently caused loss or damage to the plaintiff. Vicarious liability makes a defendant liable although not at fault, the fault being that of the defendant's servant, agent or perhaps independent contractor. 22 The distinction between personal liability and vicarious liability can be blurred, for example where the defendant's fault lies in employing an incompetent servant who causes the loss or damage or where the defendant is said to be under a non-delegable duty of care. If there is to be vicarious liability, however, it requires a basis in statute or the common law. 23 The Soblusky v Egan principle was ascribed to agency. Soblusky's liability did not depend on employment of Lewis, or upon actual exercise of direction and control. There was authority for Lewis to drive and, by reason of ownership or possession as bailee, the right to direct or control his driving. That was said to mean that Soblusky was driving by his agent Lewis. 24 Statute now commonly deems the driver of a motor vehicle to be the agent of the owner, regardless of actual authority, as part of a scheme of insurance against liability for personal injury. This very much limits the occasions when a plaintiff needs to find a common law basis for vicarious libility of the owner of a motor vehicle. A common law basis may be required if the defendant is not the owner - Soblusky was not the registered owner - or in the case of property damage. 25 The Soblusky v Egan principle must be seen in what Hayne J in Scott v Davis called (at [300]) "the more general fabric of vicarious responsibility". Ascribing vicarious liability to agency can be far-reaching. Agency can encompass a servant or an independent contractor, to the extent that the general rule of no liability for the fault of an independent contractor would be swallowed up. Thus Professor Atiyah said, in Vicarious Liability in the Law of Torts (1967), p 99 - "There is no more settled doctrine in the law of tort than that a master is liable for the torts of a servant committed in the course of his employment, but there is no more controverted proposition than that a principal is generally liable for the torts of an agent committed within the scope of his authority. While there can be no doubt that a principal is in some circumstances liable for the torts of a person who is not a servant it is still a question of the greatest difficulty whether these cases are illustrations of a general rule or whether they remain isolated cases, explicable perhaps as historical anachronisms or as special rules designed to meet special situations, or whether, indeed, they can be explained on other grounds altogether not assignable to any head of vicarious liability." 26 The learned author concluded (at 110) that there is no general principle of liability for agents, particularly when there is normally no liability for independent contractors, and went on to examine cases of particular kinds of agency. One, examined in his ch 13, was the liability of a vehicle owner for the negligence of the driver. 27 The cases in England took a rather different course from Soblusky v Egan, although still founded on agency, see Hewitt v Bonvin (1940) 1 KB 188; Ormrod v Crosville Motor Services Ltd (1953) 2 WLR 1120 and (after Soblusky v Egan) Morgans v Launchbury (1973) AC 127. But it came to be recognised that the agency was "merely a concept, the meaning and purpose of which is to say 'is vicariously liable'", and was "expressing a value judgment that the owner should pay" (per Lord Wilberforce in Morgans v Launchbury at 135). In Scott v Davis also Gleeson CJ observed (at [4]) that describing a person as the agent of another, in this context, is to express a conclusion that vicarious liability exists, rather than to state a reason for the conclusion, and that if agency was to be used as a criterion of liability "it is necessary to be more particular as to what is meant". Other of their Honours did not favour agency as an acceptable explanation for the Soblusky v Egan principle: see in particular Gummow J at [268]-[272] and Hayne J at [299]. 28 The Soblusky v Egan principle could have application beyond owners and drivers of motor vehicles. It was said to have been established in horse and buggy days, and the owner of any other form of conveyance could equally place its management in the hands of another person who is then said to be his agent. As will be seen, in Scott v Davis it was recognised that the principle could be applied to other chattels, see Gleeson CJ at [8] instancing the negligently managed teapot (a reference to Moynihan v Moynihan (1975) IR 192), Hayne J at [425], and Callinan J at [347]-[350] referring to a carelessly lit barbecue and a badly wielded cricket bat as well as the teapot. Particularly if applied to other chattels, unless the power of control was given considerable content it would matter not that the manager of the owner's chattel was an independent contractor. The status of the manager of the owner's chattel, other than being the authorised manager, would be immaterial. The extension of vicarious liability in commercial life would be considerable; the extension in social life would be enormous. This also was recognised in Scott v Davis, see Gummow J at [272] observing that introduction of "agency" and "control" in the performance of social activities would be liable to chill ordinary social and familial intercourse; Hayne J at [279] and [310] pointing out the impact in a social rather than commercial setting; and Callinan J at [351] referring to damage to social and familial intercourse "were a far reaching rule in relation to chattels to be adopted". 