Geroheev Pty Ltd & Ors v Wheare [2005] HCATrans 226 (22 April 2005)

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Geroheev Pty Ltd & Ors v Wheare [2005] HCATrans 226 (22 April 2005)

Last Updated: 28 April 2005

[2005] HCATrans 226

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P69 of 2004

B e t w e e n -

GEROHEEV PTY LTD

First Applicant

MARINA ATHANASIOU

Second Applicant

ROSE FERMANIS

Third Applicant

ROSE COURTIS

Fourth Applicant

and

RAMON JON WHEARE

Respondent

Application for special leave to appeal

HAYNE J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 22 APRIL 2005, AT 11.05 AM

Copyright in the High Court of Australia

__________________

MR M.J. BUSS, QC: May it please your Honours, with my learned friend, MR S.M. DENMAN, I appear for the applicants. (instructed by Pynt & Partners)

MR R.I. VINER, QC: May it please your Honours, with my learned friend, MR D.M. BRUNS, I appear for the respondent. (instructed by Separovic & Associates)

HAYNE J: Yes, Mr Buss.

MR BUSS: Your Honours, section 6 of the Act is concerned with an independent contractor as distinct from an employee. Section 6 is not concerned with whether the alleged independent contractor is an agent or not. An independent contractor may be an agent of the person who appointed him for certain purposes and not for others and, similarly, an employee may be an agent of a person who employs him for certain purposes but not others.

HAYNE J: Well, that opening reveals, does it not, the difficulty implicit in the use of the word “agent”? We understand that difficulty. See what Sir Owen Dixon said.

MR BUSS: Yes.

HAYNE J: How do you relate it to section 6?

MR BUSS: In this way, your Honours. The Full Court made three basic errors. First, it failed to analyse whether for the purposes of section 6 Knight Frank was an independent contractor as distinct from an employee. Secondly, it concluded that if a manager has only limited authority to expend money on behalf of the person who engages him, then the manager cannot be an independent contractor and thirdly, it failed to appreciate a point of distinction between this case and the CML Case, namely, in CML Justice Dixon held that the appellant was liable because the so-called agent committed a tort in the course of exercising actual authority when acting as a true agent representing his principal in dealings with third parties. By contrast in the present case Knight Frank’s tort was not committed in the course of representing the applicants while dealing with third persons.

Now, the learned Commissioner and the Full Court held that Knight Frank was “a managing agent” and, therefore, was not an independent contractor and the reasoning of the learned Commissioner in that regard is apparent from paragraphs 31 to 35 of his judgment at page 15 of the application book. One can see in paragraph 31 that the learned Commissioner refers to a clause, clause 9.2 in the leases between the applicants and their lessees, but the learned Commissioner immediately recognises that that is an irrelevant point in determining whether Knight Frank was an independent contractor or not.

In paragraphs 32 and 33 the learned Commissioner refers to Knight Frank’s authority to expend money on behalf of the applicants, and in particular the learned Commissioner held that Knight Frank had only limited authority to expend money on the premises on behalf of the applicants without consulting the applicants and obtaining their approval.

In paragraph 34 the learned Commissioner refers to a letter of 18 May 1998 which is reproduced in paragraph 23 of his reasons as an example of Knight Frank’s limited authority to expend money on behalf of the applicants. The learned Commissioner then says that Knight Frank was truly a managing agent and not an independent contractor. In paragraph 35 the learned Commissioner’s conclusion is that as he describes it, for a combination of all these reasons Knight Frank was not an independent contractor within section 6 of the Act.

HAYNE J: This may be to approach the task of applying section 6 from the wrong end in the sense that it is seeking to give a global description to the position occupied by Knight Frank. That may or may not be right. But what relevantly here could be said to be the damage due to the negligence of an independent contractor engaged by the occupier?

MR BUSS: The damage to the independent contractor is this, that we are here concerned with a negligent omission by Knight Frank and if it be the case that the proper characterisation of Knight Frank’s status as against the occupier is that of independent contractor as distinct from employee, then if paragraphs (a) and (b) of section 6(1) of the Act are satisfied, then the independent contractor is not liable for Knight Frank’s negligence. So from the viewpoint of the occupier, the errors in the approach of the Commissioner which were compounded in the Full Court is that there has been a failure to commence from the point of analysis of whether truly Knight Frank as an independent contractor or an employee, if in fact it is an employee, then Knight Frank will be liable vicariously.

The issue of agency only arises if it can be said that having regard to the principle enunciated by Justice Dixon in the CML Case, that the facts of this case and the findings made can relevantly be assimilated to that case. In our submission, they cannot. Really what the Full Court has done is to extend the principle enunciated by Justice Dixon in the CML Case in a way that is not in accordance with authority and recently the decision of the Court of Appeal of New South Wales in Boylan Nominees made claim that as their Honours understood the course of authority in this Court in recent times where the CML case has been considered, that merely because a person is the agent of a principal, the commission by the agent of a tort in the course of the agency does not necessarily give rise to direct, as distinct from vicarious, liability in the principal. Their Honours in Boylan Nominees took the view that a representative, as referred to in a number of relatively recent judgments of Justice McHugh, connoted much more than a mere agent.

The problem in the judgment of the Full Court, with respect, is that having erred by failing to construe section 6 at the outset, appreciating that the distinction was between an independent contractor and an employee, then having failed to analyse the findings of fact in the context of whether Knight Frank fell within either of those categorisations, the Full Court simply set out part of the judgment of Justice Dixon in CML which identified the particular problem that confronted the Court in that case, did not refer to the relevant passages at page 50 of the judgment where his Honour Justice Dixon resolved that point and simply concluded that because Knight Frank had only limited authority to expend money on behalf of the applicants without their prior approval, that was somehow inconsistent with any conceivable finding that Knight Frank could be an independent contractor.

They then reasoned that because Knight Frank was a “managing agent” that it necessarily followed by application of Justice Dixon’s judgment in CML that the necessary conclusion was that the applicants were directly as distinct from vicariously liable for Knight Frank’s negligence. On that latter point it is our submission that the Full Court failed to appreciate the distinction on the facts between CML and this case, an
important distinction, because in CML the tort was committed in the course of representing CML in the course of dealings with third parties seeking to induce them to enter into insurance contracts.

In this instance there was a negligent omission by Knight Frank, not in the course of representing the applicants in the course of dealings with third parties. In that way at least the Full Court, without any reasoning or discussion of these issues of the kind one at least saw in the judgment of the Court of Appeal of New South Wales in Boylan Nominees, has extended the principle in CML. For that reason it is our respectful submission that there is a point of general public importance raised by this application.

The other point of general public importance of course is that if we are correct in our contention that the Full Court, with respect, misconstrued and misapplied section 6 of the Act, that in itself gives rise to a question of general public importance in the sense that it is self-evident that the type of relationship that exists between Knight Frank and the applicants is one that is reproduced in hundreds or, indeed, thousands of commercial arrangements in relation to commercial and residential properties. Those are our submissions, your Honours.

HAYNE J: Thank you, Mr Buss. Mr Viner, we need not trouble you.

There are, in our opinion, insufficient prospects of success of an appeal to warrant a grant of special leave to appeal in this matter. It follows that special leave to appeal is refused with costs.

AT 11.17 AM THE MATTER WAS CONCLUDED