Achievement Concepts v Redken Laboratories & Anor

[2001] HCATrans 117

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  Nos S152 and S245 of 2000

B e t w e e n -

ACHIEVEMENT CONCEPTS PTY LIMITED

Applicant

and

REDKEN LABORATORIES (AUSTRALIA) PTY LIMITED

First Respondent

NATASHA DOCKER

Second Respondent

Applications for special leave to appeal

GLEESON CJ
GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 4 MAY 2001, AT 11.12 AM

Copyright in the High Court of Australia

MR C.G. GEE QC:   May it please your Honours, I appear with my learned friends, MR C.M. SIMPSON and MS E.T. BOYLE, for the applicant in each application.  (instructed by Blake Dawson Waldron)

MR P.J. DEAKIN QC:   In each of those matters, if the Court pleases, I appear with my learned junior, MR A. VENTURA, for the respondent.  As there is an application, I think, to amend, we will be the first respondent if the application is considered ‑ ‑ ‑ (instructed by Hickson Wisewoulds)

GLEESON CJ:   These are two matters because there is a cost issue in one of them, is there not?  They stand or fall together, I take it?

MR GEE:   Yes.  Correct, your Honour, with respect.  If we were to be given a grant of leave in the principal we would get a grant of leave in the other and vice versa.  Your Honours should have the amended application for special leave to appeal.  Unless otherwise indicated, your Honours, I am referring to No 152 of 2000, and the reason for the amendment is not to raise any ‑ ‑ ‑

GLEESON CJ:   May I interrupt you to say something, Mr Gee?

MR GEE:   I am sorry, yes.

GLEESON CJ:   I have a certificate from the Deputy Registrar to the effect that she has been informed by the solicitor for the second respondent, Natasha Docker, that the application for leave involves issues that entirely relate to the applicant and the first respondent and do not involve the second respondent and the second respondent does not propose to make any submissions or appear.

MR GEE:   Your Honours, the first aspect that I wanted to draw attention to for the purposes of this application is the character of the negligence found by his Honour the learned trial judge in respect of the present respondent and is of no little importance that that be identified.  It is to be seen at the bottom of page 27 and on to 28 of the application book.

GAUDRON J:   That is inclined to give negligence, vis-à-vis, the employee.

MR GEE:   Yes.

GAUDRON J:   What it says really is that he should never have trusted you.  That is ultimately what it means, is it?

MR GEE:   Well, perhaps so, your Honour, but even formulating it that way it has this important characteristic:  that had Redken’s personnel discharged the duty identified there really would have been a difference in outcome, that is, we would have done something if they had intervened in discharge of that duty.

GAUDRON J:   And you would have observed your contractual obligation.  You would have performed your contractual obligation.  Does it say more than that?

MR GEE:   Yes, your Honour.  With great respect, it means that there is a single causative question involved and I identify it because of the need to contrast it with cases like Florida Hotels v Mayo, where whilst it is true that vis‑a‑vis the plaintiff there was negligence by more than one party so as to sustain a verdict - - -

GAUDRON J:   And of a different order, presumably, because of the non‑delegable nature of the employer’s duty.

MR GEE:   Perhaps so, your Honour, but in Mayo, for example, the negligence of the architect left the structure fatally weak.  It is true that the employer removed the props, and, qua, the employee, the employer was held liable but there was always going to be a collapse.  Here, with respect, the difference is that if Redken had performed their duty then they would have genuinely, causatively, had an effect on whether we caused any duty to the ‑ ‑ ‑

GAUDRON J:   Performed your contractual obligation to them?  Is that not what it comes down to, though?

MR GEE:   Well, having identified the character of what we say was their breach, one then moves, with respect, to submitting that where there is – we start with the position, of course, that as an incident of the contract between Redken and Achievement there is a term of implied care on the part of Achievement – unarguable.  The problem is, what is the precise content of that term, given that the cases do not take it to the necessary level where there is more than one negligent actor.

GAUDRON J:   But do not forget you are sequential actors here.  You are not co‑participants in the one negligent act.

MR GEE:   Your Honour, with respect, that helps us.  We are sequential actors and that means that if they had not breached their anterior duty to make sure that the web was safe ‑ ‑ ‑

GAUDRON J:   Their anterior duty to a third party?

MR GEE:   Yes.

GAUDRON J:   You would have performed your contract?