29 These matters, and others, underlay the observations of Gummow J in Scott v Davis - "[158] In this Court, no application was made to re-open Soblusky . However, there was debate as to the proposition for which it is authority, and the doctrinal basis and scope of that proposition. Argument ranged over various issues. A significant concern here is the place of agency in the law of torts, particularly as a legitimate source of vicarious liability. Given the possibility of vicarious liability, the submissions were directed to such issues as the degree required of control by the bailor of a chattel; whether the vicarious liability was based on ownership, or right to possession, or something else; the nature of the interest for or purpose of the bailor required to make the bailor liable; whether the principle was confined to motor cars, or extended to chattels of mobile conveyance; and, finally, whether it should be extended to aircraft, as in England and British Columbia it appears already to apply to boats."

Scott v Davis in outline 30 The chattel was an aeroplane. During a birthday party at a country property the owner of the aeroplane asked a licensed pilot, who was a guest at the party, to taken another guest on a joy ride. The pilot flew negligently and the plane crashed. 31 At first instance the owner was held to be vicariously liable for the negligence of the pilot. The judge considered that there was "general control" over the use to be made of the aeroplane, although the owner was not in the aeroplane and there was no radio contact between it and the ground. In the Full Court it was said (Davis v Scott (1998) 71 SASR 361 at 367) - "The judge referred to a number of English cases dealing with the vicarious liability of the owner of a motor vehicle for the negligence of a driver. He referred in particular to the decision of the House of Lords in Morgans v Launchbury . The judge appears to have accepted and to have applied the law as stated by Lord Cross in that case. That was to the effect that the owner of a vehicle will be liable for the negligence of the driver if the driver was driving as the result of a request by the owner to the driver, and if there was some benefit to the owner. That benefit need not be pursuant to a contract.

The judge considered that this was a common law principle, and was not restricted in its application to motor cars." 32 In the Full Court the owner's appeal was upheld by Doyle CJ and Nyland J. Millhouse J dissented. In the joint judgment their Honours distinguished between what they described as "the narrow principle stated in Soblusky v Egan" and a wider basis of an owner's liability according to the approach in Morgans v Launchbury. As to the narrow principle, they said simply (at 377) that it did not cover the case because the piloting of the aeroplane was not under the control of the owner nor did he have the ability to assert control. As to the wider basis, they considered that Soblusky v Egan did not stand in the way of adopting it, that it had been adopted elsewhere in Australia, but that it should not be applied to an aeroplane. Referring to the extent of vicarious liability that would be occasioned by adopting the wider basis, and seeing as the rationale for the wider basis in the case of motor vehicles that motor vehicles were involved in accidents causing large scale damage and the owners of motor vehicles were likely to be insured or able to absorb the loss, their Honours said (at 377) - "We consider that the rationale for the wider approach taken in relation to motor cars does not apply in relation to aircraft. For that reason, we are not persuaded that the wider approach should be applied to aircraft. If the wider approach is applied to other forms of conveyance, there seems to be no reason why it should not be applied to chattels generally, and we consider that that development would have an unsettling effect on the law. For those reasons, we consider that the wider approach should not be extended to a new area, even though we acknowledge that as a matter of logic it is capable of extension. Accordingly, we decline to do so." 33 The appeal to the High Court was dismissed by Gleeson CJ and Gummow, Hayne and Callinan JJ, who held that the owner was not vicariously liable for the pilot's negligence. McHugh J dissented. The reasons were extensive, and the reasoning of the members of the majority differed. 