Stevens v. Brodribb Sawmilling Company Pty Ltd
160 CLR 1663 ALR 513
(Judgment by: MASON J)
Between: STEVENS
And: BRODRIBB SAWMILLING COMPANY PTY LTD
Judges:
Mason J.Wilson J.
Brennan J.
Deane J.
Dawson J.
Subject References:
Negligence
Judgment date: 13 February 1986
Canberra
Judgment by:
MASON J
These appeals, which are brought from a decision of the Full Court of the Supreme Court of Victoria, arise out of an action for damages for personal injuries commenced in the Supreme Court by the appellant Roy Albert Stevens against the appellant Stanley Charles Gray and the respondent Brodribb Sawmilling Company Pty Ltd ("Brodribb"). They raise significant issues concerning the liability of an employer to a person engaged to perform a function forming part of the employer's business operations for injuries caused through the carelessness of another.
Brodribb is the owner of a large hardwood sawmill at Orbost in eastern Victoria for which it conducts extensive logging operations on the nearby Errinundra Plateau under licences from the Forests Commission of Victoria ("the Commission"). The licences, which are issued in accordance with the provisions of the Forests Act 1958 (Vic.), grant exclusive rights to remove timber from designated areas of forest, subject to conditions which include compliance with certain directions given by officers of the Commission. It has not been suggested, however, that officers of the Commission are in any way responsible for ensuring the safety of persons engaged in logging operations.
In order to facilitate its logging operations, Brodribb's practice over the years has been to engage persons whose functions fall within three categories, namely, felling, snigging and truck driving, and to allocate them to specified parts of its logging areas known as "compartments". It is the function of a feller to fell trees and of a snigger to push or pull logs to a loading ramp constructed by him by means of a tractor or bulldozer and to load them onto trucks for delivery to the sawmill by the truck driver. The logging operations are overseen by a "bush boss" who is an employee of Brodribb.
It was in the course of such logging operations that Stevens' injuries were sustained. In November 1977, while engaged by Brodribb as a truck driver, he was struck by a log. For the purpose of loading Stevens' truck Gray was making use of a loading ramp which had been constructed by him one week before. The selection of the site at which the ramp was constructed was the joint decision of Gray, the bush boss and an officer of the Commission. However, the construction of the ramp, in accordance with Brodribb's standard practice, had been entirely a matter for Gray. It was a simple earthen structure retained by one large log at the front, next to which Stevens drove his truck. Along the slope of the ramp were laid two sets of two small parallel logs, known as skids, which were usually slippery and which were set sufficiently far apart to enable a bulldozer to move backwards and forwards between them. The loading procedure was for Gray to manoeuvre logs on to the skids and to use the blade of his bulldozer to push them along the skids and onto the truck.
On the occasion in question, Gray had successfully loaded three logs onto Stevens' truck but was experiencing difficulty in loading a fourth log. This was because the log was substantially shorter than the others and would not straddle both pairs of skids. Gray attempted to balance the log on one set of skids and to use the blade of his bulldozer to push it onto the truck. Twice he pushed the log up the ramp and twice it became jammed between the edge of the ramp and the side of the truck. Each time he was able to extricate the log by using the bulldozer's blade. He tried a third time and again the log jammed. This time, in response to Stevens' protest about possible damage to his truck, Gray decided to pull it out using a chain. To that end Stevens, who had until that time been standing by observing the loading operation, obtained a chain from his truck and attached it to the log. As he did so, Gray moved the bulldozer back down the ramp so that its blade was ten to twelve feet from the log. Stevens then attached the other end of the chain to the blade of the bulldozer and proceeded to walk to its rear. Before Stevens was able to move away from the bulldozer, Gray swung it around, releasing the log which rolled down the ramp, pinning Stevens between it and the bulldozer. It is now not disputed that in so doing Gray acted negligently.
In addition to the admitted negligence of Gray, Stevens sought to impute liability to Brodribb in two ways. First, it was said that Brodribb is vicariously liable for the negligence of Gray because the relationship between them was that of employer and employee. Alternatively, it was submitted that even if Gray was an independent contractor and not an employee, Brodribb is nevertheless vicariously liable because this case falls within two exceptions to the general rule that a principal is not liable for the negligent conduct of his independent contractors; namely that the snigging operations were an extra-hazardous activity and that Brodribb was in breach of a non-delegable duty. Secondly, it was argued that Brodribb is personally liable for the breach, by its own acts, of a duty of care owed to Stevens, either because Stevens was an employee of Brodribb and was thus owed the complex of duties arising in relationships of employment, or because, notwithstanding the absence of such a relationship, a duty of care was owed pursuant to the general principles of the law of negligence.
