Hollis v Vabu Pty Limited t/as Crisis Couriers S149/2000 [2000] HCATrans 743 (8 December 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S149 of 2000

B e t w e e n -

GARY JOHN HOLLIS

Appellant

and

VABU PTY LIMITED t/as CRISIS COURIERS

Respondent

GLEESON CJ

GAUDRON J

McHUGH J

GUMMOW J

KIRBY J

HAYNE J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 8 DECEMBER 2000, AT 11.44 AM

Copyright in the High Court of Australia

MR G.B. HALL, QC: May it please the Court, I and with me my learned friend, MS S NORTON, appear for the appellant. (instructed by Brydens Law Office)

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friends, MR W.S. REYNOLDS and MR J.J. RYAN, for the respondent. (instructed Henry Davis York)

GLEESON CJ: Yes, Mr Hall.

MR HALL: Your Honours will have, I hope, some written submissions we filed and also some supplementary submissions which your Honours would have received this morning in relation to the respondent's written submissions. May I take it that your Honours are familiar with the facts in the case?

GLEESON CJ: Yes.

MR HALL: Your Honours, if I can grasp the nettle from our point of view at the start, we contend that the principle of vicarious liability needs to be reconsidered and - - -

GLEESON CJ: You mean needs to be reconsidered or needs to be reconsidered in order for you to succeed?

MR HALL: Well, both. Your Honour, it does not need to be reconsidered in order for us to succeed as we see the facts. We adopt the decision of the dissenting judge in the Court of Appeal and he found for the plaintiff and - - -

KIRBY J: There seems to be a skirmish that has arisen relating to the grounds on which you were given special leave to appeal. Do you accept what Mr Jackson's side have said about that or are you going to seek to enlarge the grounds of appeal or - it might be as well for us to get clear at the outset exactly what is being argued.

MR HALL: Yes, your Honour. If one goes back to the original appeal, the appellant appealed to the Court of Appeal and specifically raised the allegation that he was a servant. Your Honour, that appears - - -

KIRBY J: If he was a servant, you would not need to grasp nettles and complain about vicarious liability.

MR HALL: Your Honour, ground 1 in the Court of Appeal, we would say, was wide enough to embrace the relief we seek. It is at page 456 of volume 3. Ground 2 expressly raised the issue of servant and agent. However, your Honour, when one looks at the decisions given in the Court of Appeal, it is said by Mr Justice Sheller, who wrote the leading judgment of the majority, that the appellant accepted the tax decision, that is, the decision in Vabu, which held that the couriers were "independent contractors". That appears at 461 point 19.

Mr Justice Davies at 482 point 5 also seems to imply that when the appeal was actually argued the appellant accepted the decision in Vabu v Commissioner of Taxation 33 ATR 537. Your Honour, that decision, I might say, in the tax decision, when one looks at it, is obviously a decision brought by Vabu in relation to all categories of couriers it had and it employed three different - or it engaged, to use a neutral term, three different kinds of couriers. It had bicycle couriers in the central business district; it had motorcycle couriers and it had couriers who had 1-tonne vans.

Of course, there is a distinction, we would say, of relevance between the duties each of those categories of couriers would perform and there is a distinction in the type of journey they would undertake and, therefore, their scope to make independent decisions to how they would do things, and a distinction in the amount of capital they would introduce into the business. Whereas, Mr Justice Davies, when he gave his decision in the Court of Appeal, I would point out, confined his decision to the situation of the bicycle couriers, it is our position, in these proceedings, that it is that relationship one needs to look at rather than the general situation of all the couriers.

KIRBY J: Well, I realise that, but are you arguing before us that your client was a servant, an agent, or an independent contractor with a special status, or all three?

MR HALL: I with to argue both. I wish to argue that the correct finding on the admitted facts and on the relationship, as revealed in the evidence, was that he was, relevantly, a servant.

KIRBY J: Can we call it "employee" in this more enlightened and almost new century?

MR HALL: Well, I am content with that, your Honour.

KIRBY J: Anyway, you say it falls into the old - - -

MR HALL: Your Honour, if I may put Mr Hollis's position, he does not really care how we win as long as we win. From my point of view, your Honour, I have, in the submissions I have drawn, suggested that it is, perhaps, dangerous to try and pick a category and steer the law into that category, and the time has come for vicarious duties to be cast in a wider ambit which can more generally be applied in relation to the relationship as it actually exists.

MR JACKSON: Your Honour, we object to this issue being raised, but I think I have made that clear in our written submissions.

GLEESON CJ: Yes. Was this question dealt with on the special leave application?

MR HALL: The special leave application was confined, your Honour, to argument as to whether we are entitled to appeal on the grounds which are set out in the notice of appeal, which is at page 494 of the appeal book. That is volume 3, your Honours. In answer to your Honour the Chief Justice, however, if we are entitled to argue, as the grant of leave enables us, that the respondent was not vicariously liable, then it would seem to me that grant must, within it, contain the power to argue the steps by which vicarious liability might be found.

KIRBY J: You say that at trial you asserted, alternatively, employment or independent contractor, special status, that the facts relevant to that were all adduced at trial, one way or the other - - -

MR HALL: Yes, they were, your Honour.

KIRBY J: And that those facts are common to each issue. That the issue was litigated in the Court of Appeal by the ground of appeal that went to that court, and that ground 1(a) before this Court is in the passive and is broad enough to encompass the issue, and that no prejudice is done to the respondent.

MR HALL: That is my submission, yes, your Honour.

GLEESON CJ: Is the question whether the cyclist was an employee of the respondent a question of law or a question of fact?

MR HALL: Well, it is a mixed question of law and fact, is it not, because the finding of law depends on the evidence adduced in the court below, but the evidence in the court below was substantially not in dispute and both the trial judge and the Court of Appeal have picked up a number of facts which were found by the trial judge at the request of the applicant.

GLEESON CJ: And is it part of your argument, on this point, that the decision in Vabu Pty Limited v Commissioner of Taxation was wrong?

MR HALL: It was wrong in so far as it applies to bicycle couriers, your Honour. A better way for me to put it, I think, your Honour, is this: it is not decisive of the relationship between this particular bicycle courier, in this particular case, because the evidence is wider than was given, or the evidence is not shown to be the same and, more importantly, there is a considerable body - - -

KIRBY J: But I notice two things. First of all, whoever did the headnote in the Court of Appeal says, on the facts there was no employee/employer relationship at common law between the company and the couriers, general.

MR HALL: Yes.

KIRBY J: And secondly, it would seem hardly likely that this Court would grant special leave on its own to allow re-examination of facts concerning whether or not your client was an employee; that is a fairly orthodox question.

MR HALL: Well it is the wider issue we have come here to debate, your Honour, but nevertheless, when one looks at - with all due respect to those in the court below - the circumstances of the relationship as they existed between the bicycle couriers and Vabu, the finding that at common law they were contractors, we would submit, is somewhat extraordinary. The court seemed to focus critically upon the mode of payment, that is to say, they were not receiving wages; they were paid piece-rate rates. But, when you look at the obligations imposed upon them by Vabu, it is hard to see any real incident of their relationship which can be said to create a true independence, and the point we would make, your Honour, is that where someone is engaged in a business in such a way as one can reasonably say they are wholly bound to the business, their relationship is in reality one of servitude rather than of independence.

GAUDRON J: Well I wonder whether, Mr Hall, we are not likely to confuse ourselves by sticking to the old terms. Things have changed very much in employment or income producing activities in the last 20 years, I suppose. But what I am thinking is this: let us say there is a measure of control and to all appearances there is ostensible control, why is not that, by analogy with ostensible authority, sufficient to locate vicarious liability in Crisis Couriers? And I suppose that really invites attention to what is the true foundation of vicarious liability?

MR HALL: Yes.

HAYNE J: Rather than the attribution of labels which are intended to convey legal conclusions disguised within them.

MR HALL: Yes. Well, in the past, obviously, it has been handy to pick a tag, say employment, employee, and therefore attach the label to that but the trend certainly in this Court in recent days has been to get away from categories, as the Court did in relation to invitee and as the Court did in - your Honour, I did not put it in my submissions but there is a discussion of the policy basis on which vicarious liability might be applied in a Canadian case.

GAUDRON J: But what is the legal basis of vicarious liability? What is the legal principle that sustains that notion, the legal rule if you like? Where did it come from?

MR HALL: It came originally from employment, your Honour, on the basis that what the servant was doing was the act of his employer.

GLEESON CJ: Should we reconsider whether employer should be vicariously liable for their employees? Should anybody be vicariously liable, because vicarious liability involves attaching liability to pay damage to somebody who has done nothing wrong?

MR HALL: In the sense that the person found to be vicariously liable did not commit the offending tort.

GLEESON CJ: Yes. Well, you cannot grasp only part of a nettle.

MR HALL: I do not have any trouble with that, with respect, but it is certainly underpinned now by a very solid policy element which is caught, if I may say so, rather concisely by Justice La Forest in a Canadian case - if I can hand up to your Honours copies.

GUMMOW J: What will this tell us?

McHUGH J: If you go back to the basic common law principles that the great common law judges expressed the basis in this way. Mr Justice Littledale said in Laugher v Pointer, which is one of the key cases in this area, that the master was liable for the acts of his servants because such servants represent the master. That was the term he used. Is not that sufficient for your purposes? That is, in a sense, the basis upon which Justice Dixon in the CML Case held that agents who were not employees were nevertheless persons for whom vicarious responsibility attached.

KIRBY J: If that is the test in this case, your client had to wear the livery of the respondent and rushed around in this uniform and had to do things and was told that he would be sacked if he did not do things quickly, so he would represent, at least arguably, on that basis.

MR HALL: He was certainly held out to the world, we would say. When Vabu put its livery on the man it held him out to be, well, we would say, either as its servant or as a person wholly engaged in its activity, and the written agreements which are set out in the appeals books and to which I have referred in my written submissions repeated - each one of them repeated that the couriers were at all times the representatives of Vabu.

GUMMOW J: Where does it say that?

MR HALL: In volume 2, your Honour. If your Honour goes, for example, to 364 which is in volume 2 of the appeal book:

Drivers should always be aware that they are a direct representation of the company. Their attitude and appearance can only be seen as a direct reflection of our organisation.

If your Honour goes back to 361 the same headnote appears.

GUMMOW J: And dress regulations.

MR HALL: Yes, your Honour. If your Honour goes over the previous page to 360:

Drivers must be neat and tidy at all times.

If your Honour goes up to 360, 15:

A uniform with the companys logo's attached must be worn at all times whilst working for this company.

The next one does not apply to couriers, your Honour, but obviously to vehicle drivers:

Signs (at least 2) are to be worn on your vehicle at all times whilst working for this company. They are not to be altered.

McHUGH J: If you are right, what happens in the case of the business franchise? Is Kentucky Fried Chicken responsible for the negligent acts of all those holding franchises? Is Harvey Norman responsible for the negligence of all the people who trade under the Harvey Norman signs?

GLEESON CJ: Is Mobil responsible for all service station proprietors who wear a uniform with Mobil on it?

MR HALL: Can I deal with those in sequence? First of all, if you take food chains, food chains, the holder of the head franchise not only requires the food outlet to be built according to its plans, to display its sign, it also issues very extensive and voluminous instructions as to how the food is to be prepared.

McHUGH J: You probably should stay close to the microphone, Mr Hall.

MR HALL: I am sorry. As to how the food should be prepared. It requires them to submit to detailed inspections. They are not allowed to sell any product, other than those specified by the food retailer and, therefore, we would argue that on the circumstances of a particular franchise it may well be the case that they are so closely bound to conduct their business as the business of Kentucky Fried Chicken or McDonald's that it would attract vicarious liability.

