National Transport Insurance Ltd v Chalker - [2005] NSWCA 62

NEW SOUTH WALES COURT OF APPEAL

CITATION: NATIONAL TRANSPORT INSURANCE LIMITED v CHALKER & ORS [2005] NSWCA 62

FILE NUMBER(S):
40384/03

HEARING DATE(S): 16 August 2004, 17 August 2004

JUDGMENT DATE: 15/03/2005

PARTIES:
NATIONAL TRANSPORT INSURANCE LIMITED
MARK WENTWORTH CHALKER
REX J ANDREWS PTY LTD
LEITH HALLORAN GRIEVE
QBE INSURANCE

JUDGMENT OF: Mason P Tobias JA Grove J

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 8483/00

LOWER COURT JUDICIAL OFFICER: Black DCJ

COUNSEL:
Appellant: L King SC / M J Stevens
1st Respondent: P G Mahony
2nd Respondent: M Ward
3rd Respondent: D Campbell SC/ C Burge
4th Respondent: P Deakin QC

SOLICITORS:
Appellant: Fraser Clancy, Sydney
1st Respondent: Cragg Braye & Thornton, Singleton
2nd Respondent: McCabe Terrill, Sydney
3rd Respondent: Beston Macken McManis, Sydney
4th Respondent: Wordsworth Lawyers, Sydney

CATCHWORDS:
Negligence - employer liability to indemnify - s3(1)(b) Employees Liability Act - independent contractor - employment status - deemed employment -Schedule 1 Cl 2(1) Workplace Injury Management and Workers Compensation Act - non-delegable duty of care - contributory negligence - Law Reform (Miscellaneous Provisions) Act 1946- motor vehicle insurance - contractual indemnity - costs - Sanderson order. (D)

LEGISLATION CITED:
Contracts Review Act 1980
Employees' Liability Act 1991 s3(1)(b)
Industrial Relations Act 1996 s106
Law Reform (Miscellaneous Provisions) Act 1946
Workers Compensation Act 1926 s6(3)(a)
Workplace Injury Management and Workers Compensation Act 1998

DECISION:
Appeal allowed in part.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40384/03
MASON P
TOBIAS JA
GROVE J
Tuesday 15 March 2005