34 The judgments in Scott v Davis 35 Gleeson CJ enquired into a principle of common law supporting "[a] claim that an owner or a bailee of a chattel is vicariously liable for the negligence of another person who has the temporary management of the chattel, even when that other person is not an employee of the owner or bailee" (at [6]). He said that, whatever the principle was, it could not apply only in respect of motor vehicles, because the earlier authorities were concerned with horse-drawn carriages, the cases did not support a special principle for motor vehicles, and any such limitation was a matter for the legislature (at [7]-[10]). 36 His Honour noted that the Court was "not invited to depart from Soblusky v Egan", but said that it did not did not assist the appellants because - "[16] The pilot was not the agent of the respondent in the sense explained in the above passages. At the time of the pilot's negligent act, the respondent was not in a position to assert a power of control over the manner in which the pilot was flying the aeroplane. The pilot was neither in fact, nor in law, subject to his direction and control at the critical time." 37 Referring then to the wider basis of Morgans v Launchbury on which the appellants relied, his Honour explained why he was of the view that it should not be accepted in Australia (at [17]-[20]). 38 McHugh J, in dissent, considered that the owner was liable for the pilot's negligence, saying - "[23] In my opinion, the District Court was correct in finding that the owner was liable for the pilot's negligence. That is because the owner had delegated to the pilot a task which the owner had agreed to perform, the pilot was not acting as an independent principal but was subject to the owner's general direction and control, and the pilot was acting within the scope of the authority conferred on him by the owner. The pilot was therefore an agent for whose negligence the owner was responsible." 39 His Honour's discussion was not focussed on Soblusky v Egan. He said that that case could fairly be seen as a case of the "owner" of a vehicle delegating a task to the driver for the owner's purposes, but that it was not necessary so to classify it (at [99]). It was an application of principles settled in the nineteenth century, and was explained by his Honour (at [97]) - "[97] Thus, an 'agency' relationship existed between the owner and driver because the "principal" had the legal authority to direct how and when the car was driven, had directed Lewis to drive it on his behalf and had retained his power of control in the circumstances, notwithstanding that he was asleep. Presumably, this authority or control derived exclusively from Soblusky's status as bailee of the car (there being no mention of any legal relationship between Soblusky and Lewis in the judgment)." 40 His Honour accepted the "general principle" of Morgans v Launchbury, perhaps subject to qualification (at [10]). He considered that delegation of a duty or task owed or undertaken to a third person plus general control of the person delegating, through ownership or possession of a chattel or otherwise, sufficed for vicarious liability (at [110]), that the "motor car" cases were within basic principles of vicarious liability (at [120]), and that there was no reason in logic to treat aeroplanes or boats differently (at [121]). 41 Going then to the reasons of Gummow J, I have earlier set out his Honour's observation that no application had been made to reopen Soblusky v Egan and his description of the debate. His Honour said that the question was not whether a principle "such as that apparently stated in Soblusky" should be extended to aircraft, because that pre-supposed that the principle to be extended was itself soundly based, but (at [159]) - "Rather, to resolve this case, the proposition stated in Soblusky and the authorities apparently underlying it must be examined. On closer reading it becomes apparent that any general principle respecting 'agency' and 'vicarious liability' derived from those cases cannot have a sound foundation. The question then arises whether, if the present case does not fall within the statement of particular principle in Soblusky , the case should be brought within it by some process of extension." 42 His Honour gave extensive consideration to the authorities and the concept of agency. He considered that Soblusky v Egan was not supported by the nineteenth century authorities". When he came to his conclusions, his Honour agreed with "the approach taken by Doyle CJ and Nyland J" (at [255]), which he had described as "to confine Soblusky and the vicarious liability principle stated there to cases involving motor vehicles" (at [251]). 