Hobbs v Petersham Transport Co Pty Ltd

124 CLR 220

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(Judgment by: Windeyer J)

Between: Hobbs
And: Petersham Transport Co Pty Ltd

Court:

Judges: Barwick CJ
McTiernan J
Menzies J

Windeyer JOwen J

Subject References:
Contract
Bailment
Carriage of goods
Due care
Failure to deliver
Onus of proof
Duty of bailee
Sub-contractor

Hearing date: 7 April 1971
Judgment date: 30 June 1971

Sydney

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Judgment by:
Windeyer J

These are two appeals from the judgment of the Supreme Court of New South Wales (Court of Appeal Division) ^[F16] dismissing an appeal from the judgment of Nagle J. in an action at common law. The plaintiff complained that certain valuable electrical equipment that it owned, which it had engaged the defendant Petersham Transport Co Ltd Pty to carry by road from Sydney to an electric power station at Ashford in the north of New South Wales, had not been carried safely but had been badly damaged enroute. For the discharge of its contractual obligations to the plaintiff, the defendant had employed a firm of carriers known as Hobbs Bros. to provide a vehicle and driver and undertake the actual carriage of the goods. While the goods were on a vehicle belonging to the partnership it ran off the road when on its way to Ashford. The goods were thrown off and damaged. The plaintiff's contract with the defendant for the carriage of the goods was made partly orally but confirmed by an exchange of letters. The defendant on its letterhead was described as "General Carriers and Haulage Contractors". The tenor of the letters, especially the plaintiff's letter of 7th August 1957, suggests that the agreement was that the defendant should be the carrier, not that it was merely a forwarding agent employing carriers. But I do not think that the plaintiff placed such reliance upon the skill and capacity of the defendant that by employing a sub-contractor the defendant broke its contract with the plaintiff. The learned trial judge refused to allow the plaintiff to rely on any allegation of that kind. He also refused to allow the plaintiff to adduce as a breach of contract the fact that the sub-contractor was not carrying the goods directly to Ashford but was intending to make a detour into Queensland as a "border hopping" exercise. I think that, having regard to the form of the pleadings, his Honour was right in rejecting these contentions. I would add that the two cases on which the plaintiff sought to rely-Lilley v Doubleday ^[F17] and Edwards v Newland & Co ^[F18] -were cases of sub-bailment by a bailee. There goods had been received by a person as bailee for custody. He without authority had handed them to the care of another person. That is not what happened in this case.

The Hobbs brothers were in business as transporters by road. They had a depot at Rozelle, which was their business headquarters, and a yard and garage at Leichhardt where their vehicles were stationed when not on the road and where they were regularly serviced. They owned a number of vehicles, six or more, of various kinds, including semi-trailers.

The accident in which the goods were damaged happened in August 1957, when the goods were being carried by the Hobbs brothers. In December 1962 the plaintiff commenced this action against the defendant. There are two counts in the plaintiff's declaration. The first alleges a contract by the defendant to use due care, skill and diligence in the carriage of the goods, and a breach of this contract, whereby the goods were damaged. The second count is in a common form in an action against a carrier. It alleges that the defendant was a carrier: that the plaintiff delivered to it, and it received, goods to be safely carried; that "the defendant did not safely carry the said goods and by themselves (sic) their servants and agents so negligently carelessly and unskilfully carried the same" that they were broken and damaged. This declaration was not filed until March 1963. The defendant's pleas were not filed until May 1964. Apparently no objections were made by either party to these delays. There were further unexplained delays. In January 1966 the defendant gave a third party notice pursuant to the Alternative Defendants and Third Party Rules under the Law Reform (Miscellaneous Provisions) Act, 1946 (N.S.W.). By this procedure the two brothers, L.R.J. Hobbs and H.A. Hobbs, who traded as Hobbs Bros., became third parties in the action. The defendant's declaration against them reflects the plaintiff's declaration. It alleges first a contract by them that would carry the goods carefully; and in a second count that they were carriers to whom the defendant had delivered the goods to be carried; and, in respect of each count, that they had been negligent; and that the defendant claimed to be indemnified (wholly or in part) by them as third parties in respect of any sum that the plaintiff might recover from the defendant.

The case, for some reason, did not come on for trial until May 1969. By these inordinate delays the parties created difficulties for themselves at the hearing. One of the Hobbs brothers died: some persons who might have been able to give evidence were not called, perhaps because recollection of details had faded: and, most important, a claim that the plaintiff might have asserted directly against the Hobbs brothers had become stale and was statute barred.