MR GEE:   Your Honour, if they had not failed in that duty the plaintiff would not have been injured.  There would not be a question.

GAUDRON J:   Let us not worry about the plaintiff being injured.  The only relevance of the plaintiff being injured in this case is because it identified the measure of your damages for breach of duty.  Let us assume nobody had been injured and they had come along and said, “Look, that is dangerous.  You are in breach of your contract.”  Albeit it would only be nominal damages, but they would be entitled to damages, regardless of injury.

MR GEE:   But, your Honour, if nobody had been injured and therefore there was nothing which the claimant contracting party could recover, nothing at all ‑ ‑ ‑

GAUDRON J:   Nominal.

MR GEE:   With respect, your Honour, it would be a totally empty breach, not even calling for nominal damages on the recovery on the implied term, in our respectful submission.  Is not the problem – I am sorry, I will put it differently.

GAUDRON J:   Would it entitle them to terminate the contract then and there?  I mean, I think you have got to look at it in the framework of contract law.

MR GEE:   Your Honour, with great respect, I agree, and that is precisely what I am hoping to do.  The relevance of showing the particular character of the breach by Redken was to show that it was of a different nature from ones that have occurred where there appeared to be two negligent actors but there was really only one negligent actor.

GAUDRON J:   That is what I think is the situation here, unless you can persuade me otherwise.  There was a negligent omission on the part of the employer, Redken.

MR GEE:   Yes.

GAUDRON J:   Negligent act on your part.

MR GEE:   Granted, your Honour, but each was a piece of negligence without which our negligence – I am sorry, their negligence, omission, let it be granted it was, would have meant no injury to the plaintiff if they had not been guilty of that omission.  I accept that it was an omission, your Honour, but it is one of those cases where characterising it as act or omission, with great respect, makes no difference.  Now, the ultimate point we are trying to put to your Honours for the Court to consider on appeal is this:  the cases give us guidelines as to the existence of an implied term in relation to safety where the parties have not specifically provided for it.

The cases give us guidelines as to the nature of that, that is, it is not an officious bystander term, it is an incident of the contract term.  So far so good.  The problem is, that the cases are dealing with single actor problems where the issue of the precise character of the term has not needed to be determined of which Lister was perhaps the supreme example where you had a single actor, the negligent employee whose truck backed over the other employee, where the result was that the only liability in the employer to the plaintiff was vicarious, so there was no difficulty.

Contrast, with respect, your Honours, this kind of case where there is more than one negligent actor and that necessarily produces the result that we do not have guidelines, in our respectful submission, for the exact content of the term to be implied.  Now, there are cases that suggest, your Honours, such as the Canadian cases that was referred to in ‑ ‑ ‑

GAUDRON J:   You are not suggesting that the term to be implied is, “We will take due care if it is pointed out to us that we are failing in that regard”?

MR GEE:   No, that is not the term, with respect, your Honour.  The term that we would suggest, if we were allowed to argue the matter, is that the implication of a term for skilful activity will be accepted but the content of what will be recoverable by the party enjoying the benefit of the term will be dependent upon whether it is ultimately right that there should be complete recovery by that party, irrespective of the degree of that party’s contribution to the outcome.

GLEESON CJ:   Now, where does Astley v Austrust lead you in relation to that issue?

MR GEE:   Astley v Austrust, in our submission, decided two things and only two:  one, that contrary to what had been held in the Full Court below, there was contributory negligence on the part of the claiming party; two, that that contributory negligence could not be reflected in a diminution of the contractual recovery by resort to apportionment legislation.  Now, it is true that Astley went on to make some observations of a policy character about whether the courts would countenance the idea that one claimant party should get the whole recovery against the other, and included in that observations about the fact that if parties chose to they could bargain in respect of that situation.

Astley said nothing about the situation with which we are confronted here, in our submission, namely, where parties have not in fact done so and where the sense of what is right that drove so many of the cases to the strained interpretation and strained application of the apportionment legislation rejected in Astley - the sense of what was right was that it could not be the case that a contracting party having the benefit of this implied term, not an express one for which a bargain had been made, but the implied term should get everything, even if they were, say, 90 per cent to blame.  Now, Astley did not, in our respectful submission, produce that result or anything like it.

GAUDRON J:   To blame for what?  We come back to this.  To blame for what?  To blame for the measure of damages resulting from breach of contract?

MR GEE:   Yes, your Honour.

