Die Jovis,
20° Decembris 1956
Upon Report from the Appellate Committee, to
whom
was referred the Cause Lister against Romford Ice &
Cold
Storage Company Limited, that the Committee had
heard Counsel, as
well on Monday the 5th, as on
Wednesday the 7th, Thursday the 8th,
Monday the 12th
and Tuesday the 13th, days of November last,
upon
the Petition and Appeal of Martin Alfred Lister, of 35
Hamlet
Road, Romford, in the County of Essex, pray-
ing, That the matter
of the Orders set forth in the
Schedule thereto, namely, two
Orders of Her Majesty's
Court of Appeal of the 26th of October
1955 and of the
16th of January 1956 respectively, so far as
therein
stated to be appealed against, might be reviewed
before
Her Majesty the Queen, in Her Court of Parliament,
and
that the said Orders, so far as aforesaid, might be
reversed,
varied or altered, or that the Petitioner might
have such other
relief in the premises as to Her Majesty
the Queen, in Her Court
of Parliament, might seem
meet; as also upon the printed Case of
Romford Ice &
Cold Storage Company Limited, lodged in answer
to
the said Appeal; and due consideration had this day
of what
was offered on either side in this Cause:
It is Ordered and Adjudged, by
the Lords Spiritual
and Temporal in the Court of Parliament of
Her
Majesty the Queen assembled, That the said Orders
of Her
Majesty's Court of Appeal, of the 26th day of
October 1955 and of
the 16th day of January 1956
respectively, complained of in the
said Appeal, be, and
the same are hereby, Affirmed, and
that the said Petition
and Appeal be, and the same is hereby,
dismissed this
House.
Lister v.
Romford Ice
& Cold
Storage
Company
Limited.
Viscount
Simonds
Lord
Morton
of Henryton
Lord
Radcliffe
Lord
Tucker
Lord
Somervell
of
Harrow
HOUSE
OF LORDS
LISTER
v.
ROMFORD
ICE & COLD STORAGE COMPANY LIMITED
Viscount
Simonds
20th December, 1956
my
lords,
The facts
in this case are not seriously in dispute, but they give rise
to
questions of considerable difficulty and importance.
The
Appellant, Martin Alfred Lister, was, in January, 1949, in the
employ-
ment of the Respondent Company as a lorry driver. He was
then some
twenty-seven years of age and had, apart from an
interval during the war,
been in that employment since he was
seventeen. He had previously for a
short time been employed by
them as a general labourer. On the 28th
January, 1949, accompanied
as mate by his father, also named Martin Alfred
Lister, whom I
will call " Lister senior ", he drove his lorry into a
slaughter-
house yard off the Old Church Road, Romford, to collect
some waste. In
the yard he backed his lorry and in doing so
knocked down and injured
Lister senior, who had previously
alighted from it.
In June,
1951, Lister senior issued a writ against the Respondents
claiming
damages for the personal injuries suffered by him,
alleging that they were
due to the negligent driving of the
Appellant and that the Respondents as
his employers were
vicariously liable. This action was tried by Mr. Justice
McNair on
the 29th January, 1953, and that learned Judge held that
the
Appellant had negligently driven the lorry in reverse without
looking where
he was going but that Lister senior was also at
fault in failing to take proper
care for his own safety, the
relative responsibility being two thirds for the
Appellant and one
third for Lister senior. The responsibility of the
Respondents was
purely vicarious. The damage was assessed at £2,400
and
judgment was entered for Lister senior for £1,600, two
thirds of that amount,
and costs.
On the
26th January, 1953, three days before the trial of Lister
senior's
action, the Respondents issued the writ in the action, in
which this appeal
is brought, claiming against the Appellant "
damages or in the alternative
"... payment by way of
indemnity or contribution in respect of such
" damages as may
be adjudged or agreed to be paid " to Lister senior in the
first
action and the Respondents' costs of that action.
On the
12th May, 1953, the Respondents delivered their Statement of
Claim
in the present action. They pleaded the facts that I have
stated,
including the judgment which had by then been given; they
alleged that
they had paid the damages of £1,600 and were
liable to pay the costs and
that they had suffered loss and damage
to the extent of such damages
and costs by reason of the
Appellant's negligence. They pleaded further
or alternatively that
it was an implied term of the contract of service of
the Appellant
that he would carry out his duties with reasonable care and
skill
and that he had failed to do so whereby they had suffered loss
and
damage. They claimed an order that they might be indemnified
by the
Appellant in respect of the sums they had paid to Lister
senior and their
costs of defending the first action and
alternatively " damages for negligence
"and/or breach of
contract". I understand the first head of claim to be
for a
contribution of 100 per cent., that is, in effect an indemnity under
the
Law Reform (Married Women and Tortfeasors) Act, 1935, which I
will
call" the 1935 Act", and the second head of claim
to be founded alternatively
on tort or the breach of a contractual
duty of care.
The
Defence of the Appellant, to which I must refer somewhat fully,
put
in issue the question of his negligence. It alleged that he
was present in
Court throughout the trial of the first action and
was ready to give evidence
2
on behalf
of the Respondents but that they did not allow him to do so, and
that
the judgment against them was, therefore, not due to his negligent
driving
but to their failure to call him as a witness. I do not
think that your Lordships
will take this plea very seriously. It
cannot by any means be sustained.
Something more formidable
follows, raising, I think, a question of general
importance. For
it was then pleaded that it was an implied term of the
contract of
service that the Respondents would indemnify the Appellant
against
all claims or proceedings brought against him for any act done by
him
in the course of his employment, and, in the alternative, that it
was
an implied term that he would receive the benefit of any
contract of insurance
effected by the Respondents and covering
their liability in respect of the first
action, that the
Respondents had in fact effected such insurance and that he
claimed
the benefit thereof. And it was further pleaded that there was
no
such implied term of service as the Respondents alleged, that
he would carry
out his duties with reasonable care and skill, but
that on the contrary the
Respondents by engaging him to drive a
lorry on their behalf impliedly
accepted him with all such faults
and failings as he might possess and without
any right or claim
against him in respect of negligent acts arising out of and
in the
course of his employment. It was in this state of the
pleadings,
though they were amended when the case was heard by the
Court of Appeal,
that the matter came before Mr. Justice Ormerod
for trial.
I will at
once state the conclusions to which that learned Judge came.
After
stating that the case had been put by counsel for the
Respondents
(Plaintiffs in the action) in two ways, first that
upon the ordinary law of
contract the servant was liable to his
master for damage suffered by him
for the servant's breach of
contract, it being an implied term of his contract
that he would
use reasonable care in the performance of his work, and,
secondly,
that he was as a joint tortfeasor entitled to contribution
under
section 6 (1) (c) of the Act of 1935, the learned
Judge said that he was con-
strained by the words of Lord Justice
Denning in the case of Jones v.
Manchester Corporation
and Others ([1952] 2 Q.B. 852 at p. 868) to consider
the case
from the point of view of the Act of 1935. He found as a fact
that
the Appellant had been guilty of negligence, rejected the
contention that the
claim for contribution could only be raised in
the original action, and then
proceeded to deal with what he
regarded as the substantial defence, namely,
that the contract of
service was subject to the implied terms to which I have
already
referred. As to this he held, following the decision of Mr.
