Van der Horn v Commonwealth of Australia S215/1999 [2001] HCATrans 50 (16 February 2001)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S214 of 1999

B e t w e e n -

ROBERT JOHN McCLURE

Applicant

and

THE COMMONWEALTH OF AUSTRALIA

Respondent

Office of the Registry

Sydney No S215 of 1999

B e t w e e n -

TANIA VAN DER HORN

Applicant

and

THE COMMONWEALTH OF AUSTRALIA

Respondent

Office of the Registry

Sydney No S216 of 1999

B e t w e e n -

ADRIAN GREGORY WATSON

Applicant

and

THE COMMONWEALTH OF AUSTRALIA

Respondent

Office of the Registry

Sydney No S217 of 1999

B e t w e e n -

DAVID NORMAN GREEN

Applicant

and

THE COMMONWEALTH OF AUSTRALIA

Respondent

Applications for special leave to appeal

GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 16 FEBRUARY 2001, AT 9.32 AM

Copyright in the High Court of Australia

__________________

MR B.J. GROSS, QC: May it please the Court, I appear with MR T.J. BOYD, for the applicants. (instructed by McIntosh McPhillamy & Co)

MR R.S. McILWAINE, SC: If the Court pleases, I appear for the respondent, with MR B.J. SKINNER. (instructed by the Australian Government Solicitor)

GAUDRON J: Yes, thank you. There are no other respondents, are there?

MR GROSS: No, your Honour.

GAUDRON J: Were there below, at all?

MR GROSS: At stages. Mr Burns was there at trial. We did not proceed against him on appeal. He is out of the proceedings as cross-undertakings. He has been released for all relevant purposes.

GAUDRON J: Thank you, Mr Gross. Yes?

MR GROSS: Your Honours, the crucial facts I wish to state, because, in our submission, they highlight the relevant legal errors. Mrs Warren, then Mrs Halliday, saw Messrs Burns and Halliday, both serving members of the Australian Regular Army, in uniform and carrying their military gear, return to the Hallidays' Warwick Farm home from army duty manoeuvres.

McHUGH J: But, stopping there, is not a crucial fact that is missing on any view in the case, as against the Commonwealth, where the shell came from or how Burns got possession of it?

MR GROSS: No, your Honour, because the source of the continuing danger was the failure, at this point, that is, when they came home, to let Mrs Warren know that it was

dangerous. What they in fact did was they reassured her it was safe, with the consequence - - -

McHUGH J: I appreciate that but - - -

MR GROSS: - - - that no report was made.

McHUGH J: The point is that Burns claimed in evidence and in his record of interview that the shell had come from Canungra.

MR GROSS: Yes.

McHUGH J: The trial judge did not accept that. The trial judge said he did not know where the shell came from. It was equally consistent with the shell having been sold at a disposal sale by the Commonwealth, and, somehow or other, Burns and Halliday getting possession of it. Is it your problem, on the facts of this case, that you do not know where or how Burns got hold of the shell?

MR GROSS: No, your Honour, because it is common ground - it is the property of the Commonwealth, and, at the relevant time, while he is dealing with it and giving advice and failing to report, he - that is, Halliday-or rather, Burns, as well as Halliday, are breaching their continuing obligation which Colonel Dempsey said they had: to report the location of such a shell, wherever they found it in the community. Secondly, your Honour, it was certainly their duty not to misinform Mrs Halliday, thereby preventing Mrs Halliday becoming the means whereby the shell was made harmless by being taken away. In other words, there was a failure in their training and in their, I suppose, level of prudence - - -

McHUGH J: There was not any failure in their training. They knew that they had to report it; they just did not. They made no case against the Commonwealth in its primary role. The case against the Commonwealth depended upon an allegation of vicarious liability.

MR GROSS: Your Honour, we failed in our case, in terms of the liability of the Commonwealth in supervising the soldiers, and therefore on appeal the issue is the vicarious liability issue. Your Honours, there was a failure to - - -

GAUDRON J: Do you not also have a further problem, in terms of vicarious liability, that you have to establish liability against each of the two individuals?

MR GROSS: Your Honour, that is so, and it is evident that both Burns and Halliday were negligent at the point where they - one, failure to report to the authorities where it is, and, secondly, give Mrs Halliday the misleading impression that this shell is a harmless piece of metal, in effect, a souvenir, and not a lethally explosive device.

GAUDRON J: What was the basis of the discontinuance of the proceedings against Mr Burns?

McHUGH J: Money.

MR GROSS: Lack of a deep pocket, to use an expression the Court uses occasionally.

GAUDRON J: And he simply discontinued?

MR GROSS: He was a man of straw; we discontinued against him and the Commonwealth itself is not persisting in any cross-claim for indemnity or contribution.

GAUDRON J: Was there a judgment entered, or just a notice of discontinuance?

