Andar Transport Pty Ltd v Brambles Ltd

Case [2004] HCA 28

HIGH COURT OF AUSTRALIA

GLEESON CJ,
McHUGH, GUMMOW, KIRBY, HAYNE, CALLINAN AND HEYDON JJ

ANDAR TRANSPORT PTY LTD  APPELLANT

AND

BRAMBLES LIMITED   RESPONDENT

Andar Transport Pty Ltd v Brambles Limited [2004] HCA 28

15 June 2004
M214/2003

ORDER

1.   Appeal allowed with costs.

2.   Set aside the orders of the Court of Appeal of the Supreme Court of Victoria dated 21 November 2002.

3.   Remit the matter to the Court of Appeal of the Supreme Court of Victoria for further consideration.

4.   Costs of the whole of the proceedings in the Court of Appeal of the Supreme Court of Victoria to be for that Court to determine.

On appeal from the Supreme Court of Victoria

Representation:

D F Jackson QC with P H Solomon for the appellant (instructed by Wisewoulds)

S G Finch SC with D J Christie for the respondent (instructed by Allens Arthur Robinson)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Andar Transport Pty Ltd v Brambles Limited

Employer and employee – Duty of care by employer to employee – Common law duty – Safe system of work – Relevance of corporate structure – Where employee is director of employer – Where employee responsible for day-to-day operation of the company – Where employee injured due to unsafe system of work – Where employee in part responsible for devising system of work – Whether employer liable to employee for breach of duty committed by employee in his capacity as director of employer.

Employer and employee – Duty of care by employer to employee – Common law duty – Safe system of work – Meaning of "safe system of work" – Where existing system of work had been in place for many years – Whether employer took reasonable steps in ensuring that a safe system of work was created and maintained – Whether length of time in which system of work has been used is relevant in assessing whether system is safe.

Contract – Construction – Indemnity clauses – Whether principles governing construction of contracts of guarantee also govern the construction of contracts of indemnity – Whether indemnity clause to be construed in favour of the indemnifier.

Tort – Joint or several tortfeasors – Contribution between tortfeasors – Wrongs Act 1958 (Vic), ss 23B, 24(2) – Where appellant liable as employer – Where injured employee responsible for breach of duty by appellant – Where damages previously reduced to account for contributory negligence of employee – Whether previous apportionment based on contributory negligence relevant in assessing contribution under statute – Whether previous apportionment based on contributory negligence is ground for exemption from contribution under s 24(2).

Words and phrases – "safe system of work".

Wrongs Act 1958 (Vic), ss 23B, 24(2).
Corporations Act 2001 (Cth), s 124.

  1. GLEESON CJ, McHUGH, GUMMOW, HAYNE AND HEYDON JJ.   This is an appeal from the orders of the Victorian Court of Appeal[1] allowing in part an appeal from the…

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AGLC
Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28
Case
[2004] HCA 28
Decision Date

CaseChat Overview and Summary

The High Court of Australia heard an appeal from the Victorian Court of Appeal concerning a dispute between Andar Transport Pty Ltd (Andar) and Brambles Limited (Brambles). The case arose from injuries sustained by Mr Daryl Wail, an employee of Andar, who was also a director and shareholder of Andar. Mr Wail was injured while loading a truck with trolleys of linen at Brambles' premises, an activity he performed as part of a contract between Brambles and Andar for laundry delivery services. Mr Wail had previously been employed directly by Brambles before the company changed its business model to contract out such services to entities like Andar.

The legal issues before the High Court included the construction of an indemnity clause within the contract between Brambles and Andar, and the operation of provisions concerning contribution between tortfeasors under the Wrongs Act 1958 (Vic). Specifically, the court had to determine whether the indemnity clause extended to cover Brambles' liability for injuries suffered by Andar's employees, such as Mr Wail, and whether a prior apportionment of damages for contributory negligence affected the ability of one tortfeasor to seek contribution from another under the Wrongs Act.

The High Court reasoned that while indemnity and guarantee clauses share some underlying principles, their construction must be based on the specific wording of the contract. The court found that the indemnity clauses in question, when read in the context of the entire agreement, were not intended to cover liability arising from injuries to the contractor's own employees, such as Mr Wail. The court also considered the operation of the Wrongs Act, noting that the prior reduction of damages due to Mr Wail's contributory negligence did not necessarily preclude a claim for contribution under the statute.

The High Court allowed the appeal, setting aside the orders of the Victorian Court of Appeal. The matter was remitted to the Court of Appeal for further consideration, with the costs of the proceedings in the High Court to be determined by that Court.

