Cotton (by his litigation guardian) & Anor v Hammond & Ors [2002] QSC 429

SUPREME COURT OF QUEENSLAND CITATION: Cotton (by his litigation guardian) & Anor v Hammond & Ors [2002] QSC 429 PARTIES: MICHAEL DAVID COTTON (by his litigation guardian THERESA EMILY SCANLAN) (respondent/first plaintiff) SAMUEL JAMES COTTON (by his litigation guardian THERESA EMILY SCANLAN) (respondent/second plaintiff) v BRETT HAMMOND (first defendant) CURRY KENNY AVIATION PTY LTD ACN 064 766 310 (applicant/second defendant) IRVINGO PTY LTD ACN 010 411 677 (applicant/third defendant) SHERLEX PTY LTD ACN 071 381 970 (applicant/fourth defendant) SETTLERS COVE DEVELOPMENT PTY LTD ACN 056 564 446 (applicant/fifth defendant) FILE NO/S: SC 8410 of 2001 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court Brisbane DELIVERED ON: 17 December 2002 DELIVERED AT: Brisbane HEARING DATE: 5 April, 18 June 2002 JUDGE: Ambrose J ORDER: 1. Order for separate trial on issue of vicarious liability to be made on election of the plaintiffs. 2. Otherwise summary judgment to be given for the third, fourth and fifth defendants on the issue of that part of the particularised pleading which seeks to hold the third, fourth and fifth defendants vicariously liable for the collateral negligence of the first defendant resulting in damage to the plaintiffs. 3. Summary judgment against the plaintiffs on their claim against the second and fourth defendants for negligence in selecting the first defendant to pilot the aircraft owned by the third, fourth and fifth -- 1 of 18 -- 2 defendants refused. CATCHWORDS: PRACTICE – Summary judgment – r293 – application for summary judgment by defendants – where plaintiffs suffered injury in aircraft accident – where aircraft was allegedly partnership property – whether pilot was agent of the partnership – whether members of partnership can be held vicariously liable for actions of pilot – whether action capable of succeeding at law – whether summary judgment should be granted – whether separate trial should be ordered Partnership Act 1891 (Qld), s5(1), s6, s6(a), s6(b), s23, s24 Uniform Civil Procedure Rules 1999 (Qld), r293, r298, r483, r486 Christmas v Nichol Bros Pty Ltd (1941) 41 SR (NSW) 317, considered General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, considered Gray v Inland Revenue Commissioners [1994] STC 360, considered Hollis v Vabu Pty Ltd (2001) 207 CLR 21, considered Morgans v Launchbury [1973] AC 127, considered Scott v Davis (2000) 204 CLR 333, considered COUNSEL: D B Fraser QC and T W Quinn for the applicants K F Holyoak for the respondents SOLICITORS: Hemming and Hart as town agents for Norton White Lawyers for the applicants McInnes Wilson for the respondents [1] AMBROSE J: This is an application by the second, third, fourth and fifth defendants for summary judgment against the plaintiffs pursuant to UCPR 293. [2] In the alternative directions are sought pursuant to UCPR 298. [3] The plaintiffs sue the first defendant for damages they suffered as passengers in an aircraft he was piloting when it crashed on Quail Island on 20 September 1999. They sue the other defendants on the basis that they are vicariously liable for the first defendant’s negligence. They sue the second and fourth defendants also for negligence in retaining the first defendant to pilot the aircraft. [4] When the matter came on for hearing on 5 April 2002 the plaintiffs were ordered to give particulars of all the facts upon which they relied to establish that the second, third, fourth and fifth defendants were vicariously liable to the plaintiffs for any negligence of the first defendant causing injuries to the plaintiffs in respect of which this action is brought. [5] The particulars ordered were provided by the plaintiffs on 12 April 2002. [6] On 29 April 2002 the plaintiffs obtained judgment against the first defendant in default of defence for damages to be assessed. -- 2 of 18 -- 3 [7] I will state as briefly as possible the facts upon which the plaintiffs rely to establish vicarious liability in their action which was commenced on 18 September 2001. [8] The four companies to which I have referred were the family companies of the Kenny family, the Scanlan family, the Kenny family and the Thompson family respectively. [9] The plaintiffs are infant children of a member of the Scanlan family, a director of the third defendant. On 20 September 1999 they were passengers in an aircraft piloted by the first defendant from Brisbane to Quail Island. They were injured when the aircraft crashed while landing on the island. It is their case that it crashed due to the negligence of the first defendant and also of Mr Kenny, a director of the second and fourth defendants in selecting him with limited experience to replace a more experienced pilot previously used to pilot the aircraft. [10] A good deal of material was filed and read upon the application by the second to fifth defendants for summary judgment against the plaintiffs. [11] Essentially it emerges that the aircraft which crashed on Quail Island resulting in injury to the plaintiffs was owned by each of the third, fourth and fifth defendants which carried on a business under the partnership name of “Rescue Helicopters”. [12] The partnership agreement was an oral one. [13] In paragraph 6 of the particulars provided by the plaintiffs on 12 April 2002 it is asserted – “6. It was a term of the partnership agreement that the directors of each of the Third, Fourth and Fifth Defendants were entitled to free use of the aircraft for 90 hours per annum for their personal use (“the personal use term”)”. [14] In paragraph 7 of the particulars it is asserted – “7. It was a term of the partnership agreement that, when the aircraft was made available pursuant to the personal use term, the partnership would arrange for a pilot to fly and land the aircraft”. In particular (a) of para 7 it is asserted inter alia – “The