A R Griffiths and Sons Pty Ltd and Workers' Compensation Board v Richards and FAI General Insurance Co Ltd
[1996] QCA 417
•29/10/1996
| IN THE COURT OF APPEAL | [1996] QCA 417 |
| SUPREME COURT OF QUEENSLAND | Appeal No. 228 of 1995 |
| Brisbane | |
| Before | Fitzgerald P. Mackenzie J. Helman J. |
[A.R. Griffiths & Sons P/L & anor. v. Richards & anor.]
BETWEEN:
A.R. GRIFFITHS & SONS PTY LTD
(Third Defendant by Counterclaim) First Appellant
AND:
WORKERS’ COMPENSATION BOARD OF QUEENSLAND
(Fourth Defendant by Counterclaim) Second Appellant
AND:
TONY CRAIG RICHARDS
(First Defendant and First Defendant by Counterclaim) First Respondent
AND:
FAI GENERAL INSURANCE COMPANY LIMITED
(Defendant by Election and Plaintiff by Counterclaim) Second Respndent
REASONS FOR JUDGMENT - FITZGERALD P.
Judgment delivered 29/10/1996
The circumstances giving rise to this appeal are set out in the reasons for judgment of the other members
of the Court. Broadly stated, an employee was injured by the negligence of a fellow employee in driving
a motor vehicle in the course of their employment. Each employee was a orker” within the meaning of sub-s. 3(1) of the Workers Compensation Act 1916.[1] The Workers’ Compensation Board of
[1] It was common ground that that Act, which has now been repealed and replaced by the Workers’ Compensation Act 1990, continues to apply in relation to the present accident, which occurred on 14 August 1989: see Part 14 of the 1990 Act.
Queensland (“the Board”), the insurer of the employer under a policy of insurance issued under that Act,
has paid damages to the injured employee. It now seeks to be indemnified by FAI General Insurance
Company Ltd (“FAI”), the insurer of the employer’s motor vehicle under a policy of insurance issued
under the Motor Vehicles Insurance Act 1936 as amended.
Disputes between the Board and third party insurers are not uncommon.[2] The Board seeks to improve
[2] See, for example, Miller v. Frost Constructions Pty. Ltd. [1971] Q.W.N. 29, Suncorp Insurance & Finance v. Workers’ Compensation Board of Queensland [1990] 1 Qd.R. 185; Glover v. Politanski [1990] 2 Qd.R. 41; Jaye v. Grahame Allen Earthmoving Pty Ltd [1993] 1 Qd.R. 389; Lorimer v. Thatcher [1993] 2 Qd.R. 25; Suncorp Insurance & Finance v. Workers’ Compensation Board of Queensland [1996] 2 Qd.R. 289.
its success rate by using an indirect route, proceeding in the name of the employer against the negligent employee-driver and contending that he is entitled to be indemnified under the policy of insurance issued
by FAI.[3] Subject to any considerations related to the Motor Vehicles Insurance Act, if the Board’s
[3] The Notice of Appeal also seeks a declaration (b) that FAI is liable to indemnify the employer against its liability to the injured employee. Although the formal order made by the primary judge dated 14 September, 1995, and his reasons for judgment delivered that day both include a declaration that FAI is not liable to indemnify the employer against its liability to the injured employee, his Honour’s reasons indicate that on, 4 August 1995, the employer’s claim for indemnity against FAI was dismissed by consent, and a perusal of the file bears that out.
theory is correct a negligent employee who injures a fellow worker will also be liable to indemnify his
employer (and indirectly the Board) when there is no motor vehicle involved and the negligent employee
is uninsured in respect of his or her liability.
In the circumstances, I consider that the preferable course is to postpone consideration of the Motor
Vehicles Insurance Act and commence with the contractual relationship between the employer and the
negligent employee, which is directly material to both bases upon which the Board relies for its
contention that the negligent employee is obliged to indemnify the employer. The contract’s relevance
in relation to the Board’s second basis, which depends on implying a promise by the negligent employee
to indemnify the employer in that contract, is obvious. The Board’s primary basis relies on sub-s. 5(c)
of the Law Reform (Tortfeasors Contribution, Contributory Negligence and Division of Chattels) Act
1952;[4] subject to a qualification noted below, [5] if the Board’s argument based on sub-s. 5(c) is
[4] While material provisions of the Law Reform (Tortfeasors Contribution etc.) Act have been relocated in the Law Reform Act 1995, it is convenient and appropriate having regard to the date of the accident, to continue to refer to the legislation by its original name and to use the section numbers in that earlier statute.
[5] By reference to Morris v. Ford Motor Co. Ltd [1973] Q.B. 792.
otherwise correct, the Board’s primary argument would fail entirely only if the converse term to that
sought by the Board is to be implied into the contract of employment, i.e., a term which “entitled [the
negligent employee] to be indemnified by the [employer] in respect of his liability” to the injured
employee. If the contract of employment between the employer and the negligent employee contains
an implied term entitling the negligent employee to indemnification by the employer, it is plain that it will
not also contain an implied term obliging the negligent employee to indemnify the employer; however,
it would be sufficient for the Board’s purpose if the contract of employment between the employer and the negligent employee contains no implied term with respect to indemnification of either party by the
other. The first question, therefore, is whether the contract of employment between the employer and
the negligent employee contained a term which “entitled [the negligent employee] to be indemnified by
the [employer] in respect of his liability” to the injured employee.
The Board relied on the majority opinion in Lister v. Romford Ice & Cold Storage Co. Ltd [1957] A.C.
555 for propositions that a term which would satisfy the requirements of sub-s. 5(c) of the Law Reform
(Tortfeasors Contribution, etc.) Act is not to be implied into the contract of employment between the
employer and the negligent employee, but that, on the contrary, the contract contains an implied promise
by the negligent employee to indemnify the employer. However, in my opinion, Lister does not oblige
this Court to uphold the present appeal.
Lister is not binding on this Court and, while decisions of the House of Lords no doubt continue to
command respect, the common law of Australia is now developed by Australian appellate courts under
the guidance and leadership of the High Court of Australia; further, the decision in Lister was not
unanimous, there were considerations which supported each of the competing views, with cogent
reasons advanced for their conclusion by the minority, Lord Radcliffe and Lord Somervell of Harrow.