Now, there will obviously be degrees, and that is why we say one must look at the relationship between the parties in the actual case. A franchisor may have, if one takes retail franchising of, say, brand names, one may merely have no more than a right to put a brand name on a tie, or something like that.

GLEESON CJ: But Mr Hall, what are you looking at the relationship for? It used to be the case that you were looking at the relationship to tell whether it was a relationship of employment, but you say we should put that to one side and you encourage us to look at the relationship, but not for that purpose. What is the purpose for which we should now look at it?

MR HALL: In the case I am propounding before your Honours today, we are looking at the relationship, primarily, to establish, we would say, that the business on which the courier was engaged was relevantly, at all times, Vabu's business.

McHUGH J: Well, that may be the distinguishing factor from, say, Harvey Norman or from Kentucky Fried, because, for the purpose of vicarious liability, it is the manner of carrying out the work, and it is the work that is done for the employer under the traditional tests, whereas, in the case of the franchisee, he is not really carrying out any work. He has a business and an assignment of certain things, but he is not really carrying out any work, whereas, in this particular case, you can argue that it is Vabu's business that third parties are contracted to do.

MR HALL: The big distinction in this particular case is that when one looks at the whole of the relationship, there was virtually no scope for independent decision making by Mr Hollis. He could not exercise some entrepreneurial skill to, for example, go and carry parcels for other people to increase the number of parcels he carried. He was bound to Vabu. He could not increase - Vabu chose, as a business course, to try and even the work out between its couriers.

GLEESON CJ: Who are the parties to the contract of carriage?

MR HALL: Vabu and to whoever the article ultimately went.

McHUGH J: This is the big difference with the franchise cases.

MR HALL: Yes, because when you go in, you are - - -

McHUGH J: Because your contract is with the person who has the franchise, not with Kentucky Fried Chicken, or whoever owns the franchise.

MR HALL: Yes.

KIRBY J: Now, you have taken us to 361 and so on, and it would seem to me that quite significant is the instruction at the bottom of 365, number 11:

No driver is to refuse work. Any driver who does so will no longer work for this firm.

It is pretty clear no lawyer ran his eye over this document. But does that represent the facts? Was there any evidence as to what happened in fact, because that is a statement - - -

MR HALL: There was no power - these were, so to speak,

non-negotiable conditions that Vabu - - -

KIRBY J: How was that established - - -

McHUGH J: Well, it was by admission.

MR HALL: You either accepted the conditions or you did not.

KIRBY J: That was admitted by the respondent, was it?

MR HALL: Yes, your Honour, it is not contested.

McHUGH J: Well, I think you went further. Did not some witness say that? Was it Mr Pearce? Did he not say or agree, or am I wrong?

MR HALL: The evidence which is extracted in the appeal book is all from executives of Vabu who were giving evidence before another inquiry, I think, when they made those statements.

KIRBY J: That was tendered in this trial, was it?

MR HALL: Tendered in the trial, yes, your Honour. It was a parliamentary inquiry - - -

KIRBY J: That is the material Justice Davies extracts in his reasons.

MR HALL: Yes, your Honour. The Parliament issued a report called the Stay Safe Report.

KIRBY J: Can you tell me, just conceptually, the point you rely on most importantly, the fact that they cannot refuse work, that these conditions are non-negotiable, that they represent the firm, the company, and they are obliged to wear their dress code. Is there anything else that is critical?

MR HALL: We would say there was no area where it can be said that the bicycle courier, by exercising his own entrepreneurial initiative, could build his income.

KIRBY J: Well, he could do urgent work, as I understand it; he could elect to try to get that - - -

MR HALL: He could only do work that was allocated to him by Vabu. The evidence is that Vabu allocated the work evenly. So, it is not the case that Vabu encouraged the more energetic couriers, the most they said was if they had a very important client, they try to send him an experienced courier to the important client because they were concerned to protect their relationship with their important client.

GLEESON CJ: Mr Hall, did they have to work a minimum number of hours in a given period?

MR HALL: It does not seem to say. There is evidence - - -

GLEESON CJ: Could a courier please himself whether he turned up for work on Tuesday or not?

MR HALL: There seemed to be somewhat paradoxically, that the courier had to apply for leave.

GUMMOW J: That is at page 361, line 41.

MR HALL: Yes. It refers, oddly enough to annual and sick leave, although they were not paid annual or sick leave.

GLEESON CJ: But it seems a pretty basic question - or under the old regime it would have been regarded as a fairly basic question - to determine whether a person, as relevant to whether a person was an employee or not, whether that person could decide to take the afternoon off because it suited him to go on a picnic.

MR HALL: Well, your Honour, if one goes to 362, line 20, it says:

No driver is to refuse work.

There is a passage in the book, which I cannot point to at the moment, but I will have it located, which indicates that the couriers were to be available, I think, from about 9.00 o'clock in the morning on.

HAYNE J: Well, you see, this invites attention to - we have two documents, one at 361 and one at 364. I suspect they are not identical. Both are in evidence. The evidence, as I understand it from page 194 is that the document at page 361 was promulgated in May 1990.

MR HALL: Yes.

HAYNE J: The document at page 364 is promulgated, so it seems, again from 194 to have been promulgated July 1992. The accident happens, what date?

MR HALL: 22 December 1994, your Honour.

HAYNE J: So that, presumably as far as the evidence goes, it is the July 1992 rules that are then operative?

MR HALL: No, your Honour; there is evidence that the couriers were given, what is described as all three documents, which seems to be, as I apprehend it, your Honour, that they completed the document at 358, that is a kind of application, headed A Contract for Service, then they were given, presumably, the equipment set out at page 359, that is the bicycle uniform and some radio equipment, and they were then given, as I would understand it, the document set out at 360, the document set out at 361 and the document set out at 364.

KIRBY J: Why would they be given two almost identical documents, it does not make sense?

MR HALL: Well, your Honour, because this is the real world and not a world that is designed logically and carefully - - -

KIRBY J: Well, you better get us the references to that, where the couriers themselves - - -

MR HALL: I am sorry, I do not mean to be insulting, but that apparently was the practice. I mean, the documents are, in some respects, rather illogical, they have some provisions - for example, if you look at 361 line 50:

Drivers terminating employment -

And at 365 line 20:

No annual leave will be considered for the period November to Christmas Eve, nor the week prior to Easter. Leave requests will be considered -

but in point of fact they were not paid annual leave, they did not receive sick pay, so that - - -

GLEESON CJ: But was there any finding made in the courts below as to whether they could please themselves when they worked?

MR HALL: My recollection is that there is no express evidence on that, your Honour.

McHUGH J: Well there was evidence, there was no finding, was there not. I mean, at page 362 they said:

No driver is to refuse work.

And then there is a requirement that they had to be at work by 9am. So it does not look like they had much option, but I cannot recollect any finding in Judge Wright's judgment to that effect.

HAYNE J: Just as to the couriers being given all three documents, it is page 196 line 36 and following.

MR HALL: Yes.

GLEESON CJ: You said earlier that there was no evidence to indicate that these people had any degree of independence.

MR HALL: Yes, your Honour.

GLEESON CJ: Being able to "please yourself" whether and for how long you work is a fair kind of independence, but do we understand your submission to be that, although there was no finding made about it, these people could not please themselves how many hours they worked?

MR HALL: That is my understanding of the relationship, in fact, your Honour, yes. In other words - - -

GLEESON CJ: It seems a fairly basic question.

MR HALL: Well, I might say, your Honour, in my written submissions I have referred to a United States case, and that case dealt with people who supplied their own shovels and unloaded coal, who were held to be employees; they could please themselves whether they came to work that day or not. But in that case, the United States Supreme Court said - and they were paid, I think, by the day - the Supreme Court said, well the only business they worked in was the business of the company and they were held to be employees of the company for the purposes of the US legislation governing social security benefits.

KIRBY J: Before we go into the principles of law, are there any other factual matters that you would lay emphasis upon, either in this document or in the oral evidence, especially if there is a finding on the matter?

MR HALL No, your Honour; we rely on the facts which my learned friend says, well they were found at our request, but we rely on those facts which are set out in the judgment of Mr Justice Sheller and were set out in the court below and they are set out at - - -

McHUGH J: At 406 volume 3, are they not?

MR HALL: Pages 405 and 406 running into 407.

KIRBY J: Did they do training of the - - -

MR HALL: So far as I am aware, not, your Honour.

KIRBY J: It is referred to at page 405, paragraph 3.

MR HALL: Page 405 point 45. There is evidence from which it can be inferred that the defendant exercised a measure of discipline over its couriers and certainly allocated jobs and certainly gave them directions but I do not think there is any real evidence.

GLEESON CJ: Mr Hall, what is the meaning - - -

MR HALL: If I could just take your Honours, just to answer that last question - there is some evidence how they came to be employed at volume 1, 106, 107 and 108 and if your Honours go to 107, line 5, the training appears to be:

If they passed that hurdle as it were, the interview, was there another step that was followed?

A. Yes, we'd arrange for them to, they go into town to a designated area where they are sent out with an experienced rider. If they've had some experience it will be for one day, if they haven't they go out for two days, with two different people.

Q. And.....would you get feedback.....

.....another discussion -

GLEESON CJ: What is the meaning of the first paragraph on page 360?

MR HALL: Well, your Honour, I assume what it means is that whatever money the courier may be entitled to will be held against any claim by someone to whom the package was delivered, that there was an overcharge or - - -

GLEESON CJ: What does it mean when it refers to "Drivers terminating contracts of carriage"?

MR HALL: Well, to be truthful, your Honour, I do not think I am any better advanced to answer that question than your Honour. Whatever the draftsman had in mind I think is the - - -

GUMMOW J: It means carrying out to conclusion, does it not, by delivering what they overcharge? Is not that the idea?

MR HALL: Your Honour, so far as I am aware, the - - -

GUMMOW J: They do not terminate in the sense of discharge by performance the company's contract properly because there is this overpayment problem, or they do not collect.

MR HALL: The couriers, I think, merely delivered - the couriers did not collect - most of the couriers did not collect any money so that - - -

GUMMOW J: How do we know that?

MR HALL: They just deliver the package.

GUMMOW J: I know that, but how do we find that? How do we know that? Is there a finding about that?

MR HALL: I cannot answer that at this instant, your Honour. I will have it looked up over the lunch hour.

GAUDRON J: At page 365 there may be something intended to be a paraphrase of that.

MR HALL: Yes, that:

Drivers terminating employment will have their last weeks pay held against any overcharges, unpaid cash jobs - - -

GLEESON CJ: The contract of carriage referred to on the top of 360 might be what you say is the employment contract.

MR HALL: Yes.

GLEESON CJ: We can infer from clause 9 on page 360 that you did not settle this document.

MR HALL: No, your Honour, nor my junior.

GLEESON CJ: No.

MR HALL: It looks as though it was never run past, I would suggest, an accountant or a lawyer.

GUMMOW J: Or a person who could write English. Look at page 361, line 19:

The cost of repair.....will be born by the courier - - -

MR HALL: Yes. It is because of the wording of these documents and the burdens it imposes on the couriers that I used the word earlier "servitude". It is a somewhat extraordinary document.

GLEESON CJ: Maybe some of the people who work as couriers are people of an independent character.

MR HALL: Well, that would be - - -

GLEESON CJ: They do not look a very servile bunch to me, as I see them driving around the city of Sydney.

HAYNE J: Well, used to wearing a uniform, too.