When at last the action came on for trial the parties agreed that it should be tried by a judge without a jury. It was heard by Nagle J. He, in a considered judgment, which he delivered within a few days of the hearing, carefully set out the facts and the relevant issues of law that had been debated before him. He found in favour of the plaintiff; and, having assessed damages at $18,046.92, he gave judgment for the plaintiff for that amount against the defendant, and held that the defendant was entitled to recover this amount from the Hobbs brothers. On appeal to the Court of Appeal Division of the Supreme Court his Honour's decision was upheld by a majority of their Honours there (Manning J.A. and Moffit J.A., Sugerman P. dissenting) ^[F19] . In their joint judgment the two learned judges who were the majority said that the case turned entirely upon a question of where, in a contract for the carriage of goods for reward, the burden of proof lay on the issue of negligence.

Their Honours held that, in the circumstances, it lay upon the defendant as a bailee to prove that the failure to deliver the goods safely was not the result of a want of due care on its part, and that it had failed to do this. They therefore upheld the judgment of the trial judge. Sugerman P. took the same view of the relevant law as to onus of proof; but he thought that, upon the facts, the defendant had discharged the onus that lay upon it. He would have set aside the judgment of the trial judge. The original defendant and the third party now both appeal to this Court.

A person who is not a common carrier but who undertakes to carry goods for reward is commonly called a private carrier. It was in 1703 firmly established as the rule of our law by the great judgment of Holt C.J. in Coggs v Bernard ^[F20] , that a private carrier is a bailee of goods delivered to him. If he is to carry them for reward, he is a bailee for reward and as such bound to use due care and diligence to keep the goods safely and to deliver them undamaged. The standard of care and diligence is that which a careful and vigilant man would exercise in respect of goods of his own of the same kind in similar circumstances. A bailment comes into existence upon a delivery of goods of one person, the bailor, into the possession of another person the bailee, upon a promise, express or implied, that they will be re-delivered to the bailor or dealt with in a stipulated way. A carrier to whom goods are delivered for carriage is a bailee. But a person who undertakes that he will carry goods is not a bailee of them unless they be actually delivered to and received by him.

The case has been conducted on the assumption that neither the defendant nor the Hobbs brothers was a common carrier. In the ordinary way of their businesses, each was no doubt a private carrier. But on a document dated 12th August 1957 setting out the terms on which the Hobbs brothers agreed "as a sub-contractor to perform contracts of carriage" for the defendant, this appeared: "I accept the responsibility of that of a Common Carrier at Law." This document was signed by one Johnson who was a servant of the Hobbs brothers. He was the driver of the vehicle on which the goods were being carried at the time of the accident. He gave evidence. Under cross-examination by counsel for the Hobbs brothers he said that he had no instructions from them to do anything but pick up goods as directed by a representative of the defendant: but it was not disputed that he had signed the document and handed it to the defendant; and the learned trial judge rightly, I think, admitted it as evidence "against the third party". In the result it may be that the Hobbs brothers should, as between themselves and the defendant, be regarded as common carriers with respect to the journey in question for private carriers can assume the responsibilities of a common carrier for a particular transaction: Robinson v Dunmore ^[F21] . However, as will appear, I do not think that the character of the Hobbs brothers is a decisive element in the case.

It has been assumed throughout the argument that the defendant was a bailee of goods of which the plaintiff was bailor and that the liability of the defendant is to be measured accordingly. This proposition has not been questioned. Nevertheless I think that it is mistaken, and that the mistake is critical. The plaintiff's declaration alleged that the defendant "was a carrier of goods for hire and the plaintiff delivered to the defendant and the defendant received as such carrier certain goods of the plaintiff ...". But, as I understand the case, there was no evidence that the plaintiff ever delivered the goods to the defendant. They were delivered by representatives of the plaintiff company directly to Johnson, the servant of the Hobbs brothers. They had been lying on a wharf at Pyrmont, Sydney. They were loaded directly from the wharf on to the lorry belonging to the Hobbs brothers, of which Johnson was the driver. Johnson had been told by one of the Hobbs to go to the wharf and there report to a Mr. Howe, who was the manager of the defendant company, and take directions from him. Johnson met Howe at the wharf. Howe pointed out the cases to be loaded on Johnson's vehicle. They had been unshipped and put upon the wharf earlier in the day. The actual loading on to Johnson's vehicle was done by a crane operated, it seems, by a wharfinger or stevedore. The articles in question were a part of a shipment of electrical goods that the plaintiff had imported from abroad. These were over a period of some days being taken from the wharf by different carriers. These carriers had, it seems, all been engaged by the defendant. In each case Howe supervised the loading, including the loading of Johnson's vehicle. He did this in association with a Mr. Badman, an employee of the plaintiff who was at the wharf throughout and who checked the delivery of the plaintiff's goods to the various carriers. When the goods were on the wharf they were apparently in the custody of the plaintiff's shipping agents. They were never, so far as the evidence shews, in the custody of the defendant.

