O'Brien v Boral Roof Tiles Limited

[1995] HCATrans 213

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S5 of 1995

B e t w e e n -

PATRICK O’BRIEN

Applicant

and

BORAL ROOF TILES LIMITED

Respondent

Application for special leave to appeal

DAWSON J
GAUDRON J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 14 AUGUST 1995, AT 10.35 AM

Copyright in the High Court of Australia

MR A.F. PUCKERIDGE, QC:   If the Court pleases, I appear with my learned friend, MR P.J. O’CONNOR, for the applicant. (instructed by Lyons Barnett Kennedy)

MR J.E. MACONACHIE, QC:   If your Honour pleases, I appear with my learned friend, MR M.T. McCULLOCH, for Boral Roof Tiles Ltd. (instructed by Phillips Fox)

MR S.D. RARES, SC:   If your Honours please, I appear with my learned friend, MR R.A. VINCENT, for GIO Australia Limited, which is seeking to be made a respondent.  (instructed by Hunt & Hunt)

DAWSON J:   Perhaps we can defer that application until we see where we are going, Mr Rares.

MR RARES:   If the Court pleases.

DAWSON J:   Yes, Mr Puckeridge.

MR PUCKERIDGE:   If the Court pleases.  Your Honour, in this application the most important finding that was made was at page 10 of the special leave application in which the trial judge found that Mr O’Brien was employed exclusively in the defendant’s business and under its control in every aspect of his work for them.  That matter was dealt with by the Court of Appeal and raised as the particular matter of special leave at page 51 of the special leave application in which Mr Justice Sheller, with whom the other judges agreed, said that:

One might say in the present case that in essence the plaintiff was carrying on his own business through the company Lasmine rather than serving Boral and that the ‑ ‑ ‑

GUMMOW J:   What does “through” mean?  “Carrying on his own business through” something else?

MR PUCKERIDGE:   Well, yes, your Honour, it is probably difficult to know - through - what that business was, because the trial judge had also found that the operation and the truck itself was under the control of Boral and as to the significance to the word “through” in that circumstance, it is difficult to know other than that it was referred by Mr Justice Sheller that he was doing some work, or that Lasmine was really the person who was the actual controlling agent and was actually in control of the system of work, but what Mr Justice Sheller said at page 51, which is of significance, is:

that the significance of the degree of Boral’s control was subsumed by the arrangement under which the parties operated.

Now, if the Court pleases, that was a finding by the Court of Appeal in respect of which, on evidence, the fundamental findings of fact of the trial judge were not disputed in any way.  The finding of fact, in particular by the trial judge, that Mr O’Brien was under the control of Boral in every aspect of his work, was not really disputed but the Court of Appeal said that the bringing into existence of Lasmine subsumed the arrangement under which the parties operated and, in particular, subsumed the question of control.  And it is in relation to that matter which, we submit, this special leave application point arises.  There are many matters in relation to the carrying of goods by vehicle, as indicated by the trial judge and accepted by the court, in which there is a principal contractor and in which the driver or carrier, for taxation reasons, incorporates and becomes a company.  The finding of the Court of Appeal in this case automatically means that if ‑ ‑ ‑

GUMMOW J:   When you say “for taxation reasons”, you mean only producing legal consequences in relation to tax?

MR PUCKERIDGE:   Well, yes, we would submit, in the circumstances of this case, that the company really acts as a bank account.  Lasmine Pty Ltd is in fact the account in respect of which the payments of moneys were paid because Lasmine - despite the finding by the Court of Appeal that it must have been the person that instituted or had overall responsibility in relation to the system of work, such would appear to be quite contrary to the facts as found by the trial judge.  That is a question of fact.  So far as the special leave point is concerned, however, we have a situation that where parties or carriers so organise their affairs, on advice, from accountants or financial advisers, that in their particular circumstances a company may well be to their best advantage and secure the best by way of remuneration for their services.  Such an event can exclude them from any duty of care whatsoever, as might be owned by the person who has the overall responsibility in organisation in relation to the matter.

That is a matter, if the Court pleases, which we would claim raises very much a significant question in that regard; that it could not be said, on the facts of this case, that the mere bringing into existence of a company could destroy or extinguish in any way the situation as to the operation or system of work which had been put in place between the parties as indicated.