NATIONAL TRANSPORT INSURANCE LIMITED v Mark Wentworth CHALKER & Ors

JUDGMENT

MASON P:
Introduction
The third respondent, Mr Grieve (hereafter “the plaintiff”) was injured when struck by a flying piece of pipe that sprang backwards when being used by the first respondent, Mr Chalker (hereafter “Chalker”) to loosen a chain that was part of the apparatus of heavy moving equipment under his control. It is no longer disputed that Chalker was negligent and that the plaintiff is entitled to recover damages for his injuries. Those damages were assessed at $157,657.15 and judgment in that sum was entered in the District Court against Chalker.
The issues in dispute in this appeal are:
•whether the second respondent, Rex J Andrews Pty Limited (hereafter “Andrews”) is liable to indemnify Mr Chalker or contribute to the verdict ordered against him;
•whether the appellant as the insurer of Chalker’s prime mover is liable under its Policy to indemnify Chalker with respect to his liability to the plaintiff.
The facts in detail
Andrews is a haulage company specialising in the transport of bulky and/or heavy items. It operates from premises at Mount Riverview. It owns purpose-built trailers and other specialist haulage equipment including dollies and jinkers which are each wheeled conveyances for carrying long loads, the dolly being attached to the prime mover and the jinker being at the back of the load.
Andrews contracts to transport heavy items for its clients. It performs an organising or entrepreneurial role that includes obtaining the services of owner-drivers of prime movers, organising requisite permits from the Road & Transport Authority (RTA) to use public roads, and the co-ordination of pick up and delivery of the load.
Andrews does not purport to employ the drivers who are involved. The drivers owning prime movers are, to use a neutral term, engaged job by job. The precise relationship between Andrews and these drivers is one of the issues in this appeal. Under the direction of Andrews’ employees, the drivers attend designated pick-up spots with their prime movers after having collected the appropriate “rolling stock” from Andrews’ premises.
The plaintiff and Chalker were among the drivers on Andrews’ books. The plaintiff had worked for Andrews since 1992, Chalker having been first engaged in July 1998. Since his engagement, Chalker had worked exclusively for Andrews, being paid monthly based on sums calculated job by job. Andrews supplied its drivers with a BP card, a Shell card and a tollways pass, but deducted expenditure on such matters from the monthly remittance. Chalker estimated that he worked an average of 12 hours per day, five and sometimes seven days per week for Andrews. Chalker wore Andrews’ company shirts and caps when working for Andrews and used dockets provided by Andrews. There was no controlling written contract.
The plaintiff’s accident occurred on 8 November 1998 at the RTA building site for the Eastern Distributor in Palmer Street, Woolloomooloo. It was on the occasion of Chalker’s fourth load to the site. The plaintiff had also brought earlier loads, but he had not previously met Chalker. These were two of several drivers engaged by Andrews to transport concrete beams from a CSR depot at Rooty Hill to the Woolloomooloo site. Each beam was 38m in length and it weighed approximately 41 tonnes. The beams were loaded on and off the trailers by crane. One end of the beam rested on the dolly attached to the prime mover, the other on the jinker. The dolly and jinker were linked by a bull chain which was a collection of smaller chains joined together and tensioned by two or more “chain dogs”.
The bull chain was attached neither to the prime mover nor to the load. It had the safety function of ensuring that the jinker that supported the rear end of the load travelled with the prime mover and dolly. Mr Rex Andrews, a director of Andrews who gave evidence, described the bull chain as “a secondary safety feature” that was “a requirement we place on the delivery” (Black 155). The bull chain passed from dolly to jinker under the load and it effectively took up the strain between the two items of rolling stock. Because of this, the bull chain could get tightened during the journey with the load, as braking occurred.
On the occasion in question several drivers brought loads from Rooty Hill to Woolloomooloo in the very early hours of 8 November. They lined up their loaded vehicles at spots designated by Andrews and waited until the morning brought the RTA contractors to work.
The drivers had to release vertical chains attaching the beam to the dolly and the jinker before a beam could be lifted. It was not necessary to remove the bull chain before the crane had lifted the beam, but some drivers used to do so. This was done to speed up the process of linking dolly to jinker and driving off once the load was taken away.
The plaintiff said that his practice as regards the bull chain was to wait until the beam was removed. The chain would then go slack as the prime mover with dolly was backed closer to the jinker. In these circumstances the task of loosening the chain dogs was easier.
Chalker and some of the other drivers had an alternative practice. They loosened and removed the bull chain while the beam rested on the dolly and jinker. In this situation the loosening of the dogs could be quite difficult, because the bull chain was taut. The dogs were loosened by working a small lever attached to a ratchet. Extra leverage was obtained by placing a length of steel pipe over the end of the lever to form an extended temporary handle. One name for this pipe was a “cheater” bar.
The plaintiff was standing near Chalker as he performed this exercise. Chalker was wearing gloves, but the pipe was damp. In the course of releasing the dog on the bull chain the pipe escaped from his gloved hand and was propelled into contact with the plaintiff, causing him injury. Chalker agreed in evidence that it was essentially his wet glove that caused his hand to slip on the pipe (Black 188, 196). Judge Black QC found that Chalker was negligent in the following terms:
I am satisfied that the Second Defendant was negligent in failing to maintain sufficient grip upon the piping when acting as he did. Further or alternatively, he failed to appreciate the degree of tension in the bullchain and failed to wait until after the beam had been removed from his vehicle. If he had held or maintained a proper grip the accident would not have happened.
Implicit in this finding is the conclusion that Chalker’s conduct was careless in a context where he endeavoured to loosen the chain while the plaintiff was standing nearby.
As indicated, no party to this appeal disputes these findings of negligence.
The plaintiff recovered damages “at common law” and not on the basis of being anyone’s employee. His status was not explored at trial and need not be determined in the appeal.
What is in dispute is whether Andrews is liable to indemnify Chalker on the basis of being Chalker’s employer and/or is liable to the plaintiff by virtue of breach of a non-delegable duty of care said to be owed by Andrews to the plaintiff. If there is liability on either basis, the appellant insurer (standing in Chalker’s shoes, assuming its Policy responds) seeks indemnity or contribution from Andrews.
Independently of this, and logically anterior to it, the appellant insurer contends that the primary judge erred in finding that its Policy insuring Chalker’s prime mover and equipment responded in the circumstances.
Ownership and insurance arrangements
Chalker owned the prime mover, the chains, dogs and “cheater” pipe. The prime mover was valued at about $50,000 and it was registered in Queensland. Chalker arranged his own insurance for the prime mover, choosing the appellant on Andrews’ recommendation.
The appellant’s Commercial Vehicle Insurance Policy (the Policy) issued to Chalker covered the prime mover (identified by its registration and serial number: Blue 95) as well as various accessories including chains and dogs. The dispute in the appeal relates to the nature of the cover and whether it was engaged by Chalker’s liability to the plaintiff for his negligence.
The “cheater” pipe used by Chalker appears to have been his own property, although he had picked it up in a scrap bin at Andrews’ yard some time before the accident. Chalker and the plaintiff contend that it is covered by the Policy in the present circumstances, a proposition denied by the appellant.
The terms of the Policy will be set out below when I address the insurance issue.
As indicated, Andrews provided the dolly and jinker being used by Chalker in the particular job. The “rolling stock” were two of many such items owned by Andrews (or a related company) and normally kept at Andrews’ premises. Each item was separately registered and insured.
QBE Insurance (Australia) Pty Ltd (QBE) was made a party to the proceedings at trial under a cross-claim filed by Chalker invoking a compulsory third party insurance policy issued to him in relation to the prime mover. The trial judge held that this policy did not respond in the present context. No one challenged this ruling in the appeal, but QBE applied to be joined as fourth respondent in the appeal in order to protect its order for costs at first instance.
The District Court proceedings
The plaintiff sued Andrews and Chalker claiming damages for negligence. He pleaded that Chalker was an employee and/or sub-contractor of Andrews, averring that Andrews incurred both direct and vicarious liability on several bases.
As indicated, the primary judge held that Chalker’s negligence had caused the plaintiff’s injury. Since however Chalker was held to be an independent contractor and not the employee of Andrews, and since nothing attracted any non-delegable duty of care owed by Andrews to the plaintiff, the plaintiff’s claim against Andrews was dismissed.
Chalker was ordered to pay the costs of the plaintiff and of Andrews (Red 54).
Four cross-claims were filed.
The first cross-claim was brought defensively by Andrews against Chalker. Andrews alleged that Chalker was not its servant or agent, but sought indemnity or contribution pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 (LR(MP) Act) against the possibility that Andrews was found liable to the plaintiff. This cross-claim was dismissed in light of Andrews’ success vis-a-vis the plaintiff.
The second cross-claim was brought by Chalker against Andrews. It sought indemnity pursuant to s3(1)(b) of the Employees’ Liability Act 1991 (on the basis of an employment relationship); alternatively, indemnity or contribution pursuant to s5 of the LR(MP) Act (on the basis of an independent contractor relationship that nevertheless involved Andrews being liable to the plaintiff). This cross-claim was dismissed. Chalker has not appealed against this order, but its reversal is sought by the appellant should its Policy be found to have responded.
The third cross-claim was brought by Chalker against the appellant insurer and it sought indemnity under the Policy. The appellant denied that the Policy responded, averring among other things that there was no causal connection between the plaintiff’s accident and the use or operation of the insured prime mover. Chalker obtained judgment against the insurer on this cross-claim on the basis that the accident arose from the use by Chalker of his prime mover and his chains in connection with conveying the load.
The fourth cross-claim was brought by Chalker against QBE. It sought indemnity pursuant to the compulsory third party insurance policy issued by QBE to Chalker insuring him against liability for injury to any third party arising out of the use of his prime mover or any trailer attached thereto. Among other things QBE denied that the policy responded in the particular circumstances. QBE obtained judgment in its favour on this cross-claim.
