Deutz Australia Pty Ltd v Skilled Engineering Ltd

IN THE SUPREME COURT OF VICTORIA
COMMON LAW DIVISION	Not Restricted

No. 5316 of 1999

DEUTZ AUSTRALIA PTY LTD	Plaintiff
v
SKILLED ENGINEERING LIMITED	Defendants
ERIC SUTTON

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JUDGE:	Ashley J
WHERE HELD:	Melbourne
DATE OF HEARING:	19, 23 and 24 October 2000
DATE OF JUDGMENT:	25 June 2001
CASE MAY BE CITED AS:	Deutz Australia Pty Ltd v Skilled Engineering Ltd and Anor
MEDIUM NEUTRAL CITATION:	[2001] VSC 194

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Tort – labour hire company – employee hired out to a third party – negligent conduct of employee causing damage to property of third party – whether labour hire company vicariously liable to third party for tortious conduct of employee – whether employee the servant pro hac vice of the third party – principles – whether employee entitled to claim protection of s. 66, Insurance Contracts Act 1984 (Cth).

Contract – labour hire company – whether contract was to provide a man to third party, or was a contract to provide services of a particular kind – implication of terms into contract – whether warranty imposed by operation of s. 74(1) Trade Practice Act 1974 (Cth) – whether breach of contract.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A.G. Uren, QC with Mr A. McH Ramsey	Hall & Wilcox
For the Defendants	Mr P.F. O'Dwyer	Ligeti Partners

HIS HONOUR:

The Incident

On 28 January 1997, at about 10.30 am, the second defendant, Eric Sutton, was reversing a forklift along a main aisle at the Braeside warehouse premises of the plaintiff, Deutz Australia Pty Ltd (“Deutz”). The mast of the forklift was in an elevated position. On either side of the aisle were racks of shelving which were used for the storage of diesel motors of various sizes. At a point not far from the intersection of the main aisle with a cross aisle a bridge spanned the shelving at its topmost point. The bridge was constituted by two parallel orange painted beams, set not far apart and attached to the shelving on either side. The bridge was used as a shelf, but only for storage of light items. At the pertinent time a box containing some light material was sitting upon it.

In the event, the mast of the reversing forklift struck the first beam in its path. In a catastrophic chain reaction much shelving was caused to collapse and many valuable motors were damaged. The amount of the damage which admittedly resulted from the incident was $369,000.

Mr Sutton had been supplied to Deutz by the first defendant, Skilled Engineering Pty Ltd (“Skilled”). In different ways the plaintiff contends that Skilled is responsible in this proceeding for what is alleged to have been Mr Sutton’s want of care.

The statement of claim and the defences, despite the simplicity of the incident in which the plaintiff’s property was damaged, are not simple. It is desirable that I consider the pleadings before going on to examine the circumstances of the incident in greater detail.

The Plaintiff’s claim against Skilled: the pleadings analysed; some conclusions

The plaintiff alleges and Skilled admits that at material times the latter carried on business supplying skilled labour for hire to business.

The plaintiff alleges and the first defendant admits that in the conduct of its business it made use at material times of a large warehouse for the storage of goods.

The plaintiff alleges and the first defendant admits that on or about 20 January 1997 the first defendant agreed to supply a qualified forklift driver to the plaintiff. That allegation and admission conceals a debate whether the agreement was to supply a qualified driver or the services of a qualified driver[1].
[1]A dichotomy which is pointed up by the different language of paragraphs 4 and 7 of the statement of claim; and which appears elsewhere in that document.

The plaintiff alleges and the first defendant admits that it was a term of the agreement that the driver supplied by the first defendant would be capable of performing the usual work tasks of a qualified forklift driver.

The plaintiff alleges that it was a term of the agreement that the driver would perform his duties without negligence and with the reasonable competence of a qualified forklift driver. The first defendant does not admit that the contract contained such terms.

I reject the plaintiff’s contention that it was a term of the contract that the driver provided by Skilled would perform his duties without negligence. It may be, the matter must later be considered, that Skilled was responsible in tort for the tortious conduct of Mr Sutton. But that says nothing about the implication of a contractual term in the form now under discussion. Application of the conventional test for implication of a term must lead to a conclusion adverse to the plaintiff.

Application of that test, however, leads to a conclusion favourable to the plaintiff in respect of its plea that a term should be implied to the effect that a worker supplied by Skilled pursuant to the agreement would perform his duties with the reasonable competence of a qualified forklift driver. It could not be doubted that the plaintiff sought from the first defendant a driver who would demonstrate that competence, and that the Skilled's business was predicated on its ability to provide such a person. The conclusion which I have just expressed, not that it is decisive, is consistent with an observation made by Lord Simonds in Mersey Docks & Harbour Board v Coggins & Griffith (Liverpool) Ltd & Anor[2] when his Lordship imagined a circumstance in which a company, having hired a crane and craneman from the craneman’s general employer, had by the negligence of the craneman suffered damage. His Lordship said:

“I do not see how the [general employer] could escape liability. For the obligation to supply a crane and a man to work it is an obligation to supply a crane which is not defective and a man who is competent to work it.”[3]

I should add one further remark concerning the implied term now under discussion. To my mind it is immaterial to determination whether the term should be implied whether Mr Sutton was, in performing his work at Deutz, for all purposes the employer of Skilled; or whether Skilled was then his general employer he then being a servant pro hac vice of Deutz. The contractual term would be relevant to adjustment of loss between Deutz and Skilled in either circumstance.

[2][1947] AC1.

[3]At 18-19.

I return to the pleadings. The plaintiff next alleges, further or alternatively, that at the pertinent time it was a “consumer” for the purposes of s. 4B of the Trade Practices Act 1974 (Cth). Skilled denies that allegation and says further that the overall price of any labour supply services supplied to the plaintiff by it exceeded $40,000 and that any such services were not of a kind ordinarily acquired for personal domestic or household use or consumption – see s. 4B(1)(b)(i) and (ii).

The plaintiff’s allegation of its status as a consumer leads on to its allegation, denied by Skilled, that s. 74(1) of the Trade Practices Act applied to the agreement; by operation of which subsection a warranty was implied into what is said to have been a contract for the supply of services to a consumer that the services would be rendered with due care and skill.

By its amended defence, and under cover of the general denial of the applicability of s. 74(1), Skilled relies upon s. 74(3), which provides, inter alia, that “services” do not include a reference to services that are or are to be provided under “a contract for or in relation to the transportation or storage of goods for the purposes of a business… carried on or engaged in by the person for whom the goods are transported or stored”.

The plaintiff next alleges, following along the contractual path, that the incident which caused the collapse of the racks and thus the damage to the motors

¨ occurred whilst the second defendant was performing the usual work tasks of a qualified forklift driver;
¨ “was caused by negligence of the second defendant and because he did not meet the reasonable competence of a qualified forklift driver”;
¨ occurred by reason of breach of the term implied by s. 74(1).
Skilled denies breach. It goes on to allege further contractual terms to which I shall advert a little later.

Pausing for a moment, the purpose of the plaintiff’s reliance upon s. 74(1) of the Trade Practices Act was evidently to ensure that there should be implied into the agreement a term that the “services supplied by the first defendant” would be rendered with due skill and care; the statutory implication standing in place of or in supplementation of the (implied) term pleaded by paragraph 5(b) of the statement of claim.

I readily conclude that the plaintiff was a “consumer” for the purposes of s. 4B of the Trade Practices Act. The plaintiff is probably entitled to the presumption afforded by s. 4B(3). But in any event the evidence showed that the agreement pertained to the “supply” of “services”, each of those words being defined by s. 4(1).

There is nothing to the first defendant’s reliance on s. 4B(1)(b)(i). The evidence showed that the first defendant from time-to-time entered into agreements with the plaintiff for the provision of skilled labour. Those agreements were separate one from the other. They could not be aggregated for the purposes of calculating a price for services in the case of the agreement in performance of which Mr Sutton was supplied to the plaintiff. It is true that the services to be provided under that agreement had not been completed when the incident occurred. But the evidence is clear that the duration of provision of services was very likely to be quite short[4]; and that the price of such services was likely to be much less than the prescribed amount.
[4]See Ex.1.