At trial, Beach J. held that both Stevens and Gray were employees of Brodribb. In addition to the negligence of Gray in moving his bulldozer before Stevens was clear, the judge found that Brodribb was negligent in that it failed properly to supervise loading operations, to ensure that safe procedures were followed and to provide adequate loading equipment such as a forklift truck. In the result, he entered judgment for Stevens in the sum of $180,000 and apportioned liability two-thirds against Brodribb and one-third against Gray.
By majority, the Full Court of the Supreme Court dismissed an appeal by Gray but allowed an appeal by Brodribb and set aside judgment against it. The majority (Brooking and Kaye JJ.) held that both Stevens and Gray were independent contractors and that, in the circumstances, Brodribb was not liable for the negligence of Gray. They further held that, on the assumption that Brodribb owed Stevens a duty of care, Brodribb was not negligent in failing to provide loading equipment or in failing to supervise loading or to give instructions to sniggers and loggers that no log was to be moved while a man was on a ramp. Starke J., who dissented, agreed with the primary judge that Stevens and Gray were servants of Brodribb.
The first question to determine is whether the relationship between Brodribb and Gray was one of employer and employee or one of principal and independent contractor. It will also be convenient at this point to consider whether Stevens was an employee of Brodribb or an independent contractor, for, although not directly relevant to the matter presently under consideration , both issues arise from a common factual foundation. A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it (Zuijs v. Wirth Brothers Pty Ltd (1955) 93 CLR 561 , at p 571; Federal Commissioner of Taxation v. Barrett (1973) 129 CLR 395 , at p 402; Humberstone v. Northern Timber Mills (1949) 79 CLR 389 ). In the last-mentioned case Dixon J. said (at p 404):
"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."
But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question (Queensland Stations Pty Ltd v. Federal Commissioner of Taxation (1945) 70 CLR 539 , at p 552; Zuijs' Case; Federal Commissioner of Taxation v. Barrett, at p 401; Marshall v. Whittaker's Building Supply Co. (1963) 109 CLR 210 , at p 218). Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.
Much of the evidence at the trial was directed to determining the precise nature of the relationship between Stevens and Brodribb and Gray and Brodribb. The logging season on the Errinundra Plateau is of some six months duration and in 1977 it began towards the end of September. Stevens and Gray were engaged at the beginning of the season - Stevens as a truck driver and Gray as a truck driver and snigger. Both men had extensive experience in the timber industry and had been engaged by Brodribb to carry out similar functions during previous logging seasons. Along with others engaged to perform those functions, they provided and maintained their own equipment, set their own hours of work and received fortnightly payment from Brodribb determined by the volume of timber they had been involved in delivering to its sawmill. Brodribb did not deduct income tax instalments from these payments. Stevens' profit and loss accounts for the years ended 30 June 1977 and 1978 showed the ratio of his expenses to his gross income to be approximately 71 per cent. Gray's financial records were not in evidence.
Although they were available each working day, fellers, sniggers and truck drivers were not guaranteed work and were free to seek other work if bad weather or other circumstances prevented them from working for Brodribb. When there was work, truck drivers were expected under normal circumstances to cart at least two loads of logs per day from the forest to the sawmill at Orbost. There is evidence that some truck drivers carried on business in partnership with their wives but this was not the case with either Stevens or Gray. Gray, however, employed his son to drive his truck and it appears that at least one other carter engaged by Brodribb also employed a driver. Brodribb's bush boss was responsible for the overall co-ordination of activities within the logging areas and had the task of ensuring a steady flow of timber to the sawmill. Fellers, sniggers and truck drivers were subject to his direction. He liaised with officers of the Commission, allocated individuals to particular compartments, settled disputes, issued directions as to the type of logs to be snigged, and monitored the volume and quality of production. He also decided whether work should take place in inclement weather. His allocation of individuals to compartments, at least in relation to truck drivers, could vary on a daily basis and it seems that in directing Gray's truck to various compartments he normally dealt not with Gray but with its driver, Gray's son. However, he had little to do with the manner in which fellers, sniggers and truck drivers carried out their functions. Gray's evidence indicates that, except in relation to the placement of ramps and various roads and the choosing of logs, he was left entirely to exercise his own skill and judgment.
