HOLLIS v VABU PTY LTD (T/A CRISIS COURIERS)
Judges: Gleeson CJGaudron J
McHugh J
Gummow J
Kirby J
Hayne J
Callinan J
Court:
Full High Court
MEDIA NEUTRAL CITATION:
[2001] HCA 44
McHugh J
64. The appellant, Gary John Hollis, was seriously injured as a result of the negligence of a courier who was unlawfully riding a bicycle on the footpath when he collided with Mr Hollis. All that is known of the courier is that he was wearing a uniform upon which were the words ``Crisis Couriers'', the trade name of the respondent, Vabu Pty Limited (``Vabu''), a company that runs a document and parcel delivery service. At the time, Vabu employed 25 to 30 bicycle riders, as well as a number of motor vehicle drivers, as couriers. It provided radio equipment to the bicycle couriers and allocated delivery jobs to them by radio. The couriers were required to be available at a certain time every day and were not allowed to refuse the delivery jobs that were allocated to them. Vabu issued uniforms to the couriers and required them to wear the uniforms. It also directed the couriers to conduct their work in accordance with specific instructions concerning dress, appearance, language, delivery procedures and dealings with clients. The couriers had to provide their own motor vehicles or bicycles. They received no salaries or wages but were remunerated in accordance with the deliveries that they made. They were taxed as independent contractors. Vabu deducted a certain amount from the couriers' payments each week to contribute towards the cost of Vabu's insurance.
65. Upon these facts, is Vabu liable for the negligence of the unidentified courier? That is the ultimate issue in this appeal which is brought against an order of the New South Wales Court of Appeal dismissing an appeal from the District Court of that State holding Vabu not liable for the negligence of the courier. In my opinion, Vabu is liable because the courier was an agent of Vabu - but not an independent contractor - and was acting as Vabu's representative in carrying out a contractual obligation of Vabu.
66. The case reveals the difficulties in applying traditional rules of liability for a worker's negligence to new and evolving employment practices. The common law has long held that a master is liable for the torts of his or her servant.
[83]
67. Because the Court of Appeal had held in an earlier decision (``the taxation decision''
[85]
ATC 4523
purpose of superannuation deductions, the issue of employee was not litigated in that Court. Indeed, counsel for Mr Hollis conceded that the courier was not an employee of Vabu. Despite the concession, I agree with Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ that in this Court Mr Hollis is entitled to argue that the courier was an employee for whose negligence the employer was vicariously liable. He is not raising ``a new argument''. [86]68. I also agree with their Honours that the courier was not an independent contractor in the sense of someone who acts as an independent principal, exercising an independent discretion in carrying out a task for his own business interest and who is retained simply to produce a result. The couriers in this case were far removed from the paradigm case of an independent contractor
-
the person who has a business enterprise and deals with any member of the public or a section of it upon terms and conditions that the contractor sets or negotiates. Moreover, I agree that certain aspects of the work relationship between Vabu and the couriers suggest an employer/employee relationship, according to the classical tests.
[88]
69. I am not in favour of extending the classical tests or their application to make the couriers employees of Vabu. To do so would be likely to unsettle many established business arrangements and have far-reaching consequences for industrial relations,
[90]
70. To hold that the couriers were employees would also require overruling the taxation decision of the Court of Appeal
[99]
71. If the couriers were confined to bicycle riders, there would be much force in the contention that, on the classical tests, they were employees. That is because the couriers were subject to extensive control and direction
-
always a strong indication that the worker is an employee.
[101]
72. Rather than attempting to force new types of work arrangements into the so-called employee/independent contractor ``dichotomy'' based on medieval concepts of servitude, it seems a better approach to develop the principles concerning vicarious liability in a
ATC 4524
way that gives effect to modern social conditions. As I pointed out in Burnie Port Authority v General Jones Pty Ltd [104]73. Accordingly, I think that the Court of Appeal was correct in holding that the courier was not an employee having regard to the classical tests for determining whether the agent of an employer is an employee. Nevertheless, in my opinion, the trial judge and the Court of Appeal erred in holding that the company was not liable for the courier's negligence. That is because:
- • Vabu had delegated to the courier a task that Vabu had agreed to perform;
- • The courier was not acting as an independent functionary but was carrying out the task as Vabu's representative;
- • The courier was subject to Vabu's general direction and control; and
- • The courier was acting within the scope of the authority conferred on him by Vabu.
