FAI General Insce Co v AR Griffiths & Sons

[1997] HCATrans 82

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B55 of 1996

B e t w e e n -

FAI GENERAL INSURANCE COMPANY LIMITED

Applicant

and

A.R. GRIFFITHS & SONS PTY LTD

First Respondent

WORKERS’ COMPENSATION BOARD OF QUEENSLAND

Second Respondent

TONY CRAIG RICHARDS

Third Respondent

Application for special leave to appeal

BRENNAN CJ
DAWSON J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 4 APRIL 1997, AT 10.14 AM

Copyright in the High Court of Australia

__________________________

MR R.N. CHESTERMAN, QC:   May it please the Court, I appear with my learned friend, MR K.F. HOLYOAK, for the applicant.  (instructed by McInnes Wilson & Jensen)

MR J.A. GRIFFIN, QC:   If the Court pleases, I appear with my learned friend, MR J.B. ROLLS, for the first and second respondents.  (instructed by Cleary Hoare)

BRENNAN CJ:   Yes, Mr Chesterman.

MR CHESTERMAN:   May it please your Honours, the point which arises in this application is whether the principle for which Lister v Romford Ice is authority is correct, that is whether it is correct that an employer may recover from his employee an indemnity in respect of the employer’s vicarious liability to an injured employee.  There is a second point which follows from the first, which is whether there should be implied into contracts of employment, either by reason of the presumed intention of the parties or because it is a necessary incident of the relationship of employer and employee, that the employer will indemnify his employee against liability to fellow employees incurred in performing his employment without reasonable care.

Your Honours, the facts from which the application arises are set out.  They were agreed facts.  The matter was determined really as a test case.  There are a number of similar actions awaiting determination.

GUMMOW J:   But is it not a test case, really, in relation to the construction of the relevant legislation which sets up these two regimes?

MR CHESTERMAN:   Not so, your Honour, for this reason.  It is true that this case comes from the compulsory motor vehicle insurance and compulsory workers compensation insurance arenas, but the principle is of general application.  That was

made clear, we submit correctly, in the dissenting judgment of Mr Justice Fitzgerald.  What is put against us by our friends is either that Lister is correct as a principle of law or that it is correct in some circumstances, these circumstances being among those, and the relevant qualification or limitation to Lister is said to be the existence of insurance in favour of the negligent employee and it would not matter whether the existence of insurance arose fortuitously or from the application of the legislation.  Our argument, with respect, is that the existence of insurance in favour of a negligent employee is likely to be fortuitous and is not a proper basis for imposing a limitation on the operation of Lister.

BRENNAN CJ:   That must raise this question, must it not?  If there is any implication to be found in a contract of employment arising by reference to the existence of insurance, it may be one thing if the insurance is voluntarily undertaken by the employer; it may be another if there is a statutory provision requiring the employer to have the employee covered. 

MR CHESTERMAN:   We would submit not because ‑ ‑ ‑

BRENNAN CJ:   You may submit not, but you will be hard put to exclude the argument, Mr Chesterman, and the problem that arises is that section 3 of the Motor Vehicles Insurance Act is not there any more.

MR CHESTERMAN:   Your Honour, that is true.  In relation to that may we say two things:  the first I have said already.  There are a number of similar cases awaiting determination by the courts which are affected by this decision.  The second is that, whether or not the Motor Vehicles Insurance Act requires the insurance of the type taken out here, the problem will arise in other cases where an injury is occasioned to a fellow employee not through a motor vehicle, either a mobile crane or something similar on factory premises, which vehicle is never taken on to the road so it is never insured, or through the use of other machinery which is static in nature.  The principle applies to all those.  It certainly arises in this case from the statutory regime but that, we would submit, is fortuitous and does not affect the consideration of the principle, which we submit is wrong and should be examined by this Court.

BRENNAN CJ:   What is the statutory provision which abolishes the doctrine of common employment?

MR CHESTERMAN:   I am sorry, I do not know that.

BRENNAN CJ:   It would be critical here, would it not, when one is thinking in terms of liability of one employee to another?

MR CHESTERMAN:   We would submit not, again.  There is no doubt the doctrine of common employment has been abolished.  There is liability between co-employees.  The question is whether the employer can recover indemnity from the negligent employee - the employer can recover an indemnity from the negligent employee who injures another employee and we would submit there are compelling reasons why there should not be such an indemnity and there is set out succinctly in the judgment dissenting of the President. 

Your Honours, we would submit that this Court should examiner Lister.  That decision has stood for a long time.  It has been much criticised and, with respect, much condemned, but as this case shows, it is still capable of having ‑ ‑ ‑

GUMMOW J:   And done away in some States, has it not?

MR CHESTERMAN:   In two States and one Territory, yes, your Honour, and of course by the Commonwealth Insurance Contracts Act, but it still is capable ‑ ‑ ‑

GUMMOW J:   That is right.