Orders

Orders of the court

1. Appeal allowed with costs.

2. Set aside the orders of the Court of Appeal of the Supreme Court of Victoria dated 21 November 2002.

3. Remit the matter to the Court of Appeal of the Supreme Court of Victoria for further consideration.

4. Costs of the whole of the proceedings in the Court of Appeal of the Supreme Court of Victoria to be for that Court to determine.

Background

Background to the litigation

GLEESON CJ, Mc This is an appeal from the orders of the Victorian Court of Appeal[1] allowing in part an appeal from the jury verdict and consequential orders of the County Court of Victoria. The issues that arise in this appeal fall into two categories: the construction of a contract of indemnity, and the operation of Pt IV of the Wrongs Act 1958 (Vic) ("the Wrongs Act").[1]Brambles Ltd v Wail (2002) 5 VR 169.The facts The respondent, Brambles Limited ("Brambles"), provides laundry delivery services to a number of hospitals. Those services involve, amongst other things, the delivery by truck of large trolleys of clean linen. Since 1990, it has been the practice of Brambles to contract out its laundry delivery services to corporations that, in turn, employ drivers to load, deliver and unload the linen as directed by Brambles. Mr Daryl Wail was one such driver. He was employed by the appellant, Andar Transport Pty Ltd ("Andar"). Prior to the change in business practice adopted by Brambles, Mr Wail had been employed directly by Brambles to load, deliver and unload linen trolleys. Mr Wail was also one of two directors of Andar and one of two shareholders in the company. It will be necessary to say something further regarding the corporate structure of Andar later in these reasons. On 26 July 1993, Mr Wail loaded a truck with 22 trolleys of clean linen at Brambles' laundry premises in Box Hill, Victoria and drove to Cotham Private Hospital in Kew. After reversing the truck into a driveway adjacent to the hospital's delivery bay, Mr Wail opened the rear of the truck and lowered the hydraulic tailgate. He then attempted to remove one of the trolleys. However, that trolley was jammed against another trolley and, in attempting to pull it free, Mr Wail felt a searing pain across his lower back. It was subsequently determined that, as a result of this incident, the lumbosacral disc in Mr Wail's lower back had been damaged.The litigation By a writ and statement of claim filed on 17 June 1998 in the County Court of Victoria, Mr Wail commenced proceedings against Brambles alleging negligence. The particulars of negligence pleaded by Mr Wail included a failure by Brambles to ensure that the trolleys could be manoeuvred without risk of injury and a failure by Brambles to ensure that the trolleys could be manoeuvred having regard to their excessive weight when fully laden. On 22 March 2000, the jury found in favour of Mr Wail. Mr Wail was awarded general damages of $100,000 and pecuniary loss damages of $315,000. After a subtraction of $104,411.60 pursuant to s 135A of the Accident Compensation Act 1985 (Vic), the balance of damages was reduced by 35 per cent to take account of Mr Wail's contributory negligence. As a result, the trial judge entered judgment for Mr Wail in the amount of $201,822.46 with damages by way of interest of $2,000 and costs to be paid on a "solicitor/client" basis. The findings of the jury, and the consequential orders of the trial judge in this respect, are not the subject of an appeal to this Court. However, it will be necessary further to consider the basis of the jury's determination as to the negligence of Brambles later in these reasons.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

