CENTRELEASE EQUIPMENT FINANCE PTY LTD v BULLOCK and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MASON P, POWELL and BEAZLEY JJA 29 April 1997, 29 April 1997 [1997] NSWCA 63 Negligence — Vicarious liability — Employee or independent contractor — Supervision — Control — Licensed commercial agent — Instructed to repossess leased equipment — Whether lessor of equipment liable for alleged negligence of commercial agent. Powell JA The first two grounds which were taken in the Notice of Appeal filed on behalf of the Appellant ("Centrelease") - of which company a Mr Miller was, at all relevant times, the Collection Manager - in respect of a judgment delivered by Craigie DCJ on 29 March 1995 were as follows: "(1) His Honour erred in law in finding that the relationship between the Appellant and the Third Respondent was such that the Appellant could be liable vicariously for the acts of the Third Respondent; and (2) Having found that the Appellant could be liable vicariously for the acts of the Third Respondent, His Honour erred in finding such liability without first finding facts such as would make the Third Respondent primarily liable." In the event, it appears to me, for the reasons which I will shortly record, that the appeal falls to be determined solely on the first of those two grounds of appeal. The proceedings before his Honour were proceedings which were commenced by the filing of an Ordinary Statement of Claim, in which Statement of Claim the First Respondent, ("Mr Bullock'), sought to recover from Centrelease damages for what was alleged to be negligence on the part of Centrelease "by its own servants or agents", the particulars of which negligence which were assigned in the Statement of Claim, if I may with respect say so, being singularly unilluminating. The facts which gave rise to the proceedings at first instance commence with the entry by a company known as Lachlan Valley Cordials Pty Ltd ("Cordials") - in which company Mr Bullock appears to have been the major shareholder, and of which company Mr Bullock appears to have been the principal director - of what is described as an Equipment Rental Plan ("the Agreement") (AB 181) relating to the hire by the Centrelease to Cordials of a "Hitachi Hifax 15" facsimile machine ("the machine"), that Agreement being for a term of some forty-eight months from 8 December 1987 unless earlier terminated. CIS of the Agreement provided that, in the event of a failure on the part of Cordials to pay instalments of rental on, or within fourteen days of, the due date, Centrelease was authorised to enter upon Cordial's premises, or upon any other premises where the machine might be located, and to take possession of the machine, Cordials waiving and releasing Centrelease from any liability for any damage or loss occasioned thereby. 2 UNREPORTED JUDGMENTS By no later than June 1991, Cordials had fallen into arrears in the payment of instalments in rental. On 12 June 1991, following discussions between a member of Centrelease's staff and a member of the staff of Cordials, Centrelease forwarded to Cordials by facsimile a complete statement of payments due and payments made together with a Memorandum (AB 163) which concluded: "Due to the unsatisfactory conduct of this account, we request payment of full arrears within 7 days before we refer to an agent." As no such payment as had been sought had been made by 16 July 1991, on that day a Mr Afoa, a member of Centrelease's staff, spoke on the telephone to a Mr Heterick a member of the staff of the Second Respondent, Gedney Holdings Pty Ltd, which company - the principal shareholder in, and the principal director of, which appears to be a Mr Chilcott - appears to carry on business in the Orange area as a licensed commercial agent and licensed inquiry agent (see Commercial Agents and Private Inquiry Agents Act 1963 ("the Act')) under the style "Associated Investigation Services" ("Associated"), for the purpose of either collecting the arrears of rental or repossessing the machine. Having done so, Mr Afoa, on 16 July 1991, forwarded to Mr Heterick by facsimile transmission a Memorandum (AB 173) which was in the following terms: "As discussed, please find instructions to collect full arrears of $728 plus your costs or repossess this fax machine. Please state our reference number in all communications." a form of Instructions (AB 166), addressed to Associated, which concluded: - "DATE OF LAST CONTACT: 31/5/91. TYPE OF CONTACT: Phone CONTENT OF LAST CONTACT: Tina the accountant, advised she would send cheque for full appears by 6/6/91. Nothing received yet although we fax to her statement of their account. SPECIAL INSTRUCTIONS: COLLECT FULL ARREARS + COSTS OR REPOSSESS GOODS." together with a form of Notice of Intention to Take Equipment into