The High Court on Non-Delegable Duties, Contractors & Roads by Roger Walter | March 2007 Expertise Area | General Insurance
Introduction On 27 February 2007 the High Court of Australia handed down its decision in Leichhardt Municipal Council v Montgomery. In allowing the appeal the High Court held that the Council did not owe a non-delegable duty of care in circumstances where, in its capacity as roads authority under the Roads Act 1993 (NSW), it had engaged an independent contractor to carry out upgrading work. Mr Montgomery, who was walking along a public footpath on the evening of 7 April 2001, was injured when he fell into a telecommunications pit, which had been left in a dangerous state by the Council’s contractor in the course of carrying out the upgrading work. The telecommunications pit had been left with a broken cover and with carpet placed over it. The contract between the Council and its independent contractor (Roan Constructions) required that access be maintained to shopfronts and residences at all times and the placement of artificial grass or carpet over the top of the road or footpath base so as to provide clean access to all commercial properties. Mr Montgomery’s case in negligence against Roan Constructions was settled before trial on the basis of a verdict for Mr Montgomery in the sum of $50,000.00 inclusive of costs. As against the Council, damages were assessed at $264,450.75 but then adjusted so as to avoid double compensation in respect of the $50,000.00. The District Court Judge held that it was not necessary to reach a view about breach of duty of care by the Council as Mr Montgomery’s entitlement to damages arose on the basis that the contractor’s negligence amounted to a breach of the Council’s non-delegable duty of care. This exception to the general rule that principals are not liable for the acts or omissions of their independent contractors was upheld on appeal to the NSW Court of Appeal but found not to exist in the High Court. Following some English authority and some earlier decisions of the NSW Court of Appeal, Hodgson JA, with whom Mason P and McColl JA agreed, said in his judgment in the NSW Court of Appeal: [W]here a road authority engages a contractor to do work on a road used by the public such as to involve risk to the public unless reasonable care is exercised, the road authority has a duty to ensure reasonable care is exercised; and the road authority will be liable if the contractor does not take reasonable care. However, the road authority will not be liable for casual or collateral acts of negligence by the contractor. This pronouncement of principle was at the heart of the appeal to the High Court where it was found by all five judges to be erroneous. The High Court has remitted the matter to the NSW Court of Appeal so that with respect to a notice of contention with which it had found it unnecessary to concern itself, there might be a finding as to whether the Council was, through fault on its part, in breach of its duty of care. The three main issues considered in the High Court were as follows and these are discussed under separate headings in this article:
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1. 2.
3.
Whether the statutory provisions governing the duties and liabilities of the Council in the performance of road work are consistent with the existence of a non-delegable duty. Whether the restatement of the general liability of highway authorities in the High Court’s decision in Brodie v Singleton Shire Council (2001) is consistent with the existence of a non-delegable duty of care. Whether the non-delegable duty of care asserted in the present case is consistent with Australian case law as to the existence of non-delegable duties of care in circumstances in which they have been found to exist.
Statutory Provisions Section 145 of the Roads Act 1993 (the Act) deems roads authorities such as the Council to be the owner of public roads and adjacent footpaths. In s146 the Act provides that that the dedication of land as a public road does not constitute the owner of the road as an occupier of land or impose any liability the owner would not have if the owner were merely a person having the care, control and management of the road. Section 71 of the Act gives a roads authority the power to carry out road work on any public road for which it is the roads authority. The High Court found no suggestion in the Act that a Council may not delegate to independent contractors and no such proposition formed part of Mr Montgomery’s assertion that a non-delegable duty existed. Gleeson CJ described circumstances where responsibilities can be non-delegable in the sense that they give rise to duties requiring a particular person to act personally. His Honour described this as “strict non-delegability” and observed in respect of it: That kind of non-delegability should not be confused with a case where the engagement of a third party to perform a certain function is consistent with the exercise of reasonable care by a defendant, but the defendant’s legal duty is not merely to exercise reasonable care but also (if a third party is engaged) to ensure that reasonable care is taken. In such a case, the third party’s failure to take care will result in breach of the defendant’s duty. The Act was found to be silent as to any particular standard of performance to be observed by a roads authority, its employees or contractors. In particular, the High Court found that there was nothing in the Act to suggest that a roads authority such as the Council had a responsibility to ensure that reasonable care be taken by its contractors. That said, Gleeson CJ explained that it is consistent with the Act that a roads authority: 1. 2. 3.
has a duty to take reasonable care to prevent injury to a person from the carrying out of road works; remains under that duty even if a contractor is engaged to carry out the work; and cannot discharge that duty merely by exercising care in the selection of the contractor – such care “may well involve a certain level of scrutiny of the contractor’s plans and supervision of the contractor’s activities”.
These issues may be among the matters to be considered in resolving the question left open in the passage of the case from the District Court to the High Court: i.e. whether the Council was in breach of its duty of care.