I next readily conclude that Skilled’s reliance on s. 74(3)(a) should not succeed. The agreement between the plaintiff and first defendant was simply for the provision of a forklift driver to do “general forklift driving”[5]. The nature, in substance, of the contracts excluded by operation of s. 74(3)(a) appears from the wording of that subsection to be quite different[6].
[5]See Ex.1.
[6]The meaning of s. 74(3)(a) was discussed, with different approaches but the same outcome, in Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388.

I turn to consider the application of s. 74(1) in the circumstances of this case. According to the plaintiff’s argument the agreement should properly be characterised as a contract for the supply of forklift driving services. So characterised, there would be a breach of the warranty implied by the subsection if the driving itself was not rendered with due care and skill. But according to the argument for Skilled the services to be supplied under the agreement consisted simply of the provision of a forklift driver. Due care and skill must be exercised in selecting and providing a suitable man.

I later conclude, for purposes of imposition of vicarious liability in tort, that Mr Sutton was at material times the employee of Skilled for all purposes; or, perhaps more accurately having regard to the way in which the case was argued, that he was not at material times the servant pro hac vice of Deutz. That conclusion does not resolve, however, the question whether the services to be provided by Skilled by the agreement between it and Deutz were for the provision of a (competent) man or the provision of forklift driving services.

Neither, in my opinion, is the question answered by the pleadings. Counsel for the plaintiff relied upon an admission made by Skilled in its amended defence. Skilled, for its part, was able to point to inconsistency in the statement of claim. Neither argument was persuasive.

I should next say that I do not regard documentation compiled by Skilled – in particular the standard order form and the invoice dated 28 January 1997[7] - as contributing anything much to resolution of the question now under discussion. The order form contained the heading “what type of man” as well as the heading “job description”. The invoice referred to “supply of personnel services” but also identified Mr Sutton and his job description.
[7]They are part of Ex.18.

In the end, the question should be resolved by identification of the substance of the agreement. So considered, I conclude that what Skilled agreed to provide was a qualified and competent man to undertake work which required a man with particular qualifications.

The consequence of that conclusion is that there was implied into the agreement a warranty by Skilled that in substance it would exercise due care and skill in selecting and assigning to Deutz a qualified and reasonably competent forklift driver. There was not implied a warranty that the performance of the forklift driving would be performed with due care and skill.

I referred a little earlier to Skilled having pleaded contractual terms other than those of which I have already made mention. Pertinently it alleges that there were implied terms of the agreement that the plaintiff would

“(a) provide the secondnamed defendant with a safe place of work;
(b)instruct the secondnamed defendant in the safe method of the performance of his duties;
(c)supervise the duties performed by the secondnamed defendant in an appropriate manner;
(d)provide the secondnamed defendant with safe plant and equipment in order to perform his duties.”

It contends that the plaintiff breached those terms, that such breach was the cause of the plaintiff’s loss and damage, and alternatively that such loss and damage was contributed to by the breach.

Sensibly, counsel for Skilled did not in his final submissions contend that the plaintiff’s alleged default caused, as the law understands causation, the incident and the plaintiff’s loss and damage. That leaves for consideration the question, in the contract claim, whether it is open to Skilled to contend that the plaintiff’s loss and damage was contributed to by its alleged breach of the implied terms and/or by contributory negligence.

The majority opinion in Astley and Others v Austrust Ltd[8] was against the availability of the latter defence. But by the Wrongs (Amendment) Act No 75/2000 a definition of “wrong” was substituted for the definition of "fault" previously appearing. By the substituted definition "wrong" was defined to mean, inter alia, an act or omission “amount(ing) to a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort”. Further by the amending Act, s. 26(1) of the Wrongs Act 1958 was recast, in part so as to speak in the language of "wrong" rather than in the language of "fault".
[8](1999) 197 CLR 1.

Having regard to the time at which the trial was conducted, the possible impact of the amending Act was not debated. But having regard to the transitional provision contained in the new s. 28 AA(1) of the Wrongs Act I sought and received additional submissions from the parties.

Subject to an important qualification raised for the plaintiff, Deutz and Skilled were in agreement that the amendments had application to this proceeding. There was also agreement – it necessarily depended upon what findings I made with respect to Skilled’s contractual duty – that the circumstances could fit the statutory description of a contractual duty that was concurrent and co-extensive with a duty of care in tort.

The qualification to which I referred a moment ago, was this: counsel for the plaintiff submitted that the amending provision could not apply because to give it application would give rise to an inconsistency under s. 109 of the Constitution.

I later conclude that Skilled did not breach its contract with Deutz. That conclusion is based, of course, on the terms of the contract which I have found was made between the two parties. Those terms, as is already evident from these Reasons, do not coincide with the terms pleaded by Deutz.

In the circumstances it is strictly unnecessary to consider whether, had Skilled breached a contract in those terms, it could be said that the contractual duty owed was concurrent and co-extensive with a duty of care in tort. Nonetheless, I should briefly address the question, in case I was wrong in concluding that there was no contractual breach.

Assuming that the vicarious liability of the first defendant in tort should be characterised as breach of a duty of care owed in tort, I think that neither breach of the term pleaded by paragraph 5(a) of the statement of claim nor breach of the statutory warranty implied by s. 74(1) of the Trade Practices Act (as I have found the content of that warranty to be) would fit the description of breach of a contractual term that was concurrent and co-extensive with a duty of care in tort, as that conception is explained by Astley. But I think that breach of so much of the term pleaded by paragraph 5 (b) of the statement of claim as I have concluded was implied into the contract would attract the description set out in the amended s. 25(b) of the Wrongs Act.

That leaves for brief comment the inconsistency argument raised by the plaintiff's submissions. The contention, in short, was that the amending statute was inconsistent with s. 74(1) of the Trade Practices Act because it would qualify, impair or negate the intended effect of the statute, which was both to imply a term into contacts and oblige compensation in the event of breach. Counsel referred to and relied upon Telstra Corporation v Worthing[9] and to Downard–Pickford.[10]
[9](1999) 197 CLR 61 at para. 27 and 28.
[10]Supra, at 396-397 per Toohey and Gaudron JJ.

The argument was one of substance. It would be wrong to accept or dismiss it without careful analysis. That said, the tentative view I take is that the amending provision did not restrict the full liability for contractual breach which, according to Downard-Pickford was part of the regime created by s. 74(1) of the Trade Practices Act. There is not the direct conflict which existed in that case between the State limitation of liability provision and the right to a full contractual remedy. Whether the amending Act is inconsistent with the existence of full contractual liability probably depends upon what is meant by “full contractual liability”. It is arguable that the amending Act does not deny a plaintiff a full contractual remedy; but rather that it says how that remedy is to be quantified in the event that (in some cases) a plaintiff is guilty of conduct in breach of contract which contributes to its loss and damage.

Upon the question of contributory negligence in the plaintiff’s contract claim, then, I incline to the view that, had there been breach of the contract as I have described it, in one connection the plaintiff would have been liable to a finding of contributory negligence against it. In that hypothetical situation the apportionment which I later consider appropriate to the plaintiff’s claim in tort would be equally appropriate (which is not to say that the reasons why that should be so would be exactly the same).

I turn to the contention by Skilled that the plaintiff’s loss and damage was contributed to by the latter’s breach of terms that were to be implied into the agreement. In Astley there was brief discussion about the insertion of terms providing for apportionment of responsibility on the basis of the respective fault of the parties[11] and about the implication into contracts for the provision of professional services of a term obliging the person engaging the professional to take reasonable care in certain respects. The terms which in the present case Skilled alleges should be implied might be described as an adapted form of the latter category.
[11]See paragraphs 85 and 86 in the majority judgment.