Justice
Finnemore in Semtex, Ltd. v. Gladstone [1954] 2
A.E.R. 206 (a case, I will
interpolate, which was in my opinion
rightly decided) that, while it must be
an implied term that the
employer would not require the servant to do any-
thing illegal
and therefore would comply with the provisions of the Road
Traffic
Act, 1930, in respect of insurance, there was no evidence to
support
any further implication. He rejected also the plea that
the writ was prema-
turely issued, and upon a consideration of the
circumstances held that the
Respondents were, under the Act of
1935, entitled to a contribution which
would amount to a complete
indemnity. He gave judgment for the Respon-
dents accordingly.
There has,
I think, been some confusion in the course of the case between
two
wholly separate torts, (a) the tort for which the Appellant
and, vicariously,
the Respondents might be made liable to Lister
senior and in respect of which
the Respondents could claim
contribution under the Act of 1935, and (b) the
tort for
which the Appellant might be made liable to the Respondents
in
respect of his breach of the common law duty of care. But I do
not think
that this now affects the issue, for, as I shall try to
show, the deciding factor,
whatever the cause of action, is
whether or not certain terms are to be implied
in the contract of
service between the Appellant and the Respondents.
The
Appellant appealed to the Court of Appeal. At the outset of
the
hearing in that Court the Appellant took the preliminary point
that the issue
of the writ was premature, inasmuch as the
liability of the Respondents to Lister
senior had not been
established: this was said to follow from the decision of
this
House in George Wimpey & Co. Ltd. v. British Overseas
Airways Cor-
poration [1955] A.C. 169. The Respondents' answer
was that at any rate
it was not premature so far as it was founded
on breach of contract whatever
3
might be
the position in regard to the claim to contribution under the Act
of
1935. The Court of Appeal, in order that all the substantive matters
in
the appeal might be argued and decided, gave leave for a second
action to
be brought and consolidated with the first, the
pleadings and evidence in the
first action to stand as if they had
taken place in the second action. This
was duly done.
Before I
state the result of the appeal it is necessary to note that
the
Appellant was allowed to make substantial amendments of his
Defence and,
as they formed the basis of much argument in this
House, I will remind your
Lordships that by paragraph 7. A it was
pleaded that it was an implied
term that the Appellant would not
be required to do anything unlawful and
in particular would not be
required to drive unless there was in force in
relation to the use
of the vehicle such a policy of insurance as would provide
him
with the indemnity required by section 36 (1) of the Road Traffic
Act,
1930, and by paragraph 7. B that it was an implied term of
the contract
that the Respondents' motor insurance should cover
the Appellant against
any third party liability which he might
personally incur arising out of his
driving the Respondents'
vehicles in the course of his employment, and by
paragraph 7. C
that in breach of these implied terms or one of them the
Respondents
required the Appellant to drive a vehicle without there being
in
force in relation to his user thereof a policy which provided him
with any
indemnity either as required by the Road Traffic Act,
1930, or at all. The
Appellant was also allowed to amend his
defence by adding a plea that
the accident whereby Lister senior
suffered damage was solely caused or
contributed to by the
negligence of the Respondents. This plea had no
substance whatever
and I shall say nothing more of it.
In order
to explain the Appellant's defences which rested on the implied
terms
in regard to insurance and the Road Traffic Act, 1930, I refer
to
section 35 (1) of that Act, which provides that subject to the
provisions of
that Part of the Act it shall not be lawful for any
person to use or to cause
or permit any other person to use a
motor vehicle on a road unless there is
in force in relation to
the user of the vehicle by that person or that other
person, as
the case may be, such a policy of insurance or such a security
in
respect of third party risks as complies with the requirements of
that Part
of the Act. Section 36 (1) states these requirements
and, so far as material
to this appeal, provides that such a
policy must be a policy which insures such
person or persons, or
classes of persons as may be specified in the policy in
respect of
any liability which may be incurred by him or them in respect
of
the death of or bodily injury to any person caused by or arising out
of the
use of the vehicle on a road, but contains the proviso that
such a policy shall
not be required to cover liability in respect
of the death arising out of and
in the course of his employment of
a person insured by the policy or of
bodily injury sustained by
such a person arising out of and in the course of
his employment.
It appears
that in fact the Respondents had taken out just such a policy
as
the Act required excluding such death or injury as the proviso that
I
have read authorised it to exclude. The policy also provided
that the
indemnity given thereby should, subject to the provisions
thereof, be
extended to any person in the employ of the
Respondents driving the vehicle
on their order and for their
purposes. They had also taken out a policy
insuring them against
their liability as employers. This fact is relevant only
because
the policy contained a term authorising the underwriters to
"
prosecute in the name of the Assured for their own benefit any
claim
" for indemnity or damages or otherwise ", and it
has not been concealed
that this action was brought by the
underwriters in the name of the Respon-
dents, who, if it lay with
them, would never have brought it. I say that
this fact is not
otherwise relevant because the action remains the action
of the
Respondents and their rights are not greater or less than they
would
be if they were un-insured.
Upon the
appeal being heard the Court was divided, Lord Justice Denning
being
in favour of allowing the appeal and Lord Justice Birkett and
Lord
Justice Romer of dismissing it. It was accordingly dismissed.
4
It will be
convenient to discuss first the question which divided the Court
of
Appeal, namely, what, if any, were the terms to be implied in the
contract
of service between the parties.
It is, in
my opinion, clear that it was an implied term of the contract
that
the Appellant would perform his duties with proper care. The
proposi-
tion of law stated by Willes, J. in Harmer v.
Cornelius, 5 C.B.N.S. 236 at
p. 246, has never been
questioned: " When a skilled labourer ", he said,
"
artizan, or artist is employed, there is on his part an implied
warranty
" that he is of skill reasonably competent to the
task he undertakes—Spondes
" peritiam artis.
Thus, if an apothecary, a watchmaker or an attorney be
"
employed for reward they each impliedly undertake to possess and
exercise
" reasonable skill in their several arts. . . . An
express promise or express
" representation in the particular
case is not necessary ". I see no ground
for excluding from,
and every ground for including in, this category a
servant who is
employed to drive a lorry which driven without care may
become an
engine of destruction and involve his master in very grave
liability.
Nor can I see any valid reason for saying that a distinction
is to
be made between possessing skill and exercising it. No such
distinction
is made in the cited case: on the contrary. "
possess" and " exercise"
are there conjoined. Of
what advantage to the employer is his servant's
undertaking that
he possesses skill unless he undertakes also to use it? I
have
spoken of using skill rather than using care, for " skill"
is the word
used in the cited case, but this embraces care. For
even in so-called unskilled
operations an exercise of care is
necessary to the proper performance of
duty.