74. In
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co- operative Assurance Co of Australia Ltd
[107]
The accident
75. On 22 December 1994, Mr Hollis, who was also working as a courier but with another firm, picked up a parcel from a building in Harris Street, Ultimo. On leaving the building, he took two steps onto the footpath and was struck by a bicycle courier. The courier was wearing a green jacket with gold writing across the front and back of it, which said ``Crisis Couriers''. The collision knocked Mr Hollis to the ground. He suffered serious injury to his knee. The courier fell off his bicycle and landed near Mr Hollis, but got up, ``dusted himself off, picked up his bike and said `Sorry mate' and left the scene'', ignoring pleas for help from Mr Hollis.
76. Mr Hollis sued Vabu in negligence (and other grounds which have since been abandoned) for the injuries that he suffered as a result of the accident. By his statement of claim and throughout the trial, he contended that the courier was the agent or servant of Vabu and that Vabu was vicariously liable for his negligence. Alternatively, Mr Hollis argued that, in respect of the activities of the couriers, Vabu owed a ``non-delegable'' duty of care to users of public thoroughfares and was liable for any injury resulting from the negligent conduct of the couriers. If this argument were accepted, Vabu would be liable for the negligence of the unidentified courier even if the couriers were independent contractors.
[108]
The findings of the trial judge
77. The trial judge, Wright ADCJ, found that ``the negligence of the bike rider was the cause or continuing cause of the accident... the risk of injury caused by the negligence and illegal
[
[109]
78. Wright ADCJ made the following findings that are relevant to the issue of whether the courier was an independent contractor or employee or merely the agent of Vabu:
- 1. Vabu set the rates of remuneration. There was no scope for negotiation of those rates between Vabu and the bicycle couriers.
- 2. Vabu allocated the work. There was no scope for bidding for individual jobs by the riders.
- 3. Vabu assumed all responsibility as to the direction, training (if any), discipline, job allocation and attire of the couriers.
- 4. Vabu provided the couriers with numerous items of equipment including the only means of communication for the purposes of job allocation and control. The items remained Vabu's property.
ATC 4525
- 5. The riders were required to wear Vabu's livery at all times, partly due to the desire by Vabu to advertise its services.
- 6. Vabu imposed requirements such as insurance and the deductions on the riders and without any opportunity for negotiation.
79. His Honour added that it was clear from the evidence that the drivers were in a ``take it or leave it'' situation and that Vabu wielded a ``significant measure of practical authority'' over the bicycle couriers.
80. Although acknowledging that the evidence supported the inference that the courier was an agent or employee, his Honour said [ at 66,564]:
``There [ was] evidence... sufficient to justify a different conclusion and when that evidence is considered in the light of the conclusions of the Court of Appeal in Vabu [ [110]
] , I do not consider that it is open to me to find that the bicycle rider in question was the employee or agent of [ Vabu].'' Vabu Pty Limited v FC of T ; 96 ATC 4898 . (1996) 33 ATR 537
81. Mr Hollis appealed to the New South Wales Court of Appeal on several grounds. One of them was that ``the Trial Judge erred in failing to find that the negligent rider was the servant or agent of the Respondent''.
The decision of the Court of Appeal
82. By majority the Court of Appeal dismissed the appeal.
[111]
``... [ O]n no basis, in my opinion, on the facts of this case, can there be set up some general duty of care owed by Vabu to other users of public streets derived from the way in which the parcels and documents are carried. Even less can such duty be elevated to one described as a non-delegable duty.''
83. Davies AJA dissented. He found that Vabu, by employing the couriers, owed a duty of care towards pedestrians such as Mr Hollis and had breached that duty.
[117]
Changing social conditions and new work practices
84. The practice of employers contracting out work that, in former times was done by their employees, is nowadays a common practice.
