Dear Colleagues;

The worker Kelly was an employee of Ngarda, a mining company. Scanlan had been engaged by TSS Recruitment, a “labour hire” firm (though there is some dispute about this label) to operate an excavator for Ngarda. Scanlan was alleged to have dropped part of the excavator onto a truck being driven by Kelly so as to have caused him injury. In the circumstances the court found that this was not a careless act and so no-one was liable. But the question that had been argued at trial was whether TSS could be held vicariously liable for the wrong committed by Scanlan, if he had been found careless.

The majority of the Court (McLure P, Murphy JA) found that authority to direct Scanlan’s work had been completely transferred by TSS to Ngarda, and that as a result there had been a “transfer of vicarious liability” so that TSS were no longer able to be held responsible for anything that Scanlan did wrong. See McLure P at [55]-[56] who referred to the “pro hac vice” cases and said that the issue was, not whether “employment” was transferred, but whether “vicarious liability” was transferred. Her Honour held that this was one of the “exceptional” cases referred to in Mersey Docks where there had been a transfer- at [59] she said that TSS were not really a labour hire firm but were more in the nature of Ngarda’s “HR” department, simply channeling pay for workers who were completely under the control of Ngarda. At [63] her Honour considered briefly whether a “dual vicarious liability” doctrine ought to be adopted following Viasystems and CCWS but concluded, on the basis of the reluctance of the NSWCA in Day to do so, that the case did not require this issue to be decided. Murphy JA generally agreed.

There was dissent on this point from Mitchell J. See from [86] ff. Again his Honour refers to a “transfer of vicarious liability” as the relevant doctrine, explicitly saying it does not require a “”transfer of employment”. But his Honour emphasised, at [89]-[90], that a notional employer who claims there has been such a transfer bears a “heavy onus”, for good reasons to do with not multiplying litigation and making liability clearer. In this case he took the view that the onus had not been discharged by TSS. At trial the precise terms of the contract under which Scanlan was doing work for Ngarda could not be produced, and on general principles it was a bad idea to assume that they had completely given up all options to issue orders to someone who was still their employee. At [110] his Honour also agreed that the issue of dual vicarious liability did not need to be resolved in these proceedings.

Colleagues who have read my comments on these issues previously may guess that I think the dissent from Mitchell J was quite compelling. If the pro hac vice doctrine is to be applied authority is clear that it requires a heavy onus which I do not think was discharged here. In addition, despite the comments of all the members of the court here, I am not persuaded that it is appropriate to speak of a “transfer of vicarious liability” instead of a transfer of employment. The classic authorities speak in terms of the whole employment relationship. Contrary to what Murphy JA says here at [71], I do not think it is helpful to “atomise” the notion of employment, regarding people as “employed” for some purposes and not for others. The notion of employment, for good or ill, is a basic “building block” of other legal doctrines, and to see it as variable from one context to the next undermines the coherence of the law, in my view.

Regards

Neil