43 Doyle CJ and Nyland J had in fact confined to motor vehicles the wider principle founded upon Morgans v Launchbury. It became clear that Gummow J meant that Soblusky v Egan itself should be so confined, because he went on to say (at [255]-[256]) - "I would go on to dispose of the present appeal on an additional footing. This concerns the status to be accorded Soblusky . [256] In this Court, the appellants did not seek leave to re-open Soblusky . For that reason, it must be taken to stand as authority for the propositions in the paragraph from the joint judgment set out in Section A of these reasons. Soblusky may well continue to have a significant field of operation in respect of motor vehicle property claims. Nothing said in these reasons should be taken to deny that proposition. However, like Hayne J and Callinan J, I would not extend the operation of Soblusky beyond its application to the vicarious liability of the owner of a motor vehicle." 44 His Honour observed (at [258]) that even if the aeroplane were considered as if it were a motor vehicle, the owner was not in the aircraft or otherwise able to assert control over the pilot. I take his Honour to have meant, in common with Gleeson CJ, that even if extended beyond its application to the vicarious liability of the owner of a motor vehicle, the principle in Soblusky v Egan would not have applied. The observation was by way of an aside. After stating "three further points respecting Soblusky", each plainly regarded by his Honour as inimical to its authority for the principle, his Honour said (at [263]) that "a more fundamental reason for denying any extension of Soblusky is that, for the reasons detailed earlier in this judgment, it rests upon insecure and unsatisfactory foundations in principle". He went on to say more of the lack of foundation in principle in agency and control as determinants of vicarious liability. 45 Hayne J said early in his reasons - "[284] No party sought to have Soblusky overruled. The appeal in this Court, and in the Full Court of the Supreme Court of South Australia, was conducted on the basis that the question is whether the holding in Soblusky revealed a principle of vicarious responsibility for the acts of an 'agent' which should be applied to the owners of aircraft. That question requires consideration of the foundations for the principle which the appellants assert should be applied. In particular, it invites attention to the course of decisions said to support the asserted principle and to whether such a principle can find support from 'the main trunk of traditional doctrine governing vicarious responsibility'. I turn first to consider the course of authority." 46 After consideration of the course of authority, the use of the concept of agency and the more general fabric of vicarious responsibility, his Honour expressed his conclusion - "[311] I would reject the appellants' contentions. In particular, I reject the contention that an aircraft owner is vicariously responsible for the negligence of the pilot when the pilot was operating the aircraft with the owner's consent and for a purpose in which the owner had some concern. If the decision in Soblusky is still good law (and that is a question I need not decide) its foundations are such that I would not extend it beyond its application to the vicarious responsibility of the owner of a motor vehicle. And even if Soblusky were to be applied to the circumstances of this case, the respondent not being on board the aircraft when it was flown negligently, I do not consider that the management of the aircraft was in fact subject to his direction and control." 47 Callinan J began with consideration of Morgans v Launchbury and its antecedents. He was of the view that the early cases "provide no safe foundation for any modern comprehensive principle for which the appellants contend" (at [338]). His Honour said (at [344]) that there "has been a trend of authority in Australia to extend the liability of owners of motor cars for the negligence of drivers of them on account virtually of ownership only", although not referring to Soblusky v Egan. His subsequent discussion, referring to the carelessly lit barbecue and the badly wielded cricket bat, included - "[349] These examples provide good reason for a narrow rule confining any principle at its widest to chattels of conveyance. The one that the Full Court gave [the carelessly lit barbecue] was influential in its holding that any principle of liability for ownership should not extend beyond motor cars." 48 After observations to the effect that limited special rules and exceptions to general rules are not uncommon in the law, Callinan J came specifically to Soblusky v Egan - "[355] There have always been special rules, common law and statutory, relating to the navigation of boats and ships and responsibility therefor: and these and other situations will fall to be considered in that and other contexts as and when they arise. The issues presented here are the breadth and true meaning of the principle for which Soblusky v Egan stands, and whether it should be extended to aeroplanes. [356] In my opinion this Court was aware of the desirability of stating a general principle and a narrow one in Soblusky v Egan . True it is that Dixon CJ, Kitto and Windeyer JJ said they thought the case an obvious one but that was certainly not the universal opinion in the profession when it was argued and the decision given. Their Honours' statement of principle should be taken to be one of general application to motor vehicles only, but it does require some clarification." 