partnership, by its manager at the time, arranged for the aircraft to be available and for a pilot to be available to fly and land the plane. The pilot which the partnership usually arranged to fly the aircraft pursuant to the personal use term was Russell Cooper”. [15] Paragraph 8 of the particulars asserts – “8. Alternatively, the personal use term of the partnership agreement was ordinarily discharged by the partnership arranging (by its manager or another servant or agent) for a pilot to fly the aircraft, particulars whereof appear in paragraph 7 hereof”. [16] In paragraph 9 of the particulars it is asserted that- “9. Approximately one week before the flight of the 20th of September 1999 (“the flight”), Mrs. Barbara Scanlan contacted -- 3 of 18 -- 4 Kenny to arrange for the use of the aircraft pursuant to the personal use term”. I note merely that Kenny there referred to is a director of the second and fourth defendants and Barbara Scanlan is a director of the third defendant. [17] In paragraph 10 of the particulars it is asserted that- “10. The aircraft was made available to Mrs. Barbara Scanlan on the 20th September 1999 by the partnership pursuant to the personal use term”. [18] In paragraph 11 of the particulars it is asserted that – “11. The availability of the aircraft on the 20 th September 1999 was arranged by Kenny, or by his servants or agents, or by the Second Defendant, by its servants and agents, for, and on behalf of, the partnership”. [19] In paragraph 12 of the particulars it is asserted that – “12. The partnership :– (a) by Kenny, by himself or alternatively by his servants or agents, (b) alternatively by the Second Defendant by its servants or agents; or (c) alternatively, otherwise by it servants or agents. engaged the first defendant for reward to be the pilot of the aircraft for the flight”. [20] In paragraph 13 of the particulars it is asserted that – “13. In flying and landing the aircraft, the pilot was performing for the partnership its obligations to make the aircraft available, and to arrange for a pilot to fly the aircraft, pursuant to the personal use term”. [21] In paragraph 14 of the particulars it is asserted that – “14. The pilot performed the obligation under the personal use term for the economic benefit of the partnership because it was part of the commercial arrangement for which the partners agreed to do business in common”. [Emphasis added] [22] In paragraph 15 of the particulars it is asserted that – “15. The pilot was the representative of the partnership who made contact with Mrs. Barbara Scanlan to advise that Mr. Russell Cooper was unavailable, to advise of flight details, and organise the luggage to be taken by those members of the Scanlan family who were going on the flight”. [23] In paragraph 16 of the particulars it is asserted that – “16. When the accident occurred, the pilot was acting within the scope of the authority conferred upon him by the partnership”. [24] In paragraph 17 of the particulars it is asserted that – “17. For the purpose of the flight, the pilot had not contracted with a member of the Scanlan family personally, but with the partnership, -- 4 of 18 -- 5 or with its agent, the Second Defendant or alternatively, with its agent Kenny”. [25] In paragraph 18 of the particulars it is asserted that – “18. In the premises, the Third, Fourth and Fifth Defendants are, or alternatively, one of them is, and further, or alternatively, the Second Defendant is, vicariously liable for the acts or omissions of the First Defendant”. [26] It is not alleged that there is any identity of interest between the plaintiffs as members of the Scanlan family and the third defendant which is the Scanlan family company. [27] The issue debated at great length is whether on the facts upon which the plaintiffs rely it is arguable as a matter of law having regard to the authorities canvassed, that the partnership, Rescue Helicopters, comprising the third, fourth and fifth defendants as its members, is vicariously liable for the negligence of the first defendant, the pilot of the aircraft co-owned by the third, fourth and fifth defendants at the time of its crash. The partnership of course has no identity independent of the third, fourth and fifth defendants. The issue then is whether each of the third, fourth and fifth defendants is vicariously liable for the negligence of the first defendant. [28] It emerges from the material that the aircraft piloted by the first defendant at the time of its crash on Quail Island was never directly chartered by the partnership to any persons in the course of its business. There seems to be no issue that the aircraft was merely an asset which the partnership made available to a charter company named Transair which was an aircraft charter company operating in Brisbane. It was left at Brisbane airport and from time to time by arrangement with the second defendant Transair chartered out the aircraft to various hirers. Transair would then pay the second defendant by cheque a fee for its use of that plane on each charter/hiring. [29] To avoid “double bookings” “Grant Hayden Kenny of Curry Kenny Aviation” would from time to time advise Transair of dates that “he wished to use the aircraft” (presumably as manager of the partnership aircraft) for the purpose of one of the partners making “personal use” of it. [30] On 20 September 1999 (the day of the accident) Transair records indicate that the aircraft was then “booked for use by Curry Kenny Aviation”. Transair was not in any way involved in making arrangements for any flight of the aircraft on 20 September 1999 and did not employ or engage the first defendant as a pilot to fly the aircraft on that day. [31] It seems that the members of the partnership Rescue Helicopters which owned the aircraft involved in injury of the plaintiffs purchased that aircraft from the second defendant in May 1998. [32] According to the