GOVERNMENT INSURANCE OFFICE v MARTINELLI SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, CLARKE and POWELL JJA 6 April 1995 [1995] NSWCA 181 Evidence — Agency — Whether evidence sufficient to establish Negligence — Vicarious liability — Whether evidence sufficient to establish Powell JA On 28 July 1986, the First Respondent, Mr Martinelli, was injured when preparing to unload a truck on a property at Glen Davis. As a result of the injuries which he sustained, Mr Martinelli was disabled from work for a time and suffered continuing disabilities which, so he claimed, severely affected his capacity for work. At some time which is not revealed by the material in the Appeal Book, Mr Martinelli seems to have commenced against his employer, the Second Respondent, Reid Excavations Pty Ltd ("Excavations") proceedings in the Workers Compensation Commission, or the Compensation Court, as a result of which proceedings he was later to receive payments totalling some $ 15,000, or thereabouts, by way of compensation pursuant to the provisions of the Workers Compensation Act 1926. At some time in 1987, which is not revealed by the material in the Appeal Book, but which may have been in April, Mr Martinelli sued Excavations in these proceedings for damages for the negligence on its part which he claimed had been the cause of his injury. In his particulars of negligence, Mr Martinelli asserted a variety of actions on the part of Excavations associated with the loading of the truck and its alleged failure to provide to him proper instruction as to the course to be followed when the truck was to be unloaded. It would appear that these proceedings may have been listed for hearing, in the first instance, in May 1991, in the District Court at Parramatta. It would seem that, at about that time, or, perhaps a little earlier, it was ascertained that the truck which Mr Martinelli had been about to unload was owned, not by Excavations, but by another company A and K Reid Rockbreakers Pty Ltd ("Rockbreakers"). It was no doubt as a result of that information being ascertained that, at sometime thereafter, the hearing date was vacated and Mr Martinelli caused to be filed an Amended Statement of Claim in which he joined the Appellant, the former third party insurer of the truck, as an additional party- Defendant. In the Amended Statement of Claim, as originally pleaded, the cause of action pleaded against the Appellant was in the following terms: "5. Further, or in the alternative, the plaintiff says that his injuries arose out of the use of the table top truck, a motor vehicle' for the purpose of the Motor Vehicles (Third Party) Act, 1941, which vehicle was registered number NUG 333 and at all material times insured by the second defendant. 6. The second defendant is liable pursuant to s14(1) of the said Motor Vehicles (Third Party Insurance) Act, 1941. 7. The plaintiffs injuries were occasioned by reason of the negligence of the second defendant, particulars whereof are as follows. 2 UNREPORTED JUDGMENTS The proceedings ultimately came on for hearing before McLachlan DCJ in the District Court at Parramatta on 11 November 1991, at which time Mr HJ Halligan of counsel appeared for Mr Martinelli, Mr Hughes of counsel appeared for Excavations and Ms Hoeben of counsel appeared for the Appellant. At the commencement of the hearing, Ms Hoeben raised two preliminary points, of which, for present purposes, the only relevant one is that, as pleaded, the Amended Statement of Claim did not disclose a cause of action against the Appellant, the basis of her submission being that, although, in the Amended Statement of Claim, it was alleged that Mr Martinelli's injury arose out of the use of the truck, there were not alleged any facts which, even if established, would result in negligence on the part of Rockbreakers, as owner of the truck - and thus, in liability on the part of the Appellant as Rockbreakers' insurer - for the injuries sustained by Mr Martinelli. After hearing argument on the preliminary point, his Honour granted to Mr Martinelli leave to amend his Amended Statement of Claim by adding at the end of para7 the words "by its insured or agent". The only oral evidence which was tendered at the hearing was that of Mr Martinelli, a Mr Lawson who had been his "offsider" at the time, and Mr Martinelli's wife. The only evidence tendered on behalf of the Defendants, as far as I can ascertain, was a series of letters written on behalf of the Appellant to Mr Martinelli's solicitors seeking further and better particulars of the cause of action sued upon as against the Appellant and some handwritten particulars which were provided by Mr Halligan during the course of the trial to Ms Hoeben. Despite the fact that the liability of the Appellant was clearly very much in issue, the evidence going to that issue which was tendered at the hearing was, to say the least, very sparse - it is in that fact which gives rise to the difficulties which face Excavations on this Appeal. Put shortly, the evidence which was tendered at the hearing, In my view, established only that Mr Martinelli commenced working for Excavations on the day of the accident; that he had been employed, for the purpose, by a Mr Reid whose position in that company