The Magistrate's decision dated 22 February 2006
13 While the plaintiff had pleaded that the employee was liable on the basis of principal/agent relationship, this was not the basis of Her Honour's decision nor does it form part of the appeal. The relationship in issue (as pleaded) was the employer/employee relationship.
14 The Magistrate stated that Klesteel was:
"…a reasonably large company engaged in the business of supplying machinery and vehicles, and it was part of the first defendant's duties to carry out repairs and/or maintenance on such equipment located at different places around the greater metropolitan areas. Although it was apparently infrequent, he might be required on occasions to make such calls during out-of-work hours. In other words, the first defendant's custody of the vehicle was a matter of convenience for both the employer and the employee."
[t 1.58-59]
15 The Magistrate continued:
"Given that…the first defendant's use of the motor vehicle for private and domestic use was incidental to the use of the vehicle for the purposes of carrying out his work as a mechanic, it is clear that the second defendant is vicariously liable for the damage caused to the plaintiff.
That is not the end of the matter. The next question to be considered is to what extent is the second defendant's liability mitigated by the plaintiffs? There is no question about that. The first defendant, having the high range PCA in his blood, simply should not have been on the roadway whatsoever…" [t 3.38-52]
16 In the last paragraph of the judgment reproduced above, the Magistrate was considering contributory negligence.
17 Klesteel submitted that it did not cavil with the Magistrate's isolation of the issue, at least so far as it was concerned, of vicarious liability. Klesteel says that it was apparent from the passages cited by the Magistrate in her reasons for judgment that Klesteel could only be considered to be vicariously liable for Mercado's negligence if he was, at the time of the accident, in the course of his employment.
18 Klesteel submitted that the Magistrate erred in finding that Mercado was, at the time of the accident, using the vehicle in the course of his employment with, or in the service of Klesteel.
19 It was further submitted by Klesteel that the Magistrate erred in concluding that whenever Mercado drove the vehicle, he should be adjudged as doing so in the interests of, or for the benefit of his employer (Klesteel). There was evidence to establish that the employee received a benefit from his employer. The Magistrate made a finding that Mercado's custody of the vehicle was a matter of convenience for both the employer and employee. Klesteel further submitted, given the accident occurred some 3½ hours after Mercado had ceased work and in circumstances when the level of alcohol in his blood placed in the prescribed "high range", that any nexus between Mercado's use of the vehicle and his employment had ceased to exist.
20 The parties referred to Scott & Ors v Davis (2000) 204 CLR 333, Christmas v Nicol Bros Pty Ltd & Anor (1941) 41 SR (NSW) 317, NSW v Lepore (2003) 212 CLR 511, Gordon v Tamworth Jockey Club Inc [2003] NSWCA 82 and Phoenix Society Inc v Cavenagh & Anor (1996) 25 MVR 143.
21 Counsel for Klesteel referred to a passage from Scott where McHugh J referred to the seminal motorcar case in modern law, Hewitt v Bonvin [1940] 1 KB 188. McHugh J in Scott stated:
"However, Hewitt v Bonvin, the seminal motor car case in the modern law, made it clear that merely giving a person permission to use a car did not make the owner responsible for the conduct of the driver. In Hewitt, a son had used his father's car to drive two friends to their homes. On the way back to the son's home, the car crashed, killing another passenger. The deceased person's estate sued the driver's father, alleging that he was vicariously liable for his son's negligent driving. The Court of Appeal unanimously held that the father was not liable.