GAUDRON J:   Now, are we not therefore into something really quite novel?  It is not mitigation of damages, is it, or are you saying contracting parties have an implied duty upon them to ‑ ‑ ‑

MR GEE:   No, we ‑ ‑ ‑

GAUDRON J:   Well, it must come very close to that.

MR GEE:   We do not need to do that, with respect, your Honour.  What we can do is to keep it perfectly within the framework of contract by asking questions about causation and remoteness.

GAUDRON J:   Yes, but it is not in dispute that there was a breach.

MR GEE: Accepted. 

GAUDRON J:    That the breach caused this unfortunate plaintiff’s injuries.

MR GEE:   Yes.

GAUDRON J:   What is in issue, only, is the measure of damages.

MR GEE:   May I respectfully part company from your Honour?  If your Honour is talking about the breach of the implied term whereby Redken recovers against us, we are not then talking about a breach of that term causing the injury to the plaintiff, we are asking what resulted from the breach of that term, the implied safety term.

GAUDRON J:   It ‑ ‑ ‑

MR GEE:   It is argued against us.  I am sorry to interrupt your Honour.

GAUDRON J:   Yes.

MR GEE:   It is argued against us that that breach of that implied term had the outcome that Redken suffered a full judgment – in fact, in this case, diminished because of workers compensation legislation, but we can leave that aside.  Now, the problem is that having isolated the fact that the breach of the implied term has produced that result, there ought then to be further inquiry, in our submission, into whether that measure of damages itself, in full, without regard to the conduct of the other negligent actor, automatically follows from the breach without any inquiry as to its causation or remoteness and, in our respectful submission, what is happening, demonstrated by the present case and by the one on which his Honour Justice Sheller below relied, namely, his own earlier decision in the Oxley Council Case reveals, we would argue - and this is why it is a good vehicle – that there is a danger of the law congealing here and Astley being given a life that it never gave itself, so that in every case where the claimant contracting party can show the implication of the term and that party has come under liability to a third party then, ipso facto, without further inquiry, there is simply total recovery.  Now, that congealment, in our submission, ought not be allowed to occur.

GAUDRON J:   But how do you put your question of principle, that is what I do not see.

MR GEE:   All right, we put it in three ways.

GAUDRON J:   Implied term was one.  I understood that.

MR GEE:   Yes, implied term and the precise content thereof.  We would say, picking up the Canadians in that Doiron Case, that the implied term has this characteristic that it would not have been in the contemplation of reasonable people that no matter how much to blame the claimant contracting party was in the ultimate verdict outcome, that person gets the lot, the affront to the sense of justice argument, and that is precisely how it was put in the Doiron Case, ultimately.  A case which, of course, at the same time did reject application of the cognate apportionment legislation, but it ultimately came to that position.  That is the first way.

The second way is that if you have an implied term which is admittedly breached for safety in the performance of the contract there must be, as in any other contractual inquiry, some inquiry into causation.  Now, what is happening is that that inquiry into causation is being simply sidestepped or sidelined in favour of saying, “You have got an implied term in your favour.  No matter what you have suffered at the plaintiff and no matter how much it is your fault, you just get it all”.

GAUDRON J:   But what is that causation inquiry?

MR GEE:   It is a causation inquiry into how much of the claimant contracting party’s damage, ie, what it has to pay the plaintiff, really was caused by this party’s negligence.

GAUDRON J:   But what does that mean?  I do not understand “was really caused by”.  I would have thought once you posed that question it was really caused by you, all of it.

MR GEE:   Your Honour, if I may say so, with deep respect, that is only looking at the heads on the coin and not the tail.  The tail is ‑ ‑ ‑

GAUDRON J:   It depends what you mean by “really”.

MR GEE:   Well, the head on the coin is that the judge was able to find against Achievement because it was in breach but the judge was also ‑ ‑ ‑

GAUDRON J:   Of a non‑delegable duty?

MR GEE:   No, Redken was in breach of the non‑delegable duty.

GAUDRON J:   I am sorry, yes.

MR GEE:   We are liable because we were negligent.  Redken is liable, partly because of non‑delegable duties, but also his Honour finds because of the existence of a truly independent piece of negligence and if it had not been negligent in that way – and this is why I started the submissions as I have – we would not have caused the plaintiff loss and that is the key ‑ ‑ ‑

GAUDRON J:   But what was that negligence?