CALLINAN J: Mr Hall, on page 366, there is a reference in paragraph 7 to "casties", "All couriers must pay in all casties", what are they?

MR HALL: I assume that is where they make a delivery and receive money to be taken back to Vabu.

CALLINAN J: In other words, they might be couriering cheques, is that what is implied by that?

MR HALL: Your Honour, I can possibly inquire.

KIRBY J: What is a "fun run", paragraph 9?

CALLINAN J: "Fun run" at paragraph 5 is defined, I think.

HAYNE J: The sort of fun you have when an argument goes up a dead end.

GLEESON CJ: Now, could you just state, in a summary form, the proposition that you are putting?

MR HALL: Yes, your Honour. I have set it out. If your Honour goes to the document headed "Applicants Reply to the Respondent's Written Submissions", we set them out in paragraphs A and B. In considering proposition A, one needs, perhaps, to look at what was said by Justice Mason in Stevens v Brodribb. At page 28 point 2 he said this:

Thus, it is said that once a person is found to be part of an organization - - -

McHUGH J: Sorry, what are you citing this for?

MR HALL: This is from - - -

McHUGH J: No, what are you citing it for, what proposition?

MR HALL: Because it, perhaps, raises a concern that should be addressed in relation to the proposition I have set forth, your Honour. His Honour said - - -

McHUGH J: What page, Mr Hall?

MR HALL: Page 28 point 2, your Honour.

McHUGH J: Yes.

GAUDRON J: Well, at page 29 there may be something that you can - - -

MR HALL: I am sorry, page?

GAUDRON J: Page 29, although that is not on vicarious liability. I am talking about the "extra-hazardous acts". It may be arguable that there was some extra-hazardous activity associated with these night riders.

MR HALL: Yes, well, that is a slightly different point, your Honour.

GAUDRON J: Yes.

MR HALL: But his Honour Justice Mason, as he then was, was saying that if one looks at it in terms of organisation, if one reads on down the page, that he felt that just relying on organisation alone - - -

GAUDRON J: His Honour does talk about imputing things and wrongs.

MR HALL: But coming back, your Honour, to the proposition I formulated under the heading A in our reply, we say that is how we would state the principle which would encompass the imposition of vicarious liability on Vabu in this case. Then, proposition B is how we would encompass the imposition of a direct duty of care lying on Vabu.

GUMMOW J: What is the content of this duty? It strikes me that is the problem with Mr Justice Davies' judgment in the Court of Appeal, he does not give content to the duty. He says it was breached. What was the content of it? You say, it seems to be, in one of your grounds, to ensure something.

MR HALL: In this particular case it is to ensure that its couriers deliver their products lawfully.

KIRBY J: But I have a problem with that because how could they ensure that a courier did not bump into somebody just accidentally in the nature of that work.

MR HALL: An accidental bump would not be tortious. It is a pure accident.

McHUGH J: You are getting away from your microphone. Your argument will not be recorded.

KIRBY J: The incident that happened here, at least as I understand it, perhaps I have not understood it, is a bump and a "sorry mate" and a disappearance.

MR HALL: Yes.

KIRBY J: Now, how, if you had vicarious liability, do you say that would be enough?

MR HALL: Here the courier who ran Mr Hollis down was riding on the footpath unlawfully and there is a finding that he was riding unlawfully on the footpath, so that he was riding unlawfully and he was not taking due care and, therefore, under the ordinary principles of negligence, the courier who struck him was negligent and we say Vabu is vicariously negligent because what he was doing was riding on Vabu's business, not his. Within the terms of the principle I have set out under subparagraph (a) in our reply he was injured whilst carrying out a business activity on behalf of Vabu.

GLEESON CJ: Anybody who drives a car negligently is driving unlawfully, is he not?

MR HALL: Yes.

GLEESON CJ: Does the law that makes it an offence to drive a car negligently also make it an offence to ride a bicycle negligently.

MR HALL: He can be charged with that offence, your Honour. The road traffic laws apply, I think, to any conveyance. You can be charged with riding a horse negligently.

GLEESON CJ: Good, but - - -

MR HALL: The cases are rare, your Honour, but there are certainly cases where persons are charged, for example, with being intoxicated whilst in the conduct of either a horse or a horse drawn vehicle.

GLEESON CJ: Right. But, assuming what you say is right, and I see no reason to doubt it, then the mere fact that one of these cyclists was engaged in negligent cycling would involve unlawfulness.

MR HALL: Yes, it could.

GLEESON CJ: So, what does the unlawfulness add to the proposition that there was negligence in the conduct of the rider of the bicycle?

MR HALL: It does not add anything. It is a particular, so to speak, or a factor going to decide whether the conduct of the rider in this case was negligent.

KIRBY J: Is there a regulation now that prohibits riding bicycles on footpaths?

MR HALL: Yes, your Honour, it was found as a - the provision that is referred to - - -

GAUDRON J: There has been one for all of this century.

MR HALL: I beg your pardon? Yes, it has been the law for a long time.

KIRBY J: Is that right? An awful lot of children of my generation were breaking the law then.

MR HALL: If your Honours go to page 460, it is the General Traffic Regulations 1916.

GLEESON CJ: But would your argument be any different if this collision occurred, not on the footpath but on the roadway?

MR HALL: No.

GLEESON CJ: So, the fact that there was - - -

MR HALL: Provided, of course, the rider was not keeping a proper look out. In other words, it is not dependent on unlawfulness, it is dependent on negligence.

GLEESON CJ: Exactly.

MR HALL: And we impose vicarious liability on the principal because the conduct occurred in the course of the principal's business activity. Your Honours, policy reasons justifying that are neatly summarised at page 283 of that extract from the Dominion Law Reports I handed up to your Honours earlier today.

KIRBY J: I see that Professor Fleming, on 282 says that:

the modern doctrine of vicarious liability cannot parade as a deduction from legalistic premises, but should be frankly recognised as having its basis in a combination of policy considerations.

MR HALL: Yes. He refers to the:

Most important of these is the belief that a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise -

and then gets back to the - - -

CALLINAN J: You have not given me a copy of this; I cannot find it.

MR HALL: I do not know how that occurred, your Honour. I came down here with enough copies for everybody, and everyone behind me is looking very - can I hand up - - -

CALLINAN J: Do not worry about it now, just make sure I get one after lunch, thank you.

MR HALL: If I can hand up to your Honour the report. It is open at the relevant page, your Honour. Your Honour will see 282 point 5, it starts. There is a passage from Fleming above it that your Honour might care to read also.

HAYNE J: That may tell us why to impose vicarious liability; does it tell us when to?

MR HALL: No, your Honour, those lines just summarise the policy reasons justifying it. His Honour actually disavowed an intention to deal with what should follow at 281H, your Honour. If your Honour goes over to 283 then, Justice La Forest does start to advance a view, again, only as to the desirability of the policy.

KIRBY J: But what is the correct principle for the Court to apply? Until now, the principle of vicarious liability has been thought to apply to employment, and you are now urging expansion to a different ambit - - -

MR HALL: I am, your Honour.

KIRBY J: You can suggest, well, relevant to that is that social conditions have changed and, in part, they have changed for income tax minimisation reasons and employment relationship and part-time employment and other reasons, but I just see a difficulty in finding a new stable principle that would permit a case such as your client really, has to wear the uniform and has to do all these other things, to be captured, but to exclude the big truck driver who is also a courier, who has got a business of his own, or the franchiser who is running the McDonald's franchise. Now, you cannot just tell us, well just give it to our client, because that is not how we can approach the matter; we have got to look for a principle.

MR HALL: I am not doing that, but as we defined the principle in that paragraph A, one looks to the business activity, and one would then ask, whose business is it when the tort occurred? Did it occur during the conduct of the tortfeasor's own business or did it occur when it can be fairly said he was carrying out the business of a person to whom you seek to attach vicarious liability?

KIRBY J: But that depends a bit on the eye of the beholder. Justice Meagher, by inference, held he was carrying out his own little business - it is not a big business, it is not a very glamorous business, but it is a tiny little business, but it is his, and he is in a different tax situation, and apparently this Court refused special leave from that decision.

MR HALL: When Mr Justice Meagher - - -

KIRBY J: You have to go back to the - you make it very difficult for the transcript if - - -

MR HALL: When Mr Justice Meagher decided Vabu on the tax point, he did not have before him the evidence that is now before this Court, and the case is factually different, and the point we are propounding is that one has to look at the circumstances in which the person was engaged when the tort was committed. It will have the untidiness that one has to look at the facts in the instant situation, but it will have the coherence that if one decides that when the tort was committed, the tortfeasor was, in reality, carrying out the business of the principal, then vicarious liability will attach to the principal.

GLEESON CJ: There is a recent decision of this Court you might like to look at over the luncheon adjournment, Mr Hall, on the question of whether or not some employees of a pharmacy who were carrying out an agency business on the part of a bank were engaged in the business of the bank. It was a case about an industrial question. The decision was delivered fairly recently - I cannot think of its name at the moment - PP Consultants.

MR HALL: I am sorry, PP Consultants.

GLEESON CJ: PP Consultants. It illustrates the fact that there can be relevantly two businesses in a situation like this. There can be the business of the bank and the business of somebody who was being an agent for the bank, and in that case, as I recollect it, the person who was being the agent for the bank wore the bank's livery. Anyway, just have a look at it over the adjournment and see whether there is anything you want to - - -

MR HALL: I certainly will. Your Honour, can I just make one point before the Court rises? In relation to trucks, if someone is driving any sort of a truck, the vehicle is registered and readily identified. If one is operating from a business, the business is readily identified. In the case of couriers, wearing sunglasses, helmets and livery, and no means of identification, if they get up and ride away, the chance of identifying the tortfeasor is gone, and that is what happened in this case.

GLEESON CJ: Mr Hall, how long do you think you will need to complete your submissions?

MR HALL: Well, your Honour, I am content with what I have written. If your Honours have read what I have written - - -

GLEESON CJ: We have.

MR HALL: Well, I would think I could finish within half an hour, if that is of assistance to your Honours.

GLEESON CJ: That is of assistance, thank you. We will adjourn now and we will resume at 2.00 pm.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.00 PM:

GLEESON CJ: Yes, Mr Hall.

MR HALL: Your Honours, during the morning Justice Hayne asked me what was the content of the duty of care which we alleged would be owed and we would say that the content of the duty would be the ordinary duty of care, as defined in Donoghue v Stevenson.

GAUDRON J: Now, you are talking about an independent duty here rather than the vicarious one that you seek?

MR HALL: No, the vicarious duty.

GUMMOW J: That is what I asked you about. I was asking you about the duty of care that Mr Justice Davies found, which was a duty of care owed by Vabu.

MR HALL: Directly?

GUMMOW J: Yes.

MR HALL: Non-delegable. Can I come to that in a moment, your Honour?

GUMMOW J: Before it becomes non-delegable it has to exist.

MR HALL: All right. I will come to that just in one moment. Your Honour, in relation to the question - I put to your Honour that in considering vicarious liability, the question should be asked in whose business the parties were engaged. That question was applied in a rather old Irish case called Lane v Shire Roofing Company which is referred to in footnote 14 of our reply, your Honour. I have a digest of that case. Can I hand a copy of the digest up, your Honour? It is also referred to somewhat in the US case of United States v Silk, which is referred to in footnote 15, which is, I think, summarised in the footnote.

Your Honour, over the lunch hour I have given consideration to the judgment of the Court in PP Consultants v Finance Sector. Your Honour, that really related to a different question of business but in the context of this case we would say that there is no relevant distinction between the business Vabu was carrying on and the business that the courier was engaged on when he struck the plaintiff.