Custody (AB 130,164). It would appear that, at some time following the receipt of those instructions, Mr Heterick, who appears himself to have been a licensed commercial agent or sub-agent, went to Cordials' premises at Forbes, and there saw Cordials' accountant - whose name was seemingly "Tine" - who then telephoned a Mr Mums, a member of Centrelease's staff, who agreed to withhold further action if a cheque for the arrears was forwarded promptly Thereafter, on 26 July 1991, Associated forwarded to Centrelease, for the attention of Mr Afoa, a report (AB 174) - apparently prepared by Mr Heterick - which concluded: "Please notify us immediately if this cheque is not forthcoming and as agreed, we will return and pick up the Unit however, there will be a further fee be (sic) involved should we have to do this and this has been explained to Lachlan Valley Cordials. Our costs in this matter as quoted: $200." The account (AB 174) which accompanied that report appears to have been paid by Centrelease to Associated on 13 August 1991. The promised cheque not having been received by Centrelease, it would seem that Mr Miller then communicated with Associated with instructions, in the circumstances, to return to the premises of Cordials and either secure payment of the outstanding arrears and costs or take possession of the machine. URGENTRELEASE EQUIPMENT FINANCE PTY LTD v BULLOCK and ORS (Powell JA) 3 For reasons which need not be entered upon, it would seem that Associated determined that, rather than carry out that task by its own officers, it would delegate, or sub-contract, the task to a company known as Sanipi Pty Ltd ("Sanipi"), a company the principal in which was the Third Respondent, a Mr Daryl Barlow. Each of Sanipi and Mr Barlow appears to have held a licence under the Act, to carry on business, and to act, as both a commercial agent and a private inquiry agent. On earlier occasions when Associated had delegated, or subcontracted, such tasks to Mr Barlow, or his company, the arrangement between the two organisations had been that Mr Barlow, or his company, would receive 60 per cent of any commissions charged by Associated in respect of the task in question. On such occasions, Mr Barlow, or his company, were required to provide any motor vehicle which was necessary for any such purpose, and no retention by way of income tax or the like was made by Associated in respect of any commissions paid to Mr Barlow, or his company, and Mr Barlow and his company had to make whatever provision was necessary for personal accident insurance, workers compensation insurance, income tax and the like. No different arrangement appears to have been made on this occasion. It would seem that, having received the instructions from Associated, Mr Barlow travelled to Forbes, reaching there on 5 August 1991, and that, after he had reached the town, Mr Barlow "checked in" with the local police - that, as I understand the evidence, being, a practice common in the industry so that the local police were made aware of what might happen on the following day. On the following day, 6 August 1991, Mr Barlow went to the premises of Cordials and spoke to Mr Bullock. When he did so, Mr Bullock made it clear to Mr Barlow that he had no intention whatsoever of paying the outstanding arrears and that he had no intention of allowing Mr Barlow to repossess the facsimile machine. Thereupon - apparently with the permission of Mr Bullock at the time - Mr Barlow telephoned Mr Miller at the premises of the Centrelease and explained to him the impasse that had been reached, whereupon Mr Miller instructed Mr Barlow that if he were unable to obtain payment, he was not to leave the premises without the facsimile machine. There then followed the incident in respect of which the claim for damages which was brought by Mr Bullock occurred. As a result of that incident, so Mr Bullock asserted, he suffered shock, injury to the lumbar area, a lumbar disc lesion and other injuries in the lumbar area. Following that incident, Mr Barlow left Cordial's premises without having received payment of the arrears and not having repossessed the machine. Thereafter, on 8 August 1991, Associated forwarded to Centrelease a formal report (AB 177-8) - apparently prepared by Mr Barlow - as to the events of 6 August 1991 and an account (AB 176) for "(its) fees to have an agent attend" in the sum of $400.00 - those fees appear to have been paid by Centrelease to Associated on 13 August 1991. These proceedings were commenced on 30 July 1992 by the filing of a Statement of Claim to which I have earlier referred. Upon receipt of the Statement of Claim, Centrelease then raised a Third Party Claim joining each of Associated and Mr Barlow seeking to recover against them damages, or an indemnity, or contribution, pursuant