I agree with the majority in the Full Court of the Supreme Court that neither Stevens nor Gray was an employee of Brodribb. The facts, as I have related them, do not support an inference that Brodribb retained lawful authority to command either Stevens or Gray in the performance of the work which they undertook to do. As I have said, they provided and maintained their own equipment, set their own hours of work and received payments, not in the form of fixed salary or wages, but in amounts determined by reference to the volume of timber which they had been involved in delivering, through the use of their equipment, to the sawmill. The authority of Brodribb's bush boss seems to have been confined to the organization of activities in the forest, determining the location of roads and ramps, selecting the logs to be snigged, monitoring the volume and quality of production and deciding whether work would take place in bad weather. There is, in my opinion, no basis for inferring an intention that the bush boss should have authority to direct Stevens and Gray in the management and control of their equipment which they were using for the purpose of delivering timber to the mill. In Humberstone, Dixon J. said, at pp.404-405:
"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."
See also Wright v. Attorney-General for the State of Tasmania (1954) 94 CLR 409 , at pp 414, 418.
What is more, Brodribb and the men, including Stevens and Gray, regarded their relationship as one of independent contract, not one of employment, an attitude evidenced in the case of Gray by his employment of his son as a driver. The power to delegate is an important factor in deciding whether a worker is a servant or an independent contractor (Australian Mutual Provident Society v. Chaplin (1978) 18 ALR 385 , at p 391).
It was in relation to the question whether Gray was an employee or an independent contractor that it was submitted on behalf of Stevens that regard should be had to the so-called "organization test". The test seems to have had its genesis in a passage of Lord Wright in Montreal v. Montreal Locomotive Works (1947) 1 DLR 161, in which his Lordship said (at p 169):
" ... it is in some cases possible to decide the issue by raising as the crucial question whose business is it, or in other words by asking whether the party is carrying on the business, in the sense of carrying it on for himself or on his own behalf and not merely for a superior."
A similar approach was adopted by Denning L.J. in Stevenson Jordan and Harrison, Ltd v. MacDonald and Evans (1952) 1 TLR 101 , at p 111, and Bank Voor Handel en Scheepvaart N.V. v. Slatford [1953] 1 QB 248 , at p 295. Since then the organization test has been mentioned in a number of cases, but there has been no agreement as to the role it should play. Indeed, there are competing views of the purpose which it serves.
In the present case it was argued that Gray was part and parcel of Brodribb's organization in that his snigging activities were integral to the supply of timber necessary for Brodribb's sawmilling operations at Orbost. The relevance of this submission was said to be that it added weight to the inference that Gray was subject to the control of Brodribb and therefore that the relationship between them was one of employment. In short, the contention was that the organization test is relevant to the issue of control. But this is not to use the concept as a criterion for determining a legal issue or legal liability. It is merely to use the fact that A is part of B's business organization as additional material from which to infer that B has legal authority to control what A does. No doubt in some circumstances, depending on the nature of the organization and the part that A plays in its activities, it is legitimate to have regard to that fact in drawing an inference as to B's control of A in the performance of a relevant activity. However, here there are other facts which bear more cogently on the issue of control and negate the inference which is sought to be drawn.
The organization test was put to a different use by Starke J. in the present case, when he said:
"The learned Judge appeared to be of the opinion that the 'control' test and the 'organisation' test were alternatives. In my judgment that is not so. Both are relevant considerations in my opinion in determining whether the contract is one of service or for services."
This is to treat the element of organization simply as a further factor to be weighed, along with control, in deciding whether the relationship is one of employment or of independent contact. This seems to be what Lord Wright had in mind in Montreal v. Montreal Locomotive Works, at p 169. For my part I am unable to accept that the organization test could result in an affirmative finding that the contract is one of service when the control test either on its own or with other indicia yields the conclusion that it is a contract for services. Of the two concepts, legal authority to control is the more relevant and the more cogent in determining the nature of the relationship. This comment applies with equal, if not greater, force to the competing view, expressed by Denning L.J. in Bank Voor Handel, at p 295, that the test is an independent method of determining who is an employee and who is an independent contractor, and in this way seeks to replace the traditional approach of balancing all the incidents of the relationship between the parties.
It has been suggested, though it was not argued in this case, that the organization test is not aimed at a determination of whether the relationship between the defendant and the tortfeasor is one of employment or independent contract, but is addressed rather to the question of who can be held vicariously liable for the wrongs of another. Thus it is said that once a person is found to be part of an organization, that organization is vicariously liable for all the wrongs of that person committed within the scope of his responsibilities, irrespective of whether he would, according to traditional doctrine, have been an employee or independent contractor.