Counsel for Skilled, however, made no submissions at all in support of implication of the terms now under discussion. That is to be contrasted with the circumstance that he made both written and oral submissions concerning the terms which the plaintiff alleged ought be implied into the agreement.

Neither did plaintiff’s counsel address the terms whose implication was pleaded by the first defendant.

In the circumstances, I cannot think that my duty as trial judge extends to determining whether the pleaded terms should be implied; and if they could, then to determining the question of breach. Whether such terms should be implied would likely be contentious. I should not have to anticipate the competing arguments and research the law unassisted by counsel’s submissions.

In all, it follows from what I have said that if the plaintiff had proved breach of contract by Skilled causing it loss and damage, no basis for reducing its entitlement to damages was disclosed.

What of tort? The plaintiff’s case, so far as the first defendant is concerned, is pleaded in contract up to and including paragraph 7 of the statement of claim. But then come paragraphs 8, 9 and 10. The plaintiff alleges, in short, that at material times Mr Sutton was the employee of Skilled, and that Skilled was vicariously liable for his negligence. Then it is pleaded that the negligent acts or omissions of Mr Sutton brought about the incident, loss and damage – for which it is said Skilled is (vicariously) liable.

According to Skilled’s defence, Mr Sutton was not its employee at the critical time. He was then acting as an employee of the plaintiff.

Neither by its defence (if that was possible) nor in argument did Skilled contend that, if Mr Sutton was not the servant pro hac vice of Deutz at the critical time, it was not vicariously liable for any tortious conduct on the part of Mr Sutton which caused Deutz loss and damage. It raised no suggestion that the plaintiff must succeed against it, if at all, in contract alone.

The question of vicarious liability apart, Skilled by its defence denies that Mr Sutton was guilty of negligence; and it raises a plea of contributory negligence. In the latter connection its case at trial, and the case pursued by Mr Sutton, was that the proportionate responsibility of the plaintiff was much larger than the proportionate responsibility of Mr Sutton.

I consider this matter on the footing on which it was pleaded and argued. I therefore assume that conceptually it is possible for the plaintiff to make out claims against Skilled both in contract and tort; and that in the latter case the critical question is whether Mr Sutton was at the material time the employee pro hac vice of the plaintiff.

Before passing on to an analysis of the pleadings as between the plaintiff and the second defendant I should note one matter that was stressed in the course of the submissions of counsel for Skilled. It relates to the question whose employee Mr Sutton was at the material time. Counsel accepted that at all times the only contract of service to which Mr Sutton was a party was a contract of service with Skilled. According to counsel’s argument Mr Sutton became the employee pro hac vice of the plaintiff because of the factual relationship established between them.

The Plaintiff’s claim against the Second Defendant: the pleadings analysed

The plaintiff’s claim against the second defendant is essentially contained in paragraphs 9, 10 and 12 of the statement of claim. The plaintiff alleges and Mr Sutton admits that the incident occurred. The plaintiff alleges and Mr Sutton denies that the incident was caused by the negligence of the second defendant. The plaintiff alleges loss and damage, the amount of which was agreed between the parties at trial.

Mr Sutton takes a defence under s. 66 of the Insurance Contracts Act 1984 (Cth). He alleges, and it is common ground, that the plaintiff was insured against the loss which it sustained and that these proceedings are brought by an insurer by way of subrogation.

Then, says Mr Sutton, under s. 66 the rights of the plaintiff “are exercisable against a person who is [its] employee”, and the “conduct of the employee that gave rise to the loss occurred in the course of or arose out of the employment”. In consequence the insurer does not have the right to be subrogated to the rights of the insured against the employee.

The issue joined between the plaintiff and the second defendant in connection with s. 66 was this: was the latter an “employee” of the plaintiff for the purposes of the section? “Employee”, I should immediately say, is not defined.

In my opinion “employee” where used in the section means a person employed under a contract of service. That is so for a number of reasons: first, that is the ordinary meaning conveyed by the word “employee”. Second, s. 66 is no doubt a response to Lister v Romford Ice and Cold Storage Co Ltd[12]. That case concerned an employee in the conventional sense. Third, the reference in paragraph (b) to conduct which “occurred in the course of or arose out of the employment” is a reference apt to describe employment in the conventional sense. Fourth, “employee” appears elsewhere in the Act. See s. 76A, which refers to “a director of a company, or an employee or agent”; and to “an individual who is an employee or agent of a corporation”. It is possible that a word might carry different meanings in different sections of the same Act; but on general principles that should not be considered likely. The context in which the word appears in s. 76A strongly suggests that by “employee” is meant an employee in the ordinary conventional sense.
[12][1957] AC 555.

Given such a meaning, what is the operation of s. 66 in the case of a person who is at the material time a servant pro hac vice of another? The answer depends on what is comprehended by the term servant pro hac vice.

According to the plaintiff’s submission it is the essence of pro hac vice employment that a worker agrees – agreement being inferred – to be transferred as a contracting party to another employer. Here, upon the concession of the defendants, no contract of service ever arose between the plaintiff and the second defendant. So there never was an employment pro hac vice, and the second defendant’s reliance on s. 66 must fail.

For the defendants it was submitted that a person becomes a servant pro hac vice not by the coming into existence of a contract between worker and temporary employer; but from the relationship established between them.

Now, whichever of the submissions be correct, it is clear that no party contended that at material times there was a contract of service between Deutz and Mr Sutton. Contentions apart, later in these reasons I conclude that there was no such contract. In the circumstances, it appears to me Mr Sutton is not entitled to the protection of s. 66.

I acknowledge the remedial intent of the section. I acknowledge that the construction which I have placed upon it means that in a few cases a worker will not have its protection. That does not mean, however, that the section does not provide a remedy to the problem which was perceived to require remedy.

It follows from what I have said that Mr Sutton is liable to suit in the present circumstances. That leads on to the issue of contributory negligence.

In the end the defendants (for both pleaded contributory negligence) put their case this way: The presence of the bridge was a hazard. It created the risk of the accident occurring. The plaintiff had an obligation to identify and remove hazards, because carelessness on the part of a hired worker could be foreseen. There were simple means of removing or guarding against the risk. The proportionate responsibility for the accident and its consequences should be resolved 75:25 against the plaintiff. Counsel for the plaintiff, it is convenient here to note, did not concede any contributory negligence on the part of his client.

The incident described in greater detail

Having set the framework for my consideration of this matter by analysis of the pleadings I should describe the incident which caused the damage in greater detail.

Mr Sutton is an A Grade electrician by trade. He also held a forklift driver's certificate of competency at relevant times. He was supplied by the first defendant to the plaintiff on 21 January 1997. Using a forklift truck provided by Deutz, it was his job to pick up motors which had been unloaded outside the warehouse, bring them into the warehouse and place them into the racks.

The forklift with which he was provided had foot pedals for forwards and backwards motion. Mr Sutton had not operated a forklift like this before commencing work at Deutz. He was shown how to operate the forklift at the outset. He familiarised himself with its operation in a large open area outside the factory. I am satisfied, considering all the evidence, and in particular Mr Sutton’s evidence, that his driving a pedal operated forklift at the time of the incident played no part in the occurrence of the incident.

Mr Sutton told me that the bridge was pointed out to him "well before I even got onto the forklift". It was initially pointed out to him by Mr Inhoven, the warehouse manager. He said that "it was reinforced by George as well". He described "George" as the head mechanic. He did not know the man's surname.

Mr Sutton said that he was shown two yellow marks – one on the frame of the forklift and one on its mast. He was told that to drive underneath the bridge he had to have the two marks aligned.

Mr Sutton told me that he worked at Deutz on 21, 22, 23 and 24 January. He used the forklift constantly. In the normal course of his work it was necessary to drive under the bridge – not on every occasion that he was handling a motor, but "probably half a dozen, a dozen times" per day.