evidence of Mr Thompson, a director of the fifth defendant, shortly after the co-owners had purchased the aircraft from the second defendant in May 1998 the directors of those companies “in partnership” met and agreed that each family company as part owner of the aircraft would be permitted to use it for personal use on condition that it paid the cost of employing or retaining the pilot for that use. It was agreed that there was to be no charge for its use of the aircraft. -- 5 of 18 -- 6 [33] Mr Thompson deposes as to the practice of various of the family companies which owned the aircraft paying the pilot directly for its “personal use”. This material seems to me to go to a factual issue the determination of which it is inappropriate to consider on an application of this kind. [34] It is the plaintiffs’ case that sometime prior to the flight of 20 September 1999 in which they suffered injury, the director of the third defendant (the Scanlan Family company) contacted Mr Grant Kenny a director of the second defendant and the fourth defendant and asked that he arrange to have the partnership aircraft available to fly members of the Scanlan family to Quail Island on 20 September 1999. It is the plaintiffs’ case that Mr Kenny advised her that he would make that arrangement and requested that the pilot he selected contact her directly. It is their case that about a week before the flight the first defendant made contact with her and advised that he would be the pilot for the proposed flight. It is their case that she did not at any time make any payment or agree to make any payment to the first defendant for his services as a pilot. It is their case that she had never had any contact with the first defendant prior to his making contact with her subsequent to the director of the second and fourth defendants agreeing to make arrangements for a pilot to make contact with her. [35] On the material generally I am persuaded that there is some evidence which might prove that Grant Kenny (whether as director of the second defendant or as director of the fourth defendant or both) was appointed by the third, fourth and fifth defendants to manage the use of the aircraft owned by them – (a) when Transair chartered out that aircraft for use in Brisbane and elsewhere and paid to him as manager of the use of the aircraft for partnership business, part at least of the charter fees received by Transair; and (b) when arranging for “personal use” by members of the families of each of the three family companies which owned the aircraft which were the third, fourth and fifth defendants. [36] There seems to be evidence to support the plaintiffs’ case (although there is no doubt that should the matter go to trial it will be a matter in issue) that Grant Kenny did arrange for the provision of the first defendant as the pilot of the aircraft for use by family members of the third defendant on 20 September 1999. The precise terms of that arrangement have not been particularised. [37] In my view, it may be open upon a full evaluation of the evidence upon trial to infer that in arranging for the first defendant to pilot the aircraft for the “personal use” of members of the family of the third defendant family company, Mr Kenny acted both as manager of the partnership business and as agent of the third, fourth and fifth defendants as co-owners of the aircraft in their personal capacity. [38] Assuming the plaintiffs were able to establish those facts, the question that must be determined is whether the third, fourth and fifth defendants (and perhaps the second defendant) became vicariously liable for the first defendant’s negligence. [39] Assuming that the first defendant was an “independent contractor” with the partnership and/or with the second and/or third defendants for the purpose of flying members of the Scanlan family to Quail Island to enable the Scanlan family company (the third defendant) to enjoy the benefits of its entitlement to use the aircraft for its “personal use”, under the partnership agreement, does the -- 6 of 18 -- 7 engagement of the first defendant by the second and/or fourth defendant to fly the aircraft for that purpose make the first defendant an agent of the partnership (or of the second or third defendant) for whose negligence its members (or the second and/or third defendant) are vicariously liable as distinct from being merely an independent contractor for whose negligence neither the members of the partnership nor the second or third defendant are vicariously liable? [40] Under section 5(1) of the Partnership Act 1891 (“the Act”), “partnership” is defined as “the relation which subsists between persons carrying on a business in common with a view of profit”. [41] Under section 6 of the Act, it is provided that in determining whether a partnership does or does not exist regard shall be had inter alia to the following rules – (a) part ownership of property does not of itself create a partnership as to anything held or owned in common whether the owners do or do not share any profits made by the use thereof; and (b) the receipt by a person of a share of the profits of the business is prima facie evidence that the person is a partner in the business. [42] In my view the fact that the third, fourth and fifth defendants were co-owners of the aircraft involved in the injury of the plaintiffs while a relevant consideration in determining whether it constituted partnership property, would not of itself establish it to be partnership property. The evidence is silent as to whether the aircraft is partnership property within s 23 of the Act. At the time of its crash it was registered with the Civil Aviation Safety Authority in the name of the second defendant and had been so registered since June 1994. The essence of the relation of partnership under section 5(1) of the Act is the carrying on of a business between the third, fourth and fifth defendants “in common with a view of profit”. I will assume that upon trial it may be shown that the aircraft was partnership property within s 23 and s 24 of the Act. [43] In any event, with respect to the plaintiffs’ claim in negligence against them, to the extent that the aircraft was partnership property each partner is deemed to have had an individual share in it. I refer to Gray v IRC [1994] STC 360 where Hoffman LJ in delivering judgment of the Court of Appeal observed: “As between themselves, partners are not entitled individually to exercise proprietary rights over any of the partnership assets. This is because they have subjected their proprietary interests to the terms of the partnership deed which provides that the assets shall be employed in the partnership business, and on dissolution realised for the purposes of paying debts and distributing any surplus. As regards the outside world, however, the partnership deed is irrelevant. The partners are collectively entitled to each and every asset of the partnership, in which each of them therefore has an undivided share.” [44] The only business carried on between the third, fourth and fifth defendants, was that managed by Grant Kenny as director of either or both the second defendant and the fourth defendant, when the aircraft owned by all three partners (whether or not it was partnership property within s 23 and 24 of the Act) was made available to Transair for the purpose of that organisation chartering it out for use by members of the public. Presumably it was this use of the aircraft which was the only activity managed by Mr Kenny for the third, fourth and fifth defendants as its co-owners -- 7 of 18 -- 8 which generated any profit which of course was the essence of the existence of the partnership. [45] Ultimately it is contended on behalf of the plaintiffs that the provision in the partnership agreement that each partner should be entitled to the free use of the aircraft for 90 hours per annum was designed ultimately to achieve the making of a profit by the partnership by persuading presumably each of the aircraft co-owner- partners to continue to provide the aircraft as required by Transair for the purpose of chartering it out to make a profit. However the material read upon the application makes it clear that one object of having Grant Kenny notify Transair of the periods of time during which each of the partners required the aircraft for the personal use of its family members was to ensure that such personal use during those periods took precedence over any use which Transair might otherwise be able to make of that aircraft for charter purposes for the profit of the partnership. [46] In my view the “personal use” aspect of the partnership agreement cannot have the legal effect of making all personal use by the partners a use of the aircraft for “the business they conducted in common with a view to profit”. In my view it can only be characterised as a term of the partnership agreement, the purpose of which was to encourage and maintain the subsistence of the partnership business by persuading each of the partners to make the aircraft available for charter at the hands of Transair subject only to each partner’s right to personally use the aircraft for a period of 90 hours per year – ie all told the partnership business would make the co- owned plane (whether or not partnership property within ss 23 and 24 of the Act) permanently available to Transair for charter, subject only to its availability for the personal use of each of its co-owners for a total period of 270 hours per year – the various periods to be notified in advance to Transair by the director of the second and fourth defendants. [47] To my mind there are two legal requirements essential to the plaintiffs’ success in their action as pleaded and particularised against the third, fourth and fifth defendants. [48] The first is to show that each partner by virtue of the “personal use” agreement while undoubtedly authorising or permitting the use of the aircraft for the purposes of one partner did so for the purpose of the partnership business thus constituting the retainer of the first defendant by Kenny his appointment as agent of each partner. [49] The second, based upon the generally accepted rule that a person who retains an independent contractor to perform a service is not vicariously liable for his collateral negligence causing injury to a third party, is to show that the first defendant was the agent of the third, fourth and fifth defendants to pursue the partnership business who are thus vicariously liable for his negligence and not merely an independent contractor retained by them for whose collateral negligence they are not liable. [50] With respect to the first point, I refer merely to the observations of Lord Wilberforce in Morgans v Launchbury [1973] AC 127. In that case a motor vehicle was driven negligently by the agent of the husband of its owner. The owner permitted her husband to use the vehicle on the understanding that when he was affected by alcohol to the extent that his ability to control the car was impaired, he -- 8 of 18 -- 9 would either persuade somebody else to drive him home to his wife or he would ring her up and she would come to “fetch” him. [51] At page 134-135 Lord Wilberforce observed – “The car cannot by any fair process of analysis be considered to have been used for the (wife’s) purposes at the time of the accident. During the whole of the evening’s progress it was as clearly used for her husband’s purposes as any car could be. … It is said, against this, that there are authorities which warrant a wider and vaguer test of vicarious liability for the negligence of another: a test of “interest or concern”. Skilled counsel for the respondents (passengers injured in the collision caused by the negligence of the driver of the wife’s car) at the trial was indeed able to put the words “concerned” and “interest” into the wife’s mouth and it was on these words that he mainly rested his case. On the general law, no authority was cited to us which would rest vicarious liability on so vague a test, but it was said that special principles applied to motor cars. I should be surprised if this were so, and I should wish to be convinced of the reason for a special rule. But in fact there is no authority for it. The decisions will be examined by others of your Lordships and I do not find it necessary to make my own review. For I regard it as clear that in order to fix vicarious liability upon the owner of a car in such a case as the present it must be shown that the driver was using it for the owner’s purposes, under delegation of a task or duty. The substitution for this clear conception of a vague test based on “interest” or “concern” has nothing in reason or authority to commend it. Every man who gives permission for the use of his chattel may be said to have an interest or concern in its being carefully used, and, in most cases if it is a car, to have an interest or concern in the safety of the driver, but it has never been held that mere permission is enough to establish vicarious liability”. His Lordship continued at 135(D-E) – “I accept entirely that “agency” in contexts such as these is merely a concept, the meaning and purpose of which is to say “is vicariously liable. … The owner ought to pay, it says, because he has authorised the act, or requested it, or because the actor is carrying out a task or duty delegated, or because he is in control of the actor’s conduct. He ought not to pay (on accepted rules) if he has no control over the actor, has not authorised or requested the act or if the actor is acting wholly for his own purposes. These rules have stood the test of time remarkably well”. Viscount Dilhorne at 139(F) having reviewed authority observed – “Thus, it was held that, whether it be alleged that the driver was the servant or the agent, to establish liability on the part of the employer -- 9 of 18 -- 10 or the principal it must be shown that the driver was acting for the owner and that it does not suffice to show that the driving was permitted”. At 140(A) Viscount Dilhorne observed – “In my view, the phrase qui facit per alium, facit per se correctly expresses the principle on which vicarious liability is based”. [52] At 142(G) Lord Pearson rejected the new principle “being proposed, whereby permission rather agency would be the basis of (vicarious) liability”. At 150(G-H) after referring to the arrangement or understanding existing between husband and wife in that case, Lord Salmon observed – “It seems absurd to me that if ever thereafter the husband, when slightly intoxicated, asks a friend to take over the driving, he is appointing the friend, with his wife’s authority, as her agent to drive the car on her behalf”. [53] The approach of Lord Wilberforce in Morgans v Launchbury was adopted by the majority in Scott v Davis (2000) 204 CLR 333. [54] I refer to the judgment of Gleeson CJ at 339. At 341 he cited and adopted what was said by Jordan CJ in Christmas v Nichol Bros Pty Ltd (1941) 41 SR (NSW) 317 at 319-320. “…in order to fix with vicarious liability a person other than the negligent driver himself, it is necessary to show that the driver was at the time an agent of his, acting for him and with his authority in some matter in respect of which he had the right to direct and control his course of action. If this is proved, liability is established on the part of the other person, and it is immaterial whether he is the owner of the vehicle or has begged, borrowed or stolen it”. His Honour continued “The pilot was not the agent of the respondent in the sense explained in the above passages. At the time of the pilot’s negligent act, the respondent was not in a position to assert a power of control over the manner in which the pilot was flying the aeroplane. The pilot was neither in fact, nor in law, subject to his direction and control at the critical time”. [55] Having referred to Morgans v Launchbury (supra) he continued at 342 para 17 – “In its application to the present facts, it is said to be that, even if the pilot was not under the respondent’s control at the time of the accident, he was using the aeroplane at the respondent’s request and for the respondent’s purposes, and on that ground the respondent is vicariously liable. I am unable to accept that there is a principle of such width. There are a number of objections to it. First, as the reasons of Gummow J demonstrate, there is no adequate foundation in authority. Secondly, -- 10 of 18 -- 11 it is impossible to reconcile with the general rule that a person is not vicariously liable for the negligence of an independent contractor. An independent contractor may be using an article at another’s request and for the other’s purposes, but the other is not ordinarily responsible for the contractor’s negligence”. [56] He continued at 342 para 19 – “All that the pilot did was to render, on a social occasion, a voluntary service at the request of the respondent. He was not a representative or delegate of the respondent. The wider principle for which the appellants contend should not be accepted in this country. On the findings of fact made by the trial judge, the respondent did nothing wrong. There is no principle upon which he can be made vicariously responsible for what the pilot did”. [57] At 374 para 126 Gummow J considering Morgans v Launchbury (supra) observed – “However, their Lordships did accept that liability might be incurred by the owner of a motor vehicle if it could be shown (and it was not shown on the facts of Morgans v Launchbury) that the driver was using it for the owner’s purposes under delegation of a task or duty. [58] At 380 para 139 he continued – “Further the existence of control has been a significant criterion by which to gauge