CITATION : HAYMAN -v- KKUT PTY LTD & ANOR [2002] WADC 107

Contract - Deed of indemnity - Formal requirements for validity - No contemporaneous attestation - Efficacy of document as contract - Lack of consideration - Economic duress

Century Insurance Co v Northern Ireland Road Transport Board [1942] UKHL 2; [1942] AC 509

Crescendo Management Pty Ltd v Wespac Banking Corporation [1988] 19 NSWLR 40

Burnett v British Waterways Board [1972] 2 All ER 1353

Deacon v Auckland District Land Registrar (1910) 30 NZLR 369

Dean v Lloyd [1990] WAR 42

Garrard v A E Southey & Co & Anor [1952] 2 QB 174

Hollis v Vabu Pty Ltd [2001] HCA 44

Le Mans Grand Prix Circuits Pty Ltd v Iliadis (1998) ATR 81-482

McDonald v The Commonwealth (1946) 46 SR (NSW) 129

New Zealand Shipping Co Ltd v A M Satterthwaite & Co [1974] UKPC 1; [1975] AC 154

Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337

Syros Shipping Co SA v Elaghill Trading Co. The Proodos C [1981] 3 All ER 189

Waltons Stores (Interstate) Ltd v Maher & Anor [1988] HCA 7; (1988) 164 CLR 387

1 WISBEY DCJ: The plaintiff, Mark Norman Hayman, brings this action against the defendants seeking damages for injuries suffered by him in an accident in the course of his employment on 5 June 1998, which he asserts was the result of the negligence of the first and/or second defendants.

2 In the statement of claim it is alleged that at all material times the plaintiff was employed by the first defendant Kkut Pty Ltd, and/or the second defendant, Resolute Limited, as a boilermaker/welder. Alternatively, that he had become pro hac vice the employee of the second defendant.

3 Insofar as it is relevant to the matter presently under consideration, the position appears to be that the first defendant who was the general employer of the plaintiff, hired out the plaintiff and his services to the second defendant. Whilst performing work for the second defendant the plaintiff was involved in an accident and sustained injuries.

4 In its amended defence the second defendant alleges, inter alia:

"13. Further and in any event, the second defendant says that:

13.1 Before commencing to work at the Chalice Gold Project Mine Site, the plaintiff entered into a deed of indemnity with the second defendant (the date of the deed being 4 June 1998) and pursuant to that deed, the plaintiff agreed that in consideration of the second defendant permitting him to enter the mine site he would release and indemnify the second defendant, its employees and independent contractors from and against all liability in the event of damage, loss or injury to himself and his property arising from any cause whatsoever including damage, loss or injury which is the fault, negligence or breach of duty of either the second defendant, the second defendant's employees or to the second defendant's independent contractors. The full terms and effects of the deed of indemnity will be referred to at trial;

13.2 the plaintiff is bound by the terms of the deed of indemnity;

13.3 in the premises, the plaintiff is precluded from pursuing this action and from being awarded any damages against the second defendant and has waived any rights which he may otherwise have had to pursue this action and claim any damages against the second defendant."

5 Although the matter came before me for the trial of an issue, the file discloses serious shortcomings in that respect.

6 On 8 June 2001 his Honour L A Jackson DCJ ordered, inter alia, that:

"The second defendant do file an agreed minute of issues to be tried as a preliminary issue."

7 On 14 August 2001, Deputy Registrar Hewitt ordered, inter alia, that the action be stayed pending the determination of the preliminary issue.

8 After further preliminary skirmishing the action was listed before me for the determination of a preliminary issue which had not then been articulated by the Court. That position was entirely unsatisfactory, and had it not been for the fact that the plaintiff had travelled from New Zealand, I would have declined to embark upon the hearing. In the event however, the matter proceeded on the basis that I determine the questions raised in the proposed minute of issues dated 12 November 2001. Although that document contains twelve questions, the issue before me simply put, is, does the document described as a deed of indemnity, executed by the plaintiff on 5 June 1998, by its terms preclude the plaintiff from obtaining a judgment against the second defendant?

9 In opening the matter for the plaintiff, his counsel Mr Spinks said:

"The case is really threefold. The first question for the Court will be whether there's a deed. The second question if not, is there a contract. The third question will be by operation of law if there is a contract should it be set aside or void. You'll see from the pleadings that a number of issues have been raised in that respect. The first one is duress. That applies both to the deed and the contract. In relation to the existence of a contract, it is alleged there was a failure of consideration."