49 His Honour set out the principle stated in Soblusky v Egan, and then formulated by way of clarification (at [357]) "the conditions necessary to establish liability of an owner of a motor car for the acts of its driver". He described them as "the minimum conditions to be satisfied" which "should constitute the rules to apply to the liability of owners (or bailees) of motor cars being used or operated by others in a non-commercial context on a proper reading of Soblusky v Egan". 50 Callinan J ended his reasons - "[358] If these rules were to be applied to this case the appeal would have to be dismissed. The context was entirely non-commercial. The respondent derived no relevant benefit from providing the aeroplane and making the request of Mr Bradford. Nothing suggested itself to the respondent as being untoward or calling for his intervention in the earlier flying of the aeroplane by Mr Bradford. There was here neither an occasion calling for, nor the opportunity for, the respondent to take any steps that could have been effective to prevent Mr Bradford from operating the aeroplane the way in which he did. [359] The appeal should also be dismissed on the ground that the principles stated in Soblusky v Egan should not be extended beyond motor cars. I would dismiss the appeal with costs."

The determination of law in Scott v Davis 51 Scott v Davis is not an easy case. Arriving at what was held as to application of the Soblusky v Egan principle beyond motor vehicles is complicated by the consideration of what some of their Honours, but others less plainly, regarded as the different basis of vicarious liability expressed in Morgans v Launchbury, and by the potential for distinguishing Soblusky v Egan (depending on what the principle required by way of control) on the ground that the owner did not have control over the pilot's management of the aeroplane. 52 The Soblusky v Egan principle itself was doubted, and was trenchantly criticised by Gummow J in particular. Although there were prominent remarks that the Court had not been asked to re-open or overrule Soblusky v Egan, at the least there was elucidation of what it required by way of control, and it was brought within general principle by McHugh J and "clarified" by Callinan J. 53 If the Soblusky v Egan principle were good law, Gleeson CJ would not have confined it to motor vehicles. McHugh J would not have confined his more general principle to motor vehicles. Each of Gummow, Hayne and Callinan JJ, however, considered that the principle should not be extended beyond motor vehicles, see particularly at [256], [311] and [359] respectively. Their Honours undoubtedly did so with recognition of the logical imperative and other reasons against confinement noted by Gleeson CJ and McHugh J. They did so for what I inadequately describe as policy reasons, and in the case of Gummow J, perhaps not alone, because the principle itself was thought to be ill-founded. 54 For each of Gummow, Hayne and Callinan JJ, that the Soblusky v Egan principle should be confined to motor vehicles was not the only reason for dismissing the appeal. Gummow and Hayne JJ also distinguished Soblusky v Egan as to control (at [258] and [311] respectively), and Callinan J considered it inapplicable for other reasons (at [358]). But for Gummow and Hayne JJ the primary reason for dismissing the appeal was that the principle should be confined to motor vehicles, and for Callinan J that was an alternative reason sufficient in itself. In my opinion, that was a determination of law of three of the five judges as a reason for their decisions, and part of what the case stands for. 55 Mr McFall submitted that Scott v Davis stood for no more than that more was required by way of control than the owner's "general control", and that while there was a numerical majority in favour of confining the Soblusky v Egan principle to motor vehicles it could not rationally be confined when its origin lay in horse-drawn carriages and there was no basis for treating motor vehicles as a special class of chattels. He submitted that there could be no stopping short of the negligently managed teapot. 56 For the reasons I have given, I do not agree with that view of Scott v Davis. I acknowledge the force of Gleeson CJ's reasons for declining to confine whatever the principle of vicarious liability may have been to motor vehicles. The influence of what I have described as policy reasons is, however, by no means novel, and was prominent in the reasoning of the other judges. It may be that the principle itself will not survive re-opening in the High Court - confinement to nil, rather than extension to all chattels, is equally an answer to the logical imperative.

