Local Court of New South Wales CITATION: Wu v Abov Service Co Pty Ltd [2009] NSWLC 27 JURISDICTION: Civil PARTIES: Plaintiff: Ying Wu First Defendant: Abov Service Co Pty Ltd FILE NUMBER: PLACE OF HEARING: Downing Centre Local Court DATE OF DECISION: 11/11/2009 MAGISTRATE: Assessor Olischlager CATCHWORDS: Motor Accident, agency, vicarious liability, employee/independent contractor LEGISLATION CITED: Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46CLR 41 Commissioner of Taxation of the Commonwealth of Australia v De Luxe Red & Yellow Cabs Co-operative (Trading) Society Ltd & Ords [1998] 361 FCA Hollis v Vabu Pty Ltd (t/as Crisis Couriers) (2001) 181 ALR 263 Kondis v State Transport Authority (1984) 154 CLR 652 CASES CITED: Launchbury v Morgans [1972] UKHL5 Scott v Davis (2000) HCA 52 Soblusky v Egan [1960] HCA9 Steven v Brodribb Sawmilling Co Pty Ltd (1986) 160CLR 16 Yellow Cabs of Australia v Colgan (1930) AR (NSW) 137 TEXTS CITED: REPRESENTATION: Ms Gorney with leave for the plaintiff Mr Lawless for the first defendant ORDERS: Verdict for the plaintiff against the first defendant in the sum of $1,642.41 together with costs and interest. 1 This is a claim for motor vehicle property damage arising from a collision on 25 August 2005 near the intersection of Market and Elizabeth Streets Sydney. The collision took place between the plaintiff's taxi and the defendant's taxi. The proceedings have been brought against both the first defendant, Abov Services Co Pty Ltd, as the owner of the taxi and the second defendant, Sheamus Joyce, as the driver of the taxi. The proceedings have been defended only by the first defendant. 2 The taxi driver for the plaintiff, Yi Jian Pu, states that the collision occurred as he turned left into Market Street from the left lane and the driver of the defendant's taxi Mr Sheamus Joyce turned left from the lane second from the left, which was contrary to the road directional signs, and that after turning left in moved into the lane occupied by Yi Jian Pu and collided with the plaintiff's vehicle. 3 Although the first defendant, Abov Service Co Pty Ltd, the owner of the taxi vehicle, does not admit fault in the collision, no evidence has been produced by the second defendant Mr Joyce as to how the collision occurred. The court is satisfied that on the evidence before it, the collision was due to the negligence of Mr Joyce in failing to change lanes with safety. 4 The primary issue in dispute is whether the first defendant, Abov Service Co Pty Ltd can be held liable for the negligent conduct of Mr Joyce. 5 The submissions on behalf of the plaintiff are that a relationship of agency exists between Abov Service Co Pty Ltd and Mr Joyce. The plaintiff states that Mr Joyce was a taxi driver and was using the defendant's vehicle solely for a commercial purpose that provided joint benefits to both Mr Joyce and the defendant. 6 The submissions by the defendant are that the relationship is one of bailment for reward and that an action will not generally succeed against a bailor for the negligent use of the chattel by the bailee because the bailor does not have effective control over the manner in which his bailee employes the chattel. There are exceptions to this general rule where the bailee is also the agent of the bailor, or where the bailor directs the use of the chattel in a manner inconsistent with taking reasonable care or where the bailor remains in effective possession of the chattel and its operator. The plaintiff submits that these exceptions do not apply in the given circumstances of the case. 7 The nature of the relationship between Abov Service Co Pty Ltd and Mr Joyce is outlined in a statement provided by Mr Alex Georgiadis, a director of Abov Service Co Pty Ltd. 8 Abov Service Co Pty Ltd owns and operates a fleet of taxis. The business is operated in accordance with the provisions of the Taxi Industry (Contract Drivers) Contract Determination 1984 and Mr Joyce is contracted subject to the terms and conditions set out in that Determination. That Determination provides that in return for a set fee, known as a "pay in" Abov Service Co Pty Ltd agree to give a driver the use of a taxi cab for a set shift period. The amount of the pay-in varies according to whether the shift is a day or night shift or a weekday or weekend shift. Pay-ins are often made after the shift and deducted from the proceeds of fares collected. 9 Abov Service Co Pty Ltd does not pay taxes on the money earned by taxi drivers and issues taxi invoices to the drivers of its vehicles. 