10 I now turn to the evidence called in relation to the matter.

11 Mr Hicks was at the relevant time operations supervisor at Kiam Engineering (a business operated by the first defendant). The first defendant was an engineering enterprise which ran its own engineering workshop and supplied labour to the eastern Goldfields.

12 Mr Hicks stated that prior to 4 June 1998 his supervisor Darrell Herbert requested that he arrange to provide labour for the second defendant at the Chalice Gold Mine, and he understood that the first defendant wished to supply a person of good quality who would enhance its reputation as a supplier of labour. Consequently, Mr Hicks selected the plaintiff, and Hansel Zaayman, anticipating that they would be under the supervision and direction of the second defendant. He understood that the plaintiff would be engaged in maintenance and fabrication duties in connection with the fabrication of a grizzly. Mr Hicks' only instruction to the plaintiff was that he was the first person to be supplied by the first defendant to the second defendant and was expected to do the right thing with a view to promoting the commercial relationship. Mr Hicks stated that the plaintiff, a boilermaker/welder, was mainly used as a welder or for fabrication and maintenance, was employed generally by the first defendant as a tradesman and, as at June 1998 had been so employed for 12 months or more.

13 Mr Herbert was the first defendant's Kalgoorlie manager. He stated that the first defendant received a phone call from the supervisor at the Chalice Gold Mine requesting the services of a boilermaker, and consequent upon that request the plaintiff was despatched. The second defendant was to pay the first defendant for the plaintiff's services on an hourly hire basis, and was to provide the plaintiff with accommodation. Mr Herbert agreed that the first defendant had some 50-60 employees which it hired out from time to time, the terms of hire requiring the other party to pay the first defendant an agreed hourly rate for the employee's services. The first defendant remained responsible for paying the employee's wages.

14 The plaintiff confirmed that he was a boilermaker/welder who had done his initial trade training in New Zealand and had mostly worked for labour hire entities whilst in Australia. He worked predominantly in the Goldfields on plant maintenance and construction. The plaintiff stated that prior to 4 June 1998 he was approached by Messrs Herbert and Hicks with a request that he go to the Chalice Gold Mine to work as a boilermaker, and he drove to the site in his own vehicle on 3 June 1998, spending the night of 3/4 June in accommodation supplied by the second defendant. He stated that on the Monday morning he drove to the mine site in the expectation that he would be engaged in general boilermaking, welding and maintenance work. Because of his prior experience with this type of engagement he expected to be required to undergo an induction procedure. Having arrived at the mine site he walked into the reception area. Initially there did not appear to be anyone present, but he was soon approached by a person and asked what he wanted. He could not recall if that person was male or female. He explained that he was reporting for duty, and the person went and returned with Reg Jones, who took him to his office. Mr Jones expressed some urgency about the plaintiff's prospective job. The plaintiff stated that he completed the induction with Mr Jones in a matter of minutes and then had "this pile of papers thrown at me", which Mr Jones told him was a standard site induction agreement. The plaintiff claimed that he was uncomfortable about signing the documentation as he didn't have a chance to read it, but was told by Mr Jones that it was required to be signed by everyone on the site; that he couldn't start work without signing it; and that it was just a standard site agreement with no hidden surprises. The plaintiff stated that he was again told that he couldn't start work without signing the documentation, and that his attitude was

"Everybody's got to work. I need the money. There wasn't a lot happening in Kalgoorlie so if I went back to Kalgoorlie there was no work. I needed the money. I had to go to work, so I signed it."

The plaintiff was adamant that at the time he signed the documentation presented to him by the second defendant his belief was that he was signing an acknowledgment that he had undergone an induction.

15 Having signed the documentation the plaintiff was taken by Mr Jones on a brief tour of the workshop and site, and shown the job he was required to undertake.

16 The plaintiff pointed out that his hours of work were dictated by the second defendant, and that whilst working for the second defendant he was not allowed to undertake duties for any other person.

17 In cross-examination the plaintiff stated that he had been with the first defendant on a full time basis for about three to four months prior to 4 June, working approximately 12 hours a day 5-6 days a week undertaking general site maintenance, construction, bucket repairs, and the like. 25 per cent of that time he was engaged in activities at the first defendant's workshop, and for the rest of the time was on hire to the first defendant's clients. He stated that when working for clients he was generally under the client's supervision, although paid by the first defendant.

18 The plaintiff stated that he presented for work at about 5.45 am on the Monday morning and was at the reception for 5-10 minutes before anyone approached him. He could not recall whether he was approached by a male or female, and specifically denied that a young female obtained his signature to the deed of indemnity. He stated that the induction process at Mr Jones' office was very brief, taking 10-15 minutes at most. At the completion of the induction he signed what he believed was an acknowledgment of having undergone the induction, and his recollection was that the signing of the documentation took place at approximately 6.15/6.30 am. Mr Jones then took him out to the job and explained what was required. He claimed that he had commenced work by 7.00 am and worked on for the rest of the day.