The authority of the determination of law 57 This Court is bound by the High Court's determination of the law. The common determination of three of the five judges in Scott v Davis, albeit their reasoning to their determinations was not identical, provides a binding decision, see Lake v Quinton (1973) 1 NSWLR 111. It does not matter that their Honours gave other reasons for dismissing the appeal. As was said by Viscount Simonds in Jacobs v London County Council (1950) AC 363 at 378, with the agreement of Lords Normand, Morton, MacDermott and Radcliffe - " … there is in my opinion no justification for regarding as obiter dictum a reason given by a judge for his decision, because he has given another reason also. If it were a proper test to ask whether the decision would have been the same apart from the proposition alleged to be obiter, then a case which ex facie decided two things would decide nothing."

Was the dinghy a motor vehicle? 58 Mr McFall submitted that a vehicle was something that was used for carriage of persons or things (referring to R v Thornton (1949) 96 Can Cr Cas 323 at 326 and Equipment Investment Pty Ltd v M J Dowthwaite & Co Pty Ltd (1969) 16 FLR 23 at 41), and that if the vehicle had a motor it was a motor vehicle. He said that the dinghy met both requirements, and that a principle akin to the Soblusky v Egan principle had been accepted as applying to boats in Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317, "Thelma" (Owners) v University College School (1953) 2 Ll L Rep 513 and Pawlak v Doucette (1985) 2 WWR 588. 59 Language does not work that way. If a boat can for some purposes be regarded as a vehicle, and has a motor, that does not make it a motor vehicle. What matters, however, is what was meant by a motor vehicle in Scott v Davis. Material to that is their Honours' references to vicarious liability and boats. 60 In Christmas v Nicol Bros Pty Ltd the plaintiff was struck by a motor vehicle driven by an employee of the defendant. The employee had signed off, but was driving home a fellow employee who was out of sorts with the intention of returning the motor vehicle to his place of work and then going home himself. The issue was whether the employee was in the course of his employment. In discussing the applicable principles, Jordan CJ said (at 320) that the owner of an article negligently used by another is liable if it is established that the user was his employee and that the use was in the course of his employment, and that the ownership itself was irrelevant to the owner's liability save that - "Ownership of the vehicle by the person alleged to be vicariously responsible for the act of the driver becomes, however, significant, if in the circumstances of the particular case the fact of ownership enables or assists the inferences that at the time of the accident the driver was probably the employee of the owner and was then acting within the scope of his employment". 61 In that connection the Chief Justice gave a number of examples of a train, a bus or a ship conveying passengers where proof of ownership could support an inference that the driver or navigator was the servant of the owner acting in the course of his employment, although his Honour pointed out in the case of a ship that ownership was by no means conclusive since (for example) the ship might be demised. 62 This was different from the Soblusky v Egan principle. Ownership plus management by another could create a kind of rebuttable presumption of employment and acting in the course of employment. 63 In Scott v Davis (at [8]) Gleeson CJ cited the judgment of Jordan CJ as demonstrating that cases about ships and railway trains had "involved the same issue" as Soblusky v Egan. The similarity was in legal terms exiguous, although in practical terms it may have been marked, and his Honour later referred to Christmas v Nicol Bros Pty Ltd as a case concerning "drawing inferences as to the relationship between an owner or bailee and a person for whose negligence the owner or bailee is said to be responsible" (at [11], footnote (71)). 64 McHugh J cited Christmas v Nicol Bros Pty Ltd as one of a number of cases "holding that the owner of a motor vehicle may be liable for the negligence of a driver who is not the owner's servant" (at [35], footnote (89); see also at [73], footnote (173)); I respectfully question whether it was so held. Gummow J cited it for the proposition that ownership was of itself irrelevant to vicarious liability (at [225]), and said that its essential point "was one of evidence sufficient to found a finding of what was perceived as the fact in issue" (at [262]). Hayne J first referred to it in reciting the appellants' submissions (at [276]), but later spoke of it only as a case of evidence of a servant driving in the course of his employment (at [305]). Callinan J appears to have had it in mind when he said (at [345]) that - " … what was apparently regarded as a rebuttable evidentiary presumption in New South Wales can provide no basis for a principle of substantive law that a driver of a motor vehicle is to be treated as the servant or agent of the owner in circumstances in which the driver clearly does not have that relationship with the owner." 