MR GROSS: There was a notice of discontinuance filed. He was not given judgment as such, otherwise that would have created the risk of inconsistent judgments and that was a matter that concerned Justice Priestley, and we resolved that problem in the manner indicated, or the arrangements in place to - which the Court accepted as appropriate.

McHUGH J: I thought your case, in your summary of argument, had much to do with the fact that this shell came off Commonwealth land. But there is no evidence to that effect, is there?

MR GROSS: In the end, no, your Honour. The best we have is that Mr Burns, while serving at Canungra, obtained possession of the shell.

McHUGH J: No, no. The judge did not accept that. Burns claimed that, and his solicitor said that to the magistrate. The judge rejected it, because there was evidence that those sorts of shells were not used at Canungra.

MR GROSS: Your Honour, while serving at Canungra, he obtained the shell. His Honour did not find that he got it from Canungra. In other words, that was in effect his base at the time. Whether or not he got it from another soldier, or by some other means, or picked it up, his Honour did not have enough facts qua, the Commonwealth, to make a determination on that. His Honour, of course, was operating in two planes because - - -

McHUGH J: What about the finding at page 25 of the McClure appeal book? Page 25, line 16:

There is in fact therefore before me no evidence that the device was found at Canungra or that there is any reason for the Commonwealth to believe that the device was on its property.

MR GROSS: Yes. Your Honour, the vicarious liability was one which did not depend on whether it was taken by Burns from Canungra, or any other specific army property. The vicarious liability was the failure in the performance of his service obligations in relation to reporting the shell, once obtained, and in not misleading members of the public that it was safe, so it could continue in the community.

McHUGH J: On this argument of yours, if a soldier is in a hotel and he sees somebody with a shell, and he fails to report it to the Commonwealth, and the shell explodes in the hotel, the Commonwealth is liable. That is what it must come to.

MR GROSS: Your Honour, that is not my proposition. Lieutenant Colonel - - -

McHUGH J: No, but that is the consequences of your proposition, is it not?

MR GROSS: Lieutenant Colonel Dempsey, called in the Commonwealth's case, had no doubt that a soldier had an obligation to report whenever he found ammunition. His view was that a soldier who knows the nature of ammunition and finds it anywhere, should report it and that "I would have thought that coming across something like that he would have reported it". That actually flows, in our submission, from two things: one is that the soldiers do have some superior knowledge and training to that of the community - - -

McHUGH J: That all can be accepted, but it is another proposition altogether to say that the Commonwealth should be liable because the soldier fails to reports something.

MR GROSS: Our submission is that the soldier is under a continuous duty, in effect, as a soldier, that which entails not only handling military equipment on classic military locations but also protecting the public at large. In our submission, when he has possession of or knowledge of the existence of military shells which are owned by the Commonwealth, he has an obligation to use his training and level of prudence in order to deal with that situation - - -

McHUGH J: That is a duty he owes - - -

MR GROSS: - - - and not to worsen - - -

McHUGH J: That is a duty he owes to the Commonwealth.

MR GROSS: Your Honour, we submit that the question ultimately becomes whether or not it is an incident of, in effect, what his duties are, or it is connected with that, that he make the report when he locates it, or that he refrain from giving misleading assurances based on apparent knowledge to witless people like Mrs Halliday, who thereafter will allow such a shell to continue in the community at the risk of whoever is near it.

In our submission, the problem in the case is that the Court of Appeal, in effect, in characterising the conduct, or the relevant conduct, circumscribed it too narrowly. Justice Priestley treated the relevant conduct as being, in effect, at page 62, the "possession" of the shell, and he later described the "appropriation" of the shell, which is the Commonwealth's property, to himself. Justice Fitzgerald characterised the relevant conduct as being the removal of the shell and the failure to return it. I suppose the latter is an aspect of the former.

GAUDRON J: What do you say it is?

MR GROSS: We say it is the failure to take appropriate protective steps at the stage when the two of them have the shell in their possession. In the presence of a third person, that is, Mrs Halliday, they should not be pronouncing the shell as safe for continued presence in the community - - -

GAUDRON J: And this is their duty as serving military officers, not as ordinary individuals?

MR GROSS: Yes, your Honour, as serving military officers, and we rely upon that statement by Lieutenant Colonel Dempsey as to - - -

GAUDRON J: Where do we find that?

MR GROSS: I am sorry, that - - -

GAUDRON J: And is there any finding, in that regard?

MR GROSS: There is no finding in that regard, in terms of what he said but he - - -

GAUDRON J: So this is not purely a case about vicarious liability. It is a case about the duty to whom - you can answer that - of serving officers.

MR GROSS: It is what is part of the job responsibilities of these soldiers when they are confronted with this situation.

GAUDRON J: No, no, it is their duty.

MR GROSS: Yes, it is their duty, but in fact, if we are looking at the matter as in classic vicarious liability terms you are looking at what are tasks which are incidental, or connected with, the due performance of their duties.