Mr Sutton described the incident this way: he had picked up a box containing a medium sized motor. Such motors were placed in the racks at the second level from the ground. He drove down the main aisleway, passed under the bridge, and made a right hand turn into a cross aisle. He moved along that aisle about 18 to 20 feet, he supposed. He turned the forklift to the left and raised its tines so as to place the box into the second level of the rack. He began to back out and at that stage heard someone calling his name. He stopped the forklift, looked around, and saw a person who he described as one of the managers. This man wanted Mr Sutton to fetch him a box from a point in the premises well distant from where the latter was then working. Mr Sutton said that he got off the forklift, put the handbrake on, and walked with the manager to the place where the particular box was, so that it could be identified for him. Then, said Mr Sutton, he walked back to the forklift, got on and drove off.

At the time when he had stopped the forklift it was still in the cross aisle – that is, at right angles to the main aisle which was spanned by the bridge.

Mr Sutton told me that on his return he reversed along the cross aisle, looking behind him so as to identify the point where it was necessary to make a 90⁰ turn back into the main aisle. He was intending to pass under the bridge after the turn had been completed. Asked by his counsel whether he was aware that the tines were up at the time he said "I should have been, but I wasn't".

Mr Sutton said that he reversed the forklift into the main aisle, started to go underneath the bridge, looked back towards the yellow marks, saw that they were not level, took his foot "off the brake" and "I heard it just hit the overhead bridge". His reference to "the brake" was very probably an error. He was referring to the reversing pedal.

It is quite clear that the mast had struck the bridge. What then occurred was the domino collapse of the racks to which I earlier referred.

In cross-examination Mr Sutton agreed that having backed his forklift away from the point where the box had been placed the appropriate thing to do was to drop the tines. He had not done that. He agreed that he had stopped the forklift and got off with the tines still elevated. He agreed that it was required procedure in such circumstances to lower the tines either to the ground or as close as possible to the ground. He had not done that. He agreed that it was proper procedure to drive the forklift, whether the tines were loaded or not, as close as practicable to the ground; and in any event no higher than the axle height of the front wheel. He agreed that the tines had in fact been left in a position that was higher than axle height in the course of reversing the machine. He further agreed that in making the turn into the main aisle the first thing to check was that the tines were in the correct position. But he didn't do that. He agreed also that in order to check that the tines did not hit the shelving as the machine was manoeuvred out of the side aisle into the main aisle it was necessary to look forwards. That, he thought, was when he noticed that the yellow marks were not aligned.

There is no doubt that, provided the mast of the forklift was set so that the yellow marks were in alignment, it was possible to pass under the bridge without mishap. Even in the short time that Mr Sutton worked in the warehouse the forklift driven by him has passed under the bridge on many occasions. As revealed by the evidence of Mr Beale, a former employee of Deutz, the bridge had been in situ at least from mid 1996.

Mr Sutton's candid admissions aside, there was other evidence that the forklift should have been operated at the relevant time with its tines preferably as close as possible to the smooth floor surface of the warehouse; and in any event not with its tines above the centre of the front axle height of the machine.[13]
[13]See the evidence of Mr Cutchel at T.59-60.

It is next convenient to refer to some measurements which were the subject of agreement. First, the lowest point of the beam struck by the mast was 2.87 m above ground level. Second, the top of the mast when the tines were on the ground was 2.5 m above ground level. Third, when the tines were raised to the level of the shelf in which the motor had been placed shortly before the collision, the top of the mast was 3.42 m above ground level.

There was further evidence of measurements. Mr Cutchel, a forklift trainer and licenser, was called by the plaintiff. According to his evidence the maximum safe travelling height of the tines was front axle height; and when the tines of the forklift were at that height the top of the mast was 2.56 m above floor level. Initially, having regard to the height of the front axle above ground level, I doubted that this measurement could be correct. But my doubt was based upon want of understanding of the mechanism of the mast. I shall explain that observation a little later.

Apart from the evidence of Mr Sutton and apart from photographs taken after the incident had occurred, evidence pertaining to what I shall shortly call the respective blameworthiness of Mr Sutton and Deutz was given by Mr Beale, formerly a storeman employed by Deutz, Mr Cutchel, Mr Graham, financial controller of Deutz in January 1997, Mr Riley, who was sent by Skilled to Deutz in late December 1996 and worked there as a forklift driver, and Mr Harley, an occupational health and safety consultant. I shall not refer to all that was said by those witnesses, but merely to evidence which went beyond the evidence to which I have already referred, and which remained pertinent at trial’s end.

Mr Beale was, in broad terms, an eyewitness to the incident. He said that prior to the incident the forklift was moving at about walking speed. At the time of the accident the tines were 1-1½ metres off the ground. He said also that he had held a forklift driver’s ticket for many years, and that he always thought that on a smooth surface the blades (tines) should be about two inches off the ground, and on a rough surface between four to six inches off the ground. When there was no load on “you had to have the tines low to the ground”. That was “because of training”; “it is policy”. He had driven under the bridge a few times and had experienced no difficulty in doing so.

Cross-examined, he agreed that it is necessary to concentrate when operating a forklift. He conceded that the standard position for driving with tines up was at front axle height, though it turned out that he had never been told that. He “reckon(ed) they should be lower”. He agreed that with the mast positioned adjacent to the yellow markers the tines would be about eight inches above ground level. He agreed that he did not really have the forklift under observation before the incident occurred. He said that “If you hop off the forklift you are supposed to lower your blades down to the ground”. That was “really [a] DLI” obligation.

Mr Cutchel, to parts of whose evidence I have already referred, assumed that with the tines at front axle height the clearance between the top of the mast and the bottom of the bridge was approximately 12 cms. In fact, it seems likely to me that the clearance was substantially more in such circumstances. That being my conclusion, it deprived concessions which he made in cross-examination of the significance they might otherwise have had – in particular his concession that constant passing under a bridge with only a 12 cm clearance “could be classified as a hazard”.

One matter that Mr Cutchel conceded was unaffected by his misapprehension as to the extent of clearance. Whether the concession was a matter of expertise, personal experience or common sense is an open question. But the witness did agree, in substance, that it was a possibility that a forklift driver operating a machine for a full day might lose concentration so as to leave the tines excessively elevated, contrary to good practice.

Mr Graham, the former financial controller, said in cross-examination that he had no knowledge that risk assessments were conducted by Deutz. But his evidence generally made it clear that he really had no idea at all of the requirements of health and safety legislation, and of any risk assessments that might have been required by such legislation. Nor, indeed, was it the case that if any such assessments had been done he would have seen them. In all, I consider that his evidence upon that issue, unsurprisingly in light of the nature of his employment with Deutz, was non-contributory.

Mr Riley gave evidence that he had been sent by Skilled to Deutz as a forklift driver in late 1996. He said that he operated the forklift, and that he had passed under the bridge “on numerous occasions”, it “could be two, three times” a day. Asked about the clearance he recalled “it was low, and that was the purpose of keeping the pallet down low”. He said that he complained to sub-assembly engine workers in that area that it was quite low; and that he mentioned it to Skilled and to “Werner” of Deutz.

In cross-examination he said that he had “mentioned it to Skilled, in conversation, … that they had a low beam”. This had been said when he was reporting an accident which had occurred when he was working at the Deutz premises. The accident was quite unrelated, as it turned out, to the existence of the bridge.

Mr Harley, the occupational health and safety consultant, said that he had been an inspector and then senior inspector with the DLI and its various successors, most recently WorkCover, in the period 1968-1998. He had particularly been an inspector of lifts and cranes. In the course of his work he had investigated probably three or four accidents involving forklifts striking overhead obstructions. He had written training manuals for forklift drivers.

He said, as is the fact, that under the Occupational Health & Safety Act which was in force in January 1997 an inspector had power to order that an immediate risk be removed, or else the operations cease.

