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Date: Tue, 16 May 2006 17:00:14 +1000 From: Neil Foster Subject: High Court of Australia on vicarious liability for contractors
Dear Colleagues; As previously foreshadowed, the High Court has now handed down its decision in Sweeney v Boylan Nominees [2006] HCA 19. Mrs Sweeney was injured by a fridge door falling off in a service station. The fridge had been serviced by a Mr Comninos, who had done the job when requested by Boylan Nominees, the company who had supplied the fridge. The question was whether Mrs S could recover from Boylan. The NSW Court of Appeal and all the members of the High Court found that C was not an employee; even on the slightly extended version of the tests for employment used in Hollis v Vabu. He was not wearing a uniform, he supplied his own tools and equipment, he invoiced Boylan on a job-by-job basis, he was conducting his own business - majority (Gleeson CJ, Gummow, Hayne, Heydon, Crennan JJ) at [31]; Kirby J at [73]. So was there some basis on which Boylan could be found vicariously liable for the negligence of a contractor? The majority said, No. The only real argument was over how to maintain the authority of CML Assurance Society Ltd v Producers & Citizens Co-operative Assurance Co of Australasia Ltd (1931) 46 CLR 41 where a very strong High Court bench (including Dixon J) had found that an insurance company was vicariously liable for defamation uttered by its contractor agent who was selling insurance on its behalf. According to the majority CML as an exception to the usual rule against vicarious liability for independent contractors should be confined to a narrow ratio - on one view (see [22]) the case of an agent with authority to bring about legal relations between the principal and third parties, and even there (perhaps) to "slanders uttered to persuade the third party to make an agreement with the principal". [Perhaps a bit like saying Donoghue v Stevenson only applies to snails in Scottish soft drinks ...] I would have thought one could have extended the CML principle to cover other acts carried out in the course of contractual negotiations. (I think Donut King Australia v Barber [1999] SASC 241 might be an example, where DK were held liable for damage caused by careless statements made in some sense on its behalf by a company negotiating a "sub-franchise" with the plaintiffs.) Kirby J in dissent argues that CML is not so confined, and that there should be vicarious liability for the actions of a "representative agent" who effectively "stands in place of" the principal and "assumes to act in the principal's right" - see [100] for the most careful expression of the principle. Here Boylan had allowed C to be regarded (in their words) as "our mechanic", had been given authority to take payment. By his position representing Boylan he had been given permission to enter the premises and work on the fridge - [96]. Despite my natural tendency to support Kirby J I have to concede that the majority seem to have the stronger argument here. Mr C wore no uniform, drove his own truck, did not really "pretend" to be part of Boylan's organisation. (Kirby J specifically holds that a reconsideration of the "organisation" test for employment was not justified and must "await another day" - [61] point (3).) I think the more natural reading of CML lies somewhere between the extremes of the majority and Kirby J - that there can be liability for the acts of "true" agents (persons with authority to enter into contracts on behalf of a principal - not Mr C's position here); but that this liability should extend beyond simply liability for defamation, into liability for other wrongs committed in the course of concluding a contract. Members of the list will no doubt be interested to see that the majority (unusually, not Kirby J) cite Jason's article in the Alberta Law Review (see footnotes 9 and 10 which as I read them betray quite a bit of judicial interest in the theory Jason propounds, though not necessary for this decision). Other members feature at fn 100 and 128! (Apologies if I have missed anyone else!)
Regards
Neil
Foster
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