The advantage of the organization test, on this view of it, is that it avoids the complications associated with the employee/independent contractor test. But at what price? The test does no more than shift the focus of attention to the equally difficult question of determining when a person is part of an organization such that his wrongs may be imputed to that organization. I doubt that the suggested test moves any closer toward a clarification of the fundamental problems of vicarious liability - a view which seems to have been shared by Stephen J. in Federal Commissioner of Taxation v. Barrett, at p 402, and MacKenna J. in Ready Mixed Concrete (South East) Ltd v. Minister of Pensions and National Insurance [1968] 2 QB 497 , at p 524. Moreover, on this approach, the organization test has the effect of imposing liability on the proprietor of the organization, whether he had the capacity to control the contractor or not. Whether the Court should impose vicarious liability on a proprietor in these circumstances is a very large question on which we have not had the benefit of argument.
The traditional formulation, though attended with some complications in its application to a diverse range of factual circumstances (Federal Commissioner of Taxation v. Barrett, at p 400), nevertheless has had a long history of judicial acceptance. True it is that criticisms have been made of it. It is said that a test which places emphasis on control is more suited to the social conditions of earlier times in which a person engaging another to perform work could and did exercise closer and more direct supervision than is possible today. And it is said that in modern post-industrial society, technological developments have meant that a person so engaged often exercises a degree of skill and expertise inconsistent with the retention of effective control by the person who engages him. All this may be readily acknowledged, but the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, "so far as there is scope for it", even if it be "only in incidental or collateral matters" (Zuijs v. Wirth Brothers Pty Ltd, at p 571).
Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered.
The finding that both Gray and Stevens were independent contractors disposes not only of the argument that Brodribb is vicariously liable for Gray's negligence by virtue of a relationship of employment, but also of the argument that Brodribb is personally liable to Stevens for breach of the duty of care owed by an employer to an employee.
The next question to consider is whether, notwithstanding the fact that the relationship between Brodribb and Gray is one of independent contract, Brodribb is liable to Stevens on the footing that his injury arose out of dangerous operations or extra-hazardous acts. Although the doctrine of extra-hazardous acts is sometimes treated as an exception to the general rule that a principal is not liable for the negligence of his independent contractor, it is in truth an instance of strict liability for breach of a duty of care which the principal personally owes to the plaintiff. The principal's liability is therefore primary, rather than vicarious (Salsbury v. Woodland [1970] 1 QB 324 , at pp 336-337, 347; Staveley Iron & Chemical Co. Ltd v. Jones (1956) AC 627, at pp 639, 646-647; Stoneman v. Lyons (1975) 133 CLR 550 , at p 574).
The doctrine has been applied in the United States and Canada. Although it has been affirmed in a number of English decisions (Honeywill & Stein Ltd v. Larkin Brothers Ltd [1934] 1 KB 191 ; Matania v. The National Provincial Bank Ltd [1936] 2 All ER 633 , at pp 645-646; Salsbury v. Woodland, at pp 338, 345, 348), it has not achieved complete acceptance (Hughes v. Percival [1883] 8 AC 443 , at pp 446-447; Rainham Chemical Works Ltd v. Belvedere Fish Guano Co. Ltd [1921] 2 AC 465 , at pp 476-477, 490-491). And doubt has been cast on its authenticity by the rejection in Read v. J. Lyons & Co. Ltd (1947) AC 156 of the proposition that dangerous operations give rise to strict liability .
The doctrine has not found favour in Australia. In Torette House Pty Ltd v. Berkman (1939) 39 SR(NSW) 156 the Supreme Court of New South Wales emphatically rejected the notion that a principal could be made liable for the negligence of an independent contractor on the basis that the activities he was engaged to perform were extra-hazardous. More recently, in Stoneman v. Lyons, this Court discussed the shortcomings of the doctrine, emphasizing (at pp 563-565, 574-575) the elusive nature of the distinction between acts that are extra-hazardous and those that are not. Furthermore, the traditional common law response to the creation of a special danger is not to impose strict liability but to insist on a higher standard of care in the performance of an existing duty (Adelaide Chemical and Fertilizer Co. Ltd v. Carlyle (1940) 64 CLR 514 , at pp 522-523, 534; Swinton v. The China Mutual Steam Navigation Co. Ltd (1951) 83 CLR 553 , at pp 566-567; Thompson v. Bankstown Corporation (1953) 87 CLR 619 , at p 645; Imperial Furniture Pty Ltd v. Automatic Fire Sprinklers Pty Ltd (1967) 1 NSWR 29, at pp 31, 44; Todman v. Victa Ltd (1982) VR 849, at pp 851-852). For these reasons, the doctrine, in my opinion, has no place in Australian law.