In that case your Honour might remember the decision of the Court turned on the fact that the banking agency was not performing all of the content of the bank and therefore you drew a distinction. The case was whether the industrial award which applied to bank employees could be said to apply to the employees who were doing the part of the business which the banking agency took over. Now, in relation to this case if one wanted to say, "All right, Vabu, in effect, divided its business into parts and gave one part to the courier who actually delivered the articles or picked them up", there would still need to be, in my submission, something to differentiate it from the overall business.

For example, some significant element of discretion in the courier as to what he did; some independent right of action or some clear demarcation which showed that that part of it was delegated clearly out to somebody as an independent subcontractual business. In our submission, in the context of this case the control was so persuasive and all embracing that Vabu imposed on its couriers that they effectively remained its servants and where, for example, we would say that the agreement in this case was designed to give the appearance of an independent contract but there was, in reality, no independence there at all

Now, if I can come to the question of duty owed directly by Vabu. I have referred to that very briefly in paragraph 19 of our reply. We would raise the duty there primarily on the vulnerability of pedestrians to injury. Now, that is a concept that was referred to by the Court in Burnie Port Authority 179 CLR 551, is the passage I have in mind. Your Honours, the joint judgment in that case said:

Viewed from the perspective of the person to whom the duty is owed, the relationship of proximity giving rise to the non-delegable duty of care in such cases is marked by special dependence or vulnerability -

And we would submit it is vulnerability in this particular case, and the vulnerability to injury, and there is evidence in this case, of course, that Vabu had knowledge of poor compliance with the traffic by-laws that at least some couriers - and Mr Justice Davies found at 488 point 35 that Vabu:

played an active part in creating the risk.

KIRBY J: Is it vulnerability to injury or vulnerability to injure others?

MR HALL: The duty is owed directly to the pedestrian who was injured, that is Mr Hollis, because of the vulnerability of pedestrians to injury if couriers ride disobeying the traffic laws. We would adopt, with respect, the reasoning of Mr Justice Davies, particularly his reasoning at page 488, your Honour. Mr Justice Davies founded his finding on a review of the facts between 473 to 476.

KIRBY J: Can I just ask in relation to the policy of insurance, did that simply indemnify Vabu against liability or did it purport to indemnify the couriers of Vabu?

MR HALL: Vabu and its couriers, your Honour. The policy is set out in the appeal papers at volume 2 at page 261.

KIRBY J: The couriers had a deduction, did they not, taken off their payment?

MR HALL: Yes, the couriers actually paid; the cost of the policy was deducted from the couriers' income. Then if your Honour turns to 266 the insured is Vabu, and some various names that are irrelevant, trading as:

Crisis Couriers including subcontractors in respect of work done on behalf of Crisis Couriers.

KIRBY J: Thank you, I am sorry to have interrupted you.

MR HALL: Your Honours, coming back to where I was, Mr Justice Davies reviewed in his judgment evidence in relation to awareness of the risk and foreseeability between pages 473 and 476 and at 476, line 30, he drew conclusions from that evidence:

bicycle couriers were recognised to be a problem, that many of them travelled fast, broke road rules, rode through red lights, rode on footpaths and so on, and that this conduct was related to the task that had to be performed.

Well, then, your Honour, perhaps I should draw your attention, however, to the contrary view of that evidence, which was taken by Mr Justice Sheller at page 470. If your Honours go to 470.10 and, in effect, he said that Vabu was entitled to say, "Well, look, we hire cyclists to ride bikes and there is nothing inherently dangerous in riding a bike on a street". But, as I have said, we would adopt the view reached by his Honour Mr Justice Davies. Now, your Honour, we rely on the written submissions we have filed and unless there is anything else - - -

GAUDRON J: Well, Mr Justice Davies really did not identify the content of that duty that he found, which is what Justice Gummow was asking you before. What do you say it was?

MR HALL: The content of the duty was to ensure that its parcels were delivered without risk to others.

McHUGH J: That is the most extraordinary duty ever imposed on anybody, is it, apart from absolute liability? You have to get in reasonableness. You have to give it some content. The duty to prevent people from being at risk.

GAUDRON J: You see, and unless there was control over the couriers, it is hard to - and I mean actual control - formulate a direct duty by reference to what they should have told the couriers to do or not do.

MR HALL: Well, their system of work should have been such as to require the couriers to deliver the - - -

HAYNE J: That assumes they can require the courier to do something, and that is the question.

MR HALL: But, your Honour Justice Hayne, the fact that they require that to be done and the fact that an individual courier disobeys the instruction and breaks the rule and causes injury, does not mean that the duty is not correct as formulated. It just means that when the courier rides negligently and injures somebody there is a tortious conduct for which they are directly liable, because the duty of care breached is their duty.

CALLINAN J: Mr Hall, just before you sit down, could you tell me, please, what application, if any, the two documents at pages 361 to 367 have to cyclist couriers as opposed to driver couriers?

MR HALL: Well, your Honour - - -

CALLINAN J: Looking at them quickly, Mr Hall, it just seemed to me that the only possible one that could refer to a cyclist is the note at page 363, but I may have missed something. Otherwise they seem to me to be referable to drivers as opposed to cyclists.

MR HALL: Well, I think that is a point fairly made, your Honour. However, when the couriers were engaged - - -

CALLINAN J: I know, at page 196 they were given copies of them. But nonetheless, if they were not relevant to them it would not matter, would it?

MR HALL: Well, the relevance in the context of the case that I am submitting, your Honour, is, for example, the indication at the top of 361 is repeated in the other document, that they are direct representatives of the company. In other words, it was certainly being held out to them that not only were they to wear the livery of the company, but they were also directly representative of the company.

CALLINAN J: I understand that, Mr Hall, it is just that in terms, the latter two documents, as opposed to the first, seem to be referring to drivers except for the note to which I drew your attention.

MR HALL: Yes, I think that is a concession I would make, your Honour, and, of course, the forms are somewhat inconsistent, as we already indicated, when they refer to employment, when they are trying to create an independent contract and when they refer to annual leave when, in point of fact, there is none given so that one cannot use them literally.

GLEESON CJ: Yes, thank you, Mr Hall.

MR HALL: As your Honour pleases.

GLEESON CJ: Yes, Mr Jackson.

MR JACKSON: Your Honours, may I deal first with a number of factual matters? The first concerns a question your Honour the Chief Justice asked my learned friend concerning the position of the contractor's ability to select the contractor's holidays and so on. That aspect, your Honours, whilst not dealt with fully in the material is dealt with to some extent in volume 1 in passages that appear between pages 198 and 202. May I indicate, your Honours, what those passages are? First of all, page 198, and the passage goes from the top of the page to about line 21 and what it demonstrates is that:

each driver would call on in the morning acknowledge that he is ready for work at 8 am and the earlier you call the earlier you get a start and it goes in a pecking order.

In effect, the radio operator distributed the work in accordance with that order. Your Honour, that is the introductory theme. If one goes then to page 199, between lines 14 to 22 which are to the same effect and then, more directly relevant is page 200 commencing about line 25, Mr Harris was asked:

Can I ask you this what sort of contacts at all did you personally have as at 1994 with your bicycle riders once they'd been engaged?

A. I travelled to the city from North Sydney usually every Wednesday afternoon and I issue them with their paysheets, commission sheets of what work they've done for the previous week and they notify me if they are having holidays things like that we discuss what's happening.

KIRBY J: Pay sheets are themselves a bit strange, are they not, for independent contractors?

MR JACKSON: Your Honour will see a comma, which indicates a pause, when he realised that if he said that, someone would say something along the lines, I suspect, of what your Honour said, with respect.

KIRBY J: The court reporter was aware of this, was he, with the comma?

MR JACKSON: No, your Honour, it probably reflects.....in their pay sheets, commission sheets or something like that, all part of the hurly-burly of the trial, your Honour. A little further down the page at about line 43 your Honour will see that he was asked:

Did you make any inquiries yourself to try to ascertain the identity of this person?

A. Yes, I went to the radio controller to try and find out if there was anyone that went home injured or whatever particularly that particular afternoon I think that was the next day after I received the call that they'd been an altercation in Ultimo. No-one had gone home- -

Indicating, your Honours, not directly, of course, but indicating the possibility that people might take themselves off. That that is so appears also at page 201 in the question and answer commencing line 4 and going through to line 11. Finally, in this regard, at page 202 at about line 23 the question and answer referring to the situation when employment came to an end:

Right, that was done when they said when they left the company, terminated their contract, they would leave and return everything -

and so on. Now, your Honours, that is what seems to us to be the evidence on the point your Honour asked about. The second matter is this. In relation to the training of the persons who were the bicycle couriers, your Honours were referred to page 107 in volume 1 and it really occupies, I think, the whole of the page and at the bottom of the page the last question and answer deal with the part, I think, to which the Court had not before been specifically referred.

May I mention, whilst your Honours are at that page, that at the top of the next page your Honours will see in the passage that goes down to about line 9 that he said:

two thirds, three quarters of the pushbike fleet would probably have one or more bicycles.

He seems to be indicating, although it is a little equivocal, that many of them had in fact more than one bicycle. Now, your Honours, bicycles are not necessarily cheap items and the prices of them can vary dramatically, depending on the particular predilection of the person who wants to acquire one.

GLEESON CJ: Did you get paid more if you owned your own bicycle?

MR JACKSON: You had to own your bicycle.

GLEESON CJ: You had to own them.

MR JACKSON: Yes, you had to provide your own bicycle. We provided the clothing and the radio. That is at page 108 I think, also, your Honour. Yes, I am sorry, at the very top of the page is the fact they had to provide their own transport.

Now, one other aspect was in relation to the position of the riders and could I take your Honours in that regard to volume 2 at page 297. Your Honours will see there - this is part of the discussion from which Justice Davies drew so much, in our submission, incorrectly, that took place before the committee of the New South Wales Parliament. At the bottom of the page between about line 42 to line 52 there was a discussion of where, in effect, some of the riders come from and - - -

KIRBY J: I am sorry, which page was that?

MR JACKSON: I am sorry, page 297 in volume 2. Now, if I can just identify the persons who were involved. Ms Robertson was - and their identities appear at page 280 - she was the Chief Executive Officer of the Courier and Taxi Truck Association. Ms Kinsella was the manager of a courier group, Red Tag Couriers. Mr Small was one of the parliamentarians and Mr Pearce was one of our company's officers. You will see that Ms Robertson said:

Many of them have cycled in Europe or Canada so they are fit.

They belong to bicycle clubs and combine the keeping fit aspect with earning money to live.

Then Mr Pearce said in relation to a backpacker question:

There are people who come in which working visas, and they do get the opportunities. The same thing happens when young Australians....it is reciprocal.

Now, your Honours, those are the factual aspects to which I wish to refer at this point. Your Honours, may I move then to some of the aspects involved in relation to the course which, in the end, the Court is being urged to take by our learned friends' arguments.

The first aspect with which I wish to deal, if I may, is whether there is a very good starting point for change in relation to the position of independent contractors provided for by analogy with the employer/employee position. Your Honours, in that regard, as a general proposition, of course, an employer is liable for any tort, be it a negligent tort or an intentional tort, committed by an employee whilst acting in the course of employment.