I have
already said that it does not appear to me to make any difference
to
the determination of any substantive issue in this case whether
the
Respondents' cause of action lay in tort or breach of
contract. But in
deference to Lord Justice Denning I think it
right to say that I concur in
what I understand to be the
unanimous opinion of your Lordships that the
servant owes a
contractual duty of care to his master, and that the breach of
that
duty founds an action for damages for breach of contract, and that
this
(apart from any defence) is such a case. It is trite law that
a single act
of negligence may give rise to a claim either in tort
or for breach of a term
express or implied in a contract. Of this
the negligence of a servant in
performance of his duty is a clear
example.
I
conclude, then, the first stage of the argument by saying that the
Appel-
lant was under a contractual obligation of care in the
performance of his
duty, that he committed a breach of it, that
the Respondents thereby suffered
damage and they are entitled to
recover that damage from him, unless it
is shown either that the
damage is too remote or that there is some other
intervening
factor which precludes the recovery. I should note in passing
that
it was urged on behalf of the Appellant that the Respondents had
not
proved the quantum of damage suffered by them by proving only
that judg-
ment had been given against them and that they had paid
or were liable to
pay the amount of the judgment and costs. This
plea could not be sustained.
It appears to me to be against reason
and authority: see, for example, Green
v. New River Co. 4
Term Rep. 589.
What,
then, is to deprive the Respondents of their remedy? I do not
think
it can be said that the damages are too remote, for the injury to
a
third party and the ensuing liability of a master are events
which the exercise
of proper care is intended to avert. It is upon
the implication of some
implied term that the Appellant must rely,
and to this question I now turn.
My Lords,
I cannot but be aware that any decision upon this question
which
has divided learned Judges in the Courts below and upon which
your
Lordships are also divided, in opinion may have far-reaching
consequences,
and I have myself had great difficulty in reaching a
conclusion.
I will
refer first to the implied terms pleaded in the reamended
Defence,
for at the end of the day the argument for the Appellant
was founded not
upon them but upon the original pleas, or at least
upon something very
like them: the amended pleas can be shortly
disposed of. As to para-
graph 7. A, the valid answer was made, in
general, that the Appellant
5
was not
required by the Respondents to do anything unlawful, and,
in
particular, that the Road Traffic Act, 1930, does not require
that a policy
of assurance shall be taken out which provides the
driver of a vehicle with
an indemnity against all the consequences
of his own negligence. And as
to paragraph 7. B, it was answered
that a policy taken out by the Respondents
in fact covered the
Appellant against third party claims but that it was not
a third
party claim that faced the Appellant in this action. No more need
be
said of these pleas, except that the variety and multiplicity of
the
suggested terms were naturally contrasted with the general
principle that
an implication must be precise and obvious. I
return, then, to the original
pleas. These, I remind your
Lordships, were contained in paragraphs 4
and 5 of the Defence and
were alternatives. Paragraph 4 pleaded an implied
term that the
Respondents would indemnify the Appellant against all claims
and
proceedings brought against him for any act done by him in the
course
of his employment. Were it not that at one time this term
appeared to
hold first place in the Appellant's favour I should
have thought that it might
be summarily dismissed. It is
all-embracing in its scope: whatever the
degree of negligence,
even of criminality, in his act: whether the Respondents
were
covered by insurance or not, whether the act gave rise to a
third
party claim, which ought by law to be covered, or not; in
every case the
Appellant would go free and the Respondents bear
the burden. I can neither
accept an implication in such general
terms nor put into the mouth of the
pleader qualifications which
might make the plea less unacceptable. It was
in paragraph 5 that
the implied term was pleaded which has appeared to me
most worthy
of consideration. It was that the Appellant would receive the
benefit
of any contract of insurance effected by the Respondents and
covering
their liability in respect of the action brought by
Lister senior. It would, it
was said, be inconsistent with this
term if the Respondents, having effected
a policy and having been
indemnified under it, then sought to recover
damages from the
Appellant either for breach of his contractual duty
of care or
under the relevant provisions of the Act of 1935. This is the
plea
which found favour with Lord Justice Denning, and the argument
was
put so simply and cogently by him that I venture to quote his
judgment:
"
Take this very case ", he says, " where the insurers issue
a writ in the
" employer's name against the servant without
consulting either the employer
" or the servant beforehand.
When the servant receives the writ he will
" take it to his
employer and say: 'Why are you suing me? Surely you
" 'have
got the money from your insurance company. So you cannot sue
"
'me.' This natural comment between master and man throws a flood
"
of light on the implied understanding of the parties." And a
little later
he says: " This shows that there is an implied
term in these cases whereby,
" if the employer is insured, he
will not seek to recover contribution or
" indemnity from the
servant."
It will be
observed that the implied term which thus commended itself
to the
learned Lord Justice is limited in its scope. The driver is to
be
relieved from liability if his master is covered by insurance
against the
claim. If he is not covered, for instance, because the
accident takes place
not on a road but on private premises and the
law does not require him
to insure against such a risk, and he has
not done so, then under this plea
the driver must bear the
consequences of his negligence if he is himself
sued. This
consideration led counsel to yet another variation of the plea.
This
was that the driver was entitled to be indemnified not only if
the
employer was in fact insured or was required by law to be
insured, but
also if he ought as a reasonable and prudent man to
have been insured
against the risk in question. It was in this
final form, which approximates
nearly to the plea in paragraph 4,
that after much travail the implied term
was submitted to your
Lordships. No qualification of this general proposition
was
suggested. The driver might owe a duty of care to his employer,
but
for any dereliction from duty he was to be absolved from all
responsibility.
Nor was it suggested that in the present case
there were any features which
distinguished the relation of the
Appellant and the Respondents from that
of any other driver and
his employer. That is why at the outset of this
6
Opinion I
said that this appeal raises a question of general importance.
For
the real question becomes, not what terms can be implied in a
contract
between two individuals who are assumed to be making a
bargain in regard
to a particular transaction or course of
business; we have to take a wider
view, for we are concerned with
a general question, which, if not correctly
described as a
question of status, yet can only be answered by considering
the
relation in which the drivers of motor vehicles and their
employers
generally stand to each other. Just as the duty of care,
rightly regarded as
a contractual obligation, is imposed on the
servant, or the duty not to
disclose confidential information (see
Robb v. Green [1895] 2 QB 315),
or the duty not to
betray secret processes (see Amber Size and Chemical
Company,
Limited v. Menzel [1913] 2 Ch 239), just as the duty is
imposed
on the master not to require his servant to do any illegal
act, just so the
question must be asked and answered whether in
the world in which we live
today it is a necessary condition of
the relation of master and man that the
master should, to use a
broad colloquialism, look after the whole matter of
insurance. If
I were to try to apply the familiar tests where the question
is
whether a term should be implied in a particular contract in
order to give it
what is called business efficacy, I should lose
myself in the attempt to
formulate it with the necessary
precision. The necessarily vague evidence
given by the parties and
the fact that the action is brought without the assent
of the
employers shows at least ex post facto how they regarded the
position.
But this is not conclusive; for, as I have said, the
solution of the problem
does not rest on the implication of a term
in a particular contract of service
but upon more general
considerations.