[119]
``In tort law it creates the prospect of a decreasing number of cases in which the injured plaintiff can assume that an employer, in the traditional master-servant sense, will be available to be held liable for the negligence of an employee in the course of employment. As more work is contracted out by employers, the typical employment relationship becomes one of employer- independent contractor rather than employer-employee. This trend requires re- examination of the principles which govern the liability of employers for independent contractors.''
85. If the law of vicarious liability is to remain relevant in the contemporary world, it needs to be developed and applied in a way that will accommodate the changing nature of employment relationships. But any such developments or applications must be done consistently with the principles that have shaped the development of vicarious liability and the rationales of those principles. They should also be done in a way that has the least impact on the settled expectations of employers and those with whom they contract.
Rationales for vicarious liability
86. In Darling Island Stevedoring and Lighterage Co Ltd v Long , Fullagar J said that the common law rule for an employer's liability for his or her employee was ``adopted not by way of an exercise in analytical jurisprudence
ATC 4526
but as a matter of policy, which did not really need to be juristically rationalised, but might perhaps be justified (however illogically) as an extension of the notion of agency as a ground of liability''. [121]``Most important of these is the belief that a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise; that the master is a more promising source of recompense than his servant who is apt to be a man of straw without insurance; and that the rule promotes wide distribution of tort losses, the employer being a most suitable channel for passing them on through liability insurance and higher prices. The principle gains additional support for its admonitory value in accident prevention. In the first place, deterrent pressures are most effectively brought to bear on larger units like employers who are in a strategic position to reduce accidents by efficient organisation and supervision of their staff. Secondly, the fact that employees are, as a rule, not worth suing because they are rarely financially responsible, removes from them the spectre of tort liability as a deterrent of wrongful conduct. By holding the master liable, the law furnishes an incentive to discipline servants guilty of wrongdoing, if necessary by insisting on an indemnity or contribution.''
(footnotes omitted)
87. Not only does the doctrine of vicarious liability have its basis in policy considerations, but common law courts acknowledge that the evolution of the doctrine continues to be guided by policy. When the Supreme Court of Canada was recently presented with the opportunity to consider and restate the principles underlying an employer's vicarious liability for the torts of its workers, McLachlin J, delivering the judgment of the Court, acknowledged that:
[125]
``Increasingly, courts confronted by issues of vicarious liability where no clear precedent exists are turning to policy for guidance, examining the purposes that vicarious liability serves and asking whether imposition of liability in the new case before them would serve those purposes.''
88. Her Honour said that the two fundamental policy concerns that underlie vicarious liability are (1) the provision of a just and practical remedy for harm; and (2) the deterrence of future harm:
[126]
``First and foremost is the concern to provide a just and practical remedy to people who suffer as a consequence of wrongs perpetrated by an employee.... The idea that the person who introduces a risk incurs a duty to those who may be injured lies at the heart of tort law.... This principle of fairness applies to the employment enterprise and hence to the issue of vicarious liability.... This policy interest embraces a number of subsidiary goals. The first is the goal of effective compensation....
However, effective compensation must also be fair, in the sense that it must seem just to place liability for the wrong on the employer. Vicarious liability is arguably fair in this sense. The employer puts in the community an enterprise which carries with it certain risks. When those risks materialize and cause injury to a member of the public despite the employer's reasonable efforts, it is fair that the person or organization that creates the enterprise and hence the risk should bear the loss....
The second major policy consideration underlying vicarious liability is deterrence of future harm. Fixing the employer with responsibility for the employee's wrongful act, even where the employer is not negligent, may have a deterrent effect. Employers are often in a position to reduce accidents and intentional wrongs by efficient organization and supervision. Failure to take such measures may not suffice to establish a case of tortious negligence directly against the employer.... Beyond the narrow band of employer conduct that attracts direct liability in negligence lies a vast area where imaginative and efficient administration and supervision can reduce the risk that the employer has introduced into the community. Holding the employer vicariously liable for the wrongs of its employee may encourage the employer to
ATC 4527
take such steps, and hence, reduce the risk of future harm.''
89. Upon the facts of this case, these policy considerations call for the imposition of liability on Vabu. First, holding Vabu liable obviously provides people in Mr Hollis's position with effective compensation. In this case, the individual courier escaped identification. It is not possible to seek a remedy from him personally. But even if he could be identified, it is likely that he and other couriers would be unable to provide adequate compensation for their victims. Because that is so, the company is likely to be a ``more promising source of recompense'' than the individual couriers.