In any event, Lister should, in my opinion, now be considered in this State as a decision which related
to a different setting, in terms of time, place, social attitudes, and legislative context, the majority view
in which has never, so far as I have discovered, been accepted as correct by the High Court as an
integral part of its reasoning or by any other Australian appellate court, but has been questioned and on occasions criticised.[6] In my opinion, the material terms of the contract of employment between the employer and the negligent employee should be decided by the application of the principles concerning
[6] Lister received the endorsement of Windeyer J., with whom Dixon C.J. and Owen J. agreed, in Voli v. Inglewood Shire Council (1963) 110 C.L.R. 74 at p. 100, but his Honour’s remarks were obiter, and were expressed at a time when the High Court was bound by decisions of the Privy Council and accorded special deference to decisions of the House of Lords: see Skelton v. Collins (1966) 115 C.L.R. 94. Generally at least, even intermediate appellate courts are to use English decisions “only to the degree of the persuasiveness of their reasoning” (Cook v. Cook (1986) 162 C.L.R. 376, 390), and the acceptability of an intermediate appellant court departing from previous authority which is not binding where necessary to reach a correct decision was confirmed in Nguyen v. Nguyen (1990) 169 C.L.R. 245, 268ff. A more reserved attitude by the High Court toward Lister appears in Commercial & General Insurance Co. Ltd v. Government Insurance Office (N.S.W.) (1973) 129 C.L.R. 374, 380-381, McGrath v. The Council of the Municipality of Fairfield (1985) 156 C.L.R. 672, 675-677, and Oceanic Crest Shipping Co. v. Pilbara Harbour Services Pty Ltd (1986) 60 A.L.J.R. 480, 491-492 per Brennan J. Lister was assumed to be correct by the Full Court in Boral Resources (Qld.) Pty Ltd v. Pyke [1992] 2 Qd.R. 25, and perhaps earlier in Kelly v. Alford [1988] 1 Qd.R. 404, and by single judges of the Supreme Court of New South Wales in Northern Assurance Co. Ltd v. Coal Mines Insurance Pty Ltd [1970] 2 N.S.W.R. 223; Kashemije Stud Pty Ltd v. Hawkes (1978) 1 N.S.W.L.R. 143; Samrani v. Roads and Traffic Authority of New South Wales (Simpson J., unreported, 21 October 1994) and Bolton Gems Pty Ltd v. Gregoire (Young J., unreported, 10 November 1995), but see Rowell v. Alexander Mackie College of Advanced Education [1988] Aust. Tort Reports 67,726, per Samuels J.A. with whom Hope J.A. agreed, Mahoney J.A. contra. The problems associated with Lister were discussed by the Queensland Law Reform Commission in a Discussion Paper (WP 48) “Vicarious Liability” published in July 1995: see Chapter 10 especially
the implication of contractual terms established by the High Court, in the context of the Workers’
Compensation Act and the Law Reform (Tortfeasors Contribution etc.) Act and prevailing industrial
attitudes and employer/employee relations in the Queensland community.7
The conditions necessary to ground the implication of a term were summarized by the majority in B.P.
Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council (1977) 180 C.L.R. 266 at p. 283 as
follows: “(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to
the contract, so that no term will be implied if the contract is effective without it; (3) it must be so
obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not
contradict any express term of the contract.” While this approach was subsequently endorsed by the
High Court on a number of occasions (see, e.g., Secured Income Real Estate (Australia) Limited v. St.
Martins Investments Pty Ltd (1979) 144 C.L.R. 596; Codelfa Construction Pty Ltd v. State Rail
pp. 69-73. See also The Laws of Australia (Law Book Company), Vol. 33 Chapt. 11, “Torts”, pp.
26-28.7 Because the negligence on this occasion involved an insured motor vehicle, reference will also be necessary later to the Motor Vehicles Insurance Act.
Authority of New South Wales (1982) 149 C.L.R. 337), it has been increasingly recognised that what
was said in B.P. Refinery (Westernport) was not an exhaustive definition of a test which is universally
applicable; see per Mason J. in Codelfa at p. 345 and per Deane J. in Hospital Products Ltd v. United
States Surgical Corp. (1984) 156 C.L.R. 41 at p. 121 and Hawkins v. Clayton (1988) 164 C.L.R. 539
at p. 573. The matter was again discussed in Esso Australia Resources Ltd v. Plowman (1995) 183
C.L.R. 10 at p. 30 per Mason C.J., with whom Dawson and McHugh J.J. agreed, and p. 34 per
Brennan J.
More recently, the High Court has considered the implication of terms into a contract of employment
of employees to whom an industrial award applied in Byrne v. Australian Airlines Ltd (1995) 185
C.L.R. 410. In their joint judgment, Brennan C.J., Toohey and Dawson JJ. said at p. 422:
“Implied term
The implication which the appellants seeks to make is based upon the presumed or
imputed intention of the parties. In that context, the remarks of the majority in the Privy
Council in BP Refinery (Westernport) Pty Ltd v. Shire of Hastings [(1977) 180
CLR 266 at 283] are frequently called in aid:‘(1) [the implication] must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.’
In laying down those criteria, it was recognised that there was a degree of overlap. Further, as Deane J. has observed [See Hospital Products Ltd v. United States Surgical Corporation (1984) 156 CLR 41 at 121], the cases in which the criteria in BP Refinery (Westernport) Pty Ltd v. Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face. He pointed out that a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test to be then applied was in a later case formulated by Deane J. in these terms [See Hawkins v. Clayton (1988) 164 CLR 539 at 573]:
‘The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.’
That is, we think, the appropriate test to apply in this case ...”
In a separate judgment, McHugh and Gummow JJ. discussed the implied term contended for by the
appellants in that case at some length: see pp. 440 et seq. It is sufficient for present purposes to quote
the following passages from pp. 441-442, 446-447, 447-448, 449-450, 450 and 451-453: “In BP itself and in other cases such as Secured Income Real Estate (Australia) Ltd v. St Martins Investments Pty Ltd. [(1979) 144 CLR 596] , Codelfa Construction Pty Ltd v. State Rail Authority NSW [(1982) 149 CLR 337] and Adelaide City Corporation v. Jennings Industries Ltd [(1985) 156 CLR 274] the question was whether a term should be implied in a formal written contract which was complete upon its face.
That is not the present case. We have referred to the exiguous nature of the evidence as to the form taken by, and the express terms of, the contract of employment between the respondent and the appellants. There are two consequences.
First, this species of implication is concerned with the circumstances of the particular case. The primary judge and Black CJ and Gray J in the Full Court referred to the need to prove facts leading to the implication of a term of this nature. Gray J said [(1994) 47 FCR 300 at 361]:
‘[T]his Full Court does not know what all of the express terms of the contracts were. It does not know whether they were adequate to make the contracts of employment efficacious or whether any of them would contradict the proposed implied term. An examination of the facts surrounding the creation of each contract of employment might lead to a different result for one appellant from the other.’
Secondly, where the contract is not in writing and is oral or partly oral or it appears that the parties themselves did not reduce their agreement to a complete written form, caution is required against an automatic or rigid application of the cumulative criteria identified in BP. We should proceed on the footing that the present case is to be approached in this way.
In such situations, the first task is to consider the evidence and find the relevant express terms. Some terms may be inferred from the evidence of a course of dealing between the parties. It may be apparent that the parties have not spelled out all the terms of their contract, but have left some or most of them to be inferred or implied. Some terms may be implied by established custom or usage, as described above. Other terms may satisfy the criterion of being so obvious that they go without saying, in the sense that if the subject had been raised the parties to the contract would have replied ‘of course’ [Hospital Products Ltd v. United States Surgical Corporation (1984) 156 CLR 41 at 121]. If the contract has not been reduced to complete written form, the question is whether the implication of the particular term is necessary for the reasonable or effective operation of the contract in the circumstances of the case; only where this can be seen to be true will the term be implied [Hawkins v. Clayton (1988) 164 CLR 539 at 573].”
...
“In contracts of this nature, apparently lacking written formality and detailed specificity, it still is necessary to show that the term in question would have been accepted by the contracting parties as a matter so obvious that it would go without saying. That cannot be postulated here.
Nor could it be said that the implication into the contract of employment of a term to the effect of cl 11(a) of the Award would be necessary for their reasonable or effective operation. In the absence of such a contractual provision, there would remain unaffected the entitlement of the employer at general law to terminate at will on giving reasonable notice and to dismiss summarily for misconduct. That this would be the case was accepted in the submissions of both sides to this court. Thus, there would be no ‘gap’ which it was necessary to fill by a provision such as cl 11(a).
Accordingly, we accept the submissions for the respondent that the term for which the appellants contend is not to be implied as a matter of business efficacy in its contracts of employment with the appellants.