65 I do not think that, the application of Soblusky v Egan beyond motor vehicles now being in question, Christmas v Nicol Bros Pty Ltd is of assistance in deciding in that connection whether a boat is a motor vehicle. It was not concerned with that question. 66 In "Thelma" (Owners) v University College School the defendant's racing eight collided with the plaintiff's motor launch. The eight was in a school regatta, and the cox was negligent. The defendant was held liable because the cox was "using the eight with the authority of the owners, the defendants; he was using it, partly at any rate, for the purposes and benefit of the owners, and he was acting within the scope of his agency" (at 618). If the eight was a vehicle, it was not a motor vehicle. In Pawlak v Doucette a water skier was injured when the operator of the ski boat negligently applied full power. The owner's vicarious liability was founded on Morgans v Launchbury. These cases were referred to in Scott v Davis, by McHugh J (at [107]) in noting that the Morgans v Launchbury principle had been applied to boats and aeroplanes; by Gummow J in noting (at [58]) the debate over whether Soblusky v Egan should be extended to aircraft "as in England and British Columbia it appears already to apply to boats, and by Callinan J (at [340]) with the observation that in Pawlak v Doucette "the fact that the owner was actually controlling the driving and the water skiing from the shore nearby, and was negligent in doing so, provided a sufficient and independent foundation for [the] finding". 67 On this issue, in Scott v Davis the question for Gummow, Hayne and Callinan JJ was whether the Soblusky v Egan principle applied to the management of aeroplanes. Their Honours were aware of these cases. In confining the principle to motor vehicles they must have intended to exclude from it both aeroplanes and boats. Whether, if it arose, horse-drawn carriages would also be excluded need not be decided; perhaps history would make them motor vehicles. The line drawn between motor vehicles and the aeroplane did not otherwise leave room for other "chattels of conveyance". The line encircled motor vehicles as a discrete class, aeroplanes and boats were together outside the class, and their Honours' reasons for confining the principle excluded its application to boats as well as aeroplanes. 68 I do not accept that the dinghy was a motor vehicle. It follows that Mr Gutman was not established to be vicariously liable to Mr McFall.

Orders 69 The appeal papers refer to a cross-claim by Mr Gutman against Mr Neumann for contribution, it seems dealt with by the judge in reasons given on a later occasion. What order for contribution and accompanying costs order were made does not appear. Nothing was said of this. If the judgment against Mr Gutman is set aside, so also should any judgment for Mr Gutman against Mr Neumann be set aside and any order for costs. Other costs questions could arise. 70 It would be unfortunate if further costs were incurred in bringing matters to an end in this Court. In the hope that agreement or recognition of reality can operate, I propose the orders -

Set aside the plaintiff's judgment and order for costs against the first defendant and in lieu thereof order that there be judgment for the first defendant and that the plaintiff pay the first defendant's costs.

Set aside any judgment and order for costs in favour of the first defendant as cross-claimant against the second defendant as cross-defendant and in lieu thereof order that the cross-claim be dismissed and that the cross-claimant pay the cross-defendant's costs of the cross-claim.

Direct that within 21 days the appellant inform Mr Neumann by letter sent to his last known address of the result of the appeal and the orders in 3.

Liberty to apply within 14 days for any variation of or addition to the orders in 3 and 4.

Respondent pay the appellant's costs of the appeal and have a certificate under the Suitors Fund Act if otherwise qualified. 71 McCOLL JA: I agree with Giles JA. **********

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