whether a relationship is one of employment, with concomitant vicarious liability, or of independent contract (Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24, 35 and 49-50)”. [59] At 418 para 253 he continued – “The doctrine of vicarious liability in modern times derives support from the notion that a party who engages others to advance that party’s economic interests should be placed under a liability for losses incurred by third parties in the course of the enterprise.” [60] With respect to the second point I refer again to my citations from two of the majority judgments in the High Court in Scott v Davis (supra) in particular those contained in paras [52] and [57] hereof. [61] More recently the High Court has considered the second point in Hollis v Vabu Pty Ltd (2001) 207 CLR 21. [62] That was a case where the issue debated was whether a bicycle courier engaged by Vabu to deliver parcels and documents while wearing a uniform identifying him with the courier business conducted by Vabu who negligently injured Hollis was an employee of or an independent contractor retained by Vabu. [63] It was held by the majority of the High Court that on the facts the bicycle courier was employed by Vabu. It is unnecessary for me to analyse the basis on which his characterisation as employee was preferred to a characterisation of independent contractor for which Vabu contended. However the majority in that case held at 46 -- 11 of 18 -- 12 para 59 in effect that the court was not contemplating the re-formulation of the basic doctrine that the principal of an agent retained as an independent contractor is not vicariously liable for the acts of collateral negligence of that independent contractor. In the majority judgment it was observed at para 59 – “This decision applies existing principle in a way that is informed by a recognition of the fundamental purposes of vicarious liability and the operation of that principle in the context of one of the many particular relationships that has developed in contemporary Australian society”. And at paras 61 and 62 it was concluded – “The relationship between Vabu and the bicycle courier who struck down Mr Hollis was that of employer and employee. Vabu thus was vicariously liable for the consequences of the courier’s negligent performance of his work. It is unnecessary in the light of the above to address the submissions as to non-delegability of the duty of care.” [64] Callinan J delivering one of the two minority judgments in effect found that the trial had been conducted on the basis that the bicycle courier was not an employee or agent of Vabu. He took the view at para 113 that Hollis ought not be permitted to retract the concession made in the Court of Appeal that the relationship between the bicycle courier and Vabu was not one of employer/employee and observed that the plaintiff contended in effect that the relationship between the bicycle courier and Vabu however it might be described was one which rendered Vabu in the circumstances liable for the courier’s negligence. [65] At para 114 Callinan J pointed out that in substance upon appeal Hollis “sought to create a new category of vicarious liability of which the predominant characteristic would be the financial imbalance between the contracting parties for the services provided. [66] At para 121 Callinan J observed – “To the extent that what the courier did was unlawful, it was not an unlawful act that the respondent (Vabu) employed him to do. I agree with his Honour (Sheller JA in the Court of Appeal of New South Wales) that the case calls for the application of the principles stated by Jordan CJ in Torette House Pty Ltd v Berkman ((1939) 39 SR (NSW) 156 at 170) – “But there is no general rule that if a person employs an independent contractor to do an inherently lawful act, he incurs liability for injury to others occasioned by the methods incidentally employed by the contractor in the course of its performance (these not being methods necessarily involved in the doing of the act and necessarily injurious) by reason only of the fact that the act is ‘dangerous’, ‘hazardous’, or ‘extra hazardous’”. [67] Callinan J continued in para 122 – -- 12 of 18 -- 13 “The statement of Jordan CJ was approved by this Court in Stevens v Brodribb Sawmilling Co Pty ((1986) 160 CLR 16 at 30 per Mason J; at 41 per Wilson and Dawson JJ)”. [68] At para 123 he observed– “Furthermore, as Sheller JA pointed out, the conduct of the respondent’s business (ie Vabu’s) gave rise to no general duty of care to pedestrians and created no relationship of a special kind between (Hollis) and the respondent”. [69] The relationship of a special kind to which Callinan J referred was one which involved the imposition of a non-delegable duty upon a principal retaining an independent contractor to do things on its behalf. [70] In his dissenting judgment in Scott v Davis McHugh J at 370 para 110 observed inter alia – “… it is enough to say that a principal who has delegated a task or duty will be liable where two conditions exist. First, where a duty has been delegated, it must be owed to a third person and where a task has been delegated, it must be one which the principal has undertaken to a third person to perform. It is not a necessary condition of liability that the duty or undertaking is legally enforceable. Secondly, by reason of the principal’s ownership or possession of a chattel or otherwise, the agent must be under the general control of the principal and not an independent functionary. By saying that the agent must be under the general control of the principal, I mean that the principal must have a right to exercise control, although that right (a) need not be actually exercised; and (b) need not extend to every detail of the manner in which the task or duty is carried out. The right of the principal to exercise general control is what distinguishes an “agent” from an