to the provisions of s5(1) of the Law Reform (Miscellaneous Provisions) Act 1926, and costs, the claims made in the Third Party Claim being based in negligence and,- in the case of 4 UNREPORTED JUDGMENTS Associated, in contract upon what was alleged to be an implied term that Associated would exercise due care and skill when taking possession of the machine. Thereafter, Associated, in its turn, raised a Fourth Party Claim based in both negligence and contract, claiming against Mr Barlow an indemnity against, or contribution to, any verdict which might be found against it. When the proceedings came on for hearing before Craigie DCJ, evidence was given as to the various matters which I have recorded shortly above and, at the conclusion of the evidence and some of the submissions at Forbes, his Honour then adjourned the matter to Sydney during the following week for the completion of argument, and, as it would seem, for judgment. In his Judgment his Honour, basing himself, as I understand it, on the instructions given by Mr Miller on the telephone on 6 August 1991 and on his understanding of the authorities - in particular referring to Albrighton v Royal Prince Alfred Hospital! held that, in the circumstances, Mr Miller was then exercising control over Mr Barlow on behalf of Centrelease and that, that being so, Centrelease was to be held vicariously liable for the alleged negligent acts of, Mr Barlow. Regrettably, however, as is pointed out in the Notice of Appeal, his Honour did not make any findings of fact which would indicate in what manner, or respect, Mr Barlow was found to have been negligent, or in what manner, or respect, such negligence as Mr Barlow may have been guilty of contributed to the injuries of which Mr Bullock complained. On the hearing of the appeal Mr P J McGrath, who appears for Mr Bullock, has sought to maintain his Honour's judgment upon the ground assigned by him. The principles to be applied when questions such as those raised by the first ground of appeal fall for consideration are, I believe, sufficiently well known and need not be examined in any great detail. The most recent decision of the High Court in dealing with the question is that in Stevens v Brodribb Sawmilling Co. Pty Ltd?, while recent decisions of this Court on similar questions may be found in the judgments of this Court in Ellis v Wallsend District Hospital3, Articulate Restorations and Developments Pty Ltd v Crawford4, Boral Roof Tiles Ltd v O'Brien5, and Vabu Pty Ltd v The Commissioner of Taxation®. It seems clear enough that the simple test of "control" applied in previous years (see, for example, Zuijs Wirth Bros. Pty Ltd7) is no longer the test to be applied in such cases as this, and that, although control, and the capacity to exercise it, remains a matter of considerable importance, one is required to look at the totality of the facts and circumstances involved in the particular case. Thus, in Vabu Pty Ltd v The Commissioner of Taxation', the then appellant, which carried on business under the name of "Crisis Couriers", retained a number of couriers, some of whom used pedal bicycles, some of whom used motor cycles and the rest of whom used a variety of motorised vehicles, to undertake the contracts of carriage which the then appellant entered into with its various clients. [1980] 2 NSWLR 542 (1986) 160 CLR 16 (1989) 17 NSWLR 553 6 December 1994, unreported 2 December 1994, unreported (1996) 96 ATC 4898. (1955) 93 CLR 561 supra SNAMRYND URGENTRELEASE EQUIPMENT FINANCE PTY LTD v BULLOCK and ORS (Powell JA) 5 In that case, the Court placed considerable emphasis upon such matters as the fact that, although there was quite a significant degree of control retained by the then appellant, nonetheless, the fact that the then appellant treated its couriers as contractors, that the contractors were left to provide for themselves in matters which, if the relationship of employee and employer had existed between them, would normally be provided for by the then appellant as employer - they being such matters as the retention of income tax, the provision of workers compensation insurance and the like - coupled with the fact that the couriers were paid a known rate of commission and that they used vehicles which they were themselves required to provide, led to the conclusion that the couriers were not to be regarded as servants of the then appellant. It will, I think, be apparent from the facts which I have recorded shortly above that, in the present case, there are many of the features to which the Court referred in Vabu Pty Ltd, the most important of which were that Associated and Mr Barlow, or his company, each carried on business on its, or his, or their, own behalf and each was required to provide for itself, himself and themselves