The Hobbs brothers were sub-contractors of the defendant to perform its contract with the plaintiff. They were strangers to that contract. They had no contract with the plaintiff. But the common law, deriving its concept of bailment largely from the civil law, has never subsumed bailment under the general law of contract. It is now beyond dispute that the relationship of bailor and bailee of a chattel can arise and exist independently of contract. By taking the plaintiff's goods into their physical possession when they were loaded on to their lorry the Hobbs brothers undertook the duties and obligations of a bailee for reward. Whether or not a sub-contractor of a bailee is himself properly called a bailee is a debatable question of terminology. But it is I think not a relevant question in this case because, as I have said, the evidence does not shew that the defendant itself ever became a bailee. However, whether that were so or not, the Hobbs brothers unquestionably became directly liable to the plaintiff if they, by their servants and agents, failed to take due care of the goods. This, the doctrine expounded in Morris v C. W. Martin & Sons Ltd ^[F22] , was made firmly binding for us by a judgment of the Privy Council last year: Gilchrist Watt & Sanderson Pty Ltd v York Products Pty Ltd ^[F23] affirming the decision of the Supreme Court of New South Wales: York Products Pty Ltd v Gilchrist Watt & Sanderson Pty Ltd ^[F24] . I need not elaborate this. I merely refer, as a pertinent statement of the rule, to passages in the judgment of Sachs J. in Learoyd Bros. & Co v Pope & Sons Ltd ^[F25] .

The obligation of a carrier as bailee is to exercise due care, skill and diligence for the safety of chattels entrusted to him. If he fails to deliver them safely at the end of the bailment, that is evidence of a failure to perform his duty to exercise due care of them. He can rebut this by shewing that their loss or damage was not the result of any default on his part. But to escape liability he must establish that. The burden lies on him. That this is the rule of the common law has been asserted in many cases in England extending now over more than a century. I need not cite them all. Cogent statements are that of Lord Halsbury, which Buckley L.J. quoted in Joseph Travers & Sons v Cooper ^[F26] :

"It appears to me that here there was a bailment made to a particular person, a bailment for hire and reward, and the bailee was bound to show that he took reasonable and proper care for the due security and proper delivery of that bailment; the proof of that rested upon him."

And the words of Buckley L.J. himself in that case:

"The defendant as bailee of the goods is responsible for their return to their owner. If he failed to return them it rested upon him to prove that he did take reasonable and proper care of the goods, and that if he had been there he could have done nothing, and that the loss would still have resulted. He has not discharged himself of that onus."

Recent statements by the Court of Appeal of this rule may be found in Houghland v R.R. Low (Luxury Coaches) Ltd ^[F27] and in Global Dress Company Ltd v Boase & Co Ltd ^[F28] . Australian decisions to the same effect are cited in the judgments in the Supreme Court in this case and I need not cite them all here. Fairbairn v Miller ^[F29] is a good example. The same rule has been applied in New Zealand: Wilson v New Zealand Express Co Ltd ^[F30] , and in some jurisdictions in the United States: see especially Hoel v Flour City Fuel and Transfer Co ^[F31] .