My Lords,
undoubtedly there are formidable obstacles in the path of
the
Appellant, and they were formidably presented by counsel for
the
Respondents. First, it is urged that it must be irrelevant to
the right of
the master to sue his servant for breach of duty that
the master is insured
against its consequences: as a general
proposition it has not, I think, been
questioned for nearly two
hundred years that in determining the rights
inter se of A
and B the fact that one or other of them is insured is to
be
disregarded: see, for example, Mason v. Sainsbury, 3
Douglas 61. And this
general proposition, no doubt, applies if A.
is a master and B. his man.
But its application to a case or class
of case must yield to an express or
implied term to the contrary,
and, as the question is whether that term should
be implied, I am
not constrained by an assertion of the general proposition
to deny
the possible exception. Yet I cannot wholly ignore a principle
so
widely applicable as that a man insures at his own expense for
his own
benefit and does not thereby suffer any derogation of his
rights against
another man.
Next—and
here I recur to a difficulty already indicated—if it has
become
part of the common law of England that as between the
employer and
driver of a motor vehicle it is the duty of the
former to look after the
whole matter of insurance (an expression
which I have used compendiously
to describe the plea as finally
submitted), must not that duty be more precisely
defined? It may
be answered that in other relationships duties are imposed
by law
which can only be stated in general terms. Partners owe a duty
of
faithfulness to each other; what that duty involves in any
particular
case can only be determined in the light of all its
circumstances. Other
examples in other branches of the law may
occur to your Lordships where
a general duty is presented and its
scope falls to be determined partly by the
general custom of the
country which is the basis of the law and partly
perhaps by
equitable considerations. But even so, the determination must
rest
on evidence of the custom or on such broad equitable
considerations
as have from early times guided a Court of Equity.
In the
area in which this appeal is brought there is no evidence to
guide
your Lordships. The single fact that since the Road Traffic
Act of 1930
came into force a measure of insurance against third
party risk is compulsory
affords no ground for an assumption that
an employer will take out a
policy which covers more than the Act
requires; for instance, a risk of
injury to third parties not on
the road but in private premises. There
7
is in fact
no assumption that can legitimately be made what policy will
be
taken out and what its terms and qualifications may be. I am unable
to
satisfy myself that with such a background there can be implied
in the
relationship of employer and driver any such terms as I
have indicated.
And though, as I have said, I feel the force of
the argument as presented
by Lord Justice Denning, I must point
out that at least in his view the
indemnity of the driver was
conditional on a policy which covered the risk
having in fact been
taken out. It may be that this was because his mind
was directed
to a case where such a policy was taken out and that he would
have
gone on to say that there was a further implication that the
employer
would take out a policy whether required by law to do so
or not. But here
we are in the realm of speculation. Is it certain
that, if the imaginary driver
had said to his employer: " Of
course you will indemnify me against any
" damage that I may
do however gross my negligence may be ", the employer
would
have said: " Yes, of course! " For myself I cannot answer
confidently
that he would have said so or ought to have said so.
It may well be that
if such a discussion had taken place it might
have ended in some agreement
between them or in the driver not
entering the service of that employer.
That I do not know. But I
do know that I am ever driven further from an
assured certainty
what is the term which the law imports into the contract
of
service between the employer and the driver of a motor vehicle.
Another
argument was at this stage adduced which appeared to me to
have
some weight. For just as it was urged that a term could not
be
implied unless it could be defined with precision, so its
existence was denied
if it could not be shown when it came to
birth. Here, it was said, was a
duty alleged to arise out of the
relation of master and servant in this special
sphere of
employment which was imposed by the common law. When,
then, did it
first arise? Not, surely, when the first country squire exchanged
his
carriage and horses for a motor car or the first haulage
contractor
bought a motor lorry. Was it when the practice of
insurance against third
party risk became so common that it was to
be expected of the reasonable
man or was it only when the Act of
1930 made compulsory and therefore
universal what had previously
been reasonable and usual?
Then,
again, the familiar argument was heard asking where the line is
to
be drawn. The driver of a motor car is not the only man in charge
of
an engine which, if carelessly used, may endanger and injure third
parties.
The man in charge of a crane was given as an example. If
he, by his
negligence, injures a third party who then makes his
employer vicariously
liable, is he entitled to assume that his
employer has covered himself by
insurance and will indemnify him
however gross and reprehensible his
negligence? And does this
depend on the extent to which insurance against
third party risks
prevails and is known to prevail in any particular form
of
employment? Does it depend on the fact that there are fewer
cranes
than cars and that the master is less likely to drive a
crane than a car?
It was
contended, too, that a term should not be implied by law of which
the
social consequences would be harmful. The common law demands
that
the servant should exercise his proper skill and care in the
performance
of his duty: the graver the consequences of any
dereliction, the more
important it is that the sanction which the
law imposes should be maintained.
That sanction is that he should
be liable in damages to his master: other
sanctions there may be,
dismissal perhaps and loss of character and difficulty
of getting
fresh employment, but an action for damages, whether for tort
or
for breach of contract, has, even if rarely used, for centuries been
avail-
able to the master, and now to grant the servant immunity
from such an
action would tend to create a feeling of
irresponsibility in a class of persons
from whom, perhaps more
than any other, constant vigilance is owed to the
community. This
was, I think, an aspect of the case which made a special
appeal to
Lord Justice Romer. It cannot be disregarded.
Finally,
it was urged that the implication of the suggested term in
the
contract between employer and driver would have the effect of
denying to
the insurer the right of subrogation given to him
either expressly by the
policy of insurance or by the implication
of law. This would no doubt be
8
the
result. But I do not attach much importance to this. For if the
implied
term is imposed by law, not in respect of a particular
contract but as a
legal incident of this kind of contract, the
insurer may be assumed to know
it as well as anyone else. It may
surprise him, but he should study the law.
My Lords,
I have come to the conclusion that the considerations which
I have
discussed do not permit me to imply a term such as is pleaded in
any
of the alternative forms adopted in the original and amended
Defence
or advanced in argument at the bar, and that the appeal so
far as it is
founded on an implied term in the contract of service
must fail.
I do not
find it necessary to discuss at any length the alternative
claim
under the Act of 1935. If under the first head of claim the
Respondents
can recover damages for breach of contract, they can
do no more. I will
only say that I see no reason to doubt that
under the Act, and probably
apart from the Act (see Pearson v.
Skelton, 1 M. & W. 504, Adamson v.
Jarvis, 4
Bing. 66), the Respondents would be entitled to recover
contribution
from the Appellant to the extent of 100 per cent.
Ryan v. Fildes and Others
[1938] 3 A.E.R. 517, was,
I think, rightly decided. But, if the Respondents
cannot recover
damages for breach of contract, they are, in my opinion,
precluded
from obtaining contribution from the Appellant; if they claim
under
the Act, by its express language (see section 6(1) (b)) and.
if they claim
apart from the Act, by the principles upon which the
rule in Merryweather
v. Nixan (8 T.R. 186) has been
consistently applied.
In the
result, the appeal, in my opinion, cannot succeed and must
be
dismissed.