90. It is also
fair
to make Vabu compensate Mr Hollis for the negligence of its courier in the same way as it is fair to hold an employer liable for the negligence of its employees. This notion of fairness stems from Vabu's control of the couriers and the fact that the couriers were acting for the economic benefit of Vabu. It was Vabu who introduced into the community a business activity that carried with it the risk of injury to users of public thoroughfares. When the accident occurred, the courier was ``on the business'' of Vabu. He was also serving its economic interests in other respects. He was carrying out its core business activity
-
the delivery of documents. He was wearing a Crisis Couriers uniform. The trial judge held that the obligation of couriers to wear the uniform was ``partly due to the desire by
[
Vabu] to advertise its services''. The contract with the couriers also reminded them that their performance and conduct in public and towards clients resulted in ``more business and more income for all''. The contract described sales efforts of the company as being a benefit to the couriers and expected the couriers to expand Vabu's client base when the opportunity arose. Finally, Vabu deducted moneys from the couriers for insurance, and Vabu's insurance included cover for liability incurred by ``sub contractors in respect of work done on behalf of Crisis Couriers''. The situation in this case then is one where ``a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise''.
[127]
91. Second, this is a case where imposing liability may be justified as a means of deterring future harm to users of public thoroughfares. The trial judge found:
``...
8. That [ Vabu] had known for some time prior to the plaintiff's accident that personal identification would lessen the risk of couriers riding contrary to road rules.
9. That for the same period [ Vabu] knew that injured pedestrians would find it difficult to identify particular couriers without means of personal identification.
10. That [ Vabu] had been at various times party to voluntary schemes which involved to some extent effective means of personal identification.
11. That these fell into disuse and part of the reason for this was [ Vabu's] failure to compel its riders to adopt the means of further personal identification suggested.
...''
92. These findings indicate that by efficient supervision Vabu could reduce the risk of injury that arose from its business activities. The ``deterrence of future harm'' justification for imposing vicarious liability is therefore applicable to Vabu and its couriers, in the sense that it encourages accident reduction and provides incentive for the discipline of workers guilty of wrongdoing.
93. It is true that the couriers employed by Vabu are neither employees nor independent contractors in the strict sense. But there is no reason in policy for upholding the strict classification of employees and non-employees in the law of vicarious liability and depriving Mr Hollis of compensation. Rather than expanding the definition of employee or accepting the employee/independent contractor dichotomy, the preferable course is to hold that employers can be vicariously liable for the tortious conduct of agents who are neither employees nor independent contractors. As McLachlin J pointed out in
Bazley v Curry
``a meaningful articulation of when vicarious liability should follow in new situations ought to be animated by the twin policy goals of fair compensation and deterrence that underlie the doctrine, rather than by artificial or semantic distinctions''.
[128]
ATC 4528
other areas of the law or their freedom to contract between themselves or to arrange their business affairs. And it has the great advantage of ensuring that the doctrine of vicarious liability remains relevant in a world of rapidly changing work practices.Formulation of a principle consistent with precedent and policy
94. Moreover, it is not only sound policy but precedent which suggests that Vabu should bear responsibility for the negligence of its courier even though the courier was not an employee. In
Scott v Davis
, I reviewed the relevant authorities
[129]
``... 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 or 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 for the wrongful acts of a person who is acting on the principal's behalf as a representative and not as an independent principal...''
95. This view is consistent with numerous statements by eminent common lawyers over the centuries since agents became known to the common law. I referred to many of these statements in my judgment in
Scott v Davis
.
[131]
``In all these cases it may be said, as it was said here, that the master has not authorized the act. It is true, he has not authorized the particular act, but he has put the agent in his place to do that class of acts, and he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of his master to place him in.''
96. This Court applied that principle in
CML
.
[133]
``... one is liable for another's tortious act `if he expressly directs him to do it or if he employs that other person as his agent and the act complained of is within the scope of the agent's authority'. It is not necessary that the particular act should have been authorized: it is enough that the agent should have been put in a position to do the class of acts complained of.''