was not further explored by the evidence; that, either, on the day before the accident, or, on the morning of the accident, the truck was loaded with timber, loading being carried out either by Mr Reid alone or by Mr Reid, assisted by one or other of the men who worked in the yard where the truck was loaded; that Mr Martinelli was instructed by Mr Reid to drive the loaded truck to the property at Glen Davis, to which I have earlier referred; that Mr Reid also instructed Mr Martinelli to check the load on the way as there was a possibility that it might move in transit; and that the accident occurred because of the negligent way in which the timber had been loaded on the truck and that, when the chains which restrained the load were removed, on arrival at Glen Davis. the unstable load fell and thus injured Mr Martinelli. Such little "evidence" - if such it can be described - as is available to Excavations to seek to support the verdict which his Honour was later to find against the Appellant is to be found in the evidence of Mr Lawson. The "evidence" upon which Excavations seeks to rely to support his Honour's verdict was "evidence" given by Mr Lawson - who seems to have been employed by Excavations for about seven years - to the effect that Excavations was, in some way, associated with Rockbreakers, the latter company, together with some other companies which were unnamed, being said to be a subsidiary of Excavations; URJ GOVERNMENT INSURANCE OFFICE v MARTINELLI (Powell JA) 3 that the property at Glen Davis to which the timber was taken was "owned by A and K Reid"; and, that the property was Excavations' "base" - beyond that. as I read it, the evidence did not go. I would have thought that most of that "evidence" was objectionable and inadmissible, either, because it was "evidence" relating to matters of which Mr Lawson would have had no personal knowledge, or, because it was "evidence" relating to matters involving at least mixed questions of fact and law. But, even if that "evidence" is to be regarded as being "evidence" available to Excavations, it seems to me that it is of not the slightest weight whatsoever, the fundamental problem being that the "evidence" such, as it is, even if accepted would not establish that, in loading the truck, Mr Reid was, in any way, acting as the agent of Rockbreakers. Be that as it may, when his Honour came to deal with the question he, after reciting the nature of the proceedings and such evidence as there was, continued: "No evidence on liability was given by either defendant. The first defendant is Reid Excavations Pty Ltd. The company is sued as the employer and was allegedly negligent as set out in the particulars. The second defendant is the Government Insurance Office as insurer of the subsidiary company, A and K Reid Rockbreakers Pty Ltd. The plaintiff's counsel says that both defendants are liable in damages to the plaintiff. He says that there is perceptibly no difference between the two companies and the plaintiff's employment had been re-allocated or seconded to the subsidiary company. He adopts the argument of the first defendant's counsel in that the loading was done by servants or agents of the registered owner, A and K Reid Rock Breakers Pty Ltd, that is, by Alan Reid who was for all relevant purposes, the boss and principal of the first defendant. Alan Reid had and exercised dominion over the truck and there was no evidence to the contrary. Alan Reid was negligent in the loading of the truck. Alternatively, the relationship between the two companies is merely a veil which ought not provide a shield to this claim. There was no argument from either defendant that the accident arose out of the use of the motor vehicle. The second defendant says that the employer is solely liable that there was no evidence to support the allegation that Alan Reid was a servant or agent of the registered owner, or that he provided a truck to the first defendant for transport purposes and there was no evidence that the registered owner failed to load the vehicle in a safe manner. For the third party policy to come into operation, there has to be some liability in the owner of the vehicle. I find that Mr Reid was negligent in the loading of the truck and/or supervision of the loading and or the giving of proper instructions to the plaintiff. It could also be said that the truck was not suitable for that purPose. I find that Mr Reid exercised dominion over the truck. In the absence of evidence to the contrary, I find that the second defendant by its servants or agents was also negligent. I find that the first and second defendant are jointly and severally liable. The accident was reasonably foreseeable to both." As result of those findings, his Honour then proceeded to find that each of Excavations and the Appellant was liable to Mr Martinelli in damages in a total sum of $64,080.35, Excavations to have credit for the sum of $15,000 odd Workers Compensation payments to which I have earlier referred. Against that verdict, and judgment, the Appellant has appealed. Although a number of grounds of appeal were taken, Mr H J Mater, who has appeared today for the Appellant has sought to rely on only three, they being in the following terms: 4 UNREPORTED JUDGMENTS "5. His Honour erred in holding that the Appellant's insured by its servants and agents was negligent. 