Date: Tue, 17 Jan 2006 13:05:52 +1100

From: Neil Foster

Subject: Vicarious vicarious liability

Dear Lionel (and others);

As I understand your question (btw we did have a discussion on this case on this list when it first came out, of course) the issue is why there should not be vicarious liability for the actions of an employee who is themselves vicariously liable. I may be wrong but I think the obvious answer is that on a traditional analysis it is fairly rare (and may be conceptually impossible) for someone who is an "employee" to themselves have "sub-employees".

Just to take the main Australian authority, in Stevens v Brodribb (1986) 160 CLR 16 Mason J used "delegation of work by the putative employee" as a key indicia of the relationship between the parties being that of independent contract rather than employment. In that case that fact Gray, the bulldozer driver, employed his son occasionally to do the work counted against there being an employment relationship. Indeed, it may be more than simply one of a number of indicia - Mason J noted that "The power to delegate is an important factor in deciding whether a worker is a servant or independent contractor", citing AMP v Chaplin (1978) 18 ALR 385 at 391 where the Privy Council had said that a power of "unlimited delegation" (ie the ability to employ others to do the work or, presumable, to assist in the work) was "almost conclusive" against a contract of employment. This approach was reaffirmed by the NSWCA last year in Australian Air Express Pty Ltd v Langford [2005] NSWCA 96. It may not be true to say that it is "conclusive" but it seems it would be pretty rare for an Australian court at least to recognise that someone who could employ someone else who was themselves an employee.

If that is the case it will explain why the CA in Viasystems did not go on to consider the issue of whether the second defendant (Darwell Pty Ltd) were vicariously liable for the vicarious liability of Hall & Day (the partnership who were the third defendants). Hall & Day were not employees of Darwell. (Nor, in case it needs saying, were Darwell, a company, the "employee" of T&T, because as far as I can recall it has never seriously been argued that a company can provide the "personal" service required of an employee. But someone may be able to correct me there too, I suppose.)

In fact the curious result of Viasystems (which in case it is isn't apparent I am by no means convinced is correctly decided) is that the company Darwell, 2nd defts, were found vicariously liable for the actions of young Darren Strang when being supervised by Horsley, but Horsley himself was "self-employed" (see para [3]). For all that we know from the facts as recited by the court, Darwell might have actually been the employer of nobody at all. Yet they are still fixed with vicarious liability ...

The other point perhaps worth making is that in Rix LJ's judgement, while his Lordship concurs in the result of dual vicarious liability, he differs on the question of whether "dual control" is the criterion. He seems to prefer (see para [79]) the question whether "the employee in question, at any rate for relevant purposes, is so much a part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence".

Regards
Neil Foster

Neil Foster
Lecturer & LLB Program Convenor
School of Law
Faculty of Business & Law
University of Newcastle
Callaghan NSW 2308
AUSTRALIA
ph 02 4921 7430
fax 02 4921 6931

>>> "lionel.smith" 17/01/06 6:53 >>>

This recent case in the English CA

Viasystems (Tyneside) Ltd. v Thermal Transfer (Northern) Ltd & Ors [2005] EWCA Civ 1151

raises some interesting questions for any theory of VL, namely if A 'lends' an employee to B, and the employee causes harm through negligence, is A or B or both vicariously liable?

Answer: both can be liable if there was dual control. In this case, both were equally liable. An assumption in the cases that it must be one or the other is unfounded.

The case also raises (though it does not address in this form) the related question of how far up a chain VL can go, ie if B has hired A and A hired the employee who was later negligent ... same question. In the real facts, the plaintiff hired TT Ltd to do work, which subcontracted part of it, which sub-subcontracted part of it, and the negligence was of an employee of the sub-subcontractor who was temporarily under the direction of (an employee of) the sub-contractor. There was a contractual claim against TT Ltd and the issues related to tort liability of the sub-contractor and sub-sub-contractor. The court framed the question as in the previous paragraph, asking whether the sub-contractor could be liable for the employee's negligence since they had borrowed the employee in some sense. I wonder why one could not just work up the chain, thus avoiding any question about whether the sub-contractor had any direct control over the employee of the sub-sub-contractor?

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