Your Honours, I said "as a general proposition" because there are some qualifications to that, and may I come to those in just a moment. But, your Honours, the general principle, its status is, of course, as a rule of law, and it sometimes actually, but often, in fact, does not, reflect reality. Could I, in that regard, make some observations with a view to the thesis that I was seeking to advance, that it does not provide a very good starting point by way of analogy? Your Honours, sometimes it will be correct - - -

McHUGH J: I am sorry, Mr Jackson, what does not provide a very good starting point by - - -

MR JACKSON: Your Honour, what I am seeking to deal with is the argument, really, underlying, in a sense, our learned friends' argument, that this is no different, so far as any relevant liability is concerned, from the situation obtaining as between employer and employee. To put it another way, if the courier had been an employee of ours, we would be liable. The situation, so far as anyone else is concerned, including the injured person, should be no different, therefore, the analogy should be drawn, the liability of the employer should extend.

McHUGH J: Yes, I understand.

MR JACKSON: Your Honours, what I was going to say was this, that sometimes it will be correct to say that an employer has authorised the servant's conduct which constitutes the tort. Not infrequently, however, that will not be the case. Indeed, the employer may not have turned its mind to the issue at all or, indeed, may have forbidden the conduct which amounts to the tort. So that, your Honours, the question of actual authorisation is not an all embracing test.

If one looks again at employer and employee, at that situation, and inquires whether the underlying rationale of it is actual control - I will come to the ability to control in a moment - but if one considers it from the point of view of actual control, control in fact, that is not the test which can be applied across the board in circumstances of employer and employee. The employer and employee may well be separated by considerable distance - the type of commercial traveller and sales people are a common example - but in other cases the employee may have the skills but the employer not and also, your Honours, the employer may be prohibited by law from giving directions, in the case, for example, of some specialist, for example, electricians, or something like that.

Your Honours, again, the employee may be a professional person who really cannot be directed as to their manner of performance of the task. If one took, for example, the case of an employed barrister or solicitor, it would be extraordinary if the employer could be regarded as having the ability to say to the solicitor, "Your opinion, even though you do not hold it, is to be this". Similarly, your Honours, if one took the case - - -

McHUGH J: But even an employee in those circumstances would not be liable, would he, because of the independent function rule? He or she would be in New South Wales now because they have abolished that. But, for example, there is no vicarious liability for the act of a policeman, for the act of the master of the ship, and if somebody has an independent discretion under the law, there is no vicarious liability.

MR JACKSON: Can I just say that is one of the things I am seeking to say, in effect, that in some circumstances if one says there is to be vicarious liability in consequence of employment, then there will be circumstances in which if one says the reason for that is control, then there would have to be exceptions to the control rule.

GLEESON CJ: You do not have to look further than in an incorporated legal practice, do you?

MR JACKSON: No, your Honour.

GLEESON CJ: A corporation can now carry on a legal practice and employ a lawyer.

MR JACKSON: Yes. Well, your Honour, in respect of other professions, that was not possible at some stages, as well.

KIRBY J: It is many years since I looked at this, but I thought the actual control had been thrown out in favour of the right, excepting cases of licence people, and so on.

MR JACKSON: I was just dealing with actual control for the moment. I was going to move then to the next thing, which really was the question of capacity to control. The point I am seeking to make is that if one is trying to draw something over from the employer/employee situation, it itself has a number of - not defects - attributes that make it inappropriate. In relation to the capacity to control aspect, your Honours, sometimes the employer will not have the capacity as a pure matter of fact to control the activity of the employee for reasons, whether it be for reasons of distance, sometimes by reason of questions of law, sometimes by reason of pure questions of knowledge.

Your Honours, that is why in the end, in our submission, it is really perhaps right to treat the employer/employee situation one where there is undoubtedly a liability in the employer for the torts of the employee as one which simply represents a rule of law. What I mean by that is that that is what the law has decided should be, as a matter of policy, the position as to liability.

Your Honours, perhaps it can be justified in one sense by - as I think Salmond says - the presumption that the servant's acts are authorised or the employee's acts are authorised or by saying that the tort is the result of some assumed want of care on the part of the employer in selecting competent servants or in the superintendence and control of them.

But, in the end, your Honours, whatever be the reasons that have led to it, the position, in our submission, is that it exists as a rule of law which represents the policy of the law that the employer should be liable and it is difficult to find a unifying justification for it.

Your Honours, I said at the commencement of the submission I was making about this that that was the general proposition, that the employer was liable, but, of course, even in the employer/employee situation the employer is not liable for all torts of the servant. Your Honours, there may be random acts which can be regarded as being wholly unconnected with the enterprise.

Could I give your Honours simply a reference to one, Warren v Henlys Ltd (1948) 2 All ER 935, a case of an attack by a shop assistant on someone? Your Honours, one sees also the cases of some frauds. Could I give your Honours a recent reference in that regard to a decision of the House of Lords? Your Honours, the decision is Credit Lyonnais Bank Nederland v Export Credits Guarantee Department [1999] UKHL 9; (1999) 1 All ER 929. Could I give your Honours copies of that in just a moment, because I will give, together with it, reference to another Canadian case? I do not intend to go to the text of them.

Your Honours - and this is the point of the Canadian cases - another area where employers have been held possibly liable in some circumstances but not in others is in relation to sexual abuse of children and there are two decisions of the Supreme Court of Canada reported one after the other, Bazley v Curry 1999 Can LII 692 (SCC); (1999) 2 SCR 534 and Jacobi v Griffiths (1999) 2 SCR 570 which went different ways in the two cases but your Honours will see that in one of the cases it was held there was not liability for the torts of the employee.

Now, your Honours, the point I seek to make from all that - perhaps I could arrange for your Honours to be given those cases at this point - is simply that the employer/employee situation is not a very clear one, in our submission, from which to draw the analogy. Your Honours, one can identify some strands in it, of course, but in reality it is a rule which, in a sense, has been held to derive from the relationship.

Your Honours, I do not intend to take your Honours to the detail of those cases. I give your Honours them for reference and could I just say in relation to them, that Bazley v Curry, of the two Canadian decisions, is the one in which the court deals in considerable detail with the legal principles. The other decision from Canada is one in which they are sought to be applied, in which there was a difference of view about the application to the particular circumstances.

KIRBY J: Do you agree with Professor Fleming's conclusion that the extension of vicarious liability did not originally rest on some broad legal principle, but just on consideration of policy, that people in positions of employers should be responsible for the torts of their employees?

MR JACKSON: Your Honour, that is what it has become.

KIRBY J: Is there any other theory as to how the idea began? Did it begin in the field of master and servant? Did it begin in the field of principal and agent or, what is the history of it? If we go back to the history we might see the germ of the idea.

MR JACKSON: Your Honour, so far as the history of it is concerned, it depends really, in a sense, on what one - and I do not mean this in any way offensive - on the view one ultimately takes. What I mean by that, more specifically, is that one does see the expression "agent" being used, acting by an agent, of which it being, in a sense, the genus and the servant being a species of the genus - - -

McHUGH J: It is the other way around, is it not? Servants were, but agents were not, known to the early common law.

MR JACKSON: Your Honours, with respect, I know your Honour has adopted that view, that is why I prefaced my answer to what I was saying a moment ago, but our submission would be that, generally speaking, and it depends how far back one goes in history, I suppose, but so far as vicarious liability in any modern form is concerned, in the particular area, it relates to the things that are done by a servant or by, in effect, an agent. Your Honour, I do not know that I can identify back further than an early point what the situation is.

KIRBY J: If it is accepted that the focus is upon people in a relationship of servant or agent, then - and in due course you will get to this - it is not a very big step, in the case of all of the indicia that link the couriers to your client, to say that your client held out these people as its representatives.

MR JACKSON: Well, your Honour, they were our agents for some purposes, but to say "agent", to say "representative", is really to give a label to things, with respect, without considering - again, your Honours, I do not mean this in any way offensive - but it is a label that does need something more. Undoubtedly, for the purpose of carrying out the contract that we had to deliver a package from A to B, they were the persons who had to perform the contract for us - - -

McHUGH J: They were agents. In the judge's finding at 405 that they were neither employees or agents is just wrong. I mean, they were at least agents on any view of the case.

MR JACKSON: But, your Honour, it depends on the context in which one is asking the question or the purpose for which one is asking it. Now, your Honour, they engaged as between us and the person with whom we had contracted to deliver the goods, be it consignor or consignee, they were the persons whom we had engaged to perform that part of the contract and if it be that the goods were lost or damaged on the way, we could not say, "Well, they were lost or damaged" and were not responsible for it.

McHUGH J: But supposing when the courier delivered the goods, he made a defamatory statement about somebody in the course of delivering those goods. The CML Case, would suggest that your client could be liable for the couriers defamatory remarks, would it not?

MR JACKSON: Well, with respect, your Honour, no, because if one looks at the CML Case, what, ultimately, in our submission, was the basis upon which the case was decided was the fact that to make representations of the kind in question was something that was within the apparent authority of the agent even though he had been forbidden. Now, your Honours, in the ordinary course of events, the common description of the types of things for which the employer would be vicariously liable would be those falling within the employment or those sufficiently connected with the employment, that one cannot, at some point, draw the line and say it is the other side of that. I have forgotten the exact method of describing it. So, one could say that what was being done was within that. Now, it is unlikely, your Honours, that one could say the same in relation to a courier, in the courier's defamation of someone.

McHUGH J: The courier might have authority to make some statements.

MR JACKSON: Yes.

GLEESON CJ: He might have authority to make representations about how quickly a parcel would be delivered.

MR JACKSON: Yes, your Honour. Your Honour, undoubtedly, there is some authority given by the fact that there is a person engaged to perform the contract. But one does then come to the other aspect of it - I am sorry, when I say "the other aspect of it", I mean the fact that there is not only one strand of legal authority with which one is dealing. There is also the other strand which is the position in relation to independent contractors. Your Honours, that is a point I will come back to in a moment - - -

McHUGH J: I suppose you will never accept this, but may not the distinction be between the person who carries on an independent function in the sense that that person is conducting his or her own business and the person who is a representative and carries out another person's business?

MR JACKSON: Well, your Honour, in that case there would really be no basis for any independent contractor situation at all because - - -

McHUGH J: No, I mean, if somebody rings up Brambles to deliver a parcel, that is one thing, they have their own business, but your client employs these persons in its business. They do not conduct a business separate from yours in which they are open to deliver parcels for Brambles or Crisis Couriers or Mayne Nickless.

MR JACKSON: What your Honour has put to me contains, if I may say so with respect, some facts and some conclusions. The conclusion aspect of it really covers what your Honour has put in a way, because the situation is, of course we carry on a business, of course in one sense they are engaged in our business. But to say that is really to say no more than persons who carry on business may perform aspects of it by (a) employees, or (b) contractors, or both, or do it themselves. That is the first thing.

If one is going to then say whenever it happens that someone engages someone else to perform part of their business and perhaps work for no one else while doing it, that they are then to be treated as servants, even though they, in a sense, carry on business on their own behalf, then, in our submission, that would just simply take away - - -

McHUGH J: But from the point of view both of legal policy and the effects on third parties, why should the law draw any distinction between a business conducted on the lines that your client's business is, and one conducted on more traditional lines, say, Kwikasair employees, in the same outfit of a company? Now, for taxation and other purposes, are there advantages from your way of organising your business? But for the purpose of the law of vicarious liability, should there be any difference?

MR JACKSON: Well, your Honour, the point I was seeking to make earlier in relation to employer and employee was that it is difficult to find a form of logic, for example, that would justify the imposition of liability on the employer in all the circumstances in which it is - - -

McHUGH J: Well, perhaps not if you adopt what Justice Littledale said in Laugher v Pointer, that liability is imposed because the servant represents the master. The old law was that you acted in accordance with the command of the master; well, that was a fiction, at least certainly as the law developed, and Justice Dixon goes back to this idea of representation in CML, that is the distinguishing feature for his Honour in that case.