Implications independent of intention
The two species of term considered above, if indeed they be distinct, are concerned
with giving effect to what is taken to have been the intentions of the parties. The
expression ‘implied term’ suggests imposition in the way in which statutes such as the
Trade Practices Act 1974 (Cth) [e.g., ss 66-74] imply conditions or warranties in
contracts of a particular description, which may not be excluded or modified. The
sense of the matter would have been better served by general adoption of the
expression - apparently coined by Sir John Salmond [Salmond and Winfield,
Principles of the Law of Contracts (1927) p 47] and used by Dixon J [Shepherd
v. Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 378] - ‘tacit term’ to
identify the latent unexpressed intentions of the parties.The third type of term upon which the appellants rely is of a different nature. In the Full Federal Court Gray J alone accepted the submission, in turn based upon Gregory, that cl 11(a) was a term of the contract of employment imported independently of the intention of the parties. His Honour referred to a number of incidents of the employment relationship which are imposed not by implication in the sense discussed above, but by law and as a matter of policy. ...”
...
“What then, is involved in the proposition that a contractual term is implied as a matter
of law rather than as the assumed intention of the parties?There is at least one basic distinction. It is that, as indicated above, terms implied by the application of what one might call the business efficacy test are terms unique to the particular contract in question, depending upon the form of the contract, the express terms and the surrounding circumstances. By contrast, terms implied by law are, in general, implied in all contracts of a particular class or which answer a given description [Esso Australia Resources Ltd v. Plowman (1995) 183 C.L.R. 10 at 30].
Further, as Hope JA pointed out in Castlemaine Tooheys Ltd v. Carlton & United
Breweries Ltd [(1987) 10 NSWLR 468 at 487]:‘Although the distinction between the two classes of implication has not been and perhaps is still not universally appreciated, classes of contract in respect of which terms will be implied by law, and the terms which will be implied, have in many cases been long established. Typical classes are contracts between master and servant, for the sale of goods, for the provision of work and materials and between landlord and tenant [A more detailed description was given by Professor Glanville Williams in his article “Language and the Law”, which was published in four parts: (1945) 61 Law Quarterly Review, 71, 179, 283, 381 at 403: “Examples of such terms ‘implied’ into contracts by rules of law are the implied conditions of reasonable fitness and merchantable quality on a contract of sale of goods, the rule that payment and delivery of goods are concurrent conditions, the implied warranty of seaworthiness, the implied condition on the letting of a furnished house that it is reasonably fit for habitation, the implied promise by one who agrees to build a house that the house will be reasonably fit for habitation, the implied promise by a servant not to disclose secret processes, not to hand over to a rival written work completed for the master, and not, while still in his master’s employment, to solicit the master’s customers to transfer their custom to himself, the implied promise by an employer (in some cases) to furnish work, the implied duty of care in the carriage of passengers and in looking after bailed goods, and the implied promise by a banker not to disclose the state of his customer’s account.”] However, the classes of contracts in which the law will imply terms are not closed; the difficult question is to determine what test should be applied before the courts imply such a term for the first time.’
Some implied terms are perhaps more usefully identified as rules of construction applied to the express terms of the contract, particularly to the written terms thereof.”
...
“However, the more modern and better view is that these rules of construction are not rules of law so much as terms implied, in the sense of attributed to the contractual intent of the parties, unless the contrary appears on a proper construction of their bargain [Cheall v. Association of Professional Executive Clerical and Computer Staff [1983] 2 AC 180 at 188-9; Thompson v. ASDA-MFI Group Plc [1988] Ch 241 at 266]. There is force in the suggestion that what now would be classified as terms implied by law in particular classes of case had their origin as implications based on the intention of the parties, but thereafter became so much a part of the common understanding as to be imported into all transactions of the particular description. The matter is put as follows in Halsbury [Halsbury’s Laws of England, 4th ed, (1974) vol 9, par 354, fn#27]:
‘Perhaps the truth is that the ambiguous terminology enables the courts in the first instance to imply terms on the basis of the intention of the parties ... but later there comes a time when the particular implied term has become so much a part of common practice that the courts begin to import it into all transactions of that type as a matter of course; and the result is a rule of law of the type considered in this paragraph.’
This understanding of the matter is consistent with the proposition that terms of this kind, although treated as implied by law, may be excluded by express provision made by the parties and also as a result of inconsistency with terms of the contract [Castlemaine Tooheys (1987) 10 NSWLR 468 at 490-3; Devefi v. Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225 at 240-1; Glanville Williams, ‘Language and the Law’ (1945) 61 Law Quarterly Review 71, 179, 283, 384 at 404. The common law as to the engagement of Crown servants has been treated as apparently in a special position. Not only is any appointment as a Crown servant, however subordinate, terminable at will unless otherwise provided by legislation (Ryder v. Foley (1906) 4 CLR 422 at 433-4, 449; Fletcher v. Nott (1938) 60 CLR 55 at 67,77; Kaye v. Attorney-General (Tas) (1956) 94 CLR 193 at 198, 203; Marks v. The Commonwealth (1964) 111 CLR 549 at 587; Director- General of Education v. Suttling (1987) 162 CLR 427 at 437; Kodeeswaran v. Attorney-General (Ceylon) [1970] AC 1111 at 1118), but it seems that the Crown cannot deprive itself of that right, even though it has purported to fetter it in the particular terms of engagement of the servant: Sir Douglas Logan, ‘A Civil Servant and his Pay’ (1945) 61 Law Quarterly Review 240 at 255, 262; cf Ansett Transport Industries (Operations) Pty Ltd v. The Commonwealth (1977) 139 CLR 54 at 74-6]. The result is that, even if treated as rules of law, they only apply in the absence of an expression of contrary intent.”
...
“Many of the terms now said to be implied by law in various categories of case reflect the concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined [Nullagine Investments Pty Ltd v. Western Australian Club Inc (1993) 177 CLR 635 at 647-8, 659; 116 ALR 26]. Hence, the reference in the decisions to ‘necessity’.”
...
“A similar approach subsequently was taken by the House of Lords in Scally v. Southern Health and Social Services Board [[1992] 1 AC 294. See also the Privy Council decision in Tai Hing Cotton Mill Ltd v. Liu Chong Hing Bank [1986] AC 80 at 104-7, dealing with the contract between banker and customer]. In this case, the appellants were medical practitioners whose terms of employment with Northern Ireland health boards had been negotiated by representatives of their professional bodies. They brought actions against their employers alleging, among other things, breach of contract in respect of failure of their employers to inform them of certain rights which they had enjoyed but which had been exercisable only within a particular period. Lord Bridge of Harwich [[1992] 1 AC 294 at 304] identified the issue as follows:
‘The problem is a novel one which could not arise in the classical contractual situation in which all the contractual terms, having been agreed between the parties, must, ex hypothesi, have been known to both parties. But in the modern world it is increasingly common for individuals to enter into contracts, particularly contracts of employment, on complex terms which have been settled in the course of negotiations between representative bodies or organisations and many details of which the individual employee cannot be expected to know unless they are drawn to his attention. The instant case presents an example of this phenomenon arising in the context of the statutory provisions which regulate the operation of the health services in Northern Ireland.’
The question was whether the law would imply into the contract of employment an obligation on the employer to notify the employees of the rights in question. Was the term a ‘necessary incident of a definable category of contractual relationship’? The House posed this question and answered it in the affirmative [[1992] 1 AC 294 at 307]. Their Lordships held that, where a contract of employment, negotiated between employers and a representative body, contained a particular term conferring upon the employee a valuable right contingent upon his or her acting as required to obtain the benefit, of which the employee could not be expected to be aware unless the term was brought to the attention of the employee, there was an implied obligation on the employer to take reasonable steps to publicise the term.