When costs were later addressed the appellant was ordered by way of Sanderson order to pay the plaintiff’s costs, the first defendant’s (Andrews’) costs and the costs of the four cross-claims (Red 58). Exactly how this order impacted on the order in favour of the plaintiff and Andrews referred to above is slightly unclear. But if, as it turns out, the appellant is relieved of the costs order against it, this will leave Chalker liable to pay the costs of the plaintiff and of Andrews on the action as ordered in the District Court.
Judge Black’s key findings as to Chalker’s status
The trial judge commenced his inquiry into Chalker’s status by acknowledging that the issue of employment involved a “consideration of the totality of the relationship between the parties” (Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29, Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 41).
Judge Black considered the experience and organising role of Andrews; the relative independence of Chalker, whom his Honour described as running his own business; the services offered and provided by Andrews for Chalker (charge cards at petrol stations, a motorway tag, suggestion as to insurance broker and provision of tee-shirts and caps with Andrews’ logos); the system provided by Andrews for recording information about particular jobs and calculating drivers’ remuneration; the fact that all negotiations with customers took place between Andrews and the customer; and the fact that Chalker had arranged his own insurance.
As regards the entrepreneurial role adopted by Andrews generally and in relation to the particular job, the judge found that Andrews was an experienced company with many years involvement specialising in heavy transport. It was Andrews that had secured the Woolloomooloo job and organised permits, pickup arrangements, travel route and time. The firm provided services to its virtually fulltime drivers in the form of organising petrol charge cards, motorway tags, insurance and providing non-compulsory uniforms with its logo. All remuneration arrangements were negotiated directly between Andrews and the customer.
Stemming from these primary findings the judge concluded that Chalker was an independent contractor at the relevant time. In his Honour’s view, Chalker “in operating his business, chose to allow [Andrews] to find and nominate work for him and to arrange payment to him in respect of that work. In return for that he realised that he would have to make himself available exclusively to [Andrews] so as to maximise his earning capacity”.
Was Chalker an employee? Did Andrews owe the plaintiff a duty of care that was breached?
The appellant did not contest the finding that Chalker had been negligent. Its submission was however that Chalker was really a victim of a system of inadequate instruction and training by Andrews.
Conceptually, the appellant’s submission (standing in the shoes of its putative insured, Chalker) attributed liability to Andrews with respect to Chalker’s negligence on two alternative bases. Either Chalker was an employee, in which event Andrews was liable to indemnify him pursuant to s3(1)(b) of the Employees’ Liability Act 1991; alternatively, Andrews had an entrepreneurial role corresponding to the position of the sawmiller in Stevens, in which event Andrews was said to have breached its duty of care to the plaintiff through inadequate instruction to Chalker, thereby attracting Chalker’s right to indemnity or contribution under the LR(MP) Act.
As to the employee relationship, the appellant invoked the principles discussed by Mason J in Stevens (at 26-29) and by Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ in Hollis.
The appellant submitted that the trial judge erred in considering why it may have been advantageous to Chalker to enter into the relationship he did with Andrews. This particular submission does less than justice to the totality of the reasoning, although it gains support from his Honour’s remarks set out above. It is, however, convenient in an appeal by way of rehearing to go directly to the unchallenged primary facts, to consider whether they support either or both of the appellant’s characterisations of the relationship between the parties.
Favouring an employment relationship, the appellant points to the following:
•Chalker had worked exclusively for Andrews since he started with the organisation in July 1998. He was expected to be always available to work for Andrews and had taken time off work only with Andrews’ permission;
•Chalker did not regard himself at liberty to nominate a different driver to perform his work;
•Andrews provided tee-shirts and caps inscribed with its name;
•All negotiations for work took place between Andrews and the customer;
•Chalker was required to keep a book recording the hours he worked for Andrews;
•Andrews determined the allocation of work;
•Andrews devised the system of work, provided appropriate equipment and determined how the work was to be performed, instructing Chalker on these matters;
•Andrews applied for permits and arranged the route and escorts necessary for the type of enterprise involved;
•Andrews required Chalker to use its Terms of Carriage (Black 113, 114).
The appellant further submitted that the plaintiff was in a position analogous to that of an employee, the relationship giving rise to a non-delegable duty of care upon Andrews in accordance with the principles discussed in TNT Australia Pty Ltd v Christie [2003] NSWCA 47.
Many of these matters are also relied upon in support of the alternative submission based on Stevens that Andrews owed the plaintiff a non-delegable duty of care and breached such duty. The focus of this alternative inquiry is of course the relationship between Andrews and the plaintiff. But the facts referable to Chalker’s relationship with Andrews appear to have been similar to those governing the relationship between Andrews and the plaintiff. The nature of any possible duty of care owed by Andrews depends on an assessment of Andrews’ function in organising the whole “enterprise” of which Chalker and the plaintiff were two of several human agents.