According to the witness, with a 37 cm clearance when the tines were on the ground, there was “a faint risk of …. the forklift hitting the bridge if he hasn’t got his mast down at least … at the level of his axle”. He said that if he inspected the factory “you would ask them to stop the traffic in there until they had either removed the hazard or taken some steps to prevent the forklift from striking that hazard”. Short of removing the bridge an alarm or warning system of some kind could have been installed. He described a simple warning mechanism.

The witness referred to the Occupational Health & Safety (Plant) Regulations 1995. He drew my attention in particular to Regulations 702, 703 and 704, which respectively cover an employer’s duty to undertake hazard identification, risk assessment in connection with any identified hazard (“hazard” being defined to mean “the potential to cause injury or illness”), and control of an identified risk.

The witness described the marks painted on the forklift, which provided a means for setting the mast in a position where it did not strike the bridge, as an “administrative control”. That was “on the bottom order of the priorities”. Under the Regulations, he said “you are expected to either eliminate the risk or engineer it out”.

Cross-examined, Mr Harley agreed that, according to the pertinent Australian Standard, when loads are being carried by forklifts, they are to be carried as close as practicable to the ground; and that on a smooth surface a load would be carried with the tines “maybe 20 or 15 cms off the ground”. He agreed that in training forklift drivers are told that the maximum height for load carrying is with the tines at front axle height. The witness also agreed, in effect, that the action of the particular forklift was such that when the tines were raised off the ground the top of the mast did not go up by exactly the same distance.[14]
[14]T. 150, lines 11-15, T. 151, lines 16-28.

This is an appropriate time to express my conclusion as to the clearance when the tines were at front axle height; and in doing so to explain my initial doubt concerning a measurement made by Mr Cutchel. According to Mr Cutchel’s evidence the top of the mast was 2.56 m above ground level when the tines were at front axle height. The parties agreed that the high point of the mast was 2.5 m above ground level with the tines in the floor position. I see no reason not to accept Mr Harley’s estimate that the height of the front axle was of the order of 30 cms above ground level. That estimate was not far removed from Mr Beale’s eight inches – that is 20 cms. Is that estimate and that evidence reconcilable with Mr Cutchel’s evidence as to the height of the top point of the mast with the tines at front axle height? The answer is “yes”, and the reason is this: the tines could be lifted 20-30 cms above floor level and yet the top of the mast would only rise by 6 cms because the mast of the forklift was apparently of the “two stage” type, whose operation produced a differential between a rise in the level of the tines and the rise in the top point of the mast.

It follows from the evidence and the matters agreed that when the tines were at ground floor level the clearance was 37 cms. When they were at front axle height the clearance was 31 cms – that is, about a foot.

Service pro hac vice: principles

I turn to consider the plaintiff’s claim in tort, and thus the issue which took centre stage at trial – expressed as a question, was Mr Sutton the servant pro hac vice of Deutz at the material time?

After a worker has been hired to a person other than his general employer loss and damage of at least three kinds may occur.

First, the worker may by his negligence in performing work cause injury – physical or material – to a third party. The question which then arises is who as employer is to be vicariously liable for the worker’s default.

Second, the worker may himself suffer injury or death in the course of performing work – a question which then arises is who, and on what basis, he or his dependants may sue.

Third, the worker may in the course of performing work damage the property of the person to whom he has been hired. The question which then arises is whether the general employer is to be vicariously liable for the worker’s tortious conduct.

In the course of argument I was referred to many cases of the first two classes; but none of the third type.

The first class of case is exemplified by Mersey Docks. The conception is that a servant of a general employer may in some circumstances become pro hac vice – “for the time being”, as Denning MR translated it in Savory v Holland Hannen & Cubitts (Southern) Ltd[15] - the servant of a temporary employer; in which circumstances the temporary employer must shoulder vicarious liability for the negligence of the servant which causes injury to a third party.
[15][1964] 3 All ER 18 at 20.

In Denham v Midland Employers Mutual Assurance Ltd[16] a case which was an offshoot of the second class of matters described above, Denning MR said this about the first class of matters:

“That conception is a very useful device to put liability on the shoulders of the one who should properly bear it, but it does not affect the contract of service itself. No contract of service can be transferred from one employer to another without the servant’s consent: and this consent is not to be raised by operation of law but only by the real consent in fact of the man express or implied: see Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014. In none of the transfer cases which have been cited to us had the consent of the man been sought or obtained. The general employer has simply told him to go and do some particular work for the temporary employer and he has gone. The supposed transfer, when it takes place, is nothing more than a device – a very convenient and just device, mark you – to put liability on to the temporary employer; and even this device has in recent years been very much restricted in its operation. It only applies when the servant is transferred so completely that the temporary employer has the right to dictate, not only what the servant is to do, but also how he is to it: see Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Ltd [1947] AC 1. Such a transfer rarely takes place, if ever, when a man is lent with a machine, such as a crane or a lorry: nor when a skilled man is lent so as to exercise his skill for the temporary employer. In such case the parties do not contemplate that the temporary employer shall tell the man how to manipulate his machine or to exercise his skill. But a transfer does sometimes take place in the case when an unskilled man is lent to help with labouring work: See Garrard v A.E. Southey & Co [1952] 2 QB 174; [1952] 1 TLR 630; [1952] 1 All ER 597."[17]

[16][1955] 2 QB 437.

[17]At 443-447.

In my respectful opinion his Lordship was exactly correct in describing the concept of servant transfer in the first class of case as a useful device. Kaye J, speaking for the Full Court, cited the passage with obvious approval, though for a different purpose, in Monarch Insurance Co Ltd v Steel Mains Pty Ltd[18].
[18][1986] VR 831 at 836.

In Mersey Docks, Lord Macmillan pointed out that:

“Servants cannot be transferred from one service to another without their consent and even where consent may be implied there will always remain a question as to the extent and effect of the transfer.”[19]

And Lord Porter said this:
“In determining this question it has to be borne in mind that the employee’s position is an important consideration. A contract of service is made between master and man and an arrangement for the transfer of his services from one master to another can only be effected with the employee’s consent, express or implied. His position is determined by his contract. No doubt by finding out what his work is and how he does it and how he fulfils the task when put to carry out the requirements of an employer other than his own, one may go some way towards determining the capacity in which he acts, but a change of employer must always be proved in some way, not presumed. The need for a careful consideration of the circumstances said to bring about the change of employment has latterly been accentuated by the statutory provisions now in force for compulsory health and accident insurance and, in the case of many firms, by the existence of funds accumulated under a trust for the benefit of employees who will not lightly incur the risk of losing such benefits by a transfer of their services from one master to another.”

[19]At 14.

But it seems to me that their Lordships were doing no more than emphasising the reluctance there should be to conclude that there has been a change in employer for the purpose of imposing vicarious liability. If their Lordships had been saying that the determinative issue was whether the contract of service was no longer between a worker and A, but was now between the worker and B, the question of servant transfer would have been a much simpler one than is suggested by the various opinions in that case.

I should add that my understanding of the matter is in line with what was said by Doyle CJ in Mason & Cox Pty Ltd v McCann[20]. Moreover, as Atiyah, Vicarious Liability, points out[21] in a passage cited by Yeldham J in McNiece Bros Pty Limited v National Employers Mutual General Insurance Association Ltd & Anor[22], if a genuine transfer of the servant was necessary before the temporary employer could be held liable there would be no “doctrine of master and servant pro hac vice” at all, and the man would simply cease to be the servant of one employer and become the servant of the other.
[20](1999) 74 SASR 438 at 433.
[21]At 155.
[22](1985) 3 ANZ Insurance Cases 60-631 at 78, 879.

Speaking of Mersey Docks, and the Australian case of McDonald v The Commonwealth[23] - the latter of which was also a case of the first class – Brennan J said this in Oceanic Crest Shipping Company v Pilbara Harbour Services Proprietary Limited[24]:

“The rule to be derived from Mersey Docks and McDonald is not that two persons cannot be vicariously liable for the same damage or that an employee cannot be the servant of two masters, but that two employers of the same servant who negligently causes damage will not both be liable for the damage if one rather than the other has what Jordan C.J. called ‘the relevant control’: McDonald.[25]

[23][1945] 46 SR (NSW) 129.