MR JACKSON: Your Honour, he does it in a context where he said something that would really support our side, of course, of the argument. The difficulty, with respect, your Honour, is that one can understand the notion of representation, if one is saying that what is being done - I am sorry, your Honours, may I start that again? It depends in a sense what one means by representation, because it is a word that has got a number of possible applications.

Your Honours, it is undoubtedly true that as much as the employee, the independent contractor, in some circumstances and for some purposes, does represent the person engaging them, because they do, so far as the third party is concerned, the thing that the principal has been engaged to do. But, your Honour, they do not really, with respect, in any other sense represent them. They may advertise them, all sorts of things of that kind, but they do not, otherwise than for the performance of the contractual obligation, represent them. Whereas, the employee is in a position where the employee, because of the contract of employment, has no independence relevantly from the person who is the employer.

HAYNE J: There are three features to which reference might be made in relation to these couriers: capacity to direct enforceable by ceasing to deal as to the future; second, a consideration of business, or perhaps if we are to talk in more general terms, unit of commercial organisation; and, three, at least in the sense of representation by holding out the livery point. Now, they are three features which can be found in some, not all, orthodox employment relationships. The question is, does finding them here suffice?

MR JACKSON: Your Honour, if I could perhaps start from the third of those, in a sense, it is a very common thing for persons not employees to wear the livery or logo of particular persons and that that has been so, really, leaving aside the fact that it has become much more common with footballers, cricketers and all sorts of things doing it, and they are unlikely to be employees of the particular persons who - - -

HAYNE J: Not of all the persons they display in the case of footballers.

MR JACKSON: Your Honour, I was speaking generally, if I may.

GAUDRON J: We are not talking about brand t-shirts here, are we?

MR JACKSON: No.

HAYNE J: We are talking of the people with whom the contracting party has dealt. They have rung Crisis Couriers and somebody wearing a Crisis Couriers' t-shirt does something.

GAUDRON J: Which has been supplied by Crisis Couriers.

MR JACKSON: The outfit, your Honour. Yes.

GAUDRON J: At a charge?

MR JACKSON: Not separately. I do not think so, your Honour, no. That was supplied. So too was the radio equipment. It had to be returned and I think in one of the passages to which I referred your Honours about page 202 if it was not returned at the end of the employment they were charged for it or for the cleaning of it.

CALLINAN J: Mr Jackson, can I just ask you to clarify one factual matter for me, please? I think we were told that the insurance that was effected by your client was effected in respect of the couriers.

MR JACKSON: Subcontractors, yes.

CALLINAN J: Yes, well that would appear to follow from the definition of the risk at 261 because it is defined as the risk of liability for "Damage caused by an Occurrence in connection with the Insured's Business".

MR JACKSON: Yes.

CALLINAN J: Now, what was the insurance for that the money was taken out of the payments that were due to the couriers.

MR JACKSON: Your Honour, at page 266 there is an insurer lapse advice in respect of the period of insurance 30 June 1994 to 30 June 1995, which would cover the period of the accident, and you will see the insured is described as various companies, including subcontractors in respect of work done on behalf of Crisis Couriers.

CALLINAN J: I see. Thank you, because I think that is an extension of the definition of "insured" in the document before the amendment.

MR JACKSON: Yes.

CALLINAN J: Thank you.

GUMMOW J: Now, Mr Jackson, have you finished all you wanted to say in response to the three points Justices Hayne and Gaudron were pursuing?

MR JACKSON: No, I had not, your Honour, I do not think.

GAUDRON J: Every unit of organisation and control, practical control.

MR JACKSON: Yes.

HAYNE J: Enforceable.

MR JACKSON: Your Honours, could I say in relation to that that first of all there is, in our submission, as much as there is in relation to employer and employees, an established set of rules in relation to the position of independent contractors and that involves the position that a person can have performed work that the person is doing for others, have it performed by employees or by independent contractors, and the different consequences are likely to flow.

Now, your Honours, if one goes then to say there should be, perhaps is, some different rule, then, in our submission, it is difficult, with respect, to see what the basis for the adoption of one rule rather than the other is and the mere - if one says there is control, it becomes a question of identifying control, first of all, in respect of what.

Your Honours, one sees in cases of this kind that whilst there may be the ability to say you will have this job or you will have that job, when it comes to the conduct which has given rise to the tort it is impossible, in our submission, for there to be a type of control that would satisfy whatever one might posit as the test because one is not talking about a case where the employer is going to sit, for example, in the case of a van, beside the driver and say, "Drive this way, drive that", sit on the back of a motorbike or bicycle and say - - -

HAYNE J: I understand the difficulty of enforcement though I note with interest the bumper sticker that reads, "Telstra Values Safe Driving - Call 1800" something or other, as a means of enforcing it in respect of motor cars and employees, but why should difficulty of enforcement answer the problem presented by capacity to direct, plus "I will enforce that by saying, `If you breach it, once, twice, thrice, I will not henceforth deal with you at all, you are sacked'" .

MR JACKSON: Your Honour, it is perfectly possible, your Honour, to have a situation where the deterrent aspect that I suspect lies behind what your Honour is putting to me, is achieved without there being, at the same time, the imposition on the principle of a personal liability for what is done by the contractor. Your Honour, it becomes a question whether the need to effect some type of deterrence is one that itself needs to be supported by the imposition of that duty and, your Honours, it may well be a desirable thing in a particular case if one took the case of a vehicle to have a bumper sticker of that kind. It may be, of course, that some persons, who are independent contractors, would object violently to having something of that kind on the back of their vehicle and say, "Well, look, you cannot do that to us".

KIRBY J: But if you look at the degree of control, if you will take that as a sort of test, the degree of control that you exerted over the couriers in this case was far greater, for example, than over the doctors in the hospital that Lord Denning had to deal with 30 years ago, 40 years ago, is it not? I mean, the reality is you give these instructions, you put them in your livery, you sack them, and in certain circumstances they cannot refuse to take your work, now, that is a much greater degree of control than those doctors. They were the princes of the grand rounds.

MR JACKSON: Well, your Honour, can I say two things in relation to that? The first is that our relationship is not significantly different from that that obtained many years ago in relation to the Readymix Concrete Trucks and Drivers that are the subject of the decision of Justice MacKenna in the United Kingdom that was - - -

McHUGH J: 1967.

MR JACKSON: Yes, your Honour. It was followed by - many, many years ago, your Honour. That was followed by the Court of Appeal in the first of the Vabu cases, the one that special leave was refused in. Your Honours, that has been the position in relation to, for example, concrete trucks, for years, and there was a case which followed that in the Industrial Court in Queensland a few years later. I cannot give your Honours a reference to it, but it occurred.

Now, your Honours, the other thing about it of course is that if one is speaking about control it is control in relation to what, in a sense. Now, undoubtedly, and this would frequently be the case in relation to independent contractors, in many of the, say, delivery areas the jobs to be done are identified by the person who is the principal which involves, of course, what has to be taken and where they have to be and by when they have to be somewhere. The price of them will be fixed by the principal, as between the principal and the other person. The person who is the contractor frequently will not have any choice but to engage in that.

But, your Honours, when it comes to the important question for present purposes, in relation to the carrying out of the job, is there control? Well, there is nothing to suggest in this case that the principal was able to say or did say to the people, "Go one way up this street" or "Go the other way down that street. You must follow this route" or anything of that kind. There was nothing to say - - -

KIRBY J: But who does that nowadays? This is the distant past. Workers, undoubted indisputable servants work in the computing industry and there is no way their boss is going to go round and tell them every little bit and how they do their job. That does not happen, now. Work has changed.

MR JACKSON: But, your Honour, one is talking in the context of circumstances where the issue does not concern the performance of the task which the principal has been engaged in, which is the delivery, but to something happening in the course of an activity engaged in by the - we would call it - the person we would call the contractor and in relation to the manner of performing the obligation that the contractor has undertaken to us. How the contractor does it, apart from keeping in contact with us and wearing the logo, is a matter for the contractor. So, your Honour, we do not exercise or claim to exercise control in respect of that critical aspect of it.

Could I, in relation to the position of independent contractors, take your Honours to a number of passages, or perhaps give your Honours the reference to them a little more quickly. What we would submit is that the general position can be seen in, for example, Stevens v Brodribb Pty Limited [1986] HCA 1; (1986) 160 CLR 16. If I could just go to page 30 of that, first of all. The first thing I wanted to advert to, your Honours, was at the top of the page, the passage where the attempt to make the principal:

liable for the negligence of an independent contractor on the basis that the activities he was engaged to perform were extra-hazardous.

So the liability which otherwise would not apply - would exist, was rejected. Your Honours will see the reference to Torette House v Berkman then at the end of the paragraph:

For these reasons, the doctrine, in my opinion, has no place in Australian law.

At page 47, your Honours will see that Justice Brennan agreed with that. Then, your Honours will see also, at the bottom of page 40, he said:

as was pointed out by Jordan C.J. in Torette House Pty. Ltd. v. Berkman (88), none of those cases supports a proposition of such width -

the extra hazardous activity -

Those principles were expounded by Jordan C.J. -

referring to the ordinary principles regarding vicarious liability. Could I go particularly, your Honour, to the second passage, which was adopted by Justice Sheller in the present case:

But there is no general rule that if a person employs an independent contractor to do an inherently lawful act, he incurs liability for injury to others occasioned by the methods incidentally employed by the contractor in the course of its performance (these not being methods necessarily involved in the doing of the act and necessarily injurious), by reason only of -

and your Honours will see the remainder of it. If I could just take your Honours to Justice Sheller's reasons for a moment, in volume 3, at page 461, in paragraph 20 of the reasons, about halfway through, about line 31, his Honour said:

That activity is no more dangerous or hazardous than any use of public streets by bicycle riders. The hazard or danger to pedestrians.....derives not from the nature of the business but from the way in which the courier rode his bicycle in performing his contractor with Vabu. To the extent that what the courier did was unlawful, it was not an unlawful act Vabu employed him to do.

Then your Honours will see, after referring to Stevens v Brodribb, in paragraph 21, his Honour quotes Justice Dixon in the Colonial Mutual Case, and your Honours will see the test there set out, particularly the second line of the passage:

he cannot be vicariously responsible if the actual tortfeasor is not his servant and he had not directly authorised the doing of the act which amounts to a tort.

Your Honours will see the remaining part of that passage.

Could we refer also, and perhaps if I can give your Honours the references without going to the passages, to Justice Brennan in Kondis v State Transport Authority [1984] HCA 61; (1994) 154 CLR 672 at 692, and then to Justice Brennan in Burnie Port Authority [1994] HCA 13; 179 CLR 520 at 574.

In relation to that case, Justice Brennan was dissenting in the ultimate result in the case, but in the relevant passage was setting out the principles to which I have referred. Could I refer also to what was said by your Honour Justice McHugh in that case at page 592 and then to page 593. That is a passage where your Honour discussed the enthusiasm, or the propriety of engaging in the change in the common law. Your Honour quoted from Justice Mason in State Government Insurance Commission v Trigwell and referred to the fact the Court was not a law reform agency and did not have the ability to conduct inquiries, and so on, and your Honours will see the passage there set out.