19 The plaintiff's recollection was that one of the documents presented to him was headed "Workplace Agreement" which he was assured was standard and was required to be signed before he could commence work. In fact he claimed he was told "Sign it and we'll go to work. We haven't got time to go through it. You will go through it fully in the next two weeks when you do the full site induction." The plaintiff also saw a document bearing the words "Health and Safety". His recollection was that he signed a register acknowledging that he had undergone an induction, and signed a workplace agreement. He could not recall seeing a document headed "Chalice Gold Project Deed of Indemnity" and claimed that he first became aware of that document when it was posted to him by his solicitor. When shown to him he recognised the document headed "Visitor and Short Term Contractor Induction Check List" which bore his signature, being the document he described as the register, but claimed that the time of 10.55 am noted on it was not consistent with his recollection of when it was signed, and repeated that he had commenced working by 7.00 am. The induction check list was received in evidence as Exhibit D1. He confirmed that a document described "Chalice Gold Project Deed of Indemnity" (Exhibit D2) contained some entries in his handwriting and bore his signature underneath the date 4.6.98, although he had no specific recollection of addressing that document or reading it prior to its signing.

20 Miss Jones, a geology administrator, born 9 July 1982, commenced employment as an office trainee receptionist with the second defendant at the Chalice Gold Mine in January 1998. She stated that in that capacity she was the visitors' first point of contact. Although her contracted hours of work were 8.00 am to 4.30 pm, she used to go to work with her uncle and consequently her hours were generally from 6.30 am until 6.30 pm. She was located in the main reception area. When they attended at reception, persons who had not previously been on site were required to sign a Visitors' Book and a series of forms before being despatched to the appropriate personnel. The forms required to be signed included the deed of indemnity, and a vehicle road form; and visitors received a pamphlet dealing with road rules. It was Miss Jones' responsibility to make sure all visitors signed the required documents. She stated that when a person came to the main administration office the only entry was into the reception area, and upon entering the reception area there was a bench to the right where the forms were located beneath a sign reading "please sign these". Above each set of forms there was a completed specimen form.

21 The importance of having the forms executed had been stressed upon Miss Jones. She had been in the practise of witnessing the forms for the first three months of her employment, but ceased doing so when her superintendent told her that it was not appropriate as she was under 18. Thereafter she simply watched to ensure the forms were completed.

22 Miss Jones claimed to have a distinct recollection of the plaintiff attending reception at about 7.00 am on 4 June, and of producing the various forms to him and explaining their purpose and the requirements concerning their signing. She recalled informing him that the intent of the deed of indemnity was that each person was responsible for their own conduct on site. She did not witness the deed of indemnity at the time of its execution by the plaintiff, but subsequently signed a photocopy of it on 27 September 2001.

23 Miss Jones recalled the plaintiff being injured the following day, and that shortly thereafter Mr Jones had come into reception looking for the deed of indemnity and other documents signed by the plaintiff, which she retrieved from the file. It appears she then explained to Mr Jones why she had not witnessed the deed of indemnity.

24 In cross-examination Miss Jones stated that during her employment with the second defendant, approximately five people a day executed the various forms. When questioned concerning the accuracy of her recollection of the plaintiff signing the documents she stated that it was assisted by the fact that the plaintiff had an accident the following day whereupon it became necessary to address what had occurred. She also recalled that the plaintiff was quite handsome. Although she was challenged, I have no doubt as to the accuracy of her recollection.

25 Mr Jones was the second defendant's maintenance supervisor at the Chalice Gold Mine from 1995 until 2000, and was responsible for all the fixed plant maintenance, maintenance planning, workshop inductions, and supervision. His office was located along side the workshop approximately 50 metres from the main administration offices. He stated that his hours were generally 7.00 am until 5.00 pm. Upon arrival at work he would conduct a tour of the facility, and then return to his office to prepare the day's schedule. At 8.00 am he would have a meeting with the mill superintendent, the mill supervisor, and the metallurgist. He would then return to his office at about 9.00 am and commence supervision. It was his task to carry out short term contractor inductions, and major site inductions.

26 Mr Jones identified Exhibit D1 as the Visitor/Short Term Contractor Induction Check List, and he stated that the plaintiff's name thereon was in the plaintiff's handwriting, although the various ticks, time and date, were in his handwriting, and he and the plaintiff had signed the document.