HUGH, GUMMOW, HAYNE AND HEYDON JJ KIRBY J CALLINAN J
However, notwithstanding the differences in the operation of guarantees and indemnities, both are designed to satisfy a liability owed by someone other than the guarantor or indemnifier to a third person. The principles adopted in Ankar, and applied in Chan, are therefore relevant to the construction of indemnity clauses[29].[29]See Davis v Commissioner for Main Roads (1968) 117 CLR 529 at 534, 537; Smith v South Wales Switchgear Co Ltd [1978] 1 WLR 165; [1978] 1 All ER 18; Greenwell v Matthew Hall Pty Ltd (No 2) (1982) 31 SASR 548. See also Andrews and Millett, Law of Guarantees, 3rd ed (2000) at 73; O'Donovan and Phillips, The Modern Contract of Guarantee, Eng ed (2003) at 258‑259.Conclusions as to construction Before this Court, Andar submits that cll 8.2.2 and 8.2.3 are limited to the indemnification of Brambles against any vicarious liability which Brambles might incur against third parties. Such a construction would, if adopted, prevent recourse to the clauses in respect of injuries suffered by employees of Andar such as Mr Wail. On their face, neither cl 8.2.2 nor cl 8.2.3 expressly provides that liability arising on the part of Brambles as a result of injuries suffered to employees of Andar falls within the terms of the indemnity. That omission is not surprising. As noted earlier in these reasons, one of the primary concerns of the Agreement is to ensure that, to outside observers, Brambles appears to be the sole entity involved in the provision of the relevant laundry services. In this way, the Agreement may be seen as an attempt to minimise, as far as is possible, the practical effects of the change in business practice embarked upon by Brambles when it required employees such as Mr Wail to be employed by independent corporations. The obligation upon Andar to paint the vehicle used by Mr Wail with the Brambles livery and name is a practical example of this desire to present to the public at large a seamless delivery operation. The possibility of a suit against Brambles premised upon vicarious liability was, in these circumstances, a distinct possibility. There are additional reasons for adopting Andar's proposed construction of the indemnity. With respect to cl 8.2.2, the indemnity is limited to liability arising in connection with the "conduct of the Delivery Round by [Andar]". As noted earlier in these reasons, the effect of cl 2.1 of the Agreement was that the Delivery Round could only be "conducted" by Andar through a nominated driver. In the absence of an express provision to the contrary, it is unlikely that the indemnity contained in cl 8 extends to liability arising in respect of injuries suffered by that nominated driver as a result of the conduct of the Delivery Round by that person. With respect to cl 8.2.3, the phrase "injury … from any cause to property or person occasioned or contributed to by any act, omission, neglect or breach or default of [Andar]" is critical. That expression contains two elements: first, an injury suffered by a "person" and, secondly, a requirement that the injury be occasioned, or contributed to, by the conduct of Andar. In the context of the Agreement as a whole, the latter element required the involvement of Mr Wail as driver. The structure of the clause therefore suggests that the person mentioned in the first element is a person other than the person necessarily encompassed within the second.

Ratio Decidendi

Legal Principle Established

Established by: HUGH, GUMMOW, HAYNE AND HEYDON JJ, KIRBY J, CALLINAN J

The difficulty for the appellant is however that it owed its employees an independent duty of care. That duty included a duty to provide a safe system of work. The duty, of course, could only in reality be discharged by a natural person or persons on behalf of the company, in this case, unlike in Nicol, by one person, Mr Wail, the director assuming responsibility for all relevant aspects of the work. It was a duty not to be discharged however, by accepting, or uncritically implementing a system of work devised by the party with whom it had a contract. The jury has held that the respondent was negligent and that as between it and Mr Wail, the latter was guilty personally of contributory negligence to the extent of 35%. And the trial judge has found that his personal negligence was also the negligence of the appellant. These are findings of fact. The last was inevitable. I do not think that this Court can disturb them. There was clearly evidence upon which the findings could be made. It included the evidence about the way and place in which the vehicle was parked, the placement of the trolleys in the truck, the means adopted to pull or push them to and from the truck, the failure of the appellant (by Mr Wail) to notice that a trolley was perhaps defective, and, in particular, the decision of Mr Wail to pull a trolley from the truck out of the stack in the way in which he did.The operation and effect of the agreement between the parties It is convenient to deal next with the effect of the written agreement of the parties. The first of the questions arising in relation to it is whether the parties continued to be bound by its terms despite that its stated period of operation had expired. As to that, cl 15.5 is of relevance:"15.5[E]xpiry or determination of the Agreement shall operate without prejudice to the rights and obligations of [the respondent] and the Operator which have accrued prior to the date of expiry or termination and shall not affect the parties [sic] respective continued rights and obligations under the Agreement and in particular shall not prejudice the rights –15.5.1to require the payment of all monies due and payable, and15.5.2to pursue any other remedy existing at law or in equity by either party against the other party or any other person." No formal renewal was effected but the parties continued to deal with each other in the same way as previously. Payment was made in accordance with the written agreement. In all respects the course of dealings between the parties and the work done were exactly the same as they had been. In Brogden v Metropolitan Railway Co[121] a slightly different problem arose. The parties there had failed to execute an agreement for the supply of a commodity that had been settled in all essential respects (except as to the identity of an arbitrator). The form of the agreement had been the subject of voluminous correspondence. But of more significance was the fact that for some years the course of dealings between the parties, including the price payable for the coal, was in accordance with the written but unexecuted contract.[121](1877) 2 App Cas 666 at 678 per Lord Cairns, 686 per Lord Hatherley, 690 per Lord Selborne.