In Stevens, the High Court held that the sawmiller owned a general common law duty of care to the injured truck driver. That duty extended to individual fellers, sniggers and truck drivers who were allocated to specific tasks that were interdependent activities carried out in the forest under the overall supervision of the sawmiller. The relevant principle was stated by Mason J (at 31) in the following terms:
The interdependence of the activities carried out in the forest, the need for co-ordination by Brodribb of those activities and the distinct risk of personal injury to those engaged in the operations, called for the prescription and provision of a safe system by Brodribb. Omission to prescribe and provide such a system would expose the workers to an obvious risk of injury. Although the obligation to provide a safe system of work has been regarded as one attaching to an employer, there is no reason why it should be so confined. If an entrepreneur engages independent contractors to do work which might as readily be done by employees in circumstances where there is a risk to them of injury arising from the nature of the work and where there is a need for him to give directions as to when and where the work is to be done and to co-ordinate the various activities, he has an obligation to prescribe a safe system of work. The fact that they are not employees, or that he does not retain a right to control them in the manner in which they carry out their work, should not affect the existence of an obligation to prescribe a safe system. Brodribb’s ability to prescribe such a system was not affected by its inability to direct the contractors as to how they should operate their machines.
See also Emoleum (Aust) Pty Ltd v Bond [2004] NSWCA 352.
Judge Black held:
I do not consider that [Andrews] owed any duty to either [Chalker] or the Plaintiff to instruct any of the drivers engaged in the transport of these beams as to how to release a dog from a chain. The fact that it was a bullchain employed in connection with dolly and jinker does not alter the fundamental situation that the exercise involved here was the release of the dog from a chain. This is the type of exercise, which I find is part of the expertise and knowledge of a person such as [Chalker] running his own business as a heavy haulage operator.
This finding uses the language of absence of duty, but it is capable of being read as a more limited finding that any possible duty was not breached having regard to the everyday nature of the task that led to the accident.
The appellant submits that Andrews breached its Stevens’ duty to the plaintiff because a reasonably safe system would have ensured that Chalker was instructed how to go about this potentially dangerous task safely. In particular he would have been told that if the chain was too tight he should wait until the load was lifted, thereby releasing the tension. This was not one of those tasks like climbing a ladder (cf Van Der Sluice v Display Craft Pty Ltd [2002] NSWCA 204 at [74]) or using a tomahawk (cf Electric Power Transmission Pty Ltd v Cuiuli (1961) 104 CLR 177 at 180-1) which were so obviously part of the mental equipment of an experienced worker as to mean that it was not unreasonable for the person in control of the enterprise to leave the worker to his or her own uninstructed devices.
Chalker said in evidence that the only instruction he was given by Andrews’ employees was on the very first occasion when he was taught how to load equipment onto a particular dolly and jinker. The instruction related to the manner of loading the beam onto Andrews’ equipment, including how to attach and restrain it (Black 179-181). This instruction included the method of attaching and tightening the bull chain, although Chalker was already experienced in tensioning chains by using a dog and pipe. There was no instruction about unloading (Black 182, 183, 185).
Mr Andrews agreed that the chains were “a secondary safety feature” and “a requirement we place on the delivery” (Black 155). He also agreed that he knew of the capacity of the chains to become tense under strain (Black 156). He was also aware that specialised knowledge was involved in loading and unloading techniques (Black 146); yet he accepted that there was no instruction about the proper use of chains and dogs, this being a matter left entirely to the individual driver (Black 134).
In this Court Chalker adopted the submissions of the appellant as regards the legal relationship between himself and Andrews.
Mr Ward of counsel, who represented Andrews, submitted that the fixing and unfixing of loads were the responsibility of “the contractors” such as Chalker. These were part of the skills in the use of their own rig and equipment that the owner-drivers hired out to Andrews. Chalker was an experienced operator and recognised as such by Mr Andrews (Black 104, 180).
Andrews supported the trial judge’s characterisation of the relationship between Chalker and itself as that of independent contractor. It drew attention to the capital investment in the prime mover ($50,000), the special licence held by Chalker to operate it and the other matters referred to by the primary judge as indicators that Chalker was running his own business. Chalker’s skills were of a higher order than those of the bicycle courier in Hollis. It was not suggested that these matters were determinative. The most skilled of professional people can be employees. Nevertheless, reliance was placed on the comparison by the majority justices in Hollis (at 41[47]) between bicycle couriers and the situation “where the investment in capital equipment was more significant and greater skill and training were required to operate it”.
The Court was also referred to the remarks of Dixon J in Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 404-5 where he said:
The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions. In the present case the contract by the deceased was to provide not merely his own labour but the use of heavy mechanical transport, driven by power, which he maintained and fuelled for the purpose. The most important part of the work to be performed by his own labour consisted in the operation of his own motor truck and the essential part of the service for which the respondents contracted was the transportation of their goods by the mechanical means he thus supplied. The essence of a contract of service is the supply of the work and skill of a man. But the emphasis in the case of the present contract is upon mechanical traction. This was to be done by his own property in his own possession and control. There is no ground for imputing to the parties a common intention that in all the management and control of his own vehicle, in all the ways in which he used it for the purpose of carrying their goods, he should be subject to the commands of the respondents.