10 The Industry (Contract Drivers) Contract Determination 1984 contains standard conditions in relation to taxi operators and taxi drivers. The contract contains a number of restrictions or controls over drivers including: (a) prohibiting the vehicle to be driven by another person without the operators consent, prohibiting the use of the vehicle for any purpose other than taxi hire, (b) prohibiting the use of the vehicle after taking prohibited drugs or liquor (c) prohibiting the vehicle to be taken outside of the area in which it is licensed, (d) requiring the taxi driver to allow inspection of the taxi cab and log books and (e) requiring the use of the meter and completion of a daily workcard 11 Driver account records indicate that Mr Joyce was engaged by Abov Service Co Pty Ltd during the period of 25 July 2005 to 31 December 2005. During that period he undertook 97 shifts. 12 The defendant drew the Court's attention to the decision of the Federal Court in Commissioner of Taxation of the Commonwealth of Australia v De Luxe Red & Yellow Cabs Co-operative (Trading) Society Ltd & Ords [1998] 361 FCA. In that case the Federal Court held that the relationship between operators and drivers that was based on the Taxi Industry (Contract Drivers) Determination 1984 was a relationship of bailor and bailee and was not one of employment. The Federal Court had regard to a decision of the New South Wales Industrial Commission in Yellow Cabs of Australia v Colgan (1930) AR (NSW) 137 where it was held that a driver could not sue for wages under an award as an employee. 13 The general rule is that an action against the bailor for the misuse of the goods by the bailee will not succeed. The bailee has independent possession and the bailor has no effective control over the manner in which the bailee uses the goods. This Court would accept the proposition that if the relationship were only that of bailment then no liability would be attributed to the first defendant in these proceedings. 14 It is worthwhile noting that the decision of the Federal Court was limited to the question of whether, for taxation purposes, there was an employment relationship between a taxi operator and driver. The Federal Court in the De Luxe Red & Yellow Cabs refers to the relationship to be properly described as also being a joint venture when it concludes; "when the present circumstances are viewed in that setting or context, a conclusion that the drivers are bailees in a joint adventure is appropriate, notwithstanding the degree of control reserved to the bailor". 15 The Federal Court also adopted the views expressed by of Street and Canto JJ in Yellow Cabs of Australia Limited v Colgan (1930)AR (NSW) 137 at 139 that the relationship is one of an independent contractor: "Each driver was substantially in the position of an independent contractor who undertakes to produce a given result, but so that in the actual execution of the work he is not under the order or control of the person for whom he does it and may use his own discretion in things not specified beforehand." 16 While the parties in these proceedings have not contended that the relationship between Abov Services and its drivers is one of employer and employee, presumably on the basis of the Federal Court decision, it is worthwhile noting that in the decision of Hollis v Vabu Pty Ltd (t/as Crisis Couriers) (2001) 181 ALR 263 the High Court held that it was open for the Court to consider whether the relationship between a transportation company and a courier was one of employer and employee for the purpose of establishing vicarious liability, and indeed the majority found that it was so, notwithstanding the finding of the Court of Appeal in earlier superannuation claim proceedings of Vabu v Commissioner of Taxation that the relationship was not one of employee and employer. 17 Since the relationship has been described as principal and contractor in the Federal Court decision it is appropriate that the court consider whether such a relationship of creates vicarious liability. 18 The general rule is that a principal is not liable for the negligent conduct of his independent contractor. There are two exceptions: where the independent contractor is under the control and direction of the principal in the actual execution of the work and where the principal engages the independent contractor to carry out a non delegable duty which the contractor fails to do. 19 In relation to the first exception the requisite level of control that might give rise to vicarious liability for the principal for the conduct of the independent contractor has been considered in a number of cases. In Steven v Brodribb Sawmilling Co Pty Ltd (1986) 160CLR 16 a sawmiller had general supervision over the operation of sniggers and truckers, however, it did not have control over the method over which sniggers and truckers carried out their work. The sniggers and truckers supplied their own equipment, set their own hours and were paid according to the volume of timber delivered. The High Court held that the sawmiller was not liable for the negligent conduct of a snigger in that case. 20 The critical factor in establishing vicarious liability on a principal for the conduct of an independent contractor is the existence of actual and direct control of the manner in which work is carried out rather than a general supervisory control. Applying this principle to the case of a taxi operator and driver it is clear that while there are restrictions upon where the taxi may be used, the operator has little direct control of the manner in which the taxi is used during the shift. 