MR GEE:   By Redken?

GAUDRON J:   Yes.

MR GEE:   Well, that is at the bottom of ‑ ‑ ‑

GAUDRON J:   It is in failing to supervise you, in a sense.

MR GEE:   No, with respect – well, yes, your Honour, at the end of the day it could be brutally summarised thus.  His Honour put it on the basis that some persons at Redken ought to have taken some steps to ensure that what we were about to do was okay, but, I accept your Honour’s formulation, it is just a difference of words.

GAUDRON J:   That is the difference I have about when you say “really causative”.  You have got to say that causation in contracts should be redefined, do you not, to say “the sole cause” that the breach should be the sole – the only cause.

MR GEE:   Could I come back to that in a moment, your Honour, because I see that my time is limited, now?

GAUDRON J:   Yes.

MR GEE:   Could I mention the third way?  The third proposition is that you do not have to look beyond the second limb of Hadley v Baxendale, the reasonable contemplation of a party’s notion, to find - granting the existence of the term, granting its breach whereby Redken had to pay a verdict, you still ask yourself in contract whether it was reasonably in the contemplation of the parties that that breach of the implied safety term would lead to indemnity, complete indemnity, even where the claimant contractor was significantly at fault.

Now, it is not, in our respectful submission, difficult to see that there needs to be an inquiry into it, and indeed - I will go to the passage if your Honours find it necessary - in Astley the majority mentioned that subject to questions of remoteness there was no reason why the claimant/contractor could not have the full amount and then went on to talk about how that could be bargained away.  So that the whole question of the issue of looking at remoteness is alive and well.  It is recognised in Astley without being taken any further.  It did not need to be taken any further in that case because it was dealing with different issues.  I have spoken of the congealment problem.  If your Honours do not give the Court an opportunity to have a look at what are now old authorities taken to be in point but not quite dealing with the case, particularly Florida Hotels v Mayo.

Finally, it is a good vehicle.  There is a neat, clean apportionment found by the trial judge.  There are clear, simple independent acts of negligence on each of the two actors to the contract; no credibility or other difficulty in the matter.  It is, with respect, a good vehicle.  There were errors below.  In particular, in the few moments I have, could I isolate those

errors as being the way his Honour Justice Sheller dealt with the matter just in the last lines of 93 in the application book, lines 35 and following where after referring to the Florida Hotels v Mayo type test, his Honour said at line 40:

The acts of negligence for which Redken was liable were a direct consequence of Achievement’s negligence.

Now, in my submission, that misstates the character of what his Honour found was the independent Redken negligence.  Finally – I have run over time, your Honours, but if I could just have a moment – at 105, 15 to 20, after recognising differences of opinion about the precise principle involved, Justice Fitzgerald below said:

Redken’s liability to Ms Docker was caused by its reliance on Achievement in conjunction with Achievement’s negligence toward Ms Docker in breach of its contract –

It was not a reliance case at all, with great respect, your Honours.  There was an independent failure found by his Honour below in Redken to act in a way that would have prevented injury to the plaintiff.  We just did not have a reliance case.

GAUDRON J:   Would it make any difference, say, if you said…..was caused by its omission to ensure that Achievement would honour the implied contractual obligation?

MR GEE:   Well, if it did make a difference we would respectfully submit it would be our way.  It would only underline the independent character of the Redken negligence, not this supposed reliance by Redken on Achievement.  As your Honour Justice Gaudron said only a few moments ago, you characterise the Redken failure as a failure to supervise.  It is quite independent.

GAUDRON J:   Failure to supervise you?

MR GEE:   Your Honour could point the finger at me all day and I will accept it.

GAUDRON J:   Yes.

MR GEE:   It is part of our argument, with great respect, your Honour, but it sidesteps what we submit is the issue.

GLEESON CJ:   We do not need to hear you, Mr Deakin. 

Having regard to the facts and circumstances of this particular case and in particular to the basis upon which liability was attributed to Redken, the Court is of the view that there are insufficient prospects of success of an appeal to warrant a grant of special leave and the application is refused, with costs.

MR DEAKIN:   Your Honour, would that be both applications?

MR GEE:   Both applications?

GLEESON CJ:   Both applications.

MR DEAKIN:   Thank you, your Honour.

MR GEE:   If the Court pleases.

AT 11.38 AM THE MATTER WAS CONCLUDED