Reliance was placed on Chalker’s evidence that he regarded himself as a sole trader (Black 223). He saw Andrews as a regular supplier of local work (Black 224).
A contrast was drawn between the present case and Hollisas regards the wearing of “livery” in that Chalker had the option to decline to wear the Andrews’ uniform.
Andrews pointed to the factors distinguishing Chalker’s business before and during his engagement to work for Andrews from that of the couriers in Hollis. The submission in part sought to convey the impression that Chalker was more independent, economically speaking, and freer to choose whether to enter and depart from the arrangement with Andrews. The fact that Chalker was working very long hours was implicitly advanced as a badge of independent contracting.
I think there is an element of circularity in this last submission. But on balance I accept Andrews’ characterisation of the relationship as that of independent contractor.
At the end of the day I am not persuaded that the trial judge erred when he held that Chalker was an independent contractor. The factors point both ways, but the situation was clearly distinguishable from that in Hollis where such a holding was regarded as an affront to common sense in the context of that case. The actual arrangements as between Andrews and Chalker were not a sham and they involved significant pointers to Chalker being perceived by himself and Andrews as running an independent business, albeit one that was practically dedicated to Andrews for the time being. Chalker worked long hours and had invested a significant amount of his own capital in the acquisition and maintenance of the prime mover and its core equipment. I am unassisted by reference to some comparative level of skills involved in his enterprise, although they were more than marginally higher than those required of bicycle couriers.
Another point of distinction from Hollis, relied upon by Chalker, is the fact that the owner drivers of the prime movers could not be said as having “effectively performed all of [Andrews’] operations in the outside world” (cf Hollis at 45[57]. The evidence does not suggest that the RTA would have perceived that people like the plaintiff and Chalker were employees of Andrews, simply from the fact that Andrews had overall responsibility for the transportation of the heavy beams.
The Court is not blind to the general trend towards to “outsourcing” that is occurring in an increasingly de-regulated labour market. The common law of tort should nevertheless proceed by acknowledging the contractual autonomy of the parties involved in cases such as the present. The issue in the present case is characterisation of relationships and not judicial social engineering to encourage one form rather than another (TNT Worldwide Express (NZ) Ltd v Cunningham [1993] 3 NZLR 681 at 698). Legislation such as the Contracts Review Act 1980 and s106 of the Industrial Relations Act 1996 can address matters such as oppression and inadequate remuneration.
The common law nevertheless remains wedded to the neighbour principle embodied in the concept of a duty of care where personal safety is involved, particularly in situations where one party has significant “control” of a place or enterprise. Many workplace relationships are of this nature. Cases such as Stevens, Christie and Emoleum show the Court giving due acknowledgement to the formal relationships or non-relationships, but nevertheless recognising that (in matters relevant to the imposition of a duty of care) the parties may have so conducted themselves that it remains just to impose a duty of care, at least one whose scope is nuanced to the areas where the defendant truly has some measure of “control”. In these situations, the common law looks to the substance and not the form of the relationship. If that relationship, though formally distanced from employment, is nevertheless analogous to it in its pith and effect, then it may be just for an analogous duty of care to be recognised.
The evidence as to Andrews’ minimal instruction in loading techniques bears two faces. The appellant seeks to rely upon it as a badge of negligence, assuming a relevant duty of care has been found. Andrews would see it as confirmation of both Chalker’s status as an independent contractor as well as some evidence that loading and unloading were seen in the industry as such basic tasks as to require little or no instruction for otherwise experienced owner drivers.
Mr Andrews agreed in cross-examination that the practice in the industry was for drivers to take responsibility for securing the loads which they were carrying once they had been loaded on to the lorries (Black 154). Although different techniques were used for dealing with a taut bull chain (see above), it did not follow that failure to instruct an owner-driver to use one rather than the other was negligent. The practice adopted by Chalker on the day in question was not inherently dangerous and was used by some owner-drivers on some occasions (cf Black 167). The real cause of the particular accident was said to be Chalker’s casual act of negligence when his wet glove slipped.
As regards the alternative submission based on a direct common law duty of care similar to that found in Stevens, Andrews did not so much dispute the existence of a duty, as contend that it had not been breached. Andrews invoked the well-known passages in Van der Sluice at [63], [65], [68], [69] and [72] and O’Connor v Commissioner of Government Transport (1954) 100 CLR 225 at 229-30.
To the limited extent that Andrews contended against a Stevens type duty of care I would reject such submission. In my view Andrews assumed an organising, entrepreneurial role analogous to that of the sawmiller in Stevens.
The real issue is whether Andrews breached the relevant duty of care vis-à-vis the plaintiff. Merely because Chalker was negligent was not enough. Nor is carelessness established merely by positing that different instruction by Andrews might have made a difference. I do not think that it was established that it was negligent for Andrews not to have instructed Chalker to refrain from using the unloading technique that he did. Was it negligent for Andrews not to have instructed Chalker to be careful when using wet gloves or to tell bystanders to step back? I have concluded that it was not, on the basis that it has not been demonstrated that the sort of techniques involved called forth a need for particular instruction. In this particular industry, they strike me as being the equivalent of climbing a ladder or using a tomahawk.
Deemed employment?
The appellant sought in this Court to establish Chalker’s employment by an alternative route. It was submitted that Chalker and the other drivers, including the plaintiff, were “deemed” workers of Andrews by force of Schedule 1 cl 2(1) of the Workplace Injury Management and Workers Compensation Act 1998 (WIM Act).