27 Mr Jones stated that the induction procedure required that after the short term contractor had signed the Visitors' Book and Indemnity Form at the main office, they would be brought down to him, and there would be a check that they had signed the required forms, following which he would carry out the induction, which for a first time site visitor would take between an hour to an hour and a half. He confirmed that Exhibit D1 was dated 4 June 1998, and that the time 10.55 am written thereon was the time of completion of the induction. He stated that no-one was allowed to commence work before the completion of the induction. Mr Jones had a specific recollection of the plaintiff's induction, and stated that the plaintiff was not required to sign a workplace agreement. He denied that he had the plaintiff sign the deed of indemnity (Exhibit D2). He confirmed that the writing on Exhibit P1, the accident/incident report form, was his.

28 In cross-examination Mr Jones stated the plaintiff arrived at his office at approximately 9.30 am on the morning of the induction. He did not have any recollection of a discussion with Miss Jones about the signing of the indemnity document, and denied telling the plaintiff that he would not be allowed onto the mine site if he had not signed the deed of indemnity.

29 When questioned as to the instructions, if any, that the plaintiff had been given as to how he was to do his work, Mr Jones said that he had been given safety instructions as to how to handle steel, and had been advised of the availability of a lifting crane, and requested to use mechanical lifting devices.

30 The foundation for a consideration of the issues before the Court is identification of the legal relationship that existed between the plaintiff and the second defendant.

31 There can be no doubt that the first defendant was the plaintiff's general employer. It is, however, argued on behalf of the plaintiff that the second defendant had in the circumstances become pro hac vice the temporary employer of the plaintiff.

32 In Glass "The Liability of Employers" 2nd ed, p 79 the author discusses the situation where one party hires out an employee to another. The author states:

"It is clear in principle that the employer of one party may become for a particular occasion the employer of another, even though he receives no remuneration from the latter. This was pointed out in Johnson v Lindsay & Co [1891] AC 371 by Lord Herschell, who said at p 377:

'The general servant of A may for a time on a particular occasion be the servant of B, and a person who is not under any paid contract of service may nevertheless have put himself under the control of an employer to act in the capacity of a servant, so as to be regarded as such.'"

33 The author went on to say that the question whether the responsibility for the employee's conduct had shifted from the general employer to the particular employer was governed by the control test. Further it is stated:

"prima facie, when the general employer of an individual lends or hires the services of that individual to a third party, the individual remains the employee of the general employer. If, however, the third party has by agreement with the general employer the right to direct the manner in which the individual is to do his work, the latter will become the temporary employee of the third party...the burden on a litigant who claims that the third party has become pro hac vice the employer of the individual, however, is a very heavy one and is not easily discharged. It is not enough to show that the individual is subject in some respects to the control or supervision or orders of the third party. The right of control or superintendence must extend to the manner of doing the work."

34 There is a useful discussion of the position in Century Insurance Co v Northern Ireland Road Transport Board [1942] UKHL 2; [1942] AC 509 where Lord Wright at p 517 relevantly said:

"Lord Herschell there emphasises that it is the extent of control which is material to be considered, but he also stresses the other elements which make up the relationship of master and servant and which have to be considered before it can be held that there has been a transfer of the man's service from his general employer to the other who is said to be his temporary employer.

It is, I think, clear that the presumption is all against there being such a transfer. Most cases can be explained on the basis of there being an understanding that the man is to obey the directions of the person with whom the employer has a contract, so far as is necessarily convenient for the purpose of carrying out the contract. Where that is the position, the man who receives directions from the other person does not receive them as a servant of that person, but receives them as servant of his employer. Where the contract is a running contract, for the rendering of certain services over a period of time, the places where, and the times at which, the services are to be performed, being left to the discretion (subject to any contractual limitations) of the other contracting party, there must be someone who is to receive the directions as to performance from the other party and they are given to the employer, whether he receives them personally or by a clerk or by the servant who is actually sent to do the work."

35 In the context of the factual situation here, where the first defendant provided the services of the plaintiff to the second defendant for a limited period, and for limited purposes, it does not seem to me that there was any notional substitution of employment - that is the plaintiff remained at all times the employee of the first defendant.

36 In the context of the issues to be determined by me however it matters little. The concept of a person becoming pro hac vice the employer of another is effectively a fiction for tortious liability. It does not alter the contractual situation. The plaintiff's contract of service was and remained with the first defendant. He had no contractual rights due from, or obligations owed to the second defendant. That effectively disposes of the plaintiff's contention that the Law Reform (Common Employment) Act 1951, s 3(2) by its term renders the deed of indemnity void. Whether deed or contract, it does not constitute a "provision contained in a contract of service of apprenticeship".