[24](1986) 160 CLR 626.

[25]At 668.

His Honour dissented in the result. I do not think that circumstance in any way diminishes his Honour’s analysis of the ratio in the cases to which he referred.

Because a court in considering servant transfer is applying a device, and because, at least for the most part, there is not the slightest doubt that the contract of service between worker and general employer is the only contract of service which subsists at the time when the worker is undertaking duties for the so-called temporary employer, the tests for determining whether a man is employed under a contract of service or a contract for services[26] have very little to say about the question whether a worker is pro hac vice the servant of an asserted temporary employer. Neither, I consider, does the principle that an employer owes a non-delegable duty of care to his employee[27] bear upon the matter[28].
[26]Discussed at length in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; see also Building Workers Industrial Union of Australia and Ors v Odco Pty Ltd (1991) 29 FCR 104 at 123-127.
[27]See Kondis v State Transport Authority (1984) 154 CLR 672.
[28]Although the observations concerning servant transfer made by Brennan J in that case at 692 are of relevance.

In truth, the courts have had to construct a framework for deciding when circumstances have been disclosed which are sufficient to shift the responsibility of vicarious liability from general to temporary employer. The framework which has been constructed owes something to the criteria for determining whether a contract of service has been created; but for reasons described I think that it would be quite wrong to seek to draw the analogy too far.

What has been decided, I think, is this: first, a general employer which seeks to shift vicarious responsibility for the negligence of its servant onto another bears a heavy onus, which can only be discharged in quite exceptional circumstances[29].
[29]Mercy Docks per Lord Simon at 10; see also Oceanic Crest at 646 per Wilson J.

Second, transfer will less readily be inferred where the general employer provides man and machine[30]; and probably also where the general employer provides a skilled worker.[31]
[30]Mersey Docks per Lord Porter at 17; and probably also where the general employer provides a skilled worker.
[31]Savory at 20 per Denning MR; Denham at 414 per Denning MR.

Third, transfer may be discerned where the hired worker, despite a machine being also hired out, is bound to work the machine “according to the orders and under the entire and absolute control” of the hirer[32].
[32]Donovan v Laing, Wharton & Down Construction Syndicate Ltd [1893] 1 QB 629 at 632 per Lord Esher MR.

Fourth, the contract made between general and temporary employers, so-called, cannot determine whether there has been change of masters for purposes now under discussion[33].
[33]Mersey Docks per Lord Porter at 15 and Lord Uthwatt at 22.

Fifth, circumstances in which transfer may be discerned are the following:

¨    Where the hirer can direct not only what the workman is to do, but how he is to do it[34].
¨    Where the hirer “is entitled to tell the employee the way in which he is to do the work[35].
¨    Where the complete dominion and custody over the servant has passed from the one to the other[36].
¨    Where, by an agreement “the employer vests in the third party complete, or substantially complete, control of the employee, so that he is not only entitled to direct the employee what he is to do, but how he is to do it”[37].
¨    Where it can be said that the hirer has such authority to control the manner in which the worker does his work that it can be said that the worker is serving the hirer, not merely serving the interests of the hirer[38].
¨    Where it cannot be said that the reason that the worker subjected himself to control of the so-called temporary employer as to what he did and how he did it was that his general employer told him to do so[39].
¨    Where it can be said that the servant was transferred, not merely the use and benefit of his work[40].

[34]Mersey Docks per Lord Simonds at 18.

[35]Mersey Docks per Lord Porter at 17.

[36]Mersey Docks per Lord Simonds at 20. See also Bhoomidas v Port of Singapore Authority [1978] 1 WLR 189 particularly at 193 A-B and 194C.

[37]McDonald, per Jordan CJ at 132.

[38]Paraphrasing Lord Uthwatt in Mersey Docks at 21.

[39]Paraphrasing Romer LJ in Denham at 446.

[40]Paraphrasing Bowen LJ in Moore v Palmer (1886) 2 TLR 781 at 782.

The framework to which I earlier referred having now been described, this should be said: There have been cases in which courts have remarked that, if the case had fallen into what I have called the first class, transfer would have been made out. Nonetheless, I was referred to no case decided in the twentieth century in which the burden of showing transfer for purposes of imposition of vicarious liability was discharged. Given that every case must be assessed on its own merits, the extent of the burden imposed on general employers is, I think, nonetheless emphasised.

The second class of case, that is, the class in which a worker whose services are hired out suffers injury or death, has at times been considered in the context of servant transfer; but not always[41]. It is easy to understand, if a worker is injured in the course of his work for a hirer, and if the matter must be looked at as one of servant transfer in order to yield a cause of action against the hirer, that a court might think that the Mersey Docks test of transfer is too strict. That was the concern of Parker J in Garrard. In fact, a claim can be mounted in such a case without resort to the relationship of employer and employee[42]. The only disadvantage for the injured worker if the matter be thus approached is that possibly he or she might not receive some of the advantages – particularly as regards contributory negligence – which the cases have bestowed upon workers in employer liability cases.
[41]See, as an example of the former approach, Bhoomidas. See also, for example, Garrard v A.E. Southey & Co and Anor [1952] 2 QB 174 at 176, 179. Parker J doubted, at 179, whether the test should be the same; but he nonetheless applied Mersey Docks. See further Opresnik v JC Smale & Co and Anor, Crockett J, unreported, judgment on third party proceedings delivered 15 November 1973. Contrast the observations of Diplock LJ in Savory at 21I-22D. Again, in Fennell v Supervision & Engineering Services Holdings Pty Ltd and Anor (1988) 47 SASR 6 at 10 Jacobs J pointed out that the hirer’s liability, not in issue on the appeal, did not depend on it having become the temporary employer.
[42]See, for example, Mason & Cox at 443 per Doyle CJ.

The present case, however, as I have pointed out, raises neither the question of injury done to a third party, nor injury suffered by the hired worker. The case is rather one of the kind contemplated by Lord Simonds in Mersey Docks in the passage which I cited at [10].

In that connection his Lordship observed, in my respectful opinion acutely, that it would be a strange twist in the law if responsibility for the workman’s negligence differed according to whether the damage was done to the property of the so-called temporary employer or to the property of a third party.

Where the negligence of a worker causes loss and damage to a company to which he has been hired out, I consider that the tests of transfer which I have described should be applied according to their tenor. In determining whether a worker has become pro hac vice the servant of that company, I see no basis for watering the tests down, as might be thought justifiable in the case of injury to a hired worker. If it be complained that the circumstances of the incident causing damage were de facto outside the purview and actual control of the general employer, the answer, at least in part, will be that the defence of contributory negligence is available to protect the general employer’s interests. If it be said that s. 66 of the Insurance Contracts Act 1984 stands in the way of an employer’s insurer suing an employee in such circumstances, implying unfairness that a hirer’s insurer should be able to sue a hired worker, the answer is that s. 66 protects employees – none other. That says nothing about the test to be applied in determining whether a worker’s employment should be regarded as having been transferred.

I should next say something about a matter raised fleetingly but quite definitely in this proceeding. Whilst it is true that over many years there have been employers whose business has consisted at least in part of hiring out men or men and machines[43], general labour hire companies operating on a large scale are relatively new to the Australian industrial landscape. A distinction may perhaps be drawn between a company which hires only to one employer[44] and a company such as Skilled. Be that as may, the operations of labour hire companies have given rise to more than one contentious issue in the last decade or so[45]. There is no occasion to revisit history. But it may fairly be said that the present case is the manifestation of another issue to which the operations of general labour hire companies may give rise.
[43]Mersey Docks and Bhoomidas are examples.
[44]Fennell was, apparently, such a case.
[45]Examples are BWIU v Odco, Accident Compensation Commission v Odco Pty Ltd (1990) 64 ALJR 607 and Mason & Cox.