Brodie v Singleton Shire Council In Brodie and the related Ghantous case the High Court dispensed with the old distinction between non-feasance and misfeasance that had emerged from the law of public nuisance. Leaving to one side the subsequent statutory re-introduction of some immunity (e.g. see s45 of the Civil Liability Act 2002 (NSW)), Brodie meant that roads
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authorities no longer had the benefit of the exceptional immunity of non-feasance if a failure to maintain a road or footway had given rise to a foreseeable risk of injury. The majority in Brodie held that the liability of highway authorities should be treated as covered by the modern law of negligence and formulated a duty of care to apply in cases of non-feasance as well as misfeasance: a duty to take reasonable care that the exercise of, or failure to exercise, powers by such authorities does not create a foreseeable risk of harm to road users. The Council in the present case mounted an argument that the restatement of the law in Brodie not only removed special immunities for highway authorities, but also, by inference, required the removal of special liabilities such as the non-delegable duty found to exist before Brodie in the NSW Court of Appeal’s decision in Roads and Traffic Authority v Scroop (1998). While that particular argument was not successful, the Council did succeed in establishing that the absence of the non-delegable duty was consistent with the law as restated in Brodie. Gleeson CJ said in the present case: The formulation of the duty of care given in Brodie, in its application to cases of misfeasance, and to a case where a roads authority has exercised its powers by engaging an independent contractor, is consistent with what I have already indicated is the construction I would place upon the Roads Act. It is not a special duty to ensure anything; certainly not a duty to ensure that no worker behaves carelessly. It is a duty to exercise reasonable care. It is not discharged merely by engaging a reputable contractor. The exercise of reasonable care for the protection of road users, in a case where an independent contractor is engaged, may be affected by the nature of the work involved and the resources respectively available to the roads authority and the contractor. What is required of a local council which engages a major construction company to build a bridge or tunnel may differ from what is required of another council in different circumstances. The content of a requirement of reasonable care adapts to circumstances, unlike the content of a requirement to ensure that care is taken.
Non-Delegable Duties of Care The ‘strict non-delegability’ mentioned under the Statutory Provisions heading above is a discrete issue that has no bearing on the matters that required consideration by the High Court in the present case, in which the discussion of non-delegable duties concerned the engagement of a third party in accordance with a right to delegate. In the High Court case Kondis v State Transport Authority (1984) Mason J referred to the special non-delegable duty of care that may exist when third parties are engaged. While referring to the few situations giving rise to a nondelegable duty, his Honour said that “the law has, for various reasons, imposed a special duty on persons in certain situations to take particular precautions for the safety of others”. Helpfully, Kirby J in the present case re-stated those recognised situations as follows: employer/employee; hospital/patient; school authority/pupil; and occupier/ contractual entrant in circumstances involving extra-hazardous activities. In the present case it was submitted unsuccessfully on behalf of Mr Montgomery that roads authority/road user is analogous to these recognised situations or relationships and that a finding of non-delegable duty was in accordance with existing principles. The High Court saw no such similarity. One difficulty with the submission was that the principles underlying and identifying the established situations are not entirely clear. In his characteristic way, Kirby J spent some time in his reasons in the present case considering the policy and principles relevant to the established situations that give rise to non-delegable duties. His Honour concluded that one criterion which distinguishes the established situations from others is that the relationship between the parties is one in which the party owing the duty has, in the context of a substantial risk being associated with an
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enterprise it conducts, assumed a particular responsibility towards the other party, such that an affirmative duty to act in relation to that other party emerges. This is a duty that can be expressed positively, not merely in terms of a duty to refrain from doing something that involves a foreseeable risk of injury. His Honour held in relation to the roads authority/road user relationship: The dependence that exists in this relationship does not rise to the level of particular vulnerability or special dependence evident in relationships such as hospital/patient, employer/employee and school authority/pupil.
Implications In a broad sense, this appeal to the High Court was undertaken to clarify the law applying to roads authorities in circumstances where a line of precedent, as manifested in Scroop, had led the NSW Court of Appeal to find that the Council as a roads authority was under a non-delegable duty of care to road users, such that, irrespective of any question of fault on its part, it became liable for the negligence of its contractor. In short, the Council was looking to reverse the finding that it was vicariously liable for the negligence of its independent contractor. In this decision the High Court has found that the Scroop line of authority should be overruled, so the desired clarity has been achieved and the general rule for roads authorities now is that they will not be held vicariously liable for the negligence of their independent contractors. The High Court’s decision also reinforces the existing and well established view that the list of situations in which a non-delegable duty of care will be found to exist (employer/employee; hospital/patient; school authority/pupil; and occupier/contractual entrant in circumstances involving extra-hazardous activities) are rather special, limited in number and not prone to expansion.
For more information, please contact: Roger Walter Partner T: 02 8257 5736 roger.walter@turkslegal.com.au
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