Section 5 of the WIM Act is entitled Deemed employment of workers. It simply states that Schedule 1 has effect. Clause 2(1) of that Schedule provides:
(1)Where a contract:
(a)to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name), or
(b) to perform any work as an outworker,
is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor.
The appellant accepts that this argument was not put in the District Court. But it contends that it is available because the evidence would have been no different had it been raised below. According to the appellant, the factual issues would have been fully explored in the evidence that was led on the employment/independent contractor issue.
The next step in this argument is the submission that once the drivers are shown to have been “deemed workers” of Andrews, that deeming extends to a claim for damages at common law and is not confined to a claim for statutory compensation. The appellant cited OP Industries Ltd v MMI Workers Compensation (NSW) Ltd, Court of Appeal, unreported, 23 October 1998, in support of this submission.
Both Andrews and the plaintiff objected to this argument being advanced. Alternatively, they argue that OP Industries is distinguishable or was wrongly decided in so far as it was concluded (by Fitzgerald AJA, Beazley JA agreeing just; Meagher JA dissenting) that the deemed employment “for the purposes of [the WIM] Act” is not confined to a role in relation to statutory compensation.
The plaintiff did not embrace the point, even for the purposes of his defensive cross-appeal against Andrews. As the plaintiff pointed out, if the point were good it might impact on the level of “common law” damages he recovered against Chalker.
Andrews and the plaintiff submitted that the clear intent of the provisions as to deemed employment is to enlarge the scope of the Workers Compensation Act1987 by protecting wider circles of “workers”, for the purpose only of giving them access to statutory compensation. The provisions may be traced back to s6(3)(a) of the Workers Compensation Act 1926 when it certainly would have been thus confined.
These are difficult issues. I admit to reservations about the correctness of OP Industries.It is not necessary to resolve them in this appeal, because the appellant is relieved of any liability with respect to the accident through its success on the insurance issue addressed below.
It follows that the appeal seeking the reversal of the judgment entered on the second cross-claim fails.
In consequence, the defensive cross-appeals filed by the plaintiff and Andrews respectively should be dismissed with costs.
The insurance issue
There was a factual dispute at trial about identification of the insurance policy issued by the appellant to Andrews for the relevant period. The judge found that it was a document in the form that became Exhibit 2D6 (Blue 216).
The appellant sought to reagitate this matter in its written submissions. However, senior counsel who appeared at the hearing, Mr King SC, accepted that nothing turned on the matter because the differences between each of the possible contenders (Blue 86 and 216) are immaterial to the way the case is now advanced by the appellant.
The relevant insuring clause was as follows:
Subject to the terms, conditions and exclusions of this policy as agreed to by You and Us, We agree to provide indemnity in the respect of any Motor Vehicle described in the Schedule against loss, damage or liability as hereafter mentioned arising out of an Accident …
In a later section headed “LEGAL LIABILITY” the Policy states:
We will pay any amount up to a liability limit of $25,000,000 … for damages in respect of:
(A)bodily injury … to Another Person …
if caused:
(1)by You using Your Motor Vehicle
(2)by and during loading or unloading merchandise onto or off Your Motor Vehicle direct to or from a fixed place of rest beside Your Motor Vehicle.
(3)by merchandise or equipment/components of Your Motor Vehicle, falling on/ in or from Your Motor Vehicle.
The proposal for this insurance submitted by Chalker nominated as the vehicles to be insured a 1977 McGrath Flat Top trailer and a 1986 Mack Superline Prime Mover. The prime mover is the one that Chalker drove to Woolloomooloo at the time of the accident.
The appellant’s contractual point is a simple one. The prime mover was not being used nor was “merchandise” (the beam) being unloaded from it when the accident occurred. The submission draws a distinction between the prime mover on the one hand and the “rolling stock” comprising the load and loading equipment (including chains) on the other. Not only were the dolly and jinker with their load separate from, although temporarily attached to, the prime mover; but also the lastmentioned items were not even Chalker’s property. As indicated, the dolly and jinker belonged to Andrews, were separately registered to go on public loads and (if relevant) were separately insured.
The Policy make no reference to the dolly and jinker. Indeed, it recognised that a prime mover could itself be a “Motor Vehicle” in one of its stipulations (Blue 87L).
At the time of the accident the prime mover was stationary with the engine turned off. It had been in this situation for several hours. It was not in use and it played no part in the injury sustained by the plaintiff.
The trial judge’s reasoning on this issue is rather unsatisfactory. His Honour said (Red 43):
I can find nothing in the policy which excludes liability in a situation such as the present where the prime mover was connected to a trailer or a non-motorised machine or implement, namely the dolly and jinker, which were connected together by equipment owned and used in connection with his prime mover by [Chalker], such chains and equipment being referred to within the policy although in respect of the latter, it is appropriate to notice that they are covered in respect of loss or damage “whilst they are in/or or attached to your motor vehicle”.
Had the cause of the accident been something arising from the condition of the dolly and the jinker in themselves different considerations may well have applied, but in the circumstances of this case, I am satisfied that it is proper to regard the accident as having arisen from the use by [Chalker] of his prime mover and his chains in connection with conveying the load. I do not regard the fact that his prime mover was stationary with its engine off as being significant. Again, had the chains not been [Chalker’s] or the dog not been [Chalker’s] it may very well be that different conditions would have applied, but in my view [Chalker] was seeking insurance to cover the use by him of his equipment, namely the prime mover and such items as chains and dogs in connection with heavy transport and I do not regard the fact that the dolly and jinker were owned by [Andrews] as breaking the nexus in the overall situation.