Suppose that such a company has quite a large number of employees who have different skills[46]. Suppose, as was the situation with the second defendant’s assignment to the plaintiff, that many such assignments are of short duration. If on proper analysis there was temporary transfer in the present case it would follow, at least as a matter of probability, that each worker should be considered to have a series of temporary employers in a year; perhaps more than one within a few weeks. Multiply the circumstances of one worker many times, and the scale of temporary transfer – in each instance carrying with it insurance implications for the temporary employer as well as for the labour hire company (and Skilled is not the only such company) – could reasonably be expected to be very large.
[46]I think it was common ground that this was so in the case of first defendant. There was, in any event, evidence tending to that conclusion.

Counsel for the plaintiff submitted, as I understood it, that it would not be sensible to conclude that the second defendant was the servant pro hac vice of the plaintiff. That would carry with it a likely consequence that “all the people that Skilled sent out… might have 10 or 20 or 30 or so employers during the course of the year”. Such a conclusion and such a consequence would sit uneasily with the documentation which had passed between Skilled and Mr Sutton. Again, though certainly in another context, he referred to the prospect of the hirer having no real security, except the financial stability of the individual worker, “which is not much of a basis upon which to let people loose in factories with machinery”.

Whilst it is possible to see force in each of those submissions, I think that the case should be resolved strictly by reference to the evidence which was adduced, and by application of received principle. That principle makes it difficult for a general employer, regardless whether it is that employer’s business to hire out workers, to discharge the burden of establishing transfer in injury to third party cases; and, as I have concluded, in cases of the present kind.

Was the second defendant the servant of pro hac vice of the plaintiff?

The trial was conducted on the footing that, if the second defendant did not become the servant pro hac vice of the plaintiff, then, specifically with respect to the imposition of vicarious liability, the first defendant bore responsibility for the second defendant’s tortious conduct.

In my opinion the first defendant has not discharged the burden which it carried to establish that was a transfer of employer in the sense in which the cases speak. I consider that the evidence was far from showing that the situation was as described in any of the seven formulations of the test of transfer which I earlier identified and set out.

The evidence unquestionably justified the first defendant’s assertion that it was at all times the general employer of the second defendant. It engaged him, after interview and assessment of his suitability, on the footing that as its employee he would be hired out to various clients. He underwent a safety course and examination before beginning work. He was fitted out with overalls, hard hat and any necessary safety equipment by the first defendant. The overalls and hard hat were adorned by the first defendant’s logo, and Mr Sutton was apparently expected to wear them when at a work-site. The overalls were laundered at the first defendant’s expense and were changed over weekly – at the time when a supervisor attended the work-site. Mr Sutton was taken on as a casual, to be paid for hours worked , with the prospect of being made permanent – in which case he would have been paid a regular wage, varying according to whether he was assigned work or not. It was his task to go to jobs as assigned by the first defendant’s managers, and to undertake work as required. At least in the case of the job at Deutz one of Skilled’s supervisor’s accompanied him to the site at the outset. His wages were calculated and paid by Skilled, based upon timesheets which it supplied and which he was required to complete, such timesheets being collected regularly by a supervisor of the first defendant. Skilled not only paid Mr Sutton’s wages, it covered him for workers’ compensation and paid superannuation contributions. It had a social club, and most of its employees agreed to a small deduction from their weekly wage in order to belong to the club – though it is not clear whether Mr Sutton in fact joined the club.

I turn to consider the evidence pertaining to the second defendant’s relationship with the plaintiff.

Skilled, in contending that the second defendant was the servant pro hac vice of the plaintiff, relied upon evidence given by Mr Sutton, by Messrs Beale and Graham and by Mr Riley.

Mr Sutton gave evidence that he was a qualified forklift driver; but that he had not previously driven a pedal operated forklift. Not surprisingly, the plaintiff’s supervisors showed him how to operate it; and he gained some experience in its operation in a yard before venturing with it into the warehouse.

Then, concerning the marks on the forklift which, if lined up, permitted the mast to pass safely under the bridge, Mr Sutton said that the plaintiff’s supervisors showed him those marks; and that the need to keep them lined up was emphasised. Understandably so.

Next, Mr Sutton said that he was told by the warehouse manager that it was his job to put the motors into the racks; and that another supervisor explained which size motors were to be placed in the various racks, and that the boxes in which most of the engines were encased were to be placed in the racks so that identifying numbers could be read from the aisle.

Mr Sutton gave evidence that a problem arose because three of the plaintiff’s supervisors were giving him work to do. The problem was resolved by the warehouse manager assuming the sole right to give him orders.

On one occasion, said Mr Sutton, he was given a job to do which he thought was dangerous. He spoke to one of the plaintiff’s supervisors, making the man show him how he wanted the job done.

Mr Beale said little that was pertinent. He ventured an opinion as to who would have taught Mr Sutton to operate the forklift in the event that he was unfamiliar with its mode of operation. That did not add to Mr Sutton’s account of what happened in fact.

Mr Graham was the plaintiff’s financial controller in January 1997. It does not appear that he had any shopfloor role. He gave evidence that Mr Sutton worked under the direction of the warehouse manager and was in the same position as regards directions as the plaintiff’s employees. He said further that by his understanding workers supplied by Skilled were directed by the plaintiff as to how they should use equipment supplied by the plaintiff, that Mr Sutton was expected to work the same hours as the plaintiff’s employees, that Mr Sutton would have required permission to leave early, and that the risks and hazards faced by the employees of the plaintiff and Skilled’s workers were the same. All this evidence was, it seems clear, based on surmise or understanding, and I think that its weight – I say nothing as to its admissibility – was thereby affected.

Mr Riley had been sent to Deutz by Skilled in December 1996. He had worked there as a forklift driver. The precise basis for the reception of his evidence was never made clear. That said, he told me that the warehouse manager had indicated to him the work which was to be done; and had shown him the correct manner to pick up and move motors – for he had not done that job before. In the course of work at Deutz he had been involved in a mishap with an engine. He had needed help to right the mishap. It was provided by Deutz employees. He had reported the incident to Skilled.

It is necessary to refer to other evidence bearing upon the second defendant’s relationship with Deutz.

I note that shortly after Mr Sutton commenced work at Deutz a supervisor in the employ of Skilled made a follow-up check on his progress. That such a check was made fits in with the evidence of Mr Syrett, an operations supervisor employed by the first defendant, that if a hirer is dissatisfied with a worker’s performance, and requests substitution, Skilled always agrees.

The plaintiff, it is clear, had no power of dismissal of a Skilled employee. Nor, indeed, was it suggested that it could direct a Skilled employee to leave the work-site forthwith in circumstances in which it could direct an employee to do so. What it could do was to indicate dissatisfaction with a worker’s performance and request substitution; or terminate the agreement with Skilled on an agreed period of notice.

I next note that the second defendant was assigned to the plaintiff[47] in consequence of a standard order form filled in by supervisors of the first defendant at or soon after contact by Deutz. The particular job description the subject of the order was specified as follows: “General forklift driving”. It was not suggested in evidence that the plaintiff had any right to direct Mr Sutton to perform any other duties, or even that it had power to negotiate with him to perform any such duties. I think that it had no such right or power.
[47]Mr Syrett used the word “assignment”.

I noted earlier that the first defendant obliged Mr Sutton to undertake a safety course and examination before he began to work for it. The safety measures that he had to abide when on a job were clearly spelled out. Mr Sutton was required to sign, and did sign, a statement that he had read and fully understood the personal safety requirements imposed by Skilled, and that he would adhere to them at all times. That was an obligation which he carried with him onto each work-site. It bound him whatever might have been said or done concerning safety measures by a hirer.