97. Dixon J, with whom Rich J agreed, did not deny this general proposition. He did note that ``
[
i]n most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorized the doing of the act which amounts to a tort''.
[135]
``The independent contractor carries out his work, not as a representative but as a principal. But a difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity... [ I]n performing these services for the Company, he does not act independently, but as a representative of the Company...''
98. Dixon J thought that there was no extension of principle in holding the insurer liable for the tort of its agent in that case.
99. CML decides, therefore, that a principal is liable for the wrongful act of an agent causing damage to a third party when that act occurred while the agent was carrying out some activity as the principal's authorised representative in a dealing with a third party. This principle is not limited to any particular types of wrongful acts. There is no reason in precedent, principle or policy to suggest that it is not as applicable to
ATC 4529
tortious acts as it is to tortious statements. [138]``The wrong committed arose from the mistaken or erroneous manner in which the actual authority committed to him was exercised when acting as a true agent representing his principal in dealing with third persons.''
100. Finally, the application of the principle is not confined to harm done to a third party in the course of dealing with that party. As I said in
Scott v Davis
,
[142]
``I do not think a distinction can be maintained between breaches of duty towards third persons with whom the agent is authorized to deal and breaches of duty towards strangers, committed in exercising that authority. If what he does is done as the representative of his principal, it cannot matter... whether the injury which it inflicts is a wrong to one rather than another person.''
The principle applied
101. Applying the principles laid down in CML to the present case, Vabu is liable for the negligence of the courier.
- (1) The courier was performing for Vabu its duty to make deliveries to or on behalf of its clients.
- (2) The courier performed the duty for the economic benefit of Vabu.
- (3) The courier was the representative of Vabu. So much was apparent to the public and clear as between Vabu and the couriers. Vabu issued all bicycle couriers with several documents when they commenced work. One was entitled ``Contract for Service'' which incorporated a ``Document 792''. Document 792 was headed ``General Rules for All Drivers'' (this covered bicycle couriers). At the top appeared the following emphatic passage:
``DRIVERS SHOULD ALWAYS BE AWARE THAT THEY ARE A DIRECT REPRESENTATION OF THE COMPANY. THEIR ATTITUDE AND APPEARANCE CAN ONLY BE SEEN AS A DIRECT REFLECTION OF OUR ORGANISATION.''
102. This ``direct representation of the company'' described in its internal documents also manifested itself to customers and the public. The uniform bearing the Crisis Couriers name and logo across front and back was readily identifiable and served to promote Vabu's business interests. In the present case, it was the only means by which Mr Hollis could identify the courier. ``The Crisis Bike Couriers'' were also promoted in a brochure advertising Vabu's services to the public.
- (4) The courier was not acting as an independent functionary who ordinarily contracted with members of the public or a section of it. He was contracted to work for Vabu and was subject to Vabu's general direction and control. Document 792 spelt out dress regulations, which required couriers to wear uniforms and to be presentable at all times. It informed the couriers that the maintenance and repair costs of vehicles were their responsibility. It reminded the couriers of deadlines and the priorities for deliveries. There were general and specific instructions about dealings with clients. There were also detailed directions setting out the procedures to be followed when using the radio communication system. The couriers were also required to contribute a certain amount each week for marine and public liability insurance. They were also required to keep their vehicles in a clean and roadworthy condition. Vabu allocated the work, and a courier could not refuse to do what was allocated to him or her. In emphatic terms, Document 792 declared that ``NO DRIVER IS TO REFUSE WORK. ANY DRIVER WHO DOES SO WILL NO LONGER WORK FOR THIS FIRM''.
ATC 4530
- (5) When the accident to Mr Hollis occurred, the courier was acting within the scope of the authority conferred on him by Vabu. The trial judge found that at the time of the accident the courier was ``on the business'' of Vabu. If it matters, and I do not think it does, Vabu was well aware that the bicycle couriers contravened traffic regulations and were likely to cause injury to persons using public thoroughfares.
Order
103. The appeal must be allowed.
Footnotes
[83][84]
[85]
[86]
[87]
[88]
[89]
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[91]
[92]
[93]
[94]
[95]
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