High Court of Ireland Decisions

1. – whether the agent’s husband was negligent and if so whether the defendant company was vicariously liable for his negligence;

2. – whether there was a term to be implied in the parties contract imposing a duty of care on the defendant company (i) by the Sale of Goods and Supply of Services Act, 1980, or (ii) by the Court, and if so was the defendant company in breach of it;

3. – whether there are enforceable exemption terms in the parties’ contract which exempt this defendant company from liability;

4. – whether the plaintiff was guilty of contributory negligence;

5. – whether the act of alleged negligence caused the plaintiff any loss;

6. – if recoverable, the level of damages.

7. To consider these issues I must first examine the relevant provisions of the Act of 1986, and then turn to the rules of the game which the plaintiff played, and details printed on the playslips which the plaintiff obtained (a crucial aspect of the case), and the agreement entered into by the defendant company and its Lotto agent.

8. Section 1 of the Act of 1986 defines “the National Lottery” as meaning any lottery game held by the Minister for Finance or under licence in accordance with the rules contained in a scheme under s. 28 sub-s. 1 of the Act. The Act by ss. 2 and 3, permits the Minister to grant a licence to a company to hold the lottery on his behalf. A company so authorised is referred to in s. 10 of the Act as “the Company”. The Minister has in this case granted a licence on An Post National Lottery Company, a subsidiary of An Post. The Company is required by s. 28 to prepare and submit to the Minister a scheme setting out the rules of the game. Section 28, sub-s. 1 (d) goes on to provide:-

9. The rules relevant to these proceedings are known as the Lotto 6/39 Rules and are dated the 20th August, 1992.

10. Section 7 permits the company to authorise persons to sell National Lottery tickets. The authorisation must be in writing and subject to such terms and conditions as are determined by the Company with the consent of the Minister. The section also prohibits the sale of National Lottery tickets by anyone who is not the holder of an authorisation under the section.

11. Section 32 provides that the Gaming and Lotteries Acts, 1956 to 1979 are not to apply to the National Lottery.

12. The Lotto 6/39 Rules contained detailed particulars relating, inter alia, to the method of playing what is called an “on-line game,” the drawings and division of prizes, the payment of prizes, the method of claiming a prize and a number of general provisions. For the purposes of these proceedings I should draw attention to the following matters. The National Lottery is based on the use of computer technology and, not surprisingly, part of the vocabulary relating to that technology is employed in the rules. Each agent has a terminal supplied by the Company (defined as the “on-line computer” hardware and software by which Lotto transactions are entered and processed and tickets generated). They further provide that the playslip completed by the player together with the appropriate amount payable by the player is to be given to the Lotto agent (Rule 4, (a) and (c)). The Lotto agent processes the playslip through the terminal which “reads” it and produces a ticket which is then given by the Lotto agent to the player. The computer has printed on the ticket the numbers selected by the player as recorded on the playslip. Only the plays recorded by the central computer system are valid for participation in the Lotto game and the ticket is the only valid basis for claiming a prize or prizes. By accepting a ticket Rule 4 (3) (c) provides that the player:-

13. Rule 4 (3) (f) provides:-

14. This is one of the exemption clauses on which the defendant company relies. The rules impose responsibilities on the player. Rule 4 (5) (a) declares that it shall be the sole responsibility of the player to verify that the plays recorded on the ticket correspond with those marked on the playslip (and this is the rule on which the defendant company bases its contributory negligence plea). Further, Rule 4 (5) (b) provides that the National Lottery, its contractors and Lotto agents shall not be liable in any circumstances for any errors or omissions in respect of the information recorded on any ticket.

15. Rule (8) (d) reads as follows:-

16. The playslip, which plays a central role in the establishment of the contractual nexus between the parties, is defined in the rules as meaning the card supplied by the National Lottery for use in marking a player’s selections. On its face it contains 8 panels each of which contain 39 rectangular boxes numbered I to 39 inclusive. The player makes a selection by manually marking six numbers in a panel with a vertical line. On any one playslip a player may play a minimum of two and a maximum of eight plays. The minimum to be paid by a player for two plays is £1.00 and the cost of each additional play is 50p. Thus when a player, as the plaintiff did in this case, completes all play panels on a playslip the total sum payable is £4. At the bottom of the playslip is a blue arrow and underneath this the following words printed in red in block capitals:

17. The reverse side contains a paragraph headed “Lotto 6/39 - How to Win.” Underneath there is a paragraph headed “How to Play” with seven numbered sub-paragraphs. On the right hand side of the back of the playslip are four further paragraphs headed “Multi Draw,” “Prize Claims,” “Allocation of Prize Monies” and then “Rules and Regulations.” This latter part (which is of considerable significance in this case) reads as follows:-

18. This is followed in bold type with the following:-

19. The defendant submits that as a matter of contract law the playslip constituted an offer which was accepted by the plaintiff and then relies on two exemption terms in the parties’ contract. Firstly, the sentence in the first paragraph which I have just quoted which states that players acknowledge that Lotto agents are acting on their behalf in entering plays into the National Lottery computer system. The defendant submits that even if the Lotto agent’s representative was negligent he is to be regarded as the plaintiff’s and not its agent at the time, and so it is not vicariously liable. The second exemption arises from the second paragraph which I have just quoted which incorporates the provisions of the rules into the parties’ contract including, it is submitted, Rule 4 (3) (f) which exempts the Company from liability for the Lotto agent’s acts or omissions. I will call the first term “the playslip exemption” and the second “the incorporated exemption.”

20. The terms of appointment of persons authorised to act as agent pursuant to s. 7, sub-ss. 1 and 2 of the Act of 1986 are contained in a document entitled “Principal Conditions of Retail Sales Agent - Lotto Agreement.” The authorisation is declared to be for a period of one year renewable on a yearly basis. It is stated to be subject to a number of conditions. Those relevant for the present purposes are as follows. Paragraph 1 provides:-

21. Provision is made for commission payable for Lotto sales, the hours on which terminals are to operate, the power of agents to validate and pay certain prizes, the agents’ liability to maintain a current bank account and a direct debit mandate. It further provides that the National Lottery is to provide terminals and data transmission lines as well as training whilst the Lotto agent is required to provide staff and to designate to the National Lottery the names of person or persons responsible for the operation and management of the “Retail Sales Outlet.” The Lotto agent is required to ensure that the designated terminal operator attends the training programme in the use and operation of the terminal.

22. Paragraph 19 provides:-

23. Paragraph 26 provides that all on-line game tickets printed by the terminal and not cancelled “shall be regarded as having been sold by the Lotto Agent and the Lotto Agent must account for the proceeds of these tickets.”

24. Paragraph 28 provides:-

25. The legal effect of the Act of 1986, the playslip and the Rules to which I have referred can be summarised as follows:-

26. The following are the relevant facts established at the hearing of this action.

27. I am quite satisfied that the member of the Lotto agent’s staff who committed the error in processing the plaintiff’s playslips through the computer owed a duty of care to the plaintiff when doing so. I am also satisfied that the error he committed amounted to a breach of that duty. Assuming for present purposes that the Lotto agent or a member of her staff is, when receiving playslips and money from members of the public for the purpose of generating a ticket from the computer terminal, acting as the agent of the defendant company (and not as the player’s agent) it is necessary to determine whether the defendant company is vicariously liable for the negligent acts of the Lotto agent or members of her staff.

28. The applicable legal principles are well established and are not in controversy. All agents are either servants or independent contractors. A servant is a person employed by another to do work for him on the terms that he, the servant, is to be subject to the control and directions of the employer in respect of the manner in which his work is to be done. An independent contractor is one who undertakes to produce a given result but so that in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified beforehand (See Bowstead on “Agency” 10th Ed. p.18).

29. The plaintiff draws attention to the terms of authorisation of Lotto agents and in particular to the fact that agents and persons employed by agents are subject to training and direction by the defendant company in the operation of terminals and the handling of playslips and the generating of tickets and submits that this means that they can properly be regarded as servants of the defendant company for whose negligence the defendant company is vicariously liable. I cannot agree. Lotto agents are sales agents selling tickets in the National Lottery on commission. Theirs is not a contract of employment. Whilst it is true that they are instructed and trained in the operation of the computer terminal it seems to me that they are not in any way subject to the control and direction of the defendant company when they are selling tickets as to the manner in which the sales are to be effected or otherwise. To describe the relationship between the Lotto agent and the defendant company as one of master and servant would be to do violence to the well established characteristics of that relationship as well as to the plain meaning of the agent’s authorisation. A fortiori, it cannot be said that a member of the staff of the Lotto agent whilst selling lottery tickets is in a master and servant relationship with the defendant company.