Lord
Morton of Henryton
MY LORDS,
I believe
your Lordships are all of opinion that this appeal must fail
unless
the Appellant can make good one or more of the special pleas
set
out in paragraphs 4, 5 and 7. A, B and C of the reamended
Defence,
delivered as reamended on the 4th July, 1956. For this
reason I shall
deal briefly with the other issues in the action,
though they are of con-
siderable importance, and shall then turn
to the pleas just mentioned.
The
Appellant injured his father and fellow-worker by reversing a
motor
lorry when his father was behind it. Ormerod, J. found as a
fact that
the Appellant " was negligent in the way in which
he reversed that motor
" lorry ", and that this
negligence " was responsible for the injuries which
"
his father suffered ". That finding of fact clearly could not be
successfully
challenged in your Lordships' House, and in my
opinion the Appellant was
under an implied contractual obligation
to take reasonable care in driving
the vehicle which he was
employed to drive. I agree entirely with the views
already
expressed on this point by the noble and learned Lord on the
Woolsack
and by Birkett and Romer, L.JJ. in the Court of Appeal. Prima
facie,
therefore, the Appellant is liable in contract to pay to the
Respondents
any damages which they have suffered as a result of
his failing to take
reasonable care on the occasion in question.
The next
question which arises is, was there evidence before Ormerod,
J.
establishing that the Respondents had suffered damage, by
reason of the
negligent act of the Appellant, to the amount of
£1,600 and costs; that
being the sum for which McNair, J.
gave judgment for the Appellant's father
in the action which he
brought against the Respondents. The Respondents
called evidence
of negligence which satisfied Ormerod, J. but they relied
solely
upon the judgment of McNair, J. to establish the damage which
they
had suffered. Counsel for the Appellant submitted that that judgment
was
not relevant evidence, in the present action, of the quantum
of damage;
the Appellant was not a party to the action brought by
his father, and the
decision of McNair, J. was in no way binding
upon him. Counsel for the
Respondents pointed out that by
paragraphs 5 and 6 of their Statement
of Claim in the present
action the Respondents pleaded the judgment of
9
McNair J.
and the fact of payment of the damages awarded against them,
and
these paragraphs were admitted by the Appellant. He did not
contend
that the judgment and payment were conclusive evidence as
against the
Appellant of the quantum of damage suffered by the
Respondents; but he
submitted that they were at least prima
facie evidence, and no rebutting
evidence was given by (he
Appellant.
My Lords,
I feel no doubt that this submission is correct, and it is
supported
by the observations of the Court in Green v. New
River
Company, 4 Term Rep. 589 at 590 med. and of Baron
Parke in Yeomans
v. Legh, 2 Meeson & Welsby 419
at p. 421. In the latter case the defendant
was sued, in an action
on the case, for negligent driving by his servant
whereby the
plaintiff suffered injury. The servant was called as a witness,
and
the question was whether he was a competent witness without a
release.
Baron Parke said: "I think the witness was competent
without a release.
" The effect of the clause in the Statute"
(3 & 4 William IV Cap. 12
section 26) " is to make the
witness competent, where the only interest is
" that the
verdict may be used for or against the witness. In this case
"
there is no interest, except that the verdict might be used
against him in an
" action by his master, to show the
amount of the damages recovered ".
It was
further submitted by counsel for the Appellant that the damages
now
claimed are too remote to be recoverable. My Lords, in my view
there
is no substance in this argument. The liability of the Respondents
to
pay damages to the Appellant's father arose directly out of the
negligent
act of the Appellant which constituted the breach of his
contract with the
Respondents.
If I am
right so far, it is clear that, in the absence of the special
pleas
already mentioned, this appeal must fail, since the
Respondents would be
entitled to receive, as damages for breach of
contract, the sum awarded
to them by Ormerod, J. and the Court of
Appeal. In considering these pleas
I find it convenient to turn
first to paragraphs 7. A, B and C of the reamended
Defence, which
are as follows:—
"
7.A. It was an implied term of the Defendant's employment that
"
he should not be required by the Plaintiffs to do anything unlawful".
So far, my
Lords, I would agree—see Gregory v. Ford and Others
[1951]
1 A.E.R. 121, but the paragraph continues—
" and
in particular that he should not be required to drive unless there
"
was in force in relation to the use of the vehicle such a policy of
"
insurance as would provide him with the indemnity which Sec. 36 (1)
"
of the Road Traffic Act 1930 requires. The said term is to be
"
implied by law."
This part
of the paragraph seems to be based on a misconception. The
Road
Traffic Act, 1930, does not compel the employer to provide an
indemnity
for the driver personally. See John T. Ellis v.
Walter T. Hinds [1947] 1 K.B.
475 at p. 484 and Lees v.
Motor Insurers Bureau [1952] 2 A.E.R. 511.
Paragraphs
7. B and 7. C are as follows: —
" B.
Further it was an implied term of the Defendant's employment
"
that the Plaintiffs' motor insurance should cover the Defendant
against
" any third party liability which he might personally
incur arising out
" of his driving the Plaintiffs' vehicles
in the course of his employment.
" C.
In breach of the aforesaid implied terms or of one of them the
"
Plaintiffs required the Defendant to drive the said vehicle without
"
there being in force in relation to his user thereof any policy
which
" provided him with any indemnity either as required by
the Road Traffic
" Act or at all."
I
need not consider whether or not paragraph 7. B is well-founded, for
it
does not appear that any third party has made any claim against
the
Appellant. The only claim against him is the employer's claim
in the present
action.
10
I now come
to the alleged implied terms set out in paragraphs 4 and 5
of the
reamended Defence, which are as follows: —
" 4.
It was an implied term of the Defendant's contract of employ-
"
ment with the Plaintiffs that the Plaintiffs would indemnify him
"
against all claims or proceedings brought against him for any act
"
done by him in the course of his said employment. In the premises
"
the Plaintiffs are not entitled to bring these proceedings against
the
" Defendant.
" 5.
In the alternative it was an implied term of the said contract
"
that the Defendant would receive the benefit of any contract of
insur-
" ance effected by the Plaintiffs and covering their
liability in respect
" of the action above referred to. The
Plaintiffs have effected such
" insurance and have been fully
indemnified and the Defendant claims
" the benefit thereof."
Counsel
for the Appellant sought to find some justification for implying
one
or other of these terms in the particular circumstances of the
Appellant's
employment with the Respondents, but I can find
nothing in these circum-
stances which should differentiate the
Appellant from any other young man
who, having passed the
necessary driving test, is employed to drive a
motor lorry. I add
that the Appellant had been driving motor lorries for
the
Respondents for about ten years before the accident happened.
If any
such term is to be implied in this case, it must surely be implied
in
all cases where an employee is employed to drive any kind of
vehicle
which might cause damage to third parties. And the implied
term cannot
be limited to cases where the vehicle is being driven
on a public highway,
for the accident in the present case occurred
in a yard. Surely it must
logically extend to cases such as a
crane driver in factory premises, and
many other cases come to
mind which cannot logically be distinguished
from the present
case.
Such an
obligation might have been imposed on the employer by statute,
and
it is perhaps of some significance that the Legislature did not take
this
course when the law was so strikingly altered by the Road
Traffic Act, 1930.
