Today the High Court held a company who hired an independent contractor to perform work on a fridge was not vicariously liable to a customer who was injured by the independent contractor's negligence.
Facts
In Sweeney v Boylan Nominees Pty Limited [2006] HCA 19 (16 May 2006) Boylan Nominees Pty Limited (hereinafter (“the Respondent”) managed a refrigerator in service stations and convenience stores. As part of their lease, the Respondent was required to maintain and service the refrigerator.
The operators of the service station and convenience store observed the refrigerator door was not closing correctly. They contacted the Respondent who hired an independent contractor to examine the refrigerator. The independent contractor tightened the screws and demonstrated to the store manager the refrigerator door was repair. The District Court judge appears to be critical of the level of care taken by the independent contractor in performing their duties.
The independent contractor was not employed by the Respondent or the service station. The independent contractor performed jobs when he was contacted by the Respondent and invoiced the Respondent for each job. The independent contractor provided his own tools, vehicle, had his own livery and paid his own superannuation and worker’s compensation and public liability insurance.
Sweeney (hereinafter “the Appellant”) went to the same service station and convenience store to purchase a bottle of milk. When she opened the refrigerator which the independent contractor had serviced, the door came loose and fell upon her. As a consequence she suffered head and hand injuries.
The Appellant sued the Respondent and decided not to proceed against the independent contractor. The majority framed her argument as:
“if A "represents" B, B is vicariously liable for the conduct of A”.
Vicarious liability is a concept derived from the Medieval Laws, where a master was responsible to manage his servants as he would his cattle. Generally, vicarious liability is imposed on a principal for the act of another where they are in a limited class of relationships. Vicarious liability generally manifests itself with an employer’s vicarious liability for the torts of their employees.
Judgment
GLEESON CJ, GUMMOW, HAYNE, HEYDON AND CRENNAN JJ held a hirer will not always be liable to a hiree, simply because the hirer gains a benefit or has their interests advanced by the hiree. The majority rejected the Appellant’s arguments and restated the ratio from Hollis v Vabu Pty Ltd [2001] 207 CLR 21. Their honors distinguished the current case on its facts. In Hollis the independent contractor wore the livery of the principal and controlled the independent contractors work. In this case, the majority found the Respondent had no control over the independent contractor. The independent contractor was working towards his own interests and not that of the principal.
In the circumstances the majority found the independent contractor was not an employee and thus they dismissed the appeal with costs.
In minority, Kirby J found the principal was liable on the grounds of agency. In Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-Operative Assurance Co of Australia Ltd (1931) 46 CLR 41 the court had found a principal liable for their “representatives”. His honor found the independent contractor was advancing the economic interests of the principal and thus constituted the principal’s “representative”.
Conclusion
Sweeney v Boylan Nominees Pty Limited [2006] HCA 19 reinforces the importance of carefully managing how principals hire independent contractors. The difference between vicarious liability in Hollis and no vicarious liability in Sweeney is a matter of legal construction of the contracts. In Hollis the principal was liable for damages and thousands in legal costs. In Sweeney the principal was not liable and had their legal costs paid. Principals can reduce their risk by restructuring their contracts in light of this important High Court decision.
July, 2006
|