30. I must hold, therefore, that even if the Lotto agent (or a member of his/her staff) can be regarded as acting as agent for the defendant company at the time the act of negligence which occurred in this case took place the defendant company is not vicariously liable for that negligence and the claim in so far as it is based in tort must fail.

31. The plaintiff has alternatively claimed damages for breach of contract. I will firstly consider the plaintiff’s claim that damages are recoverable because of a breach of a term implied in the parties’ contract by the Sale of Goods and Supply of Services Act, 1980, and in particular ss. 3, 39 and 40 of the Act.

32. For reasons already explained the contract between the plaintiff and the defendant company was not for the supply of services by the company to the plaintiff but for the sale of a lottery ticket by the defendant company and accordingly there was no term implied into the parties’ contract by virtue of the Act of 1980. Furthermore, I am of the opinion that the exemption printed on the playslip to the effect that the Lotto agent at the time was the player’s agent was brought to the plaintiff’s attention and as required by s. 40 the implied term on which the plaintiff relies had been lawfully negatived in this case.

33. The plaintiff pleaded that there is an express or, alternatively, an implied condition in his contract with the defendant company that the counterhand would use reasonable skill and care in entering his plays into the Lotto draw. Quite clearly there was no express term in that behalf in the parties’ contract. I am of the opinion that the court cannot imply such a term into the contract for two reasons. The Act of 1986 provides that the National Lottery is to be held in accordance with rules approved by the Minister for Finance (s. 28) and the rules so approved have an express condition that the National Lottery shall not in any circumstances be liable to a player for any acts or omissions by the Lotto agents (Rule 4 (3) (f)). The court cannot properly imply into the parties’ contract a term which not only is not contained in the rules but which would be directly contrary to an express term in the rules as approved by the Minister. Secondly the court will only imply a term in a contract if it is necessary to do so in order to give effect to the intention of the parties. In this case the defendant company quite clearly expressed the intention that it would not be liable for the negligence of its Lotto agents and so the court cannot imply a term which is contrary to the clear intention of one of the parties.

34. As the plaintiff has no cause of action based on an alleged breach of a term in the contract implied by the Act of 1980, or on the alleged breach of a term which the court should imply into the contract, and as the defendant company is not vicariously liable for the Lotto agent’s negligence (assuming in the plaintiff’s favour that Mr.McKay was acting as the defendant company’s agent at the time the negligent act was performed), this means that the plaintiff’s claim must fail. However, as the parties may wish to have my decision on all the issues that have been raised I will consider whether or not the defendant company can rely on the exemption clauses in the contract, assuming that it is vicariously liable for the negligence of the Lotto agents and their staff and three other issues raised by the defendant company.

35. I can summarise the plaintiff’s submissions on this part of the case as follows:-

36. There is a large body of case-law on the subject of standard form contracts and the binding effect of exemption clauses they may contain. In the present case the plaintiff accepts that a contractual relationship arose between himself and the defendant company and has, as I understand the submissions made on his behalf, accepted that the contract arose when he filled in the playslip, paid the applicable charge, and received a ticket from the computer terminal. Dispute, however, arises as to the terms on which the parties contracted. I have found as a fact that the plaintiff knew that there were rules printed on the reverse side of the playslip and that he did not read them. This finding means that, subject to certain qualifications to which I will refer in a moment, the plaintiff is bound by them (see Parker v. South Eastern Railway Co. Ltd (1877) 2 C.P.D. 416 at p. 423) and they are enforceable terms of the parties’ contract. And this applies both to the term printed on the reverse side of the playslip by which a player accepted that the Lotto agents acted on their behalf in entering plays into the National Lottery computer system and also to the Rule 4 (3) (f) incorporated into the contract by the term on the reverse side (see Thompson v. London Midland and Scottish Railway Company [1930] 1 K.B. 41). This means that, in principle, the term printed on the reverse of the playslip which I have just quoted had contractual effect as did Rule 4 (3) (f) of the rules (which provided that the National Lottery would not in any circumstances be liable to a player for any act or omission by Lotto agents), and will be enforced by the courts.