the various forms of service or protection which, if it, he, or they had been Centrelease's servant or servants, Centrelease would have been required to provide for it, him or them. I therefore conclude that, in determining, as he did, that Mr Barlow was a servant of Centrelease, his Honour fell into error. The question which then arises is what one should do with the costs of the appeal and of proceedings below. Each of Associated and Mr Barlow has been joined as a respondent to the appeal, for Craigie DCJ entered a verdict in favour of them against Centrelease and ordered Associated to pay the costs of each of the trial below. Tf the result of this appeal were to be that, although this Court held Centrelease vicariously liable for the actions of Mr Barlow, the question of whether or not there had been negligence on the part of Mr Barlow ought to be the subject of re-trial, then it would be necessary, in my view, that any verdicts and orders for costs in favour of Associated and Barlow be set aside so that the questions which remained outstanding could be dealt with in any new trial. In the event, that will not be necessary, but the question of costs both at first instant and of the appeal still needs to be dealt with. It seems to me that in the present case, Centrelease having been the only defendant against whom proceedings were brought in the first instance, and there being some doubt as to the circumstances which involved the relationship between Associated and Mr Barlow and his company, and the events surrounding the incident in the offices of Cordials, it was reasonable for Centrelease to seek to raise against each of Associated and Mr Barlow the Third Party Claim which it did. This being so, it seems to me that, if, as I propose, the appeal be upheld and the verdict in favour of Mr Bullock be set aside, Centrelease should have its costs, both of the appeal and the proceedings at first instance, such costs in each case to include the costs payable by Centrelease to each of Associated and Mr Barlow (see, for example, Bullock v The London General Omnibus Company?. The orders which I would propose are as follows: 1 ORDER that, insofar as it relates to the verdict entered by Craigie DCJ in favour of the First Respondent against the Appellant, the appeal be upheld. 9. [1907] 1 KB 264 6 UNREPORTED JUDGMENTS 2 ORDER that the verdict entered by Craigie DCJ in favour of the First Respondent be set aside and that, in lieu thereof, there be entered a verdict in favour of the Appellant against the First Respondent. 3 ORDER that insofar as it relates the verdicts entered by Craigie DCJ in favour of the Second and Third Respondents, the appeal be dismissed. 4 ORDER that the First Respondent pay the costs of the Appellant of the trial at first instance and of the appeal, such costs, in each case, to include the costs ordered by Craigie DCJ to be paid by the Appellant to the Second and Third Respondents and the costs to be ordered by this Court to be paid by the Appellant to the Second and Third Respondents. 5 ORDER that the Appellant pay the costs of the Second and Third Respondents of the appeal. 6. ORDER that the First Respondent, if qualified, have a certificate pursuant to the provisions of the Suitors Fund Act 1951. Mason P IJ agree. Beazley JA I agree. MASON P: The orders of the Court will be as proposed by Powell JA. 1. ORDER that, insofar as it relates to the verdict entered by Craigie DCJ in favour of the First Respondent against the Appellant, the appeal be upheld. 2. ORDER that the verdict entered by Craigie DCJ in favour of the First Respondent be set aside and that, in lieu thereof, there be entered a verdict in favour of the Appellant against the First Respondent. 3. ORDER that insofar as it relates the verdicts entered by Craigie DCJ in favour of the Second and Third Respondents, the appeal be dismissed. 4. ORDER that the First Respondent pay the costs of the Appellant of the trial at first instance and of the appeal, such costs, in each case, to include the costs ordered by Craigie DCJ to be paid by the Appellant to the Second and Third Respondents and the costs to be ordered by this Court to be paid by the Appellant to the Second and Third Respondents. 5. ORDER that the Appellant pay the costs of the Second and Third Respondents of the appeal. 6. ORDER that the First Respondent, if qualified, have a certificate pursuant to the provisions of the Suitors Fund Act 1951. Counsel for the Appellant: D P F Officer QC and P M Morris Solicitors for the Appellant: Moray & Agnew Counsel for Respondent 1: P J McGrath Solicitors for Respondent 1: Palmers (Forbes) Counsel for Respondent 2: W J Walsh Solicitors for Respondent 2: Campbell Paton & Taylor (Orange) Counsel for Respondent 3: In person Solicitors for Respondent 3: In person