“Liability of a Principal for the acts of an Independent Contractor” : Sweeney -v- Boylan Nominees Pty Limited [2006] HCA 19

Author: Nicholas Gordon

Judgement Date: 16th May, 2006

Citation: Sweeney -v- Boylan Nominees Pty Limited [2006] HCA 19

Jurisdiction: High Court

In Brief

  • This High Court decision considered whether a party (“the defendant”) who engaged the services of an independent contractor to carry out repair work could be held vicariously liable for his negligence on the basis that that repairer was a “representative of the defendant”.  The majority of the High Court determined that the defendant could not be held vicariously liable for the actions of the independent contractor.

Background Circumstances

  • In August 2000 Maria Sweeney (“the plaintiff”) went to buy a carton of milk at a service station and convenience store.  When she opened the door of the refrigerator in which the milk was kept, the door came off and hit her on the head causing injury to her head, neck and hand.  The plaintiff commenced proceedings in the District Court claiming negligence against the owners and operators of the service station and Boylan Nominees Pty Limited (“the defendant”).
  • At trial the claim against the owners and occupiers failed, however the claim against the defendant succeeded on the basis that the defendant was vicariously liable for the negligence of a mechanic it had sent to service the refrigerator in response to the service station’s complaint that the door of the refrigerator was not closing properly.
  • Neither the mechanic nor his company were parties to the proceedings.  It was determined at trial that the defendant had leased the refrigerator to Australian Co-Operative Foods Limited.  The lease obliged the defendant to service and maintain the refrigerator in a proper and workmanlike manner and to replace any part which required replacement due to the normal operation of the refrigerator.
  • About 4 or 5 hours before the accident those operating the service station had told the defendant that the door of the refrigerator was not closing properly.  A mechanic came to the premises and worked on the door.  The mechanic was not an employee of the defendant and was described at trial as being a contractor to the defendant.  It was said that he performed duties at the defendant’s request and that he then invoiced the defendant.  The defendant provided him with no uniform or tools or equipment, nor a vehicle in which to transport tools and equipment. 

District Court Decision

  • The trial judge found that the defendant was vicariously liable for the mechanic’s negligence as the mechanic “was acting as a servant or agent of the defendant with the authority and the approval of the defendant to undertake the work that he did.”  In reaching his decision, the trial judge gave strong consideration to the fact that the mechanic had given a written service report to the service station operators and to the defendant which was written on the defendant’s form.  Among other things, that form referred to “our mechanic”.  Secondly, the defendant in its claim report to its personal and public liability insurer again referred to “our mechanic” as having gone to the premises, and said nothing about the mechanic not being an employee.

Court of Appeal Decision

  • The Court of Appeal (Giles and Ipp JJA, Brownie AJA) held that the defendant was not vicariously liable for the negligence of the mechanic and overturned the trial judge’s decision.  The plaintiff was then granted leave to appeal the decision of the Court of Appeal in the High Court.

High Court Decision

  • The majority of the High Court stated that recent cases such as Hollis v Vabu Pty Limited (2001) 207 CLR 21 and NSW v Lepore (2003) 212 CLR 511 have established that there is the distinction between employees (for whose conduct of the employer will generally be vicariously liable) and independent contractors (for whose conduct the person engaging the contractor will generally not be vicariously liable).  The Court also noted that there is the importance which is attached to the course of employment.
  • The High Court noted that it is necessary always to recall that much more often than not, questions of vicarious liability fall to be considered in a context where one person has engaged another to do something that is of advantage to, and for the purposes of, that first person.  However, the Court stated that “yet it is clear that the bare fact that the second person’s actions were intended to benefit the first or were undertaken to advance some purpose of the first person does not suffice to demonstrate that the first is vicariously liable for the conduct of the second”.  The Court added that the use of terms such as “representative”, “delegate” or “agent”, “must not be permitted to obscure the need to examine what exactly are the relationships between the various actors”.
  • The plaintiff sought to rely upon the decision in Colonial Mutual Life Assurance Society Limited v Producers & Citizens Co-operative Assurance Co of Australia Limited (1931) 46 CLR 41 and submitted that the trial judge was correct in concluding that the mechanic did the work “as a representative” of the defendant as he “represented” that he had an association with the defendant, and that the defendant “represented” that same association.  The High Court however stressed that saying that B did what he or she did as the “representative” of A does not reveal, without definition of what is meant, what was the relationship between the parties.  
  • The High Court held that Colonial Mutual Life only establishes:

“That if an independent contractor is engaged to solicit the bringing about of legal relations between the principal who engages the contractor and third parties, the principal will be held liable for slanders uttered to persuade the third party to make an agreement with the principal.  It is a conclusion that depends directly upon the identification of the independent contractor as the principal’s agent (property so called) and the recognition that the conduct of which complaint is made was conduct undertaken in the course of, and for the purpose of, executing that agency”.

  • The High Court held that neither Colonial Mutual Life or the more recent cases of Scott v Davis (2000) 204 CLR 333 or Hollis v Vabu Pty Limited, were authority for the proposition that a party can be vicariously liable for the conduct of another if that other party “represents” the first party (in the sense of that other party acting for the benefit of the first party”).
  • The High Court also stressed that in this case the mechanic was engaged from time to time as a contractor to perform maintenance work for the defendant and, unlike the principal in Hollis v Vabu Pty Limited, the defendant did not control the way in which the mechanic worked.  The Court also noted that the mechanic supplied his own tools and equipment, as well as bringing his skills to bear upon the work that was to be done.  The Court also concluded that the two documents on which the trial judge relied upon did not support the conclusion that was reached as “neither says anything of the nature of the relationship between the mechanic and the respondent beyond the fact that the mechanic was acting at the request of the defendant”.
  • In dismissing the appeal the High Court noted that the two central conceptions of distinguishing between independent contractors and employees and attaching determinative significance to course of employment are “now too deeply rooted to be pulled out”.  The Court further added that:

“the plaintiff’s claim against the defendant must fail as the mechanic was an independent contractor who did what he did for the benefit of the defendant and in attempted discharge of its contractual obligations.  But he did what he did not as an employee of the respondent but as a principal pursuing his own business or as an employee of his own company pursuing its business”.

  • The High Court concluded succinctly that:

“The conclusion that the mechanic was an independent contractor is determinative of the issue that arises in the appeal and that accordingly the appeal must be dismissed with costs”.

  • Justice Kirby, the sole dissenter, relied on the judgment of Colonial Mutual Life which he noted had never been overruled and was not doubted by any of the judges in Hollis v Vabu Pty Limited.  His Honour also noted that “the passage of time, and the emergence of new hybrid forms of employment make the principle stated in Colonial Mutual Life one easily apt for the relationships with business enterprises in contemporary Australia”.  Finally, His Honour dismissed the defendant’s arguments that policy considerations should result in no finding of vicarious liability, and stated that even if policy considerations were taken into account, those policy considerations should favour the plaintiff

Implications

  • The decision is based on established legal principles and is easily distinguished from an earlier decision of the High Court in Hollis v Vabu Pty Limited.
  • However, it does appear that the High Court has sought to more clearly define the instances when vicarious liability will arise, and that in particular parties will not be deemed vicariously liable for the actions of independent contractors unless a strict set of criteria are met, such as that they had control over the actions of the independent contractor.
  • Whilst not dealing directly with the issue, the High Court appears to have confirmed that in most cases employers will be deemed vicariously liable for the actions of their employees provided that the actions were undertaken “in the course of employment”.