37. The qualifications to which I have referred are as follows. When it is generally known that tickets and other documents which contain conditions are not read by those to whom they are given then there is an implied understanding that there is no condition included in them which is unreasonable to the knowledge of the party tendering them. (See Parker v. South Eastern Railway Co. (1877) 2 C.P.D. 416, 428, and Thompson v. London Midland and Scottish Railway Co. Ltd [1930] 1 K.B. 41, at p. 50). So, if it can be shown in this case that either of the exemption clauses on which the defendant company relies was unreasonable the plaintiff is not bound by it. But there is a further qualification. The party receiving a document which forms part of a contract between him and the party tendering it may know that it contains conditions which he does not take the trouble to read. But if the condition relied on by the party tendering the document is particularly onerous or unusual that party must show that it has been fairly and reasonably brought to the other party’s attention. If he cannot do so, then he cannot rely on it. This proposition is illustrated by the following cases:

38. The Court of Appeal held that the car park proprietors could not rely on them. Counsel for the defendant had in fact admitted that the defendant had not done what was reasonably necessary to give the plaintiff notice of the exempting condition, and Denning M.R. (at p. 690) stated:-

39. The defendant was an advertising agency. It required photographs of the 1950s for presentation to a client. The plaintiff ran a library of photographic transparencies and at the defendant’s request dispatched a number of photographs for the defendant’s consideration. The bag in which they were sent contained a delivery note which stated that the photographs were to be returned by the 19th March. The note contained 9 printed conditions one of which (Condition 2) provided that if the transparencies were not returned within 14 days from the date of delivery ‘A holding fee of £5.00 plus VAT per day will be charged for each transparency which is retained by you longer than the said period of 14 days’. The transparencies were not returned until the 2nd April and the plaintiff sent an invoice for £3,783.50 being the holding charge calculated at £5 per day per transparency. The defendant refused to pay. The trial judge held that they were liable, but this decision was reversed, the Court of Appeal holding that when a condition in a contract is particularly onerous or unusual and would not be generally known to the other party the party seeking to enforce that condition had to show that it had been fairly and reasonably brought to the other party’s attention.

40. This case explicitly recognised the principle that, whilst in the earlier ticket cases the court looked at the conditions as a whole and considered whether the printed conditions as a whole had been sufficiently brought to the customers’ attention so as to make the set of conditions part of the parties’ contract, the court would also consider if there was a particularly onerous or unusual condition in the contract. If so, then the party seeking to enforce it must show that it was fairly brought to the notice of the other party (see page 437).

41. The basis for the refusal of the courts to permit a party to rely on certain contractual terms is a two-fold one. Firstly, by the application of the law of contract; secondly, by the application of the concept of fair dealing in the particular circumstances (see Bingham Interfoto Picture Library Ltd. v. Stiletto Visual Programmes Ltd. [1989] QB 433 at p. 439). If a party does not do what is reasonably necessary to draw attention to the fact that the document (including a ticket) being tendered contains conditions of a contractual nature and the other party does not know this fact, then he/she has not given consent to the conditions (see Mellish, L.J. in Parker v. South Eastern Railway Company (1877) 2 C.P.D. 416 at page 423). If the document being tendered contains conditions of an unusual or particularly onerous nature the party tendering it must take reasonable steps to draw attention to such conditions in order to establish that the other party has agreed to it. The refusal to enforce the conditions is also justified if it can be shown that in all the circumstances of the case it

42. Turning, then, to the two exemption terms in this case it seems to me that both pass the test of reasonableness in all the circumstances. Firstly, as to the incorporated exemption, by exempting the defendant company from vicarious liability for the negligent acts of Lotto agents Rule 4 (3) (f) is merely declaratory of the existing legal position, and is therefore reasonable.

43. Secondly, as to the playslip exemption I think that the agency agreement must be construed as meaning that the Lotto agent is acting as the company’s agent (not the player’s agent) when receiving playslips and entering them into the terminal. This means that the contractual term of the agreement contained in the playslip exemption is not declaratory of the existing agency relationship - rather it draws attention and gives effect to the rule by which the company is not liable for the agent’s negligence. But the playslip exemption is declaratory of the existing legal position for another reason – it gives recognition to the legal relationship arising from the rules authorised by the Minister.