McHUGH J: You seem to say that whenever a soldier breaches some duty that he owes to the Department of Army and, as a result, injury is caused to some third person, the Commonwealth is always liable. I suppose a soldier is under an obligation not to get drunk when he is in uniform. So, on your argument, if he gets drunk while he is in uniform and assaults somebody in a hotel, the Commonwealth is vicarious liable.

MR GROSS: We are not posing it that way. The Court of Appeal posed our submission in that way, erroneously. We are not saying because there is an obligation owed to your employer not to burn down his building that if you do so, that is part of your work; we are not putting that proposition. What we are saying is that when you look at the job responsibilities for which people are trained and which they are expected to carry out, when they are performing those duties so as to create a unreasonable risk of injury, they are doing so in their work or job capacity when they should be applying to that deliberation and activity the training and caution they have been given.

Your Honours, we submit that a further mistake was that the court concentrated on the fact it was in breach of orders, or it was contrary to their training, or that it was illegal. None of those considerations ever dilute vicarious liability cover in an employment setting. As such, one really has to look at the degree of connectedness of the activity with what occurs. We also submit this, your Honours, that the outcome of this Court's decision in Scott v Davis is a recognition that what is being treated as a test of vicarious liability, and indeed was treated so in this case, is ultimately an outcome - it is a result, it does not give you the reasoning whereby you arrive at that process.

GAUDRON J: Is not your anterior problem to locate a duty in these people, in Mr Halliday and Mr Burns?

MR GROSS: We do not have to locate - - -

GAUDRON J: A duty of care to - not Mrs Halliday - to the people who were ultimately injured?

MR GROSS: Yes, at the stage when they are permitting that - - -

GAUDRON J: No. Is there evidence that they knew it was live? Or to have known it was live?

MR GROSS: Yes, your Honour, because, if they had that training, that would not take the risk, they would not - - -

GAUDRON J: No, no. Knowledge.

MR GROSS: There was not evidence that they knew it was dangerous, rather that they took a risk that should not have been taken, by giving an assurance of certainty of safety when in fact they should have someone who knows better, that is, experts from the Army, to look at it to make that judgment. They went beyond the scope of what should have been their area of competence, and thereby made Mrs Halliday the unwitting courier of a shell that could explode. And, of course, that is - - -

McHUGH J: That is another problem. But you have to overturn a century of the law of vicarious liability to even get your case off the ground, because the standard test is whether or not their conduct was either expressly or impliedly authorised by the Commonwealth or was incidental to what he was authorised to do.

MR GROSS: Your Honour, the Canadians say basically that Salmond-type test is merely describing an outcome, it is not really giving you any means or tools whereby you can arrive at the correct outcome. And, your Honours, we submit that - - -

McHUGH J: The Commonwealth seems to have gone along quite well since Salmond formulated it in the first edition of his book back in 1906.

MR GROSS: Yes. Your Honours, what it really comes down to is what meaning do you give to the expression "connected to the performance of duties or incidental". In the end, those words tell you nothing, and if, in fact, in light of the High Court's recent decision, it is recognised that agency is a pretty unwieldy tool with which to create results, so also is authority, which, of course, is at the essence of agency. And if, in fact, it is said, as the Canadians say, that there are certain policy factors that come into the equation, we submit that the Court ought articulate what those policy considerations are, and it gives some guidance to the profession and the courts as to how those policy considerations can be articulated, balanced and ultimately given weight.

In our submission, although we have the standard test - and it is obvious, within the standard tests, further questions have to be asked - we do not have guidance. All we have is labels which attach as part of the conclusion but without providing any guidance as to how you get there. And we submit that that problem becomes particular - - -

McHUGH J: I think the standard tests provide a lot more certainty than attempts to weigh up policy factors in various cases to determine whether or not an employer should be liable.

MR GROSS: Whether something is incidental or connected - - -

McHUGH J: You only have to look at some of this Court's decisions on negligence to see what happens when it starts looking at policy questions.

MR GROSS: Whether the outcome of exploration of these matters is greater clarity or not, the fact is that the parties do not have the guidance and the profession and the courts do need that guidance so that better, more reasoned decisions are arrived at.

GAUDRON J: Thank you. Yes, we need not trouble you, Mr McIlwaine. Mr Gross, I should say you needed an extension of time.

MR GROSS: That is correct, your Honour.

GAUDRON J: I presume you do not oppose that, MrMcIlwaine.

MR McILWAINE: No, your Honour.

GAUDRON J: In these matters, time for the bringing of applications for special leave to appeal is extended. However, given the trial judge's inability to make factual findings against the Commonwealth, the proposed appeals do not enjoy sufficient prospect of success to warrant the grant of special leave. Accordingly, the applications are dismissed with costs.

AT 9.52 AM THE MATTER WAS CONCLUDED