21 The second exception is based on the existence of a non-delegable duty. In Kondis v State Transport Authority (1984) 154 CLR 652 Mason J identified the circumstances in which the law imposed a non delegable duty of care. The rationale for the non-delegable duty is explained by Mason J as being based on the existence of a "special responsibility" to undertake the care of another person. No such "special relationship" exists between taxi operators who engage drivers and other road users. 22 The plaintiff seeks to establish a relationship of principal and agent between Abov Service Co Pty Ltd and Mr Joyce. 23 In Soblusky v Egan [1960] HCA 9 the High Court held that a bailee under a hire purchase agreement was vicariously liable for the negligence of the driver. The Court considered it to be a relevant factor that the bailee was present in the vehicle and had authority to assert control over the vehicle and it was immaterial that the bailee had fallen asleep. The Court considered that the delegation of management of the vehicle to another person as his agent did not detract from the principal's authority to assert control. 24 The more recent authority on principal and agency is the High Court decision of Scott v Davis (2000) HCA 52. The facts of that case were that Mr Davis was the owner and occupier of a property with a runway and light aeroplane. Mr Davis arranged for a pilot to take Travis Scott for a flight in an aeroplane. The plane crashed and Travis Scott was seriously injured. An action was brought against Mr and Mrs Davis on the basis that they were vicariously liable for the negligence of the pilot. The High Court held that Davis was not vicariously liable for the negligence of the pilot who was not his employee and was not subject to his direct control. 25 It is relevant to note that Scott v Davis involved a non commercial arrangement. Differing opinions were expressed by their Honours on the principles that relate to vicarious liability arising from negligent use of modes of transport. 26 Gleeson CJ noted the historical distinction between different forms of transport and rejected the contention raised in Launchbury v Morgans [1972] UKHL5 that vicarious liability could be established on the basis that the aeroplane was being used at Mr Davis' request and for his purpose although there was no direct control. Gleeson CJ states at 19: "In Launchbury v Morgans Lord Wilberforce spoke of the use of a chattel, such as driving of a car, "under delegation of a task or duty". There may be cases in which the driver of a motor vehicle is to be regarded as the representative of an owner or bailee who has no immediate control over the vehicle, in circumstances which make the owner or bailee liable on the same principle as was applied to an independent contractor in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd". 27 His Honour indicated that in the factual circumstances of Scott v Davis the principle of vicarious liability did not apply given that the flight took place in the context of a social gathering and the absence of any commercial arrangement between Mr Davis and the pilot. 28 Gummow J at 250 referred to the decision of the Court of Appeal of South Australia in the proceedings where Doyle CJ and Nyland J observed that modern decisions such as those outlined Soblusky appear to be confined to the use of motor vehicles where: "the underlying principle appears to be that if an owner requests another to use the owner's chattel, and the other agrees, and the task is one in which the owner has an interest, the owner will be responsible for damage caused by the negligence of the person using the chattel". 29 Gummow J agreed that if such a principle were to be applied generally to chattels it would have the potential of unsettling the law. In Launchbury v Morgans Lord Wilberforce criticised the contention that vicarious liability should depend only upon identification of an "interest or concern" of the owner in the journey being undertaken by the driver as being too vague particularly in the absence of a commercial arrangement. Although the High Court did not overrule the decision in Soblusky, Gummow J, Hayne J and Callinan J limited the operation of the principles in Soblusky to the vicarious liability of the owner of a motor vehicle. 30 Callinan J at paragraph 357 considered the conditions that must be satisfied to establish liability of an owner of a motor car for the acts of a driver was the need for there to be an appointment, engagement or request that is made not merely in a social or domestic context. Secondly there must be the reality of an actual power of control. Furthermore, in a non commercial context, an owner not actually personally using or managing the car is unlikely to satisfy the requirement of having effective control. 