It cannot be said, in my view, that the
implication of either of these terms
is necessary in order to give
" to the transaction such efficacy as both parties
"
must have intended that at all events it should have ". (The
Moorcock,
14 P.D. 64 at p. 68).
Turning
now to another branch of the argument for the Appellant, I
cannot
see that any events which have occurred in modern times, such as
the
passing of the Road Traffic Act, 1930, could justify your Lordships
in
holding it to be the law today that one or other of the implied
terms now
under discussion forms part of every contract whereby a
man is employed
to drive a vehicle. No provision of the Act of
1930 suggests to me that
the terms to be implied in such a
contract immediately after the Act
became law should differ in any
respect from the terms to be implied
immediately before the Act
became law. This matter is fully dealt with
in the Opinion about
to be delivered by my noble and learned friend Lord
Tucker, which
I have read, and I need only say that I entirely agree with
his
views upon it.
Counsel
for the Appellant finally suggested that some such term ought
to
be implied because in its absence the employee was placed in a
most
unfortunate position. It is, however, your Lordships' task to
decide what
the law is, not what it ought to be. In saying this I
am far from suggesting
that either of the terms now under
discussion ought to be implied.
As to
paragraph 4, the words " all claims or proceedings " would
seem
wide enough to cover, for instance, a fine imposed on the
Appellant under
the Road Traffic Act, 1930; and the words "any
act" would appear to
cover reckless as well as careless acts.
So read, this alleged term might
well be void as being against
public policy. I shall, however, assume in
favour of the Appellant
that the term should be construed more narrowly,
so as to read
"would indemnify the Appellant against any civil
"liability
for accidental injury or damage done by him in the course of
his
said employment". Even so, it seems to me hardly consistent
with
11
the duty
of a driver to take reasonable care in driving his employer's
vehicle.
That duty has been recognised in many cases, but no such
implied term
was ever suggested. As I have said, such a term is
not necessary to give
efficacy to the contract, and indeed it
seems to me doubtful if an employer
would agree to it. If so it
cannot be implied.
My reasons
for rejecting the implied term set out in paragraph 4 of
the
reamended Defence apply also to the implied term set out in
paragraph 5,
with one exception; I do not think that the latter
term, or any possible
construction of it, could be held to be void
as against public policy. It
has, however, this somewhat
surprising result—insurers who had paid the
employer in a
case of this kind would apparently be deprived of their right
of
subrogation by reason of an implied term in a contract to which
they were
not a party.
The result
is, my Lords, that I am unable to accept any of the implied
terms
which have been pleaded, and I apprehend that no other implied
term
comes before your Lordships' House for consideration.
I feel, my
Lords, that I ought not to end without making further reference
to
the judgment of Ormerod, J. That learned Judge felt himself bound
by
authority not to decide the Respondents' claim for damages for
breach
of contract. His decision in favour of the Respondents was
given in the
exercise of his discretion under section 6 (2) of the
Law Reform (Married
Women and Tortfeasors) Act, 1935. In the eyes
of the law the Respondents
were joint tortfeasors with the
Appellant, since the Appellant was their
employee and his
negligent act was done in the course of his employment.
Ormerod,
J., therefore, had to consider whether the Respondents ought
to
recover contribution from the Appellant, and if so, what the
amount of the
contribution should be. After considering and
rejecting submissions by
counsel for the Appellant that the
contribution should be reduced by reason
of certain defects in the
lorry provided by the Respondents, he said: " I am
"
afraid here that the negligence was the negligence of the Defendant,
and
" in those circumstances he is not entitled to anything
by way of mitigation,
" and there must be a contribution here
for the full amount." The learned
Judge and I have thus
arrived at the same result, although by a different
route. I think
it is only right to say that in my opinion this alternative
route
was open to the Respondents in the present case, the reasoning of
the
learned Judge was correct, and his exercise of his discretion was
entirely
proper.
I would
add that there may have been yet another routs by which
the
Respondents might have achieved success. Counsel for the
Respondents
submitted that his clients could have sustained an
action in tort against
the Appellant, apart altogether from the
provisions of the Law Reform
(Married Women and Tortfeasors) Act,
1935, notwithstanding the well-
known decision of Lord Kenyon,
C.J. in Merryweather v. Nixan (1799) 8
Term Rep. 186. He
referred to A damson v. Jarvis (1827) 4 Bingham
66,
Pearson v. Skelton (1836) 1 M & W. 504, and
Palmer v. Wick and
Pulteneytown Steam Shipping Company,
Limited [1894] AC 318. and to
observations of Lord
Coleridge, in W. H. Smith & Sons Ltd. v. Clinton
and
Harris ;(1908) 99 L.T. 840. In the first of these cases
Best, C.J. said, in
regard to the rule laid down in Merryweather
v. Nixan: " From reason,
" justice, and sound
policy, the rule that wrong-doers cannot have redress
" or
contribution against each other is confined to cases where the
person
" seeking redress must be presumed to have known that
he was doing an
" unlawful act"; and this saying was
approved by Lord Herschell, L.C.
and other Members of this House
in the third of the cases just mentioned.
Counsel for the
Respondents submitted that his clients, though joint tortfeasors
with
the Appellant in the eyes of the law, were only liable vicariously
for
the wrongful act of their servant and were not debarred at
common law
from bringing an action for damages against him. My
Lords, this is an
interesting point, which may some day fall for
decision by this House; but
I express no opinion upon it, as it
has not been considered in the Courts
below and I am of opinion
that the Respondents are entitled to succeed upon
other grounds.
I would
dismiss the appeal.
12
Lord
Radcliffe
My lords,
In my
opinion the appeal ought to be allowed and an order made
dismissing
the Respondents' action. Although the argument of the
case necessarily
travelled over a number of interesting points,
there are only two issues which
present themselves to me as
essential to its decision. I confine myself to them
accordingly.
The first question is: Did the Appellant incur any and, if so,
what
liability to the Respondents by virtue of the fact that while acting
as
their employee he drove their lorry negligently and thereby
injured a third
party? The second is: Are the Respondents entitled
to enforce any such
liability by legal action against the
Appellant, having regard to the circum-
stances of his employment
and in particular the statutory scheme of compul-
sory insurance
against third party risks which related to his employment?
On the
first point I think it plain that the law does impute to an
employee
a duty to exercise reasonable care in his handling of his
employer's property.
It is the fact of such employment that places
the property within his control;
and if, as must be the case, he
owes a general duty to all concerned not to be
negligent in his
exercise of that control, it would be a surprising anomaly
that
merely because there was also a contractual relationship
between himself and
his employer the standard of his obligation to
his employer were to be some-
how lower than the standard of his
obligation to the outside world.
I cannot
see any good reason why we should uphold the existence of such
an
anomaly. If the contract of employment is viewed as a general
legal
relationship in which the law imputes certain rights and
responsibilities to
each side, it would assign a very undignified
position to the employee
to suppose that the employer takes him "
with all faults" and that the
employee does not by virtue of
his engagement impliedly undertake to use
all reasonable care in
the conduct of his employer's affairs. To say this is
to say
nothing new in the law. I am satisfied that from early times the
law
has consistently recognised the existence of this duty. I need
not lengthen
my Opinion by reciting the authorities, some of which
are noticed by others
of your Lordships.