MR CHESTERMAN:   It still is capable, as this case shows, of imposing .....influence on the law and it ought to be re-examined and, we would submit, said to be incorrect for those circumstances and States where legislation has not intervened.

May I take the Court to some remarks made about Lister in this Court in McGrath v Council of the Municipality of Fairfield 156 CLR 672 at 676 and 677. The Court was there dealing with the New South Wales legislation which abolished the effect of the Lister principle.  Reading towards the bottom of page 676 the Court said:

The 1982 amendment sprang from a deeply rooted and general concern with the substance of the problem as it was thought to exist under the law as expounded in Lister v Romford Ice, namely, the perceived injustice in the employer’s entitlement to recoupment whether under s.5(1)(c) or under the contract from an employee whose fault resulted in the employer becoming liable to a plaintiff.  The perceived injustice arose from the conviction that the employer should shoulder the responsibility for damages for which he becomes liable in consequence of the “fault” of his employee occurring as an incident of the latter’s employment when in most instances the employer insures himself against that liability.  Plainly enough this was the mischief which the Act sought to remedy, a mischief of which lawyers at least were made aware -

and so it goes on.  So we would submit this Court has been critical of Lister.  It is a principle which continues, as the majority decision in this case shows is regarded as authoritative in the State intermediate courts of appeal and it ought, with respect, to be laid to rest.

GUMMOW J:   Why is it not for the legislature to lay it at rest?  Why is it not for the Queensland legislature to stir itself?  The federal legislature has, it has in other States.  This is a common law decision now, some 40 years of age.

MR CHESTERMAN:   It is, though, with respect, a common law decision that ought to be said to be wrong and the Court of Appeal declined the opportunity to do so.  We submit this Court should take that opportunity because, as I said before, the application of the principle will cover a number of situations, not just that of compulsory motor vehicle insurance where it intrudes into the area of workers compensation insurance.  It will, as the President said in his judgment, affect the situation where an employee ‑ this is another, where there is no insurance and no motor vehicle ‑ that the principle will still be applicable and could work the same mischief.

Your Honours, we would submit that there were three strands to the reasoning of the majority in Lister.  May I summarise it without taking your Honours to the passages.  We would submit that the strands are really quite unconvincing ‑ ‑ ‑

GUMMOW J:   They are explained in McGrath, are they not?  The three strands are explained in McGrath, are they not, at 675?

MR CHESTERMAN:   They are certainly referred to, yes, your Honour.  But may I nevertheless go to the three strands.  The first was that the term which would need to be implied into the contract of employment to overcome the right of the employer to an indemnity was too imprecise for the court to formulate. We would submit that is quite unconvincing.  Mr Justice Fitzgerald had no difficulty in formulating what we would submit is an entirely satisfactory term.  It appears at pages 49 to 50 of the application book.

The second strand which appears in the judgment of Viscount Simonds at 579 of the report was the social undesirability of allowing the working classes to go unchecked.  It was thought that a liability to pay damages or an indemnity to the employer was desirable to keep the working classes careful and vigilant.  We would submit that such reasoning is, today, wholly unacceptable and ought to be rejected.

The third strand was that the implied term was not necessary to give business efficacy to the contract of employment.  But we would submit that is equally unconvincing and that Lord Somervill, in his dissenting judgment, was surely right when he said that without such a term, the contract of employment would be unworkable.

So, in our submissions, which I think I have made, this application does raise squarely the application of Lister.  The majority of the Court of Appeal has said that it is good law and should continue to provide a legal principle for this State.  We submit that Lister is wrong, ought to be departed from and that this Court really is the Court that should say so.  The Court of Appeal has declined the chance.

Your Honours, those are our submissions, unless there is something else the Court wishes to hear from us.

BRENNAN CJ:   Thank you, Mr Chesterman.  We need not trouble you, Mr Griffin.

The applicant seeks special leave to canvass in this Court the decision of the House of Lords in Lister v Romford Ice & Cold Storage Co Ltd (1957) AC 555 and its application in Australia.  However, that question necessarily arises on the footing that the employer was under the statutory obligation contained in section 3 of the Motor Vehicle Insurance Act 1936 (Qld).  That provision has been repealed.  Moreover, the principle which Lister expresses has been legislatively overruled in some jurisdictions and, in circumstances of which this case is an example, it is desirable that a legislative rather than a judicial solution be found.  In those circumstances, this is not a suitable case for the grant of special leave.  Accordingly special leave is refused.

MR GRIFFIN:   I ask for costs, if the Court pleases.

BRENNAN CJ:   Have you anything to say to that, Mr Chesterman.

MR CHESTERMAN:   No, may it please your Honours.

BRENNAN CJ:   Special leave is refused with costs.

AT 10.29 AM THE MATTER WAS CONCLUDED