independent contractor. When these two conditions exist, the delegate stands in the shoes of the principal and is within the principle of this Court’s decision in CML”. [71] His Honour then referred to that part of the decision of Sir Frederick Jordan in Christmas v Nichol Bros Pty Ltd (1941) 41 SR (NSW) 317 at 320 which is cited in para [53] of these reasons. At 371 para 114, His Honour observed “However, the fact that the respondent asked Mrs Davis to ask Mr Bradford to take the boys up does not prevent a finding that the respondent delegated his task to Mr Bradford, as I think he did”. At para 115 he observed – “The respondent, as owner of the plane, had the right to direct and control much of the manner in which the pilot carried out the delegated task. He owned the plane and the airstrip and was entitled, inter alia, to give directions as to the duration, speed and direction of the flight”. [72] At 372 para 117 His Honour observed – “Moreover their Lordships were engaged in a completely futile exercise in Morgans when they inquired into the purpose for which the driver was driving if physical presence is required: Mrs Morgans was at home at the time of the accident”. -- 13 of 18 -- 14 [73] In expressing his conclusion at 372 para 119 His Honour observed – “The categories of vicarious liability did not close in 1840 when Quarman was decided. That case established only that a person employing another could not be liable for the latter’s wrongful conduct if the person employed was an independent contractor. The common law continued to hold a master liable for the torts of the servant and a principal liable for the torts of agents who acted in a representative capacity. Moreover, not only did the categories of vicarious liability remain open, but the principles of vicarious liability themselves underwent significant change after 1840.” [74] His Honour expressed the view that the appeal should be allowed on the basis that the owner was vicariously liable for the pilot’s negligence. [75] In Hollis v Vabu, McHugh J although one of the majority judges, agreed on the evidence that Vabu was liable because the negligent courier was its agent, but not an independent contractor, and was acting as Vabu’s representative in carrying out a contractual obligation of Vabu. At para 68 he observed – “I also agree with their Honours (in the Court of Appeal) 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”. [76] At 50 para 73 His Honour observed – “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”. [77] His Honour continued in para 74 – “The principal will be liable when the conduct occurs while the agent is carrying out a task for the benefit of the principal as his or her representative. In my view, it is the agency principle recognised by this Court in CML that provides the appropriate solution for this important case. Applying that principle, the courier was an agent for whose negligence Vabu was responsible.” -- 14 of 18 -- 15 [78] At 57 para 93 His Honour observed – “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”. [79] At 58 para 94 His Honour referred to his review of authorities in Scott v Davis (supra) and adhered to his dissenting view expressed in that case. [80] At 60 para 101 His Honour observed with respect to the facts of the case before him – “Applying the principles laid down in CML to the present case, Vabu is liable for 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”. His Honour then detailed various documents given to couriers including “general rules for all drivers” which included “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”. [81] At 61 para 102 His Honour observed – “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. It reminded the couriers of deadlines and the priorities for deliveries. There were general and specific instructions about dealing with clients. There were also detailed directions setting out the procedures to be followed when using a radio communication system. … Vabu allocated the work, and a courier could not refuse to do what was allocated to him or her. … 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 -- 15 of 18 -- 16 was well aware that the bicycle couriers contravened traffic regulations and were likely to cause injury to persons using the public thoroughfares”. [82] It is clear then that the basis upon which McHugh J concurred that the appeal should be allowed was completely different from that upon which the other majority members of the court arrived at that conclusion. Indeed in his dissenting judgment Callinan J analysed the applicable legal principles upon which Vabu could be held vicariously liable consistently with the analysis of the majority other than McHugh J. The other majority judges and Callinan J regarded as significant, determination whether the courier was an employee of Vabu in which event Vabu was vicariously liable for his negligence or whether he was in the circumstances an independent contractor in which event Vabu was not vicariously liable. [83] In my view the only basis on the facts pleaded by the plaintiffs in the present case, upon which they could even arguably succeed against the second, third and fourth defendants is by adopting and widening the approach of McHugh J in both Scott v Davis and Hollis v Vabu in which he alone of all judges in the High Court disregards the “dichotomy” traditionally drawn with respect to a principal’s vicarious liability for collateral negligence of somebody categorised as an employee and that for somebody categorised as an independent contractor. [84] Essentially it is the case for the plaintiffs that this is a matter which they should be permitted to canvass upon trial of their action with a view ultimately to persuading the High Court to re-visit this question which it refused to do in either Scott v Davis or Hollis v Vabu. [85] In my view in exercising jurisdiction under UCPR rule 293 in effect to