Nor does
any different result appear if we attend to the circumstances
of
this particular employment. Certainly the Appellant was a youth of
seven-
teen when he began to drive for the Respondents. But he was
required to
take and did take his driving test before he took up
the job, and there is
nothing in the relationship which excludes
an expectation of reasonable skill
and care. Actually, I should
regard the implications of his present employment
as being
determined by the circumstances in which he was re-employed after
the
end of the late war. He " came back as a full-time driver ".
It was
much canvassed in argument before your Lordships whether, if
there
was some such duty on the Appellant, it was anything more than
the
general duty he owed the world to avoid the tort of
negligence. On one
view of the case this would indeed be a
question of some importance in
respect of costs. Since I take a
different view as to the proper result of the
case anyway, I do
not need to dwell on this part of it. It is perhaps sufficient
if
I say that in my view this question is a somewhat artificial one. The
exis-
tence of the duty arising out of the relationship between
employer and
employed was recognised by the law without the
institution of an analytical
inquiry whether the duty was in
essence contractual or tortious. What
mattered was that the duty
was there. A duty may exist by contract, express
or implied. Since
in any event the duty in question is one which exists by
imputation
or implication of law and not by virtue of any express
negotiation
between the parties, I should be inclined to say that
there is no real disinction
between the two possible sources of
obligation. But it is certainly, I think,
as much contractual as
tortious. Since in modern times the relationship
between master
and servant, between employer and employed, is inherently
one of
contract, it seems to me entirely correct to attribute the duties
which
arise from that relationship to implied contract. It is a
familiar position
in our law that the same wrongful act may be
made the subject of an action
13
either in
contract or in tort at the election of the claimant, and, although
the
course chosen may produce certain incidental consequences
which would not
have followed had the other course been adopted,
it is a mistake to regard
the two kinds of liability as themselves
necessarily exclusive of each other.
I have
said this much out of respect to that part of the judgment
of
Denning, L.J. in the Court of Appeal which deals with this
topic. I do
not agree with him that " the action against a
servant must be founded on
" tort", and I do not think
that his citation of authorities proves this point.
When I
turn to the second issue with which I wish to deal it seems
unlikely
that any decided authority will be of direct assistance.
For the critical point
is that we have to deal with an employment
which it was illegal for the
employer to authorise or for the
employed to pursue unless insurance cover
had been provided
against third party liability. What are the necessary
consequences
of that legal requirement upon the respective rights and
liabilities
of employer and employed?
That there
were some consequences has been common ground throughout
this
case. It is accepted that the law must impute a term to the
effect
that the employee could not be required to carry out any
order that would
involve him in doing something that was illegal,
even, though, but for the
illegality, the thing required would
have been within the normal scope of
his duties. Put into
non-theoretical language, that means that because of the
Road
Traffic Act, 1930, the Appellant could not be employed to drive
the
Respondents' lorry for them on the road unless there existed a
policy of
insurance complying with the conditions of the Act and
so providing cover
to indemnify any third party who might suffer
actionable damage from the
Appellant's driving of the lorry.
Now the
insurance policy required could not come into existence of its
own
motion. One of the two parties, employer and employed, had to
assume
responsibility for taking it out or keeping it running and
for paying up the
necessary premiums to buy the cover. To which of
them ought we to
attribute that responsibility, having regard to
the relationship of the parties?
In my view, to the employer. I
cannot suppose that, short of special
stipulation, any other
answer would be given in such a case. So far as it is
relevant,
all the evidence given at the trial, both by the Appellant and
by
Colonel Howis, the Respondents' managing director, confirms
that this would
be the right answer.
Is it,
then, consistent with such an arrangement that, if the driver
does
cause third party damage by negligence and the person injured
sues and
recovers damages from the employer on the ground of his
vicarious responsi-
bility for the act of his servant, the
employer should be able to recover over
the damages that he has
had to pay by suing the driver? In my opinion
that is the simple
question on which this appeal turns, but, of course, it is
in
practice impossible to keep it simple owing to the
complications which
emerge in any well-argued case. I will try
briefly to notice some of them.
It is not that I do not think that
they involve difficulties, but the difficulties
do not present
themselves to me as being such as should affect the final result.
In the
first place I do not think that it matters whether the employer
is
really or only ostensibly the plaintiff. In this case we know,
because no
secret has been made of it, that the real plaintiff is
one of the two insurance
companies concerned. But the defendant's
point, if it is a good one at all,
is equally good whether it is
his employer who is claiming against him or the
insurers by
subrogation. To each his reply is the same—" I and my
employer
recognised that a fund of money had to be secured by
insurance to take
care of any third party liability that my
driving might involve us in, and we
arranged that he should pay
for and provide the insurance policy that would
produce the money.
It follows from that that he cannot now look to me to
find all or
part of that money ". If that answer is a good reply to
the
employer, it is good against insurers who are subrogated to
him. I do not
at all understand the idea that it is somehow hard
on the insurers that they
should be affected by an implied term
that bound the person to whose rights
they are claiming to be
subrogated.
14
Secondly,
it is, I think, true that it would not have been illegal in
the
circumstances of this particular accident if there had been no
insurance policy
against third party liability. I assume, though
we did not have any detailed
argument about it, that the yard in
which the accident took place was not
a "road" within
the meaning of the Road Traffic Act, 1930; and also
that the Act
does not make it compulsory to provide insurance against
injury
caused to another servant of the same employer. But if we
take it, as in my
view we must, that the existence of compulsory
insurance under the Act
involved that it was a term of the
employment that the driving should be
covered by a policy against
third party liability, I do not think that the term
postulated
should be tied down to all the complications and qualifications
which
arise on a strict interpretation of the Act. What mattered to
the
parties was that while the lorry was being driven on the
employer's business
someone might be injured in circumstances that
entitled him to recover
damages from either employer or employee
or both of them. From that
point of view it did not signify
whether the accident occurred on a road or in
a yard that turned
off it or whether the person injured was or was not in the
employer's
service. Any other view would leave it to the employee to take
out
his own policy to cover the residual risks, and this does not seem to
me
a reasonable arrangement to impute to the parties.
In fact,
as we know, the employer provided insurance at his own expense
by
means of two separate policies, and these between them secured
cover
without excepting accidents off a road or injury to a fellow
employee. More-
over, the motor vehicle policy took what is
certainly not the uncommon form
of including a " Third Party
Extension ", the effect of which was that the
driver was
equipped with his own direct right to call for indemnity from
the
insurers if he became liable to a third party for damages
caused while driving
the Respondents' lorry.