In the present appeal, the appellants relied upon this concept of necessity. Their submission was that employment contracts were a well-recognised ‘class’ of contract. That was conceded by the respondent. So also was the proposition that the law imported various incidents into the relationship of employment, one of them being the entitlement of the employer to terminate the employment at will on giving reasonable notice and to dismiss summarily for misconduct. It was then submitted that the existence of the award, and in particular cl 11(a), ‘required’ reformulation of that incident of the relationship by importing, in terms, the provisions of cl 11(a).
However, there is no ‘necessity’ for such a step in the sense in which that term was applied in cases such as Irwin and Scally. The contract of employment is not, from the viewpoint of the employee, rendered nugatory if the existing provisions thereof remain, as a matter of contract, to operate concurrently with the regime established by the award and deriving its authority from statute.
There is nothing to suggest that the contracts of employment were not workable and effective before the introduction into awards of provisions such as cl 11(a). This is not a case where a provision such as cl 11(a) is necessary lest the contract be deprived of its substance, seriously undermined or drastically devalued in an important respect.”
No information concerning the terms of employment of the negligent employee, including the position
in which or the period for which he was employed or the applicable award, is available. However, it
is not in dispute that, at the material time, the negligent employee was acting in the course of his
employment, and it seems appropriate to infer that his regular tasks included the task which he
performed negligently, causing injury to his fellow employee (in this instance, driving a motor vehicle,
although any special considerations which arise by reference to that particular activity are put to one side for the moment). It seems appropriate also to assume that there was neither a formal written contract
nor an industrial award which is material, either directly or contextually, to the issues which fall for
decision.
The Workers’ Compensation Act 1916 had been in force for more than 70 years when the material
accident occurred, and had obviously been in force for many years when the negligent employee was
first employed by the employer. By s. 9, a worker injured in the course of his employment was given
an entitlement to compensation out of the Workers’ Compensation Fund established under the Act.
Nothing in the Act excluded the injured worker’s right to damages from any person legally liable for
his or her injury, and sub-s. 16(1) expressly preserved the legal liability of the injured person’s employer
“when the injury was caused by the personal negligence or wilful act of the employer or of some person
for whose act or default the employer is responsible ...”. Under sub-s. 8(1), the injured worker’s
employer was also made liable to pay the compensation for which the Act provided. Provision was
made in s. 16 and cll. 24 and 24A of the Schedule to the Act (see s. 15) for the amount of
compensation payable out of the Fund to be deducted from damages recovered by the injured worker,
or for the compensation to be repaid if already paid. Sub-section 8(1) also obliged every employer to:
“insure himself and keep himself insured with the [board] against all sums for which, in respect of injury to any worker employed by him, he may become legally liable by way of -
(a) compensation under this Act: and
(b) ... (except such an injury in respect whereof the employer is required by some other Act ... to provide against such liability as prescribed by such other Act) damages arising under circumstances creating also, independently of this Act, a legal liability in the employer to pay damages in respect of that injury.”
Under sub-s 8(5), the Board was empowered to recover any amount paid to the injured worker from
his or her employer where the employer had “failed to comply with the requirements of” s. 8.
So far as presently material, cll. 24 and 24A[8] of the Schedule to the Act provide:
[8] Clause 24A was first inserted, and cl. 24 was made subject to cl. 24A, in 1954 (by s. 6 of the Workers’ Compensation Acts Amendment Act of 1954). The original cl. 24A was repealed and a new cl. 24A inserted in lieu in the following year (by s. 4 of the Workers’ Compensation Acts Amendment Act of 1955). Later changes do not need be identified for present purposes.
“24. Recovery of damages from stranger. 5 Edw. 7 No. 26, s. 8. Va. 1914, No. 2496, s. 16. When the injury for which compensation is payable by the Board under this Act was caused under circumstances creating also a legal liability in some other person to pay damages in respect thereof -
(i) The worker may both take proceedings against that person to recover damages and may apply for compensation under this Act, but is not entitled to recover both damages and compensation; and
(ii) If the worker has recovered compensation under this Act, the Board shall be entitled to be indemnified by the person so liable to pay damages as aforesaid, and all questions as to the right to and amount of any such indemnity shall in default of agreement be settled by action ... .
This clause applies subject to clause 24A of this Schedule.
24A. Compensation receivable until damages become recoverable. (1) Subject to this clause, in respect of an injury received under circumstances creating both -
(a) Independently of this Act, a legal liability in some person, whether the employer or a person other than the employer, to pay damages in respect of that injury; and
(b) A claim for compensation under this Act,
a worker may both take proceedings to recover those damages and apply for compensation under this Act according to his entitlement thereto, but such a worker is not entitled to receive compensation under this Act at any time ... after those damages become recoverable by him.
(2) Any amount of compensation ... under this Act paid in respect of an injury to a worker to whom this clause applies at a time or in respect of a period of time before damages become recoverable by him from the employer or, as the case may be, other person legally liable therefor, shall be a first charge upon those damages.
The employer or other person from whom those damages are recoverable shall pay to the Board any sum charged thereon by virtue of this subclause or, if those damages are insufficient to meet that charge, the whole of those damages, and that payment shall, to the extent thereof, satisfy the liability of that employer or other person for payment of those damages.
(3) If a worker to whom this clause applies who has received compensation under this Act has not, independently of this Act, recovered any damages from the employer or, as the case may be, other person legally liable therefor, the Board shall be entitled to be indemnified by that employer or other person to the extent of his liability.
If, subsequently to that employer or other person paying under such indemnity, the worker recovers damages against him, the payment under the indemnity shall to the extent thereof, satisfy the liability of that employer or other person.
...”
Sub-section 5(c), and ss. 6 and 11 of the Law Reform (Tortfeasors Contribution, etc.) Act provide:
“Proceedings against, and contribution between, joint and several tortfeasors 5. Where damage is suffered by any person as a result of a tort (whether a crime or not) -
...
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by the person in respect of the liability in respect of which the contribution is sought.”
“Amount of contribution and power of the court
6. In any proceedings for contribution under this Part the amount of the contribution
recoverable from any person shall be such as may be found by the court to be just and
equitable having regard to the extent of that person’s responsibility for the damage; and
the court shall have power to exempt any person from liability to make contribution, or
to direct that the contribution to be recovered from any person shall amount to a
complete indemnity.”
“Provisions as to workers and employers
11.(1) Where, within the time limited by the Workers’ Compensation Act 1916 for
making application for compensation under that Act, an action is brought to recover
damages independently of the Act in respect of an injury giving rise to a claim for such
compensation, and it is determined in that action that -(a) damages are recoverable independently of the Act subject to such reduction as is mentioned in section 10(1); and
(b) there is a liability to pay compensation under the Act;
section 23(1) of the Schedule to the Act (which enables the court, on the dismissal of an action to recover damages independently of the Act, to assess and award compensation under the Act) shall apply in all respects as if the action had been dismissed, and, if the claimant chooses to have compensation assessed and awarded in accordance with section 23(1) of the Schedule, no damages shall be recoverable in the said action.
(2) Where a worker ... has recovered compensation under the Workers’ Compensation Act 1916 in respect of an injury caused under circumstances which would give a right to recover reduced damages in respect thereof by virtue of section 10 from some person other than the employer (‘the third party’), any right conferred by section 24 of the Schedule to the Act on the [Board] to be indemnified by the third party shall be limited to a right to be indemnified in respect of such part only of the compensation recovered by the worker ... as bears to the total amount of compensation so recovered the same proportion as the said reduced damages bear to the total damages which would have been recoverable if the worker had not been at fault.”
(Sub-section 10(1) provides for the reduction of liability if the injured person has been guilty of
contributory negligence; the reduction is to be “to such an extent as the court thinks just and equitable
having regard to the claimant’s share in the responsibility for the damage.”)