The appellant points out that the first of these paragraphs proceeds directly to the issue whether the Policy excluded liability, whereas the primary question was whether the Policy responded in the first place. The pleadings referable to the third cross-claim squarely raised the issue as to whether the Policy responded (see Red 21). This however does seem to be the matter addressed in the second paragraph, however compelling that reasoning may be.
The appellant challenges this reasoning. There was no evidence of what Chalker was seeking from his insurance beyond what appears on the face of the documents. The contract governs, not the subjective intention of one of its parties (see generally Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52). Furthermore, it is just not possible to tease out a meaningful causal relationship between any “use” of the prime mover and the accident that befell the plaintiff.
If necessary, the appellant invokes Exclusion (b)(3) which refers to liability occurring “beyond the limits of a carriageway or thoroughfare declared a designated road whilst merchandise is being delivered or collected away from Your Motor Vehicle”; and Exclusion (b)(8)(ii) concerning liability for bodily injury by a Queensland registered trailer whilst “being towed by a Motor Vehicle” (Blue 218R). I find it unnecessary to decide whether either exclusion was engaged. It is accordingly unnecessary to decide whether it is open to the appellant to rely in this Court on these unpleaded bases for excluding liability.
In my opinion, the requisite causal link that must be shown before the Policy is relevantly engaged was clearly lacking in the present case. The prime mover and trailer were separate motor vehicles and recognised as such on the face of the Policy. All that had happened was that the prime mover had towed the load to the site and its engine switched off. The accident only happened when Chalker proceeded to detach the load in a negligent manner. The prime mover played nothing beyond a purely historical role in the accident that befell the plaintiff.
I find it unnecessary to rely upon the authorities cited by the appellant (esp Suncorp Insurance and Finance v Workers’ Compensation Board of Queensland [1996] 2 Qd R 289 and National & General Co Ltd v State Government Insurance Office(Queensland) (1972) 46 ALJR 375 at 376). I simply record that they give comfort to the appellant and not to Andrews.
In the first of the two paragraphs set out in [86] above, Judge Black mentions chains and equipment being referred to within the Policy. This is true, but ultimately irrelevant, as his Honour appears to accept. The Policy extended to loss of or damage to “extras” to the motor vehicle including “tarps, gates, chains, and chain dogs, if nominated in the Schedule” (Blue 87A). The Schedule mentions dogs and chains to a nominated insured value as “vehicle accessories” (Blue 96). There is also reference to “tools”. But even if these references were capable of picking up the pipe that injured the plaintiff, all that is insured against is loss or damage to the equipment. The question of legal liability is addressed later in the Policy and is relevantly confined to the insured’s Motor Vehicle, in this case the prime mover.
On the insurance issue, Chalker contended that the Policy responded because of the reference to injury caused “by and during … unloading merchandise onto or off your Motor Vehicle” (Blue 88E). He relied upon the judge’s finding that the accident occurred in connection with the unloading of the beam (Red 42S). There is no reason to doubt that finding, but it does not assist Chalker. That is because the insuring clause deals only with injury caused by unloading from the insured’s Motor Vehicle, here the prime mover. This did not occur in the present case.
Chalker seeks to meet this argument by pointing to the definition of “Motor Vehicle” (Blue 86L) as meaning
“- a mechanically-propelled vehicle… designed for use on land only
- a trailer … [when] attached to an insured mechanically-propelled vehicle as described above ….”.
This is the fallacy of using a definitional clause without reference to the substantive provision in which it is relevantly engaged (cf Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 at 635). The printed form of Policy provides an extended definition of “Motor Vehicle”, but the definition is only engaged if a vehicle falling within it is insured under the Policy. The only vehicles insured by Chalker were his prime mover and a 1977 McGrath Flat Top trailer that had nothing to do with the present case.
It follows that the trial judge’s orders on the third cross-claim must be set aside and replaced with judgment for the third cross-defendant with costs. The Sanderson order against the appellant must also be vacated.
Conclusion
The appellant has failed in so much of the appeal as endeavoured to free Chalker of liability to the plaintiff or to require Andrews to contribute as a concurrent tortfeasor of Chalker. The appellant has however succeeded in freeing itself entirely of any contractual indemnity to hold Chalker covered under its Policy.
As to the costs of the appeal:
1.Chalker unsuccessfully supported the appellant on the tort issues and unsuccessfully opposed the appellant on the insurance issue. In my view, he should pay one half of the appellant’s total costs in the appeal.
2.Andrews successfully opposed the appellant on the tort issues and unsuccessfully supported Chalker on the insurance issue. The appeal produced no result adverse to Andrews apart from the loss of its Sanderson costs order against the appellant. In my view, the appellant should pay two thirds of Andrews’ costs in the appeal.
3.The plaintiff unsuccessfully supported the appellant on the tort issues and unsuccessfully supported Chalker on the insurance issue. He retains his verdict and costs order against Chalker but loses the benefit of the Sanderson costs order obtained at trial against the appellant. Since, however, no one in this Court attacked the plaintiff’s verdict against Chalker it seems just that the appellant should pay his costs in this Court.
4.QBE’s position will be addressed separately.
I am informed by the Registrar that QBE applied by motion filed on 9 July 2004 and returnable on 6 July 2004 to be joined as a respondent in the appeal. The appellant opposed the order sought and the other respondents consented to it. The appellant submitted to the Registrar that there was no direct issue between QBE and itself. QBE asserted that if the appeal was successful a natural consequence would involve the setting aside of the costs order in its favour below and that none of the other parties to the appeal would have any mandate to protect its interests. This strikes me as an extremely tenuous basis for joinder. It certainly does not justify allowing QBE to recover the costs of senior counsel. The protection of QBE’s interests, if protection was required (which I doubt), could have been secured by correspondence between the solicitors. QBE had triumphed easily at trial (see Red 44-5, 55), obtaining judgment against Chalker on the fourth cross-claim. The only costs order was the somewhat dubious universal Sanderson order by which the appellant was ordered to pay QBE’s costs, along with the costs of all other parties at trial other than Chalker’s of the action. QBE unsuccessfully supported the appellant on the tort issues and unsuccessfully supported Chalker on the insurance issue. This latter stance was no doubt with a view to protecting the Sanderson order obtained against the appellant at trial, notwithstanding the fact that it was Chalker that brought QBE into the proceedings under the fourth cross-claim that had never been seriously pressed. The only costs adjustment proposed by QBE in its submissions was that Andrews should pay its costs in the event that the appellant’s appeal succeeded against Andrews (which it hasn’t). In my opinion QBE should pay its own costs of the appeal.
The defensive cross-appeal filed by the plaintiff against the contingency the appellant succeeded in its appeal against Andrews should be dismissed with costs. Likewise, the defensive cross-appeal filed by Andrews against the contingency that it would be held liable.
The appellant has succeeded in demonstrating that the Policy that it issued to Chalker did not respond, with the consequence that the judgment in Chalker’s favour on the third cross-claim must be set aside and replaced with an order in the appellant’s favour with costs, leaving Chalker relevantly uninsured with respect to his liability to the plaintiff. It may be that Chalker has the protection of a different policy taken out by Andrews (Blue 105, CA Tr p32, 66) but that is not a matter in issue in this appeal.
I am unaware of submissions having been advanced, except by the appellant, as to the consequences for the trial costs of the appellant succeeding. Its success in the appeal resulted in overturning the adverse order on the third cross-claim with its attendant grand Sanderson order. Merely to set aside that order will leave the costs in the District Court of all other parties lying where they fall, except as regards the order against Chalker with respect to the costs of action of the plaintiff and of Andrews.
This may well be a just result in light of the mixed outcomes of the submissions raised by the various parties other than the appellant and the plaintiff. I would however reserve to all parties the liberty to address the costs issues, especially those in the District Court, in light of these reasons. Written submissions will be considered if received by the Court no later than 1 April 2005. Any party against whom a costs order is sought in these submissions that is more burdensome than that ordered or proposed in these reasons may respond to those submissions within a further 7 days. If submissions are received late they will be disregarded in the absence of cause and explanation.
The orders therefore proposed are:
1.Appeal allowed in part.
2.First respondent (Chalker) to pay one half of appellant’s total costs of the appeal.
3.Appellant to pay two-thirds of the second respondent’s (Andrews’) costs of the appeal.
4.Appellant to pay third respondent’s (plaintiff’s) costs of the appeal.
5.QBE to pay its own costs of the appeal.
6.Set aside the judgment against the third cross-defendant on the third cross-claim and all orders for costs of the proceedings in the District Court made against the third cross-defendant.
6.In lieu, enter judgment for the third cross-defendant on the third cross-claim, with costs.
7.First and second cross-appeals dismissed with costs.
8.Liberty to all parties to file written submissions as to the costs of the proceedings in the District Court, including the costs awarded above, such submissions to be delivered to the Registrar no later than 1 April 2005. Any party against whom a costs order is sought in these submissions that is more burdensome than that ordered or proposed in these reasons may respond to those submissions within a further 7 days. Such submissions will be considered on the papers unless the Court decides otherwise.
TOBIAS JA: I agree with Mason P.
GROVE J: I agree with Mason P.

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LAST UPDATED: 17/03/2005