44. Both the playslip exemption and the incorporated exemption contained in Rule 4 (3) (f) can be justified as being reasonable on another ground, as follows.

45. The risks involved in holding the National Lottery in the absence of such exemptions would leave the defendant company open to fraudulent claims and the defendant company is entitled to reasonable protection from such claims. As can be seen from the circumstances of this case a malefactor could complete two duplicate playslips and after the draw complete another playslip with the winning number on it and then claim fraudulently that the Lotto agent had negligently failed to enter the playslip into the computer and deliver him a ticket. This fraud would not be easy to detect. Indeed it seems to me that the absence of a protective exemption clause might make the whole National Lottery unworkable.

46. I am also of the opinion that neither of the terms relied on is particularly onerous or unusual. Of course, every exemption clause which limits the liability of one party imposes some detriment on the other. The court must look at all the surrounding circumstances to see whether an unduly burdensome and therefore unenforceable term was imposed. In doing so in this case, bearing in mind the risk of fraudulent claims to which I have referred, it cannot be said that either of these terms is exceptionally onerous. It is to be noted that the exemption is not a general one in that it does not exempt the defendant company from liability for the negligence of its own servants and employees - its ambit, therefore, is comparatively limited. It is also to be noted that the two exempting clauses are not by any means unusual in that it is not uncommon for one party to include an exempting term in a contract by which its possible vicarious liability for at least some of the acts of its agents is excluded.

47. I conclude, therefore, that as the plaintiff knew there were rules printed on the back of the playslip (but did not bother to read them) the defendant company can rely on both exemption terms because it was not required to give special notice of these particular terms to the purchasers of Lotto tickets. If I am wrong in this conclusion it seems to me that the defendant company had, in all the circumstances, done what was reasonably necessary to bring to the notice of purchasers of Lotto tickets the exempting term relating to the status of the agent printed on the back of the playslips by drawing the attention of purchasers to “instructions” on the rear of the playslip and by printing the exempting term in such a way as to make it readily accessible to, and understandable by, readers of the matter printed on the reverse side of the playslip. This conclusion also means that had the Act of 1980 applied to this transaction (because the defendant company was delivering a “service”) that there had been compliance with s. 40 of the Act of 1980 in that the term was fair and reasonable and had been specifically brought to the plaintiff’s attention.

48. Three other issues were raised on behalf of the defendant company to which I will briefly refer.

49. The defendant company submitted that the plaintiff had been guilty of contributory negligence. I think this is so. The plaintiff was bound by the term of the contract which incorporated the rule requiring the examination of the ticket by a player after its receipt (Rule 4 (5) (a)) and as this rule was breached contributory negligence is established. I am of the opinion, however, that the degree of fault involved in the plaintiff’s contributory negligence is slight as a purchaser could reasonably conclude that in all probability the terminal computer was working properly and its operator carrying out the simple functions required of him in a proper way. Assuming, therefore, that the defendant company was vicariously liable for the Lotto agent’s husband’s negligence I would consider that he was 90% responsible for the damage which the plaintiff suffered, and the plaintiff responsible for 10%.

50. It is claimed on behalf of the defendant company that, assuming that it is vicariously liable for the negligent act of the Lotto agent’s husband, the plaintiff has failed to establish on the balance of probabilities that this act of negligence caused the damage claimed. This submission is based on the fact, established by the evidence, that had the operator not been negligent the terminal would not have generated a ticket for the plaintiff because one of the panels had been incorrectly filled up. It is submitted in these circumstances that the negligent act did not deprive the plaintiff of a winning ticket. It seems to me, however, that had the terminal failed to generate a ticket the error would have been immediately noticed. I think that on the balance of probabilities a corrected playslip would have been inserted and a ticket generated with the winning numbers on it. I conclude therefore that if liability for the negligent act was established, the necessary link between it and the plaintiff’s loss was also established.

51. The plaintiff, it is claimed, is only entitled to £14.00 damages as this was the loss sustained by the plaintiff when the wrongful act (be it breach of contract or act of negligence) occurred. I cannot agree with this submission. The plaintiff, it seems to me, has established that the wrongful act alleged resulted in the failure of the plaintiff to obtain a winning ticket and that the loss he suffered which flowed from the wrong which occurred was one half of the value of the jackpot.

52. For the reasons earlier given I must dismiss the plaintiff’s claim.