DAWSON J:   But it was not the mere bringing into existence a company; it was bringing into existence a company for a particular purpose.

MR PUCKERIDGE:   Yes, your Honour, and prior to that the parties had operated on the basis of a partnership only.  We come then to the situation, as referred to in the summary of argument as to the fact that we have also, in this situation - the Court of Appeal has announced, it would seem, a particular category which applies in a case such as this.

DAWSON J:   Is this not a case of trying to have your cake and eat it?

MR PUCKERIDGE:   In which way, your Honour?

DAWSON J:   To be employed and not be employed by the company.  I mean, you say it is only for taxation purposes, but that is no real answer, is it?

MR PUCKERIDGE:   It is no real answer in relation to that matter, but we have certainly a situation, as indicated also in the Stevens v Brodribb point,  that there is still a question of proximity.  Certainly, your Honour, if we look at questions of ‑ ‑ ‑

DAWSON J:   But Stevens v Brodribb was a case in which there was, if I may say so, a somewhat unique set up.  I know it would apply in the timber industry, but it was unique in the sense that it carried with it certain hazards.

MR PUCKERIDGE:   Your Honour, what the applicant says in this case, so far as having your cake and eating it too, is that it may well be in the present circumstances, and this is quite a common arrangement which occurs in circumstances such as applied in Mr O’Brien’s case, that just looking at it in terms of an employer and employee situation and the present often commercial arrangements which are entered into between the parties, it cannot extinguish entirely any duty of care.  That does raise the question as to overall responsibility; overall responsibility and authorisation.  Here we have a situation that the bringing ‑ ‑ ‑

DAWSON J:   If the applicant was employed by the company, it was employed by the company to deliver tiles, to load and unload tiles, was it not?

MR PUCKERIDGE:   Yes, your Honour.

DAWSON J:   And the system of work would have been the system of work of the company.

MR PUCKERIDGE:   The system of work, however, was the system of work which was organised by Boral, not by Lasmine.  Lasmine had nothing to do with the system of work as indicated by the fact that the first commercial arrangement was a partnership only; it had nothing to do with it.  Once the company was incorporated and a request was made that payments of moneys go to Lasmine, there was no objection by the company.

DAWSON J:   But was the applicant employed by the company?

MR PUCKERIDGE:   The applicant was employed, we would submit, by Boral.  The question as to Lasmine - Lasmine did pay out some moneys on an irregular basis to the applicant, and in the journal book, as referred to in the judgment, those payments were referred to as wages, but they were only on an irregular basis.

DAWSON J:   Well now if, contrary to that submission, the applicant was employed by the company, it was the company’s responsibility for the system of work, was it not, in these circumstances?

MR PUCKERIDGE:   If the company got involved in the situation; if the company had some responsibility.  But the company did not.  That raises the question as to ‑ ‑ ‑

DAWSON J:   Well, on the basis in which I put that question to you, it did; it employed the applicant.  That is the basis in which I put the question.  And that is getting involved, is it not?

MR PUCKERIDGE:   Well, your Honour, it is getting involved so far as employment is concerned, but is it involved so far as overall responsibility or organising of the activity?  The only person who organised the activity was Boral.  Lasmine had nothing whatever to do with that, as indicated again by the trial judge.  If, in fact, Mr O’Brien turned up for work and the truck was in a manner which was not in accordance with Boral’s requirements, he would have to modify, and the whole of the operation was an operation which was organised by Boral and in respect of which Boral had the overall responsibility.  And the question arises in relation to the Stevens v Brodribb point, then again - and that is referred to in the special leave application point at page 87, your Honours - dealing with the distinction which is drawn by Mr Justice Sheller in the Court of Appeal, in relation to Lasmine, and it raises the matter which your Honour raised in argument and discussion in this matter, in which he says:

In the present case Lasmine was under contract to Boral to provide Boral with a carrying service.

Well, Lasmine was not under a contract to Boral; there was nothing between Lasmine and Boral in relation to carrying on a contract service.  All Lasmine was doing was being a party to whom, at the request of Mr O’Brien, payments were made.  Again the Court of Appeal said the system of work adopted was that of Lasmine.