Now, your Honours, sometimes it is appropriate, of course, for the Court to change the law, sometimes not, and your Honours will see the passage there set out, but this is a case, of course, where, for example, the material that is in volume two, showing the parliamentary committee's work and the difficulty that there has been in relation to working out what is an appropriate way of dealing with the position, for example, of bicycle couriers and the suggested complaints about some of them, the ragged end of the industry, as someone put. Your Honours will see that this is a case where the parliamentary committees have debated how to deal with the particular question, without arriving at any particular conclusion.

KIRBY J: We have had one Canadian case given to us. Is there any development in the law in England or in Canada or in New Zealand?

MR JACKSON: The House of Lords' case I gave your Honours deals with the position of vicarious liability in relation to employees, but your Honours will see in the decision, the principal judgment, or the only separate judgment being that of Lord Woolf, he, and the House of Lords with him, expressed reluctance to extend the categories of vicarious liability.

KIRBY J: Which one was that one? That is in this collection.

MR JACKSON: It is Credit Lyonnais, your Honour.

KIRBY J: Is that the Credit Lyonnais?

MR JACKSON: Yes, your Honour.

KIRBY J: Yes, we have that, thank you.

MR JACKSON: Your Honours will see the bottom of page 939, I think, is the particular reference I was making to your Honour.

KIRBY J: In Northern Sandblasting Justice McHugh observed that it might be time soon to consider the step that Mr Hall has asked the Court to take.

MR JACKSON: Yes. Well, your Honour, it may well be a time to consider it, but it is not a time to accede to the temptation or the suggestion that it should be changed.

GLEESON CJ: Mr Jackson, can I take you back to the Colonial Mutual Case. For my part I have some difficulty with the concept of representation, because it can cover a number of different things, but putting that word to one side and just concentrating on the facts and the decision in that case, I would have been very surprised if the majority in that case had intended to decide that, for example, if the insurance salesman or agent had driven negligently, the insurance company would have been vicariously liable for the agent's negligent driving, and for much the same reason in the present case, I would be very surprised at a conclusion that if one of these couriers defamed somebody, Crisis Couriers would be vicariously liable for the defamation.

But the basis of liability in the Colonial Mutual Case, as I understand it, was that in the course of performing the business activity that the insurance company was engaged in, which included soliciting proposals for insurance, the agent was authorised to say things to prospective customers about the way they should go about deciding what insurance policies to take out, and it was in the course of doing that that the defamatory remark about another insurance company was made. A possible point of view is that, by parity of reasoning where the business of Crisis Couriers is transportation of documents, negligence in the act of transportation is conduct for which the principal is liable.

MR JACKSON: Your Honour, could I say in relation to that first, undoubtedly that would be so if one is looking at it from the point of view of the business, being the business of delivery of the goods. Now, what I mean by that, your Honour, is that we could not escape liability to the person to whom the goods should have been delivered or the person to whom we have contracted to deliver the goods if we were negligent in something concerning the delivery of the goods because that is what we have engaged to do. It may be that in respect of one end of the transaction the liability would be contractual. It may be tortious in respect of another end perhaps.

But, your Honour, one is not talking about that. One is really talking about something that happens in the ordinary course of events in doing something that the independent contractor has contracted to do. I am not endeavouring to avoid what your Honour put to me. I am just saying one should take a more limited view and because really, the Colonial Mutual Case, in a sense, comes down to no more than an uncommunicated limitation on the apparent ambit of an employee's authority, of someone's authority.

GLEESON CJ: Yes, if you look at the other majority judgment they put it on the basis of authorisation.

MR JACKSON: Yes.

GLEESON CJ: They said this was an authorised act, that is putting a sales pitch about insurance, and the fact that in the course of performing that authorised activity, if I can use that expression, the agent said something defamatory did not take it out of the authorisation.

MR JACKSON: Yes. Your Honour, that, in our submission, is really what that case decided. It is not the basis for a larger view about vicarious liability.

HAYNE J: It is a view that may be thought to find reflection in Justice McLachlin's judgment in Bazley, notably at 554 paragraph 31 where it said that the employer, acknowledging that it is employer/employee context that is being spoken of:

The employer puts in the community an enterprise which carries with it certain risks. When those risks materialize and cause injury to a member of the public despite the employer's reasonable efforts, it is fair that the person or organization that creates the enterprise and hence the risk should bear the loss.

Now, I do not want to parse the words for the moment but the notion of introduction of the risk of the business enterprise is the idea that I inelegantly was trying to capture with the reference to unit of organisation.

MR JACKSON: Your Honour, could I say that what her Honour said there was first of all in an employer/employee context and dealing with the situation where what was sought to be said was the employer was not liable.

HAYNE J: Indeed.

MR JACKSON: But what one sees is that at page 543 in paragraph 10, what her Honour had endeavoured to do was to summarise the Salmond test, if I can say that, and the Salmond test is really that referred to on page 541 in the middle of the page, that is that the:

acts authorized by the employer or (2) unauthorized acts that are so connected -

et cetera. Then later she goes on to say, looking at the cases that fall within the second class they can be classified into three groups and it is, I think, that classification that her Honour is then dealing with in the later area. So, your Honour, it is really difficult, in our submission, to treat the observations that your Honour referred to at, I think, page 551 as doing more than identifying the circumstances in which, so far as employees are concerned, the vicarious liability generally imposed will not be reduced.

HAYNE J: Though Justice McLachlin appeared at 552, paragraph 29, to begin the discussion as if a discussion on general considerations seen as underpinning "vicarious liability". As I say, I do not want to parse the words with you, I do not think that will be profitable for us. It is the underlying idea, though, of introduction of risk. Is that a significant consideration in deciding whether vicarious liability exists or should it be put to one side?

MR JACKSON: Well, your Honour, I am sorry to answer this in a

two-sided way, but it cannot be left out completely but it really depends a little on what the question is. It cannot be left out completely because if one is saying, "What is the liability for this or for that?", then, in some circumstances, particularly where one is dealing with, for example, the delivery of the goods themselves, matters of that kind, then one does look to see, is that a relevant matter? But where one is dealing with something that is incidental, in effect, in our submission, one would not. Could I just say, your Honour, one other thing about the Canadian case - - -

GUMMOW J: Just before you leave what Justice Hayne was referring you to, paragraph 37 on page 557, I think, takes up the idea, and then refers to Prosser and Keeton.

HAYNE J: And connected to the employment enterprise.

GUMMOW J: Yes.

MR JACKSON: Your Honours, could I say, if one goes to the second case, Jacobi, there was a very significant difference of view in the Supreme Court on the application of the test and the majority did not appear, in fact, to take as wide a view as Justice McLachlin, in that case, in circumstances where one might have thought that the danger to which the children were exposed in respect to the employee, was something that, prima facie, came from the circumstances of the employment where the employee was - I have just forgotten the exact title - the person who was in charge of programs for the boys and girls who were in the home.

HAYNE J: The notion of unit of organisation seems to me to carry with it a number of quite considerable difficulties. Is there one business? Are there two businesses? Those are not susceptible of instant and immediately obvious answers in some cases. Does it matter, for example, that there is an element of exclusivity? Does it matter whether it is factually exclusive that this courier worked only in relation to Crisis? Does it matter whether there was some obligation of exclusivity? All of these considerations are, perhaps, masked by a glib reference, on my part, to notions of unit of organisation.

MR JACKSON: Well, if I can take one aspect of it, your Honour. If one speaks of livery, whether it be in trucks or bicycle riders, livery almost always will mean exclusivity, in terms of only being engaged for one person. On the other hand, one sees, very frequently, persons who are obviously enough independent contractors who choose to wear the livery of a particular group. What I mean by that, your Honours, is if one had a washing machine of a particular brand, something goes wrong with it, rings up, from the yellow pages, that number, in effect, for that brand, the person who comes is very likely to be someone who is an independent contractor but wearing that brand; of doing so and so's plumbing.

GLEESON CJ: I do not know whether Avon ladies, if they still exist, wear uniforms, but they would have been classically regarded as independent contractors, I think.

MR JACKSON: Yes, your Honour.

GLEESON CJ: But suppose they make representations about cosmetics and their effect on the purchaser - - -

HAYNE J: And aging processes.

GLEESON CJ: Yes, and cause harm, you know, damage somebody's skin or something like that.

MR JACKSON: Your Honour, that would seem to be, prima facie, really within the ambit of the task they were engaged to perform. There would seem little difference between that and the Colonial Mutual-type of case.

GLEESON CJ: At the same time, I do not imagine it would be easy to suggest that if an Avon lady negligently ran over somebody the principal would be liable.

MR JACKSON: We would submit not, your Honour, but it would be very difficult because that person would be engaged to do the work of selling the thing and, undoubtedly, incidentally, one has to travel from place to place.

Your Honours, could I move to our written submissions for just a moment, and in particular to paragraphs 17 and 18. Some of this I have dealt with already. May I simply seek to make the point we make in paragraph 17(b) and that is that underlying the appellant's argument, in a sense, is the notion that it is really the norm to have performance by employees and that performance by independent contractors is somehow lesser and should be made, in effect, analogous to it.

Now, we set out some reasons in paragraph 17(c) why that should not occur and we would also seek to make the point that is in 17(d) that the issue inevitably arises because the independent contractor is carrying out some tasks on behalf of the principal. The issue would not arise otherwise. What we seek then to say in paragraph 18 is to set out some reasons why a new principle should not be adopted and, your Honours, I will not go through those again. May I say, however, a couple of further things in relation to the case. Your Honours, in the particular case the act which amounted to the tort, in effect, was the negligent riding of the bicycle too fast or without care.

That was in no way directly authorised, nor did the respondent control the manner of riding the bicycle. We were not in any way a back seat driving saying, "Do not go fast. Careful, now. Watch out, someone might be coming out of there" or the things that one commonly encounters in that regard.

KIRBY J: That is hardly an answer because, if you were an employer, you could not actually control what the bicyclist did and if you are a hospital you cannot control what the doctor does when he wields the knife and, yet, in this particular case it was said, and I think Justice Davies accepted, that the very way you organised your business and gave priority to urgency and even your name, "Crisis" suggests that you put a lot of pressure on these people to move with great speed.

MR JACKSON: Well, your Honour, you would not hang a dog with a name like that, really, with respect.

KIRBY J: Well, it sounds very urgent.

MR JACKSON: Of course it is, your Honour, and no doubt if your Honours want to get some documents from here on a Thursday to Sydney or Melbourne for special leave, you engage someone like us to do it.

HAYNE J: Some bike ride.

MR JACKSON: Maybe not when it leaves here, your Honour; I do not know about the other side of the coin. But, of course, businesses currently and forever have used names that are attractive and look as though they perform things efficiently and in circumstances - - -

KIRBY J: Do not worry about the name; the name was really a side issue.

MR JACKSON: But, your Honour, what Justice Davies did, in our submission, was to adopt a view of the circumstances which, we would submit, was not justified by the findings of the primary judge and, without going to the detail of it, could not be justified by the material upon which he sought to rely. That was what took place before the Committee of the New South Wales Parliament. I do not want to go through that page by page, even though it is not terribly long, but what we would submit is that if one looks at what took place there, and in terms of our behaviour, one could not attach to us the opprobrium that his Honour sought to.

Could I move then to the last aspect with which I wish to deal. That is the question of the so-called "non-delegable duties". Could I take your Honours to a summary of, in effect, what is the position in relation to them by Justice Mason in Kondis [1984] HCA 61; (1984) 154 CLR 672 at page 684. Your Honours will see that his Honour refers, in the last paragraph on page 684, to the nature and consequences of a non-delegable duty, and then goes on to deal with various circumstances in which a non-delegable duty has been held to arise. Your Honours will see at the bottom of page 685 he refers to the circumstances of hospitals, and at page 686, in the first new paragraph, deals with the position of school authorities, then invitors and a number of other circumstances.