The final questions are whether Brodribb was under a general common law duty of care and, if so, whether it was a personal (non-delegable) duty. In this case the first question is to be determined by reference to the elements of reasonable foreseeability and proximity discussed in the judgment of Deane J. in Jaensch v. Coffey (1984) 58 ALJR 426, at p 442; 54 ALR 417 , at p 445. It is plain that Brodribb could reasonably foresee that there was a real risk that a worker carrying out Stevens' duties would sustain an injury of the kind that occurred. It is equally plain that a relationship of proximity existed between Brodribb and the individual worker sufficient to ground a common law duty of care. Subject to the ultimate control of the Commission, Brodribb had an exclusive licence to cut and take away logs from the logging areas. It allocated fellers, sniggers and truck drivers to specified parts in those logging areas; it required them to work together in teams in an intricate process of extracting timber from the forest and delivering it to the sawmill; and it monitored and co-ordinated the operations through its bush boss. While individual fellers, sniggers and truck drivers may have been responsible for their own safety with regard to carrying out their own functions, they had little choice but to rely on the care and skill of Brodribb in the arrangements which it made for the disposition of the work, and on the care and skill of the persons engaged by Brodribb in the execution of the work.
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.
Accepting that Brodribb owed such a duty, the next question is whether it has been breached. It was suggested that the system of work devised by Brodribb was defective in various respects. First, it was said that the ramp was unsafe for loading shorter logs. However, it was found by the primary judge that Gray had constructed the ramp according to established practice and had used his best endeavours in that regard. It was not possible to reduce the distance between the two sets of skids to enable the short log to be rolled along them because the bulldozer would then be unable to move backwards and forwards between them. The small log here was only fractionally longer than the blade of the bulldozer (14 feet).
Secondly, it was submitted that there was negligence in failing to provide a forklift such as the one which was available at the sawmill for unloading logs. This was relied upon by the primary judge. But, as Brooking J. pointed out in the Full Court, there was no evidence as to the feasibility of their use in the forest or even the feasibility of transporting them to the site. Forklifts were described in evidence- as "enormous pieces of machinery". In the context of logging operations in mountainous terrain, the suggestion appears to be unrealistic.
Thirdly, it was suggested that there was negligence in failing to supervise the loading operation or to ensure that safe procedures were followed. Although the primary judge found that Brodribb was negligent in these respects, there was no evidence of any previous accident occurring during loading operations and Gray and Stevens both had considerable experience. The loading operation was dangerous but "anything in the bush is dangerous" and if the work was to be performed at all, Gray and Stevens were ideally suited to perform it. The safety precaution put forward by the appellants is no more than a suggestion that had a supervisor been present he would have warned Gray not to operate the bulldozer until Stevens had reached a position of safety. I do not think that a reasonable man in the position of Brodribb would have regarded it as reasonably necessary to guard against this type of accident or to have employed a supervisor to guard against it. For similar reasons the submission that Brodribb should have provided an extra man or men to help load the log must be rejected.
Accordingly, none of the matters suggested by the appellants amounted to a breach by Brodribb of its duty to provide a safe system of work.
Finally, it remains to consider whether the duty which Brodribb owed to Stevens was non-delegable. In Kondis v. State Transport Authority (1984) 154 CLR 672 I considered that the law sometimes imposes on people a duty higher than the usual common law duty to take reasonable care. This higher duty is a duty to ensure that reasonable care is taken and it is said to be non-delegable because a principal who engages another to perform work will be liable for the negligence of the person so engaged, notwithstanding that he exercised reasonable care in the selection of the contractor. I also stated (at p 687) that a non-delegable duty will arise where a person:
" ... has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised."
If Brodribb's duty in the present case is non-delegable, it necessarily follows that it is liable for the admitted negligence of Gray. However, the facts in the present case are essentially different from those in Kondis in that there is not the requisite relationship between the parties such as would be required to impute liability to Brodribb for the casual negligence of Gray in freeing the log without satisfying himself that Stevens was in a safe position. In Kondis the crane driver assumed the control or supervision of the labourer who was injured, control or supervision which was ordinarily exercised by the employer (see at pp 677-678). Here, Gray had not in any sense assumed control or supervision of Stevens during the loading operation. And, as I have found, Brodribb did not exercise control of, or retain a right to control or supervise, the loading operation. In these circumstances it can scarcely be suggested that Stevens could reasonably expect that Brodribb would see to it that due care was exercised in the loading operation by Gray. Indeed he probably would have been surprised at the suggestion that Brodribb should have done so.
I would dismiss the appeals.