37 I now turn to a consideration of the deed of indemnity (Exhibit D2).

38 I regard the plaintiff's evidence concerning the timing and nature of the induction process as unreliable and I reject it. The plaintiff was unable to recall the sex of the person who first approached him, and alleged that the only documentation signed by him was executed in the presence of Mr Jones at about 6.15/6.30 am in the morning. That is inconsistent with Miss Jones' evidence, and with Mr Jones' working schedule. Further, it is in conflict with the time notation on the visitor and short term contractor induction check list (Exhibit D1) I am satisfied as confirmed by that document, that the evidence of Miss Jones as to the standard visitor procedure, and that the plaintiff signed, inter alia, the deed of indemnity (Exhibit D1) upon arriving at the administration office, is accurate.

39 The evidence does not disclose what has happened to the original of the deed of indemnity, Exhibit D2 being merely a photocopy thereof; but it does establish that it was not "attested by at least one witness", that being a prerequisite for a valid deed. (See Property Law Act 1969, s 9(1)(b)).

40 I am quite satisfied that a proper interpretation of s 9 of the Property Law Act, having regard to the fact that the formalities of a deed set out therein was designed to replace, inter alia, the sealing and delivery of a deed, requires that the witness attestation be contemporaneous with the execution of the deed by the party to be bound thereby. In Halsbury's Laws of England, 3rd ed vol 11, par 558, dealing with the attestation of deeds, it is stated "A witness must be actually present at and witness the execution of the deed; attestation upon the acknowledgment of the party is not sufficient." Even if that is not the position, the signing of a photocopy of the deed of indemnity by Miss Jones on 27 September 2001, more than three years after its execution by the plaintiff, could not amount to attestation, particularly as historically a deed was intended to and does take effect from the date or time of its delivery. (Halsbury par 552).

41 The second defendant contends that even if the deed of indemnity fails as a deed, it is still supportable as a contract between the plaintiff and the second defendant, whereby the plaintiff releases the second defendant from liability for negligence. The difficulty with that proposition is that there must be consideration for the contract. The plaintiff's promise to release and indemnify the second defendant from its common law liability for negligence is only binding on him if consideration for that promise passes to him from the second defendant. The consideration alleged in the document, and by counsel during argument, is the agreement by the second defendant to allow the plaintiff to enter the Chalice Gold Mine site. It was fundamental to the hiring agreement between the first defendant and the second defendant, that the second defendant would accept the plaintiff onto the site - indeed not to do so would clearly have been a breach by the second defendant of the commercial arrangement it had entered into with the first defendant. The plaintiff was in the employ of the first defendant, and it cannot be said that any benefit passed to him by the second defendant performing the contract it had entered into with the first defendant. The second defendant was simply performing an existing contractual duty owed by it to the first defendant, a breach of which would have given rise (inter alia) to a right to damages on the part of the first defendant.

42 If the deed of indemnity had been properly executed as a deed, or alternatively if there was consideration for it so that it otherwise constituted a binding contract, the plaintiff asserts that it is voidable by reason of duress.

43 Although I am not prepared to accept the plaintiff's account of how the document came to be executed by him, it is clear on any view of the evidence that its execution occurred in a situation where it was made apparent to the plaintiff that its execution was a condition precedent to him commencing the work he had been despatched to carry out, and it was on that basis that he signed it.

44 In Crescendo Management Pty Ltd v Wespac Banking Corporation [1988] 19 NSWLR 40, his Honour McHugh JA stated that the proper approach in determining whether there had been economic duress was to ask:

(i) whether any applied pressure induced the victim to enter the contract; and

(ii) whether that pressure went beyond what the law is prepared to countenance as legitimate. (Illegitimate pressure being (inter alia) unlawful threats or unconscionable conduct).

45 His Honour stated that it was not necessary for the person seeking to avoid a contract on the ground of duress to prove that illegitimate pressure was the reason for him entering into the contract, it being sufficient that such pressure was one of the reasons for him entering into the contract.

46 The second defendant having contracted with the first defendant to hire the services of the plaintiff, and the plaintiff having travelled 400 km or so to the Chalice Gold Mine to undertake the activity for which he was hired, it was indeed inappropriate for the second defendant to require him to execute a release and indemnity before allowing him to commence work. The terms of the document in the context of the nature of the plaintiff's duties and the second defendant's contractual obligations were illegitimate and contrary to public interest.

47 If the deed of indemnity was otherwise valid, it would by reason of duress be avoidable by the plaintiff.