6. His Honour erred that in holding that any person who was negligent was a servant or agent of the Appellant' insured and 7. His Honour erred in failing to provide reasons for the finding that persons who were negligent were servants or agents of the Appellant's insured." Although Mr Martinelli was joined as a party-Respondent to the Appeal, and has been represented today by Mr Halligan, he sought to submit to such Order as the Court might seek fit to make, other than as to costs, and sought, in the event that the Appeal be allowed, that he have the benefit of a "Bullock Order" (Bullock v The London General Omnibus Co!). As each of Mr Mater and Mr JS Burn, who appeared today for Excavations, expressed the view that, in the event that the Appeal were to succeed, such an Order ought properly be made in Mr Martinelli's favour, Mr Halligan was then released from further attendance. Mr Burn, if I may say so, has said everything that could be said on behalf of the Excavations in its endeavour to maintain the verdict found, and judgment entered, by McLachlan DCJ, but if I may, with respect, say so, he has been left with the task of attempting to make bricks without straw. There was, in my view, simply no evidence whatsoever upon which his Honour could properly find that, in loading the truck on the day in question, Mr Reid was to be regarded as the agent of Rockbreakers. ORDER Upon this simple ground it seems to me that the appropriate Orders to be made are: 1. Appeal upheld. 2. Set aside the judgment entered in the District Court in favour of Mr Martinelli against Government Insurance Office of New South Wales. 3. Set aside the order for costs made in favour of Mr Martinelli against the Appellant in the District Court. 4. Mr Martinelli to pay the costs of the Appellant of the trial, but that the costs payable by him in respect thereof be part of the costs recoverable by him against Reid Excavations Pty Ltd. 5. Order that Reid Excavations Pty Ltd to pay the costs of the Appellant and of Mr Martinelli of the appeal. Priestley JA I agree. I would only make a reservation for myself that in regard to the evidence of Mr Lawson concerning the matters already appropriately described by Powell JA as mixed question of fact and law I would not in the circumstances in which the case was conducted below wish to base my acquiescence in the upholding of the appeal on any decided view about the admissibility of what Mr Lawson said. This is because it may have been that there was a rough kind of convention adopted by counsel at the hearing which would have had the effect of making it difficult afterwards for either side to complain about what happened in regard to that evidence being permitted on the record in the way that it was. However, even with that reservation and even assuming in the second respondent's favour, total admissibility of the evidence, there still did not emerge at the hearing anything which in my opinion could have been properly used as a 1. [19071] 1 KB 264 URJ GOVERNMENT INSURANCE OFFICE v MARTINELLI (Clarke JA) 5 basis for finding that Mr Reid was acting at any relevant time as the agent for the appellant's insured, the second defendant at the trial. Subject only to that reservation I agree with all that has been said by Powell JA. Clarke JA I also agree with Powell JA and I have no observations to make about Priestley JA's reservation. Priestley JA: The Orders of the Court will be as proposed by Powell JA but they will not become effective until 2.20 pm today. [On resumption at 2.15pm] Priestley JA: In addition to what was said this morning in regard to the Martinelli appeal, counsel for the Appellant has, this afternoon, drawn to our attention his instructions received since the matter was dealt with this morning, to the effect that on 17 February 1992 the GIO paid to Martinelli the amount of $32.040.18 in satisfaction of the District Court judgment. At first, the Appellant's counsel requested, both, that the Court note what he has now been instructed concerning that amount, and, also, order Reid Excavations Pty Ltd to repay that amount with interest. Mr Burn for Reid Excavations Pty Ltd said he could say that his client would repay $32,040.18 but did not feel he was in a position to say anything about interest. The Court feels that the simplest way of dealing with the matter is to record what I have already said, and reserve liberty to the Appellant to apply to the Court if some further order is subsequently to be asked for, at which stage, if it is reached, the Court will consider what its powers were and what it would do in light of the evidence before the court, but it seems unlikely that this will be necessary in view of Mr Burn's statement to the court that the matter should be capable of sensible resolution between the parties without the court being further troubled. Counsel for the appellant: HJ Mater Solicitors for the appellant: Audrey Balla (Lindfield) Counsel for the (Martinelli): HJ Halligan Solicitors for (Martinelli): BJ Bunyan and Associates (Liverpool) Counsel for (Reid Excavations Pty Ltd): JS Burn Solicitors for (Reid Excavations Pty Ltd): AO Ellison and Co