strike out the plaintiffs’ action on the current state of the law applying the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 on the basis that the plaintiffs could not succeed in their action as presently framed it would be inappropriate to permit this action to proceed to trial on all factual issues relating to negligence and quantum on the basis of a possibility that the matters canvassed on this application may be revisited by the High Court having regard to comments made by members of that court to which I have referred. [86] In my view upon the facts pleaded and particularised in the present case – (a) The first defendant was an independent contractor whose services were procured by the second and/or fourth defendants for the personal use of the third defendant’s family members (b) The first defendant was not retained or employed as the agent of all three partners/co-owners of the aircraft which crashed due to his alleged negligence for any profit making purpose of the partnership (c) The first defendant was retained by Mr Kenny at the request of the third defendant to pilot the aircraft for the purposes only of the third defendant (d) The third, fourth and fifth defendants as partners under the “personal use” term of the partnership agreement merely authorised or permitted the use of their aircraft by members -- 16 of 18 -- 17 of the Scanlan family for a purpose not in any way connected with conduct of the partnership business (e) The only “benefit” accruing to the partnership by reason of the personal use of the aircraft enjoyed by members of the Scanlan family at the time of the aircraft crash and its only interest in or concern with such personal use was not of a financial kind but arguably only one which might encourage the subsistence of the partnership by allowing each of the partners to use the aircraft for a personal purpose unconnected with the partnership business making any profit. [87] In my view on the present state of the law as declared by the majority judgments in Scott v Davis and Hollis v Vabu the plaintiffs could not succeed in their action as currently framed against the third, fourth and fifth defendants. [88] On the other hand, in my view as the authorities presently stand should the plaintiffs establish as pleaded, negligence of the part of Mr Kenny as director of either the second defendant or the fourth defendant in selecting the first defendant to pilot the Scanlan family to Quail Island with knowledge that he lacked sufficient experience to do so safely, that would constitute a viable cause of action against the second and/or fourth defendants. [89] I make no comment of course upon the likelihood upon the material placed before me of such negligence being established. However if this fact be established the plaintiffs’ cause of action pleaded against the second and fourth defendants would be viable. [90] I would not therefore give summary judgment for the defendants upon the plaintiffs’ action framed against the second defendant and the fourth defendant on the basis of the negligence alleged against Mr Kenny. [91] Should the plaintiffs elect to comply with a direction that there be a separate trial of the issue debated before me as to the vicarious liability of the third, fourth and fifth defendants based upon the content of the “personal use” term as particularised to which I have referred in para [13] hereof I would be disposed to make such an order which might then result in the speedy determination of one of the principal issues in the action brought by the plaintiffs against the defendants. To facilitate the ultimate determination of that issue should perhaps special leave be granted by the High Court of Australia I would make such a direction. The evidence on that issue should be within a very narrow compass. Such a course one would hope would obviate the necessity for calling a great deal of evidence with respect to liability and quantum. Negligence of the first defendant of course would have to be proved against each of the second, third and fourth defendants without reliance upon default judgment obtained against him. [92] I would make a direction under UCPR 298 and 483 for a trial of the issue of vicarious liability separate from the trial of all other issues with a view to obtaining its relatively speedy determination and thus avoiding the consequences of calling a great deal of evidence and incurring significant costs to no avail should all factual issues be tried together and the plaintiffs fail on the issue of vicarious liability. -- 17 of 18 -- 18 Should the plaintiffs succeed on that issue it is likely that the only issue for determination would be quantum of damages and that issue might be settled. [93] I indicate that I would only make an order for separate trial of the issue really debated upon the application for summary judgment before me should the plaintiffs elect to seek such an order. I would invite the parties to agree on the form and content of the separate question under UCPR 486. In the event that the plaintiffs do not seek a separate trial of that issue, I propose to give judgment for the defendants on that part of the particularised pleading which seeks to hold the third, fourth and fifth defendants vicariously liable for the collateral negligence of the first defendant resulting in damage to the plaintiffs. [94] I would not, however, give summary judgment against the plaintiffs on that part of their claim against the second and fourth defendants which asserts negligence on the part of Mr Kenny in selecting on behalf of the Scanlan family the first defendant to pilot the aircraft owned by the third, fourth and fifth defendants. Should the plaintiffs succeed on the issue of vicarious liability, it is probably unlikely in any event that they would pursue their action against the second and fourth defendant based upon the alleged negligence of Mr Kenny. -- 18 of 18 --