I must
call attention to this last point because it illustrates the
almost
intolerable anomalies which are involved in the
Respondents' argument. The
situation is this. If an accident takes
place through negligence, the person
injured can sue either
employer or employed or both of them. If he sues
the employee
alone, the latter calls on the insurance company for the cover
which
the employer has bought him; the insurance company has to provide
the
fund of damages required; neither the wages nor the savings of
the
employee can be touched to reimburse the insurers for the risk
that they have
underwritten. But if the injured person takes a
different course, one which
neither employer, employee nor
insurance company can control, and sues the
employer either alone
or jointly with the employee, the position of the
employee is,
apparently, much worse and the position of the insurance com-
pany,
apparently, much better. For now the latter can indemnify itself
for
the money it finds by getting it back from the employee in the
employer's
name and the former, instead of getting the benefit of
the insurance which his
employer was to provide, is in the end the
one who foots the bill. I should
be very much interested to know
how the premium required by an insurance
company is adjusted to
the risk of these alternative situations.
My Lords,
on this part of the case I take the same view as that taken
by
Denning, L.J. I agree with what he says at p. 192 of his
judgment as
reported in L.R. [1956] Q.B. 180 Romford Ice &
Cold Storage Company
Limited v. Lister, and I do not
think it possible to escape the force of his
reasoning. If we
assume any understanding at all between the Appellant and
Respondents
as to insurance against third party liability, to the
Appellant's
enquiry as to who was to provide it the Respondents
must have answered:
" We will see to that and the expense of
providing it will fall on us ": but the
result of this appeal
depends upon which of the following alternatives they
must be
taken to have added. One would be to this effect—" but, of
course,
" you understand that although we are going to secure
the monies required to
" pay the injured person in the first
instance, you will have to make them
" good ultimately,
either to us or to the insurance company. " The other would
be—"
and, of course, it is understood that, since we are providing for the
fund
" that will indemnify the injured person, that closes
any question of our
" calling upon you at any time to
contribute to that fund." I can only say
15
that to me
the first alternative seems a contradiction of what is involved
in
the Respondents' undertaking to pay for and provide the fund.
The second
seems to be the natural exchange to take place between
the company and their
lorry driver.
I am,
therefore, in favour of allowing the appeal. I think it a very
difficult
point and I well understand the difference of approach
that leads us in this
House to different conclusions. I ought,
however, to say something about
two considerations which have been
advanced on behalf of the Respondents
but which are to me
unpersuasive. It is said that to imply such a term as I
propose is
in effect to contradict the general duty of the employee to
exercise
reasonable care in carrying out his employer's work. I do
not think that this
is so. The general duty remains and it will
have its legal effect on all acts
of the employee which do not
touch this question of insurance against third
party liability. It
is the special system whereby this form of insurance is a
necessary
condition of the employment which brings about the special result.
Then it is
sought to show that the term in question cannot exist in law
because
it has never been heard of before this case. When did it first
enter
into the relations of employer and employed? Could it really
have existed
since the Road Traffic Act, 1930, if it did not exist
before it? My Lords, I
do not know because I do not think that I
need to know. After all, we need
not speak of the master's action
against his servant for negligence as if it
had been common fare
at the law for centuries. Economic reasons alone
would have made
the action a rarity. If such actions are now to be the usual
practice
I think it neither too soon nor too late to examine afresh some of
their
implications in a society which has been almost
revolutionised by the growth
of all forms of insurance. No one
really doubts that the common law is a
body of law which develops
in process of time in response to the develop-
ments of the
society in which it rules. Its movement may not be perceptible
at
any distinct point of time nor can we always say how it gets from
one
point to another; but I do not think that, for all that, we
need abandon the
conviction of Galileo that somehow, by some
means, there is a movement
that takes place.
Lord
Tucker
MY LORDS,
I am of
opinion that a servant employed to drive a vehicle in the course
of
his employment by his master owes a duty to his master to take
reasonable
care in the driving and management of the vehicle, that
for breach of this
duty an action founded on contract can be
brought by the master
against the servant, and that damages which
have been awarded against the
master by reason of the servant's
negligence or breach of this duty are not
too remote to be
recoverable in the master's action against his servant
claiming
damages for breach of contract.
The
reasons for reaching these conclusions, which are in accord with
the
views of the majority of the Court of Appeal, have already
been stated. I
agree with them and do not wish to add anything
thereto.
I will
accordingly confine myself to the question of the terms which
the
Appellant contends should be implied in his contract of
service which, if
accepted, would have the result of relieving him
from the financial conse-
quences of his breach of his contractual
duty in so far as such breach might
result in injury to the person
or goods of a third party when he was driving a
motor vehicle on
his master's business.
My Lords,
the terms which it is alleged are to be implied in this contract
are
to be found in the Appellant's Defence after amendment and
reamend-
ment. Throughout the hearing of this appeal counsel for
the Appellant
has been content to adhere to the terms as pleaded
and has not sought leave
to make any further amendment
notwithstanding various alternatives ten-
tatively suggested by
some of your Lordships during the hearing. In these
16
circumstances
I propose, and indeed I feel myself bound, to confine my
observations
to the implied terms which have been pleaded. They are as
follows:
—
Paragraph
4 of the Defence: " It was an implied term of the
"
Defendant's contract of employment with the Plaintiffs that the
Plain-
" tiffs would indemnify him against all claims or
proceedings brought
" against him for any act done by him in
the course of his said employ-
" ment."
Paragraph
5: "In the alternative it was an implied term of the said
"
contract that the Defendant would receive the benefit of any
contract
" of insurance effected by the Plaintiffs and
covering their liability in
" respect of the action above
referred to. The Plaintiffs have effected
" such insurance
and have been fully indemnified and the Defendant
" claims
the benefit thereof."
Paragraph
7. A: " It was an implied term of the Defendant's employ-
"
ment that he should not be required by the Plaintiffs to do
anything
" unlawful and in particular that he should not be
required to drive
" unless there was in force in relation to
the use of the vehicle such a
" policy of insurance as would
provide him with the indemnity which
" Section 36 (1) of the
Road Traffic Act 1930 requires. The said term is
" to be
implied by law."
Paragraph
7. B: "Further it was an implied term of the
Defendant's
"employment that the Plaintiffs' motor insurance
should cover the
" Defendant against any third party
liability which he might personally
" incur arising out of
his driving the Plaintiffs' vehicles in the course of
" his
employment."
Apart from
the difficulty on general principles, to which I shall refer
later,
of accepting any implied terms of this kind, those pleaded seem to
me
on their face to be open to serious objection. Paragraph 4 is far
wider
than anything which could reasonably be required on any view
and would
result in completely nullifying the effect of the duty
of care which the servant
owes to his master and to give him a
licence to be as negligent as he liked.
Paragraph
5, to be effective, must purport to deprive the insurance com-
pany
of their right on payment of the claim to be subrogated to the
rights
and remedies of their insured, which right exists
independently of any express
term in the contract of insurance.
Alternatively, it may mean that the
insured who has paid damages
to the injured person out of his own pocket
and received payment
by way of indemnity from his insurance company must
pay out of his
own pocket the same sum to his servant to enable him to
meet a
claim brought against him by the insurance company by virtue of
their
right of subrogation.
Paragraph
7. A is based on the erroneous assumption that the Road Traffic
Act,
1930, imposes an