It is desirable at this point to identify what is in issue and some matters which do not arise. The
questions for the trial judge’s determination were stated in the following terms:
“1. Is the [employer] entitled to indemnity and/or contribution [from the negligent
employee] pursuant to -
(a)
Section 5 of the Law Reform (Tortfeasors, Contribution, Contributory Negligence and Division of Chattels) Act 1952; and/or
(b) an implied term in the contract of employment? 2.
If the [employer] obtains an order against the [negligent employee] for indemnity and/or contribution, is the [negligent employee] entitled to be indemnified in relation thereto by FAI General Insurance Company Limited?”
The declarations sought by the Board from this Court which remain for consideration are that:
“(a)
[The employer] is entitled to contribution amounting to a complete indemnity against [the negligent employee] in respect of any liability to the [injured employee], including any liability in respect of costs;
... (c)
[FAI] is liable to indemnify [the negligent employee] in respect of [the injured employee’s] claim against [the negligent employee], including the claim for costs,[9] and to indemnify [the negligent employee] against the [employer’s] claim against the [negligent employee] for contribution or an indemnity;
...” [9] Reference has earlier been made to the refusal of para. (b) of the declarations sought in this Court. The first part of declaration (c) should likewise be refused; it has been impermissibly added to the issues submitted to the trial judge, and has no relevance on the facts; the negligent employee is not, and will not become, under a liability to the injured employee, who has been paid damages by the Board.
The Board does not seek orders based on any right it might have against the negligent employee by
virtue of the Workers’ Compensation Act or which it might have, in the name of the employer, against
the negligent employee for damages for breach of an implied term to take reasonable care: cf. Oceanic
Crest Shipping Co.
It should also be noted that the Board’s entire case is underpinned by an assumption that, by the
doctrine of subrogation, it is entitled to pursue claims for the declarations sought in the name of the
employer, which has itself suffered no loss, since the injured employee’s entitlement to compensation and damages has been satisfied by the Board. It is implicit in the Board’s argument that its rights under
the Workers’ Compensation Act are not exhaustive, but that its indemnity rights under cll. 24 and 24A
of the Schedule to the Act are consistent with the existence of both the employer’s right to an indemnity
from the negligent employee and the Board’s exercise of that right in the name of the employer under
the doctrine of subrogation.
It is declaration (a) which it seeks for which the Board relies on Lister. However, in my opinion, when
regard is had to the prevailing legislative, social and industrial context at the material time, the
relationship of employer and employee obliged employers to indemnify their employees against liabilities
(at least liabilities to fellow employees) incurred in carrying out their duties, albeit without reasonable
care (or negligently) subject only to such limitations, modifications or qualifications to that obligation as
derived from statute, or in appropriate cases the terms of a contract of employment or an industrial
award. Such a view effectively removes the need for further consideration of the Law Reform
(Tortfeasors, Contribution etc.) Act, and leaves the respective rights of the employer, injured employee,
negligent employee and Board to be decided by reference to the Workers’ Compensation Act.
It is unnecessary, and undesirable, to attempt in the present case to solve all the problems which could
arise, or perhaps could have arisen, since the presently relevant Workers’ Compensation legislation was
repealed and a new Act came into force in 1990, as has already been mentioned. While the Workers’
Compensation Act at the material time obliged employers to insure against their own liabilities to injured
employees, it did not oblige them to provide their employees with insurance against such liabilities, which
the statute preserved - see cl. 24 of the Schedule. On the other hand, the structure of the Act is entirely consistent with the decision in Morris v. Ford Motor Co. [1973] 1 Q.B. 792, 800-802, 808ff,[10] that
[10] (a) See also the dissenting judgment of Sugerman J. in Mayo v. Florida Hotels Pty Ltd (1964) 65 S.R.(N.S.W.) 41; revd. (1965) 113 C.L.R. 588; Cotogno v. Lamb (No. 3) (1986) 5 N.S.W.L.R. 559, 571; Transport Accident Commission v. CMT Construction of Metropolitan Tunnels (1988) 165 C.L.R. 436, 442; Betts v. White Constructions (ACT) Pty Ltd (No. 2) (1992) 107 F.L.R. 352, 359-360; cf. Edwards v. Joyce [1954] V.L.R. 216, 220.
the Board does not have rights against the negligent employee in the name of the employer by virtue of
the doctrine of subrogation. The Board has rights against the negligent employee, but in its own name,
under the material Workers’ Compensation Act,[11] which it does not seek to enforce in this proceeding. There might be policy reasons for the Board’s omission to proceed against the negligent employee under
[11] For an example of the exercise of such a right by the Board, see Re McDonald [1992] 2 Qd.R. 510.
the Workers’ Compensation Act, or the explanation might lie on this occasion in the Motor Vehicles
Insurance Act, which to this point has not been discussed. It is evident that it is not the negligent
employee, but FAI, from which the Board seeks to recover. It cannot do so directly or on the basis
that the employer was insured against its liability to the injured employer by both the Board and FAI:
see Jaye and Lorimer and the provisions of the Workers’ Compensation Act and the Motor Vehicles
Insurance Act referred to there. The Motor Vehicles Insurance Act was amended in 1988 to make the
Board, not the licensed insurer, the employer’s insurer in circumstances such as the present.[12]
[12] See the paragraph added to the end of sub-s. 3(1) of the Motor Vehicles Insurance Act by s. 7 of the Motor Vehicles Insurance Act Amendment Act 1988.
It follows from what I have earlier stated that I would answer each of the questions presented for the
trial judge’s determination in the negative, as his Honour did, and refuse the orders sought by the
appellant on appeal. I am fortified in reaching this conclusion by the circumstances that the opposite
conclusion would not only expose employees to harsh consequences for mistakes made in the course
of their employment, with likely industrial disharmony, but would also defeat the purpose of the 1988
amendment to the Motor Vehicles Insurance Act.
In my opinion, the appeal should be dismissed, with costs to be taxed.
IN THE COURT OF APPEAL
| SUPREME COURT OF QUEENSLAND | Appeal No. 228 of 1995 |
| Brisbane | |
| [A.R. Griffiths & Sons P/L & anor v. Richards & anor] BETWEEN: |
A.R. GRIFFITHS & SONS PTY LTD
(Third Defendant by Counterclaim) First Appellant
AND:
WORKERS' COMPENSATION BOARD OF QUEENSLAND
(Fourth Defendant by Counterclaim) Second Appellant
AND:
TONY CRAIG RICHARDS
(First Defendant and First Defendant by Counterclaim) First Respondent
AND:
FAI GENERAL INSURANCE COMPANY LIMITED
(Defendant by Election and Plaintiff by Counterclaim) Second Respondent Fitzgerald P. Mackenzie J. Helman J.
Judgment delivered 29/10/1996
Joint reasons for judgment of Mackenzie and Helman JJ.; separate dissenting reasons of Fitzgerald P.
APPEAL ALLOWED WITH COSTS.
THE ORDERS AND DECLARATIONS MADE IN THE BRISBANE DISTRICT COURT ON 14 SEPTEMBER 1995 SET ASIDE AND THE FOLLOWING DECLARATIONS AND ORDERS SUBSTITUTED:
IT IS DECLARED THAT:
1. A.R. GRIFFITHS & SONS PTY LTD IS ENTITLED TO CONTRIBUTION AMOUNTING TO A COMPLETE INDEMNITY FROM TONY CRAIG RICHARDS IN RESPECT OF ITS LIABILITY TO GREGORY DAVID MCNEILL INCLUDING ITS LIABILITY FOR COSTS; AND
2. FAI GENERAL INSURANCE COMPANY LIMITED IS LIABLE TO INDEMNIFY TONY CRAIG RICHARDS IN RESPECT OF A.R. GRIFFITHS & SONS PTY LTD'S CLAIM AGAINST TONY CRAIG RICHARDS FOR SUCH CONTRIBUTION.