Your Honours, a feature of many of them, is that the duty is one to take care of, or in respect of, some other person or some other person's property. If one takes the case of hospitals, your Honours have seen that referred to at the bottom of 685 and at the top of 686, the obligation of the hospital itself is an obligation to treat and to treat with reasonable care. One can see that in such circumstances it remains the duty of the hospital to take reasonable care and it is immaterial whether the person whose negligence gives rise to the claim was an employee or a contractor to the hospital or a volunteer.

GLEESON CJ: Put the hospitals to one side. I would guess that many, perhaps most, medical services are now, so far as the contract is concerned, provided by a corporation. Certainly most doctor's bills that you get have the name of a corporation on them. Presumably it is a matter for the corporation and the doctors to decide whether there is a relationship of employer and employee or a relationship of principal and independent contractor. Does the vicarious responsibility of the corporation, in that case, all depend upon which of those choices is made?

MR JACKSON: No, your Honour, because one would think that the situation would be - I will give the answer first and the reason second - in our submission, similar to that obtaining in the case of a hospital or a school and the reason for that would be that by going to the service, which let us assume was conducted by the company, and the service taking one on as it were, it engages to exercise reasonable care in the treatment that is required.

GLEESON CJ: If that is right then, presumably, the same would apply to an incorporated legal practice.

MR JACKSON: It may well, your Honour, yes, it may well. Your Honours, the same applies if one took the case of a school - by taking a child into a school, the school undertakes an obligation itself to take reasonable care for the safety of the child, and that is so whether the school is operated by a company or by an individual or by a charitable organisation or whatever; it is the school's own obligation, it does not matter whether the school performs some of its functions by independent contractors or by servants of the school, employees of the school. Your Honour, if one takes a small child and gives them a big bass drum in the school band and they are hurt in some way because it is too big for them, it does not matter that the person who is in charge of the music has their own company or is engaged by a company which has the contract to do it.

McHUGH J: The whole notion of this non-delegable duty is very difficult. I mean, how can you delegate a duty? You either have a duty or you do not have a duty. What is really meant, I think, in these cases is that you cannot avoid your liability.

MR JACKSON: Quite, your Honour, yes, and it is a doctrine, whatever its merit, that is marred by its name. Your Honours, could I say that the function we are engaged to perform is not to take care of the person who was injured; what we are engaged to do is to deliver packages to someone else. Your Honours, we would submit it is very difficult to draw an analogy with the hospital/school cases and so on, and also to draw an analogy with the employer/employee situation referred to, for example, in Kondis, because the essence of the Kondis-type situation is that the employer has a duty to the employee to take - - -

GLEESON CJ: But it would be a very good analogy, would it not, if what was damaged was a parcel?

MR JACKSON: Yes, quite, your Honour. The duty is to the employer to take reasonable care for the safety of the employee and the Irish case to which our learned friend earlier, Lane v Shire Roofing Co is like Kondis; it was the duty owed to a person because the other person was held to be in control of the works.

Your Honours, duty of that kind, as Justice Mason said in Kondis at page 687, those and the other circumstances to which he refers give rise to a duty because the person on whom the duty is imposed has undertaken the care or supervision or control of the person or property of someone else.

Your Honours, in the other types of cases where the non-delegable duty has been held to apply, for example, the Dalton v Angus type of case to which his Honour referred there, the duties of adjoining owners are treated as personal each to the other owner and, in a sense, what else could they be other than that? If the obligation of an occupier is not to withdraw support from the next door occupier, then to withdraw support is a breach of that obligation.

Your Honours, what we would submit is that in all those cases there is an obligation of one kind or another owed directly to the person injured. The injury occurs by reason of the manner of performance of that obligation and it is then possible to say that the relationship to the person, subject to the duty of the person whose negligence causes the injury, should not matter but, your Honours, that is different, in our submission, from circumstances where our obligation was to have packages and parcels delivered.

Your Honours, could I say three final things. The first is that in relation to the approach taken by Justice Davies, in relation to the actual evidence in this case, Mr Harris gave evidence that he was only aware of there having been one accident prior to March 1993 involving the bike riders when he came on to the scene and he was unaware of any further accidents until the claim that is the subject of these proceedings. Your Honours will see that at volume 1 at page 228 at about line 15 through to about line 23.

The second matter, your Honours, is this. Our learned friend said this case is factually different from the other Vabu case. Your Honours, we would submit that that is not the case. There is no material difference in the facts and, as we have submitted in our written submissions, the determination in both cases was on a common law basis. Your Honours, I want to deal now, if I may, with the question whether it is appropriate to allow the employee/independent contractor issue to be agitated here.

Now, your Honours, this is a case where the issue, although the subject of the notice of appeal to the Court of Appeal was not ultimately agitated in that court and, as your Honours will see, Justice Sheller said it was accepted that for the purposes of the case the appellant was to be treated as an independent contractor.

KIRBY J: I wonder about that, because it is expressed, in a sense, in the passive, about vicarious liability and Mr Hall was about to seek to change it, and Justice Callinan - Mr Hall, having been stopped - said it is better to leave it as it is. So he did, and that is how it is before us. If it is vicarious liability, that does present, in which respect? Orthodoxly, it would not apply to an independent contractor. It might apply to an agent.

MR JACKSON: Can I just say, your Honour, in relation to that - I am sure your Honours will correct me if I am wrong - I had thought that the part of the notice of appeal - I thought that what your Honours see in the record now was the notice of appeal but was the amended notice of appeal minus a ground presently irrelevant, that was not, ultimately, raised. So, one sees the amended notice of appeal there. It certainly does not clearly raise the issue.

Can I say, your Honours, there does not seem to have been any dissent from the proposition that was raised by Mr Hislop, who was appearing for our side at the time, said, when he was called on, "There are three issues, as we would apprehend it. They can be stated in this way. The first is that the respondent should have been held to be vicariously liable for the negligence of the bike rider. The second is that the respondent is alleged to have owed and breached a personal duty of care of a

non-delegable nature, and the third is the judge who had given leave to amend the statement of claim.".

KIRBY J: The first is wide enough for the argument, is it not?

MR JACKSON: Well, your Honour, if one looks at the words, yes, it is, but if one looks at the words in the context, the case was one that achieved significance because of the fact that the issue sought to be raised was whether, in the case of independent contractors, there was either

a non-delegable duty or else vicarious liability.

KIRBY J: But was there not a contest at trial as to whether or not the appellant was an employee?

MR JACKSON: I accept that, your Honour.

KIRBY J: Well, in that event, presumably, all the evidence relevant to that point was presented and you had the full opportunity to test it.

MR JACKSON: We did, and we won, your Honour, and the issue then was not further pursued.

CALLINAN J: That is right, I thought, because of paragraph 19 at page 461, in the judgment of his Honour Mr Justice Sheller, who said that:

The appellant accepted in light of the decision of this Court in Vabu Pty Limited v Commissioner of Taxation that the couriers were not employees of Vabu but independent contractors.

It seems to have been accepted, certainly, in the Court of Appeal, at all events.

MR JACKSON: No, your Honours, I do not doubt that the Court could, if it chose, allow that issue to be re-agitated. But, in our submission, there is not any particular reason why it should. It is not an issue which, by itself, would ordinarily result in the grant of special leave, and the special leave was granted to raise the issue which our learned friends seek to argue and which, your Honours, has been argued and, no doubt, it is a question of importance.

KIRBY J: There are two points. First, that was in the context of the Pay-Roll Tax Act and, secondly, it is said, and I have not formed any final view about this - it is said that we have many more facts than were available to the court which dealt with that earlier case.

MR JACKSON: As to the first thing your Honour said about it being dealt with in the context of the pay-roll tax legislation could I say in that regard - and this is a matter with which we have dealt in our written submissions in footnote 8 at page 3 and that is this, that in the earlier Vabu Case, and we give the references, what was done was to decide the issue on two bases, basis 1 being the common law position and then basis 2, whether there was something different because of the particular provisions of the revenue legislation there in question.

Now, it is really very clear, your Honours, because their Honours say in that case, and we have given the paragraph references, that they were dealing with it on the common law basis first. The second aspect is that it is clear that both the primary judge in this case and, of course the Court of Appeal, but in the very limited way with which it dealt with the case, were dealing with the matter on a common law basis unrelated to the revenue legislation. It is, with respect a shibboleth started by our learned friend's written submissions, your Honours, to say that it was done in the context of revenue legislation. That is true, but it is not the full story.

The second thing, your Honours, is that the facts really are insignificantly different. I do not know that they are any different or really significantly fuller, except, perhaps in respects that are adverse to the contention of employment rather than independent contractor. When I say factors that are adverse I refer, for example, to the references to leave that I gave at the start of our submissions this afternoon, and perhaps one or two matters of detail that I would have some difficulty in identifying where there is any difference.

CALLINAN J: Mr Jackson, do you rely upon Justice Gummow's apparent adoption of what was said by Professor Markesinis and Dr Munday in their book which is paragraph [238] of Scott v Davis?

MR JACKSON: Would your Honour excuse me just a moment?

CALLINAN J: Yes.

MR JACKSON: I am sorry, your Honour, I did not catch the paragraph number?

CALLINAN J: Paragraph [238]. I think it really involves the sorts of considerations that the Chief Justice was putting to you defining the scope of the agency.

MR JACKSON: Your Honour, may I answer that by saying I think so. It is not a short - - -

CALLINAN J: It does appear to be consistent with the answers you gave to some questions by the Chief Justice.

MR JACKSON: Yes. The first paragraph of it particularly, your Honour, yes. We would refer, also, of course, to what is contained in our written submissions but, subject to that, your Honours, those are our submissions.

GLEESON CJ: Thank you, Mr Jackson. Yes, Mr Hall.

MR HALL: Your Honour, in so far as my learned friend dealt with the courier's conduct not being directly authorised, we rely on paragraph 14 of our reply which dealt with the reference to an improper mode of performing an authorised act.

When my learned friend debated the position of an electrician or a barrister, the significant difference between those sorts of persons and the courier would be that the person contracting with an electrician or a barrister does not have power, relevant power, to direct what they do. They have significant independent discretions, which we would say distinguishes them factually from this case. All of those, I would point out, would fall outside the formulation of the rule which we set out in paragraph A of our reply.

Your Honour, there is a discussion of the origins of the doctrine of vicarious liability in 97 Dominion Law Reports 4th Edition at 280, point 10. That is that case I handed up to your Honours earlier. In relation to practical control, which was referred to during my friend's submissions, the capacity to direct in this case was substantially exercised by Vabu in the conditions which it enforced on the couriers. Your Honours, there is evidence that Vabu could, for example, have imposed identification on its couriers at appeal book 207 and 213, and a concession it chose not to do so at 213, 214. In relation to the point made by his Honour Mr Justice Sheller in the Court below at 461, point 35, that the hazard did not arise from the nature of Vabu's business, we would rely on the differing opinion of Mr Justice Davies at appeal book 473, point 40.

In relation to the question whether a courier guilty of defamation would be acting within the business, we would say that that would be outside Vabu's business. It would not be something that either Vabu or the courier was engaged to do. In relation to 17(b) of my friend's submissions, we would rely on what is set out in our reply to that paragraph.

Those are the only matters, subject to anything your Honours may wish to raise, that I wish to put in reply.

GLEESON CJ: Thank you, Mr Hall. We will reserve our decision in this matter.

AT 3.46 PM THE MATTER WAS ADJOURNED