I should next refer to Skilled’s safety induction document. In it Skilled pointed out that it could not go onto a client’s premises and demand a change in work practices. But it went on to say that if a worker at any time felt that a potentially hazardous situation was present, and was concerned for his safety, then the worker should contact his operations supervisor and discuss the problem. The inductee was told by the document that if there was a genuine risk a Skilled supervisor would “call out to the site and discuss the danger with the client.”

Viva voce, Mr Syrett said that there was a system whereby Skilled employees were normally given contact details, and were told to contact the office at any time they had concerns or queries.

In all, the system meant that a Skilled employee, unlike an employee of the hirer, had a superior quite external to the hirer to whom a complaint could be made, and who might intervene on his behalf.

Another matter to which I should draw attention is the regime which applied if Mr Sutton had an accident whilst at a work-site. He undertook, at the outset of his employment, to adhere to “personal safety requirements” which included an instruction that in the event of an accident he was under no circumstance to leave the site before he contacted his Skilled supervisor. He was required to report all accidents, regardless how minor, to Skilled.

Looking at the relationship which was constituted between Deutz and Mr Sutton, it seems to me significant that the former had no role in the selection of the latter, that it apparently had no power to require or to negotiate with him to do any work other than forklift driving, that it had no power to dismiss him or (apparently) to require him to leave the workplace forthwith, that he was obliged to adhere to a safety regime which stood apart from anything said or done by Deutz, that he had recourse to a potential intervener (that is, quite apart from any union to which he belonged) in the event of a concern about safety, and that the safety regime to which he was contractually bound inhibited his leaving the work-site in the event of an accident regardless what Deutz might say. In my opinion those matters put in context the evidence upon which the first defendant relied, evidence which, stretched as far as it could go, might support a conclusion that this man, working at Deutz in his Skilled overalls, met one or more of the tests for determining whether a man is pro hac vice the servant of a temporary employer.

Looking simply to the evidence relied upon by the first defendant, and to the matters which I summarised a moment ago, I think that it can aptly be said that Mr Sutton, whilst undertaking his Skilled work at Deutz, was serving the interests of that company rather than serving that company. I consider also, focussing upon that evidence and those matters, that the first defendant has not discharged the burden imposed on it by any of the formulations of the (right of) control test propounded by the authorities. My conclusions are reinforced when consideration is given to other features of Mr Sutton’s employment by the first defendant to which I earlier drew attention; to which I should add the circumstance that it was probable that the period for which Mr Sutton would have worked in all for Deutz, had there been no accident, was short[48].
[48]See Ex.1 “few day” (sic).

Tortious conduct

It necessarily follows, as the case was argued, because Mr Sutton was not the servant pro hac vice of the plaintiff at the critical time, that Skilled is vicariously liable in this proceeding for tortious conduct on the part of Mr Sutton on 28 January 1997. Tortious conduct there undoubtedly was. Counsel for the defendants did not contend to the contrary. It would be surplusage, in light of my description of the circumstances of the incident, to explain this conclusion any further.

It further follows, from my rejection of Mr Sutton’s reliance on s. 66 of the Insurance Contracts Act 1984, that Mr Sutton is also liable to the plaintiff in tort.

That takes me to the issue of contributory negligence.

Contributory negligence

The extent of contributory negligence is to be resolved by a comparison of culpability of plaintiff and defendant, that is, the degree of departure by each of them from the standard of care of the reasonable person; and by a comparison of the relative importance of the acts of the parties in causing the damage. The whole conduct of each negligent party in relation to the circumstances of the accident must be subjected to comparative examination. The antecedent question, in practice considered conjointly, is whether the plaintiff has suffered damage as a result partly of his own fault and partly of the fault of the defendant.

In cases in which a worker sues his or her employer the law has taken a benevolent attitude in favour of the employee, as exemplified by cases such as Illiopoulos v Victorian Railways Board[49], McLean v Tedman[50], Bankstown Foundry Pty Ltd v Braistina[51], Nicol v Allyacht Spars Pty Ltd[52] and Bus v Sydney County Council[53]. The benevolence has had two aspects: first, in defining what an employer must do in order to take reasonable care for the safety of an employee; second, in relieving an employee from a finding of contributory negligence, or relieving the extent of contributory negligence.
[49](1981) 55 ALJR 668.
[50](1984) 155 CLR 306 at 311-313.
[51](1986) 160 CLR 301 at 310-311.
[52](1987) 163 CLR 611.
[53](1989) 167 CLR 78 at 90.

The present case is not one brought by a worker against his employer. Nonetheless, the submissions made for the defendants had about them an invitation for me to treat this matter as if it was an employer's liability claim. Thus the reference in counsel's submission to the foreseeability of carelessness on the part of the hired worker.

I think that it is not necessary to equate the present case with a claim by an employee against an employer in order to have regard to the matters urged by defendants' counsel. Regardless that Mr Sutton was not an employee of any kind of the plaintiff, he was a worker on site, susceptible to momentary inattention or inadvertence, or to misjudgment, and exposed to any site hazards that were present. The plaintiff's reasonable obligation to identify and remedy any such hazard did not depend upon its common law or statutory duty as an employer. I consider, then, that the matters pressed on behalf of the defendants may properly be taken into account in assessing the existence and extent of the plaintiff's responsibility for the damage.

Applying the principles which I have set out to the facts of the case I consider that to a very large extent the responsibility for the damage rests with Mr Sutton. It is true that the plaintiff created what was, to some extent, an unnecessary hazard, one that might easily have been removed, or in respect of which a simple and cheap warning system could have been put in place. As against that, Mr Sutton was put on notice of the hazard in a very clear way - both orally and on a regular basis by the presence of the yellow marks on the forklift. Moreover, the hazard only achieved that status if the various warnings were not acted upon. If at the critical time the tines had been at the maximum correct height, there was quite adequate clearance – some 30 cms.

Then consider the circumstances of and surrounding the incident. This was not an incident resulting from momentary inattention on the part of a tired worker. The incident occurred at 10.30 am, and Mr Sutton, as his frank evidence showed, had no less than four opportunities to address his mind to lowering the tines to the correct travelling height – that is, after offloading the motor, when stopping the forklift (he should, at that time, have lowered the tines to the floor) on remounting the forklift, and on looking forward as he was executing the 90ø turn back into the main aisle. It is also apparent that Mr Sutton did not keep a proper lookout for the bridge after he reversed the forklift into the main aisle.

In all the circumstances I consider that the proper apportionment of responsibility is 85% against Mr Sutton and 15% against the plaintiff.

The plaintiff's claim in contract

According to my earlier conclusions there were terms of the contract between Skilled and Deutz that Skilled would provide a driver capable of performing the usual work tasks of a qualified forklift driver and that a driver supplied by it would perform his duties with the reasonable competence of a qualified forklift driver. Further, Skilled warranted (by operation of s. 74(1) of the Trade Practices Act) that it would render the service of selecting and assigning to Deutz a qualified and reasonably competent forklift driver with due care and skill.

In my opinion Skilled breached none of those obligations. There is nothing to indicate that its process of selection of Mr Sutton was exercised with less than due care and skill. Counsel for the plaintiff did not submit that there was any default in that connection. Nor am I satisfied that Mr Sutton was other than capable of performing the usual work tasks of a qualified forklift driver, or that he performed his duties – the focus being general, and not confined to a specific moment or incident - other than with the reasonable competence of such a driver. I consider that breach of Skilled’s contractual obligations is not made out by Mr Sutton having committed a single negligent act, no matter how serious its ramifications in terms of damage occasioned to the plaintiff. There is nothing in Mr Sutton's disclosed qualifications, experience or conduct on the job generally which make out the plaintiff's case in the present connection.

Conclusion

There should be judgment for the plaintiff against both defendants in the sum of $313,650, being the agreed amount of the plaintiff's damage, $369,000, reduced by 15% for the plaintiff's contributory negligence.

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Citations

Deutz Australia Pty Ltd v Skilled Engineering Ltd [2001] VSC 194

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[2001] VSC 194

25 June 2001