This rule has been seen as an anomaly. It is suggested that a carrier's failure to deliver goods in accordance with his contract is simply an illustration of a res ipsa loquitur: that it is an evidentiary fact from which, in the absence of an explanation, an inference can be drawn of default on the part of the carrier, but that the ultimate onus is upon the plaintiff and that it never shifts. This proposition would be irrefutable if the rights of the parties depended simply on a contract to carry with due care. But that, it seems, is not so when goods having been delivered into his custody, the carrier has assumed the duties of a bailee for reward. An explanation of the apparent anomaly may well be that the duty of a bailee to use due care does not arise from contract or from tort. It could in former times have been asserted in either assumpsit or in case: but it is now generally recognized as sui generis. If the matter be put in terms of an implied undertaking or promise by the bailee, it is that he will re-deliver the goods to the bailor or whoever he appoints to receive them, except he, the bailee, be prevented from doing so by events not caused by negligence on his part, proof of the exception being upon him. Seen in this way, the burden that is put upon a bailee of exonerating himself when he fails to re-deliver the goods is simply a peculiar incident of the law of bailment. I accept the analysis that Sholl J. made after a survey of the authorities in his judgment in Fankhauser v Mark Dykes Pty Ltd ^[F32] . I appreciate that the second count of the plaintiff's declaration tenders an issue of fact to be proved by the plaintiff. I realize too that to say that the bailee must exonerate himself when the facts raise a prima facie inference of negligence may well seem anomalous when set alongside the doctrine that this Court has established for Australia of the onus of proof in cases when res ipsa loquitur is put forward: as in Anchor Products Ltd v Hedges ^[F33] . And I recognize that some judgments in which the onus is said to be on the carrier to negative negligence are equivocal. For example, in the New Zealand case to which I have referred Reed J. placed the onus of proof on the carrier, quoting the decision of the New Zealand Court of Appeal in Aurora Trading Co Ltd and Jackson v Nelson Freezing Co Ltd ^[F34] . Yet he went on to refer ^[F35] to cases in which "a reasonable explanation of the loss was given, which caused the onus to shift to the plaintiff to establish negligence. And that no doubt", he said, "is the law". And in the United States there have been cases in which a loss of articles bailed has been taken to be a res ipsa loquitor. One explanation that has been put forward is that an inference of negligence arises if the loss be not explained by the bailee, the burden of adducing explanatory evidence being on him because the facts are peculiarly within his knowledge and not within the knowledge of the bailor. However, despite all these countervailing considerations I think that the rule as to the onus, being an incident of the law of bailment, is too firmly established to be shaken by demands for logical consistency with the consequences of res ipsa loquitur in other circumstances.

If I thought that the defendant had become a bailee of the goods, I would, for the reasons I have given, agree with the learned judges of the Supreme Court that it was for it, the defendant, to negative negligence as the cause of the accident; and then, because for reasons that I gave in Da Costa v Cockburn Salvage & Trading Pty Ltd ^[F36] , I would gravely hesitate to say that the learned trial judge was wrong, especially as two other members of the Supreme Court were of the same opinion. The question would be whether anything which would have avoided the accident, and which ought reasonably to have been done, was not done. If that was left in doubt the bailee would be liable. But, as I do not think that the defendant was a bailee, this is in my view irrelevant. It would be the relevant onus if the plaintiff had sued the Hobbs brothers directly as bailees, or had sought to amend this action to sue them in the alternative. But neither of these courses was pursued. It is now presumably too late for either, as any claim by the plaintiff against the Hobbs brothers is statute barred: see The Commonwealth v Temple ^[F37] and cases there cited. The Hobbs brothers are therefore only liable if the defendant be liable, and then only to indemnify it. I therefore turn back to the position of the defendant under the contract it made with the plaintiff.

Although the Hobbs brothers were independent contractors, the defendant is, by well-established common law rules, liable for their negligence in relation to the carriage of the plaintiff's goods. That is because the defendant impliedly promised the plaintiff that the goods would be carried to their destination with due care. If it procured someone else to perform the carriage for it, it became liable for his, the sub-contractor's negligence: Doolan v Midland Railway Co ^[F38] ; John v Bacon ^[F39] ; Machu v London and South-Western Railway Co ^[F40] . The rationale of this may be debatable. But I think that Professor Atiyah, who discusses it in his book Vicarious Liability in the Law of Torts (1967) (at pp. 361-362), rightly describes it as a form of vicarious liability. In Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd ^[F41] Lord Radcliffe spoke of it as "the carrier's responsibility for the diligence of all those whom he employs to discharge his own primary duty". I think therefore that the plaintiff would be entitled to recover damages from the defendant if it proved that the accident occurred by negligence for which the Hobbs brothers were responsible either because their vehicle was negligently driven, or because there had been negligence in maintaining it so that it was not in a serviceable condition. But to establish liability on the part of the defendant it would be necessary for the plaintiff to prove this negligence. The onus was on it. It could not found its case on the onus that a bailee has; for the defendant was not a bailee. It could claim that the fact that the vehicle ran off the road spoke for itself of negligence, and called for an explanation. But the explanation of the accident in a broken axle left it upon the plaintiff to prove that this was the result of negligence. The mere fact that the mechanism of a vehicle fails does not itself shew that the owner or driver was negligent. No doubt a failure to maintain a vehicle in good order may in some cases amount to negligence. But even a common carrier of passengers is not to be held responsible for the consequences of a latent defect in his vehicle not discoverable by reasonable inspection: Readhead v Midland Railway Co ^[F42] ; Webb v Cassidy ^[F43] . I need not rehearse the evidence. It makes it abundantly clear that, the onus being on the plaintiff to prove negligence, the plaintiff's case failed. The appeal should therefore be allowed.