IT IS ORDERED THAT TONY CRAIG RICHARDS AND FAI GENERAL INSURANCE COMPANY LIMITED PAY TO A.R. GRIFFITHS & SONS PTY LTD ITS COSTS OF AND INCIDENTAL TO ITS CLAIM TO CONTRIBUTION OR INDEMNITY FROM TONY CRAIG RICHARDS TO BE TAXED.
CATCHWORDS: | DAMAGES - CONTRIBUTION OR INDEMNITY - joint tortfeasors - motor vehicle collision in which driver negligently caused injury to fellow employee passenger - whether employer who compensated the injured employee entitled to a complete indemnity from the negligent employee and if so, whether the negligent employee entitled to be indemnified by the motor vehicle insurer - construction of s.3 of the Motor Vehicles Insurance Act 1936 |
| Counsel: | Mr J. Griffin Q.C. with him Mr J. Rolls for the appellants |
Mr R. Chesterman Q.C. with him Mr K. Holyoak for the second respondent
| Solicitors: | Cleary Hoare for the appellants McInnes Wilson & Jensen for the second respondent |
| Hearing date: | 21 February 1996 |
IN THE COURT OF APPEAL
| SUPREME COURT OF QUEENSLAND | Appeal No. 228 of 1995 |
| Brisbane | |
| Before | Fitzgerald P. Mackenzie J. Helman J. |
[A.R. Griffiths & Sons P/L & anor v. Richards & anor]
BETWEEN:
A.R. GRIFFITHS & SONS PTY LTD
(Third Defendant by Counterclaim) First Appellant
AND:
WORKERS' COMPENSATION BOARD OF QUEENSLAND
(Fourth Defendant by Counterclaim) Second Appellant
AND:
TONY CRAIG RICHARDS
(First Defendant and First Defendant by Counterclaim) First Respondent
AND:
FAI GENERAL INSURANCE COMPANY LIMITED
(Defendant by Election and Plaintiff by Counterclaim) Second Respondent
JOINT REASONS FOR JUDGMENT - MACKENZIE AND HELMAN JJ.
Delivered 29 October 1996
This is an appeal from a determination of a question of contribution or indemnity between joint
tortfeasors in an action in the Brisbane District Court. A passenger who was injured when the motor
vehicle in which he was travelling collided with another motor vehicle claimed damages for negligence.
On 14 September 1995 the learned judge who heard the matter ordered that the claim by a defendant against another defendant for contribution or indemnity be dismissed. In addition his Honour made
certain declarations, the details of which we shall give later.
The parties to the original action were Gregory David McNeill the plaintiff, Tony Craig
Richards the first defendant, A.R. Griffiths & Sons Pty Ltd trading as ARG Stainless Products the
second defendant, and FAI General Insurance Company Limited the defendant by election. There was
a counterclaim in which FAI was the plaintiff, McNeill the first defendant, Richards the second
defendant, Griffiths the third defendant, and the Workers' Compensation Board of Queensland the
fourth defendant.
There was a statement of agreed facts before his Honour (Exhibit 1):
"MCNEILL V. RICHARDS
AGREED FACTS1. At all material times:
(a) A.R. Griffiths & Sons Pty Ltd trading as A.R.G. Stainless Products was the owner and was registered as owner of a Toyota Hiace Panel Van motor vehicle Registration No. 934-PVL (`the Toyota'). (b) Tony Craig Richards was the driver of the Toyota. (c) A.R. Griffiths & Sons Pty Ltd had a policy of insurance with FAI General Insurance Company Limited issued pursuant to the Motor Vehicles Insurance Act 1936 as amended in respect of the Toyota. (d) Tony Craig Richards was an employee of A.R. Griffiths & Sons Pty Ltd trading as A.R.G. Stainless Products. 2. On the 14th August 1989 at approximately 12.05 p.m. Gregory David McNeill was travelling as a passenger in the Toyota being driven by Tony Craig Richards in a westerly direction on Ipswich Road, Woolloongabba, Brisbane in the State of Queensland.
3. On that date at approximately the intersection of Ipswich Road and Harrogate Street, Woolloongabba the Toyota collided with a motor vehicle.
4. As a result of the said collision Gregory David McNeill sustained injuries in the form of trauma in the patello-femoral region of his left leg.
5. The collision was solely caused by the negligent driving of Tony Craig Richards.
6. At all material times, a policy of insurance with the Workers' Compensation Board of Queensland pursuant to the Workers' Compensation Act 1916 as amended, subsisted in respect of A.R. Griffiths & Sons Pty Ltd.
7. The plaintiff in the original action sustained the said injuries on 14th August 1989 arising out of or in the course of his employment with A.R. Griffiths & Sons Pty Ltd.
8. At all material times the plaintiff in the original action was a `worker' within the meaning of the Workers' Compensation Act 1916 as amended.
9. At all material times the plaintiff was an employee of A.R. Griffiths & Sons Pty Ltd.
10. The first defendant was, at the time of the collision, driving in the course of his employment with the second defendant.
11. The second defendant settled with the plaintiff who thereupon discontinued the action.
It was reasonable to settle on the terms on which the second defendant did settle."
The issues for determination by his Honour were reduced to the following, set out in Exhibit
3:
"MCNEILL V. RICHARDS
ISSUES FOR DETERMINATION1. Is the second defendant entitled to indemnity and/or contribution from the first defendant pursuant to —
(a)
Section 5 of the Law Reform (Tortfeasors, Contribution, Contributory Negligence and Division of Chattels) Act 1952; and/or
(b) an implied term in the contract of employment? 2. If the second defendant obtains an order against the first defendant for indemnity and/or contribution, is the first defendant entitled to be indemnified in relation thereto by FAI General Insurance Company Limited?"
The underlying question in the case was of course whether the Board, exercising its right of subrogation,
could recover from FAI the sum it had paid to settle McNeill's claim. His Honour determined both
issues against the appellants.
His Honour dismissed Griffiths's claim against Richards for contribution or indemnity and
declared that:
"1.
FAI GENERAL INSURANCE COMPANY LIMITED is not liable to indemnify A.R. GRIFFITHS & SONS PTY LTD against GREGORY DAVID McNEILL's settlement.
2.
FAI GENERAL INSURANCE COMPANY LIMITED is not liable to indemnify TONY CRAIG RICHARDS against A.R. GRIFFITHS & SONS PTY LTD's claim against TONY CRAIG RICHARDS for contribution or indemnity in respect of either GREGORY DAVID McNEILL's action or A.R. GRIFFITHS & SONS PTY LTD settlement thereof."
His Honour made an order for costs in favour of Richards and FAI against Griffiths and the Board.
Griffiths and the Board now seek orders that his Honour's orders and declarations be set
aside. We have had the advantage of reading the reasons of the President and we agree that the
declarations sought by the appellants which remain for consideration are declarations that:
(a) Griffiths is entitled to contribution amounting to a complete indemnity against Richards in respect of any liability to McNeill, including any liability in respect of costs; and
. . . . .
(c) FAI is liable to indemnify Richards in respect of McNeill's claim against Richards, including the claim for costs, and to indemnify Richards against Griffiths's claim against Richards for contribution or indemnity.
We agree with the President, for the reason he gives, that the first part of (c) should be refused in any
event.
Section 5 of the Law Reform (Tortfeasors Contribution, Contributory Negligence, and
Division of Chattels) Act 1952, so far as relevant, was as follows:
"5. Where damage is suffered by any person as a result of a tort (whether a crime
or not)—
. . . . .