31 McHugh J gave a dissenting judgment holding the owner liable on the basis that he had delegated to the pilot a task which the owner had agreed to perform and the pilot was not acting independently from the owner and the pilot was therefore the agent of the owner. 32 McHugh J referred to Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46CLR 41 where the High Court held that a principal may be liable for the tortious act of an agent even though the agent was not an employee. The critical finding in that decision was that the independent contractor represented the Company and was acting within the scope of authority. Although this decision related to an action in defamation McHugh J considered that there was no reason in principle that it should not apply generally to tortious acts. 33 McHugh J expressed the opinion at [34] that the authorities justify a conclusion that: "a principal is also liable for the wrongful acts of an agent where the agent is performing a task which the principal has agreed to perform a duty which the principal is obliged to perform and the principal has delegated that task or duty to the agent, provided that the agent is not an independent contractor. The principal is also liable or the wrongful acts of a person who is acting on the principal's behalf as a representative and not as an independent principal". 34 Although the opinion of McHugh J was not followed by other judges in the circumstances of this case, it appears open at least, that such an approach would be accepted if the circumstances of the case related to a commercial arrangement. 35 The apparent difficulties in discerning the clear boundaries of vicarious liability are due, at least in part, to the changing nature of the labour force. Increasingly, work that was traditionally done by employees is now done by independent contractors. A number of judicial comments note that the common law has struggled to keep pace with these changes. 36 There is little doubt that had Mr Joyce been an employee of Abov Service Co Pty Ltd then Abov Service Co Pty Ltd would have been vicariously liable on a master/servant agency basis. 37 The nature of the relationship between Mr Joyce and Abov Service Co Pty Ltd bears strong similarities to the relationship between courier company and courier considered in Hollis v Vabu Pty Ltd (t/as Crisis Couriers) (2001) 181 ALR 263. Indeed, there are some additional factors present in this case that add weight to the argument that Mr Joyce, if not an employee, was a representative of Abov Service Co Pty Ltd. Mr Joyce was provided a motor vehicle which was owned and maintained by Abov Service Co Pty Ltd. Abov Service Co Pty Ltd was responsible for the running costs of the vehicle. Those factors were not present in the case of Hollis. 38 Mr Joyce could hardly be said to be involved in his own independent enterprise. He did not operate a separate business or own any tools of trade. He could be required to wear a uniform which was provided by Abov Service Co Pty Ltd. He worked 97 shifts for Abov Service Co Pty Ltd over a period of less than six months. The pay-in amounts were determined by Abov Service Co Pty Ltd rather than the taxi driver offering a service as an independent contractor. 39 Abov Services Co Pty Ltd does not have a mere interest or concern in Mr Joyce carrying out his duties. It is the primary function of Abov Service's operations and essential for its continuing business and commercial profit. The Court is of the view that these factors would satisfy the conditions referred to by Cullinan J in Davis v Scott. There is also no doubt that in view of the reasoning of McHugh J that he would readily find that there was an agency relationship on same the basis that he did in Scott v Davis. 40 This Court considers itself constrained by the decision of the Federal Court that arrangements of this type are not an employer/employee relationship and makes no finding on this point. However, the Court is satisfied from the significant level of general control that Abov Services Co Pty Ltd retained in determining the scope of work done by Mr Joyce and the manner in which it was carried out that Mr Joyce represented Abov Service Co Pty Ltd while undertaking these duties and that he was operating within the scope of his agency at the time of the collision. The service of Mr Joyce was retained for the commercial benefit of Abov Services. Accordingly, the Court finds that Abov Service Co Pty Ltd is vicariously liable for the negligent conduct of its agent. 41 The Court will enter a verdict and judgment in favour of the Plaintiff against the first Defendant together with costs and interest. Assessor Stephen Olischlager 11 November 2009 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.