Vicarious liability – workers on ‘loan’ & contractors

QBE v Orcher; Bowcliff v Orcher [2013] NSWCA 478

1 McCOLL JA: I agree with Tobias AJA’s reasons and the orders his Honour proposes.

2 MACFARLAN JA: Subject to the following, I agree with the judgment of Tobias AJA.

3 As, for reasons given by his Honour, it was not established that Mr Paea was negligent in the performance of his duties, determination of the question of whether Bowcliff or DSSS would have been vicariously liable for any breach of duty on his part does not affect the disposition of the appeals. Nevertheless, I note my disagreement with his Honour’s conclusion that it would have been DSSS rather than Bowcliff that would have been so liable (see [153] – [152]). On my view of the evidence, Mr Paea, although employed by an independent contractor, was integrated into Bowcliff’s business in a manner that entitled Bowcliff to direct Mr Paea not only what he was to do but how he was to do it (McDonald v The Commonwealth (1945) 46 SR (NSW) 129 at 131 – 2). The present case is distinguishable from Sweeney v Boylan Nominees Pty Limited [2006] HCA 19; (2006) 226 CLR 161 where the mechanic who was contracted to fix a refrigerator door “supplied his own tools and equipment, as well as bringing his skills to bear upon the work that was to be done” (at [32], citation omitted). The work that he did was done “as a principal pursuing his own business or as an employee of his own company pursuing its business” (at [33]). In the present case, Bowcliff had its own qualified security guards who were in a position, and entitled, to give Mr Paea instructions about how he was to do his job and Mr Paea was integrated into the hotel’s security arrangements.




153 Accordingly, in my view the evidence of Mr Paseka which was admissible against Bowcliff ultimately takes the matter no further in terms of any breach of duty on the part of Mr Paea than did that admitted against DSSS. Of course, Mr Paea was not employed by Bowcliff but by DSSS as a consequence whereof only DSSS could be vicariously liable for any breach of duty on Mr Paea’s part. Nevertheless, as recorded at [14] above the respondent submitted that as Mr Paea was under the direction and control of Mr Lokotui, Mr Keough and Mr Davies, he had been subsumed into the hotel security system so that Bowcliff was vicariously liable for any breach of duty on the part of Mr Paea.

154 To support this proposition reliance was placed upon the following passages from the judgment of the Court delivered by Jordan CJ in McDonald v The Commonwealth (1945) 46 SR (NSW) 129 at 131-132:

“When an employer agrees with a third party to make the services of one of his employees available to the third party, and the employee, after commencing to perform the stipulated services, injures someone by negligence, the question arises whether the employer, the third party, or only the employee himself is liable to the injured person. … It has been said that the test is ‘in whose employment the man was at the time when the acts complained of were done, in this sense, that by the employer is meant the person who has a right at the moment to control the doing of the act’ or ‘whether the servant was transferred, or only the use and benefit of his work.’ … The more authoritative modern decisions emphasize the point that, unless of course the act of the employee was outside the scope of the employment of both general and particular employer, the liability of the former or the latter depends upon the nature and the extent of the control transferred to the latter or retained by the former … and liability is not shifted to the particular employer by the fact that even a considerable degree of control is exercisable by him; but the greater his right to control, the greater the likelihood that it is open to a tribunal of fact to find that his has become the relevant control, and that a shift of liability has occurred. … But in every case the question is one of degree. From certain facts, if accepted as proved, it would follow as a matter of law that the liability remained with the general employer. From others, that it had shifted to the particular employer. Between the two extremes there is a wide field in which a finding of liability on the part of either by a tribunal of fact would not be disturbed.

If by the agreement the employer vests in the third party complete, or substantially complete, control of the employee, so that he is entitled not only to direct the employee what he is to do but how he is to do it, and the employee was performing services stipulated for, or authorised by, the third party at the time, the third party is liable: … If the control vested in the third party is only partial, so that, although the third party is entitled to give directions to the employee as to what he is to do, he is not entitled to direct him how he is to do it, the employer remains liable.” (Emphasis added and citations omitted.)

155 The respondent submitted that the present case fell within that part of the Chief Justice’s reasons which I have emphasised. However, to succeed with that submission, the evidence would need to establish that there was a substantially complete transfer of control by DSSS to Bowcliff of the services of Mr Paea to the point where he could not only be directed what to do but how to do it.

156 In my view, the evidence does not come close to establishing that level of control. Bowcliff engaged through ACMS trained and licensed security guards (Messrs Paea and Stegnajaic) to supplement its own security personnel such as Mr Lokotui. The latter could no doubt instruct Mr Paea as to where he was to patrol but did not and could not instruct him how to perform the job of a professional security guard. This was unnecessary as the DSSS guards were engaged by Bowcliff because of their expertise as trained and licensed security guards.

157 As noted at [124] above, the respondent also relied in this present context on this Court’s decision in North Sydney Leagues Club v Berecry. Relevantly, there appear to have been two issues in that case. The first was whether the Club had delegated its duty of care to the independent contractor who had supplied the security personnel. It was held that it had not. There could be no suggestion in the present case of any such delegation by Bowcliff to DSSS. The second was whether the Club was liable for the negligence of one of the security personnel by failing to intervene to prevent him assaulting a patron inside the Club’s premises.

158 The facts of that case with respect to the second issue have no parallel with those in the present case. In particular, the trial judge found in Berecry that the security officer had taunted and provoked the plaintiff inside the Club, that he continued to do so as the plaintiff was leaving the premises and that his provocative behaviour was observed by Club personnel who were standing nearby: see at [20]. It was found that the Club had ample and observable warning that the situation would become dangerous but its officials took no action to intervene. The primary judge did not rely on this decision and in my opinion he was correct to ignore it. It does not on the facts of this case assist the respondent.

159 The respondent nevertheless submitted that Bowcliff could not avoid liability by pointing to the fact that Mr Paea was on the street. His failure to act was a failure to give effect to Bowcliff’s system. In other words, there was a direct failure by Bowcliff to prevent Mr Paseka, as someone who was not trained as a security guard, from intervening in the disturbance between the respondent and Izzy which its security system required.

160 In my view this submission cannot be sustained once the McDonald approach is rejected and the Berecry approach, where the conduct of the security guard was observable to the Club’s officials, is distinguished, it follows that the respondent’s case against Bowcliff must fail as having no legal or factual basis.


David Cormack – Brisbane Barrister.



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