OH & S Update

• June 2006

On the 16th May 2006 the decision of Sweeney v Boylan was handed down by the High Court.  The case examined whether a company could be held vicariously liable for the negligent actions of an independent contractor. 

By a majority, it was held that whilst an employer will generally be vicariously liable for an employee’s negligence, someone engaging an independent contractor will not generally be vicariously liable for the contractor’s negligence.

VICARIOUS LIABILITY

Vicarious liability is when an employer is held legally responsible for negligent acts or omissions performed by employees in the course of employment, regardless of whether the employer is personally at fault.

BACKGROUND

In August 2000 Mrs Sweeney went to buy a carton of milk at a service station near where she lived. When she opened the door of the refrigerator in which the milk was kept, the door came off and hit her on the head. She suffered injury to her head, neck and hand.

The refrigerator which caused the damage was owned by Boylan Nominees.  Under the terms of the lease agreement, Boylan agreed to service and maintain the refrigerator. Boylan subcontracted the maintenance of the refrigerator to a mechanic, Mr Comninos. Mr Comninos was an independent contractor.

About four or five hours before Mrs Sweeney was injured by the fridge door, those operating the service station had informed Boylan that the door of the refrigerator was not closing properly. Mr Comninos came to the premises, tightened the screws in the hinges and, after demonstrating to the manager of the service station that the door was working correctly, left the premises.

DECISION

The question that arose at trial was whether Boylan Nominees could be held vicariously liable for the negligence of the independent contractor, Mr Comninos.

Trial Judge

The trial judge held that Boylan Nominees was vicariously liable for Mr Comninos' negligence. He concluded that Mr Comninos "was acting as a servant or agent of Boylan with the authority and the approval of Boylan to undertake the work that he did "

New South Wales Court of Appeal

The Court of Appeal decided that Mr Comninos was an independent contractor on the basis that there was "no control of his work by Boylan; no mutuality of obligations; and other indications, such as working under the serviceman's own business name and providing his own tools and equipment, which established that the serviceman carried on his own business." Consequently, there was no vicarious liability of Boylan for the serviceman's negligence.

High Court

Mrs Sweeney obtained special leave to appeal this decision to the High Court.

Majority

In determining whether Boylan Nominees were vicariously liable for the repairs carried out by Mr Comninos, the majority examined the relationship which existed between the two.  The question was whether or not Mr Comninos represented Boylan when carrying out repairs to the refrigerator.

Employee or Contractor?

The majority drew the distinction between employees (for whose conduct the employer will generally be vicariously liable) and independent contractors (for whose conduct the person engaging the contractor will generally not be vicariously liable.)

On the facts of the case, it was found that the Mr Comninos was indeed a contractor.  A number of factors led the majority to draw this conclusion:

  • He performed duties at Boylan's request, invoicing Boylan accordingly for the hours worked and the cost of spare parts
  • Boylan did not provide Mr Comninos with a uniform, tools, equipment or vehicle in which to transport tools and equipment
  • Mr Comninos' van was marked with a name derived a company of which he was a director
  • Boylan made an effort to verify that Mr Comninos had proper workers' compensation and public liability insurance
  • Boylan did not control the way in which the Mr Comninos worked
  • Mr Comninos was not presented as an emanation of Boylan.

The majority made it clear that even where it was shown that Mr Comninos' actions were intended to benefit Boylan, or were undertaken to advance some purpose for Boylan; this did not in itself demonstrate that Boylan was vicariously liable for his conduct.

The majority held that Mr Comninos was working towards his own interests and not those of Boylan Nominees.  They found that he was not an employee and thus they dismissed the appeal with costs.

Minority

Justice Kirby, held that Boylan was vicariously liability for Mr Comninos' negligence.  Although accepting Mr Comninos was an independent contractor, Kirby J held that he carried out his activities as Boylan's representative, standing in Boylan's shoes and not acting in an independent capacity.  Kirby J thus agreed with the decision of the trial judge.

IMPLICATIONS

Sweeney v Boylan Nominees is an important case for helping to establish whether a worker is an employee.

Where the worker is held to be an employee, vicarious liability of the employer still stands, however, if the worker is shown to be an independent contractor, this vicarious liability will not extend to the company or individual engaging the worker's services. 

There are certain factors a company/individual can look at to determine whether they may be vicariously liable for the services of a contractor.  These include:

  • Is the worker held out as an emanation of your company?
  •  Does the worker supply their own tools, transport and uniform?
  • Does the worker supply you/your company with invoices after completing work and charge for equipment and labour?
  • Does the serviceman work under his/her own business name?
  • Does the worker make his/her own decisions or do they perform work under your strict guidance?
  • Does the worker have their own workers compensation and public liability insurance?

The above factors were found to be crucial in determining the relationship which existed between Mr Comninos and Boylan Nominees by the majority in the recent High Court case.  They may be used as a guide in your own business to determine the status of workers carrying out services for you.

CONTACT GRECH PARTNERS

Independent contractors play an integral role in the delivery of services for companies.  An understanding of the status of those carrying out services for you is essential for business success.  If you would like legal assistance or have any questions regarding the implications of this decision please do not hesitate to call Grech Partners on (02) 9851 2500.

This publication contains general information only. It is not provided as legal advice. Professional advice should be taken before any course of action is pursued, or any information herein relied upon.