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by the person in respect of the liability in respect of which the contribution is sought."
Subsections (1) and (2) of s.3 of the Motor Vehicles Insurance Act 1936, which was
repealed in 1994, were at the relevant time as follows:
"3. (1) Subject to this Act, the owner of any motor vehicle shall at all times during the registration, or as the case may be, any renewal of the registration of such motor vehicle indemnify and keep indemnified the owner and every authorised agent of the owner by a contract of insurance with the State Government Insurance Office (Queensland) or with some licensed insurer against all sums for which the owner or his estate or any such authorised agent or his estate shall become legally liable by way of damages in respect of such motor vehicle for accidental bodily injury (fatal or non-fatal) to any person (including, in respect of such injury caused by any such other person, the owner himself) in any State or Territory of the Commonwealth of Australia where such injury is caused by, through, or in connection with such motor vehicle.
Liability by way of damages referred to in the first paragraph of this subsection includes the liability (either joint or several) of an insured person—
(a) to pay or to contribute to the payment of such damages;
(b) to make contribution to any other tortfeasor under the provisions of The Law Reform (Tortfeasors Contribution, Contributory Negligence, and Division of Chattels) Act of 1952;
(c) to pay damages for breach of his contract of employment evidenced by his causing such injury.
Liability by way of damages referred to in the first paragraph of this subsection does not include the liability of an employer incurred on or after 22 September 1988 to pay damages on account of accidental bodily injury (fatal or non-fatal) caused by, through or in connection with a motor vehicle to his employee (being a worker within the meaning of the Workers Compensation Act 1916 - 1988) in circumstances such as would give rise to an entitlement to the payment of compensation under that Act.
(2) For the purposes of any such contract of insurance and of every claim for accidental bodily injury (fatal or non-fatal) to any person caused by, through, or in connection with a motor vehicle insured thereunder, every person, other than the owner, who at any time is in charge of such motor vehicle, whether or not with the owner's authority, shall be deemed to be the authorised agent of the owner, and to be acting in relation thereto within the scope of his authority as such agent:
Provided that if at the time when any such claim arose the motor vehicle was in charge of or being driven by any person for whose acts or omissions at such time the owner apart from the provisions of this subsection would not have been liable, the liability of the owner under this subsection shall be limited to the amount for which he shall be entitled to be indemnified against such claim under the said contract."
The second issue set out in Exhibit 3 is one of construction of the relevant provisions of the
1936 Act and, as was suggested before us on behalf of FAI, it is convenient to begin by considering
that issue.
The intention revealed in the 1936 Act was to provide for a universal compulsory scheme of
indemnity insurance in relation to registered motor vehicles. The damages for accidental bodily injury
for which the owner of a registered motor vehicle could have become responsible would have arisen
from either personal or vicarious liability. The breadth of the scheme was demonstrated by s.3(2), the
effect of which was to extend the vicarious liability of an owner to include the actions of any person
other than the owner who was in charge of the motor vehicle without the owner's authority. A further
indication of that breadth was in the second paragraph of s.3(1) which required the insurance contract
to provide indemnity for the liability of an insured person to make contribution to another tortfeasor
under the 1952 Act and the liability to pay damages for breach of a contract of employment evidenced
by the insured person's causing injury to a claimant: see (b) and (c).
The only liability expressly excluded from the scheme was liability by way of damages of an
employer incurred on or after 22 September 1988 to pay damages on account of accidental bodily
injury (fatal or non-fatal) caused by, through, or in connexion with a motor vehicle to the employer's
employee (being a worker within the meaning of the Workers' Compensation Act 1916 - 1988) in
circumstances such as would give rise to an entitlement to the payment of compensation under that Act.
That exclusion was provided for in the last paragraph of s.3(1), which was inserted by an amending Act
of 1988. The liability of such an employer could of course be either personal or vicarious. If the liability
were vicarious, then the question of contribution or indemnity by a joint tortfeasor could arise.
It follows from the argument advanced on behalf of FAI, as Mr Chesterman Q.C. conceded,
that an employee would not have been an insured person under the Act in circumstances in which the
third paragraph of s.3(1) applied. But the ordinary and natural meaning of the words of the third
paragraph was to exclude from the insurance scheme only the liability of the employer. There was no
express exclusion of the liability of an employee, nor was such an exclusion necessarily implied in our
view. To give the words of the subsection as a whole their natural meanings they provided that any
driver of a registered motor vehicle was covered for direct personal liability under the first paragraph
and for any claims to contribution or indemnity under the second paragraph, and there was nothing
express in the third paragraph which affected those provisions. It was argued on behalf of FAI that if
the Act were construed in that way a result little short of absurd would follow: the effect of the third
paragraph would have been confined to cases in which the employer was personally liable. It is,
however, difficult to explain the inclusion of (c) in the second paragraph of the subsection and the
omission of any reference to claims by an employer to contribution or indemnity by an employee in the
third paragraph if FAI's contention is correct. That contention would result in a construction with the
effect that if a claimant employee pursued only the allegedly negligent employee, as the claimant would have been entitled to do, the latter employee would not have been indemnified under the policy applying
to the motor vehicle. In our view such a gap in the universal coverage would have been quite
inconsistent with the breadth of the insurance scheme.
We therefore conclude that his Honour erred in his resolution of the second issue in Exhibit
3, and that on its proper construction s.3(1) provided that an employee of an employer referred to in
the third paragraph was an insured person under the relevant policy of insurance who was entitled to
be indemnified by the insurer for any liability of the kinds referred to in the first and second paragraphs.
There remains the first issue in Exhibit 3. Even if Richards is entitled to be indemnified by FAI
under the motor vehicle policy in respect of an order for contribution or indemnity, the question remains
whether such an order can be made in favour of Griffiths. His Honour decided it could not because he
concluded that there was an implied term in the contract of employment that Griffiths would indemnify
Richards against the liability in respect of which Griffiths was seeking contribution or indemnity from
Richards. That implied term was then the impediment to Griffiths's claim against Richards. Without that
obstacle no reason for denying Griffiths the relief claimed on either basis could be advanced. His
Honour considered the decision of the House of Lords in Lister v. Romford Ice and Cold Storage
Co Ltd [1957] A.C. 555 and decided it did not represent the law of Queensland on this subject at the
relevant time.
In Lister v. Romford Ice the contract of employment under consideration was held not to
include an implied term of the kind found by his Honour in this case. A lorry driver, while driving in the
course of his employment, injured his father who had accompanied him as mate. The father brought an
action claiming damages from the driver's employer alleging negligence on the part of the driver. The
claim succeeded and judgment was entered against the employer, whose responsibility was purely
vicarious. The employer's insurer, exercising its right of subrogation, brought an action in the name of the employer against the driver claiming that, as a joint tortfeasor, it was entitled to contribution of 100
per cent. under the Law Reform (Married Women and Tortfeasors) Act 1935, in respect of sums the
insurer had paid to the father and the costs of defending the father's action. A second head of claim for
damages was founded alternatively on tort or the breach of a contractual duty of care. The action in
the name of the employer succeeded before Ormerod J., and an appeal against that decision was
dismissed by the Court of Appeal. In the House of Lords there was unanimity that the driver was under
a contractual obligation of care to his employer in the performance of his duty as driver. It was held
further (per Viscount Simonds, Lord Morton of Henryton and Lord Tucker, Lord Radcliffe and Lord
Somervell of Harrow dissenting) that the employer was entitled to recover from the driver damages for
breach of that contractual obligation and that there was no implied term in the contract of service that
the driver was entitled to be indemnified by the employer, either if the employer was in fact insured or
was required by the relevant statutory scheme of insurance against third party risks to be insured, or if,
acting reasonably and prudently, it ought to have been insured. Viscount Simonds and Lord Morton
of Henryton held that the employer was also entitled to recover contribution from the driver under the
1935 Act.
Lord Radcliffe said it was plain that the law imputes to an employee a duty to exercise
reasonable care in his handling of his employer's property (p.586), but, having regard to the
circumstances of the driver's employment and in particular the statutory scheme of compulsory insurance
against third party risks which related to his employment, his Lordship concluded that the employer was
not entitled to enforce any legal liability the driver might have incurred to the employer as a result of his
breach of that duty by driving the employer's lorry negligently and injuring his father. The circumstances
of the case would result in "almost intolerable anomalies", his Lordship said, if the employer were entitled to be indemnified by the driver for any sum for which the employer was found liable to the
father:
"The situation is this. If an accident takes place through negligence, the person injured can sue either employer or employed or both of them. If he sues the employee alone, the latter calls on the insurance company for the cover which the employer has bought him; the insurance company has to provide the fund of damages required; neither the wages nor the savings of the employee can be touched to reimburse the insurers for the risk that they have underwritten. But if the injured person takes a different course, one which neither employer, employee nor insurance company can control, and sues the employer either alone or jointly with the employee, the position of the employee is, apparently, much worse and the position of the insurance company, apparently, much better. For now the latter can indemnify itself for the money it finds by getting it back from the employee in the employer's name and the former, instead of getting the benefit of the insurance which his employer was to provide, is, in the end, the one who foots the bill."
(p.590)
Lord Radcliffe accordingly held it to be an implied term of the contract of employment that the employer
would see that the driver was protected by insurance from any third party liability arising from his
driving, and neither the employer nor its insurers could sue the driver in respect of that liability. Lord
Somervell of Harrow agreed with that conclusion. Lord Somervell agreed that there is normally
a contractual duty on the part of an employee to take care in carrying out the employee's duties (p.598),
but his Lordship referred to the Court of Appeal's decision as far-reaching but also anomalous: "If a
driver was sued direct it seems clear the insurers would have to pay and there would be an end of it.
If, however, the employer is sued the insurers again pay but can by subrogation recover against the
driver and levy execution on his savings." (pp.600 - 601).
On behalf of the respondents in this case the learned trial judge was asked to find in the
contract of employment implied terms that:
(a) The employer would see that Richards was protected by insurance from any third party
liability arising from his driving;
(b) Neither Griffiths nor its insurer could sue Richards in respect of that liability; and
(c) Griffiths would exhaust its rights under the policy of insurance with its insurer before
seeking recovery from Richards.
It was submitted on behalf of FAI to us that his Honour should have found terms to the effect
of (a) and (c) to have been implied in the contract of employment. The term he found to have been
implied has, we were told and it may be accepted for the purpose of resolving the issues before us, the
same practical consequence but differs from the formulations suggested on behalf of the respondents.
The formulations in (a) and (c) are based on obiter dicta of Samuels J.A., with whom Hope J.A.
agreed, in Rowell v. Alexander Mackie College of Advanced Education [1988] Aust. Torts Reports
80-183 at pp.67,730-67,731.
It was pointed out that Lister v. Romford Ice has been widely criticised and in some
jurisdictions its effect abrogated. If it were correct that the term decided upon by his Honour or one
to the same effect should be found to have been implied in the contract of employment then Griffiths
must fail however its claim is framed. If it were framed under s.5 of the 1952 Act it would fail because
of the application of the proviso in paragraph (c) of that section, and it would fail if the claim were
framed in contract as being contrary to a term of the contract.
Was his Honour correct in declining to follow Lister and Romford Ice? The effect of the
decision in that case has not been abrogated in Queensland by the legislature and we were referred to
no case binding upon us in which its authority has been doubted. Indeed in Kelly v. Alford [1988] 1
Qd.R. 404, a case concerned with another aspect of the 1936 Act in which Lister v. Romford Ice was
discussed and found to be distinguishable, the following appears in the judgment of Connolly J., with
whom Carter and de Jersey JJ. agreed:
"The only other case to which reference need be made . . . is McGrath v. Council of the Municipality of Fairfield (1985) 156 C.L.R. 672 in which a reference is made in the judgment of the court to Lister's case. Their Honours note that the parties were agreed that the decision of the House of Lords was authority for the proposition that there can be no implied terms that the employer would ensure that the driver was protected by insurance against third party liability. The court accordingly proceeded on that basis, observing that the decision in Lister's case had never been the subject of critical examination in the High Court. It was suggested that this meant that the court was in some way casting doubt on Lister's case. For my part, with respect, I would not have thought so but, for the reasons I have given, it is of no moment . . .. " (pp.411-412)
It may be that the legislature might in due course consider abrogating the effect of the decision
in Lister v. Romford Ice, for its application in the circumstances of the case itself was harsh. The same
cannot, however, be said in this case, in the light of the construction we consider should be placed upon
s.3(1) of the 1936 Act. We do not think that there is in the circumstances of this case any justification
for formulating a rule of general application to contracts of employment which would have the effect of
abrogating the authority of Lister v. Romford Ice, but if there were an anomaly of the kind referred to
by the dissentients in Lister v. Romford Ice there could be justification, in accordance with
contemporary standards relating to conditions of employment, for concluding that a term of the kind
proposed should be found to have been implied. Since however there is no such anomaly in this case
- Richards will not be required to foot the bill because the second paragraph of s.3(1) of the 1936 Act
protects him - we do not think that his Honour was correct in reaching the conclusion he did. Nor do
we think, for the same reason, that any other term to the same effect should be found to have been
implied in the contract of employment. The application of the decision in Lister v. Romford Ice to the
facts of this case does no more than to recognize a duty of care owed to an employer by an employee
for whose breach of that duty the employer is entitled to contribution or indemnity in circumstances in
which the employer is blameless and has ensured that the employee will be indemnified by an insurer.
There is therefore no impediment to Griffiths's entitlement to an order for one hundred per cent.
contribution, or indemnity, from Richards who will himself be fully indemnified.
Since no issue was taken before us concerning the Board's exercising its right of subrogation
as Griffiths's insurer we express no view on whether the principles accepted by the majority of the Court
of Appeal in Morris v. Ford Motor Co. [1973] 1 Q.B. 792 have any application to this case.
For those reasons we conclude, with respect, that his Honour erred on both issues, that the
appeal should be allowed with costs, that the orders and declarations made in the Brisbane District
Court on 14 September 1995 should be set aside, and that the following declarations and orders should
be substituted:
It is declared that:
1. A.R. Griffiths & Sons Pty Ltd is entitled to contribution amounting to a complete
indemnity from Tony Craig Richards in respect of its liability to Gregory David McNeill
including its liability for costs; and
2. FAI General Insurance Company Limited is liable to indemnify Tony Craig Richards
in respect of A.R. Griffiths & Sons Pty Ltd's claim against Tony Craig Richards for
such contribution.
It is ordered that Tony Craig Richards and FAI General Insurance Company Limited pay to
A.R. Griffiths & Sons Pty Ltd its costs of and incidental to its claim to contribution or
indemnity from Tony Craig Richards to be taxed.
Consistently with that consent order, the issues presented to the trial judge for his determination which resulted in his judgment of 14 September 1995 did not include a claim for a declaration that FAI is obliged to indemnify the employer against its liability to the injured employee. In the circumstances, it is plain that that declaration should be refused.
(b) Morris was not referred to in Boral Resources, which was concerned with sub-s. 66(2) of the Insurance Contracts Act 1984 (Cth), which, by sub-s. 9(1)(e), is inapplicable to contracts between the Board and employers under the Workers’ Compensation Act.