GUMMOW J:   On that theory they would be deemed receipts of Mr O’Brien, would they not?  I am not sure that was the objective at all.

MR PUCKERIDGE:   Well, your Honour, it certainly was not the receipts of O’Brien.  O’Brien was the person in respect of whom, as was indicated, was carrying the tiles.  O’Brien was the person who was directed by Boral how to carry those tiles.  O’Brien was the person who, before he left the premises of the truck - he would not invoice them in any way - they would be documented thereby on Boral’s own documentation or records in relation to the amount of tiles that were covered, and it was the system of work which was Boral’s, we would submit.

Your Honour, this matter does raise special leave as indicated in the summary of argument if this maintains the mere existence or bringing into being of a company is going to absolve entirely, or extinguish entirely, any duties of care which might be owed to persons in these circumstances.  The proximity question is also a very, very important one and requires special leave.  We would be relying upon circumstantial and causal proximity, that the parties were in such a situation in relation to one another; that a duty of care was owed in these clear circumstances.  It is not a case of having your cake and eating it too; it is a case of saying that, if this maintains, all that has going to happen in relation to, let us say, independent contractors - assume that they are independent contractors - is for the principal to suggest that it be advisable, perhaps, that they incorporate, that it might be of some benefit.  It will be of importance to accountants, who have been advising people up to the present stage as to the need for incorporation, because they must be aware as to whether or not incorporation, in these circumstances, immediately absolves any duty of care.

Here we have a situation in which Boral directed Mr O’Brien.  Mr O’Brien, on his Honour’s the trial judge findings of fact, was found to be under the control of direction in every aspect of the work, that he could not in any way refuse duties in this regard.  That was the clear finding as accepted.  That must, on that finding alone, we would submit if the Court pleases, bring about a situation of proximity such as would bring about a

need or a duty of care situation, and the scope of that duty of care would also be of importance.  The Western Australia decision, which has already been referred to in the summary of argument, of course, raised questions and they looked at it from the perspective purely of the overall control or organisation; the court looked at it in that review, from an organisation point of view.  They did not immediately accept that because a company was incorporated that, of necessity, brought about a situation there was no proximity.  The system of work, it is said, is that of Lasmine.

Then the court raised the question of the absent extra special hazard.  That is a matter, of course, which has been referred to in the authorities.  The extra hazardous principle is not one which has found favour with the court, and the situation is that it was more, as is indicated in Stoneman v Lyons, a question of preferable approach, might have been that as adopted in the case which they referred to of Torette House Pty Ltd v Berkman a question of authorisation.  Now here we have a clear situation of authorisation.  If, in fact, O’Brien was authorised to carry out the work as directed, does the creation of Lasmine to some extent revoke that authorisation?  Is the authorisation, once it is originally put in place, come to an end in certain circumstances?  Because the authorisation question, as indicated in Stoneman v Lyons, was a matter in which to some extent extended the extra hazardous situation. 

The situation is, your Honours, they are matters which are such as require, we would submit, special leave for the reasons as stated, that it does raise the very much matter of principle, a matter of principle which is of importance for people, even in the trade union organisation in relation to matters in that regard, and we can only but say that O’Brien was the person who did everything that he was told; Lasmine had no say in it whatsoever.  And, for the reasons as stated in the summary, if the Court pleases, we would submit it is appropriate for special leave to be granted.

DAWSON J:   Thank you, Mr Puckeridge.  We need not trouble you, Mr Maconachie.  Now, Mr Rares, is there any point in granting your application just so we may say that we need not trouble you?

MR RARES:   No.

DAWSON J:   The Court is of the view that there is insufficient doubt as to the correctness of the Court of Appeal’s conclusion, that the applicant was neither employed nor owed a duty of care by the respondent, to warrant the grant of special leave to appeal.  Special leave is accordingly refused.

MR MACONACHIE:   We ask for costs, your Honours.

DAWSON J:   Mr Puckeridge?

MR PUCKERIDGE:   I can say we made our submissions in that regard, again, in the summary of argument.

DAWSON J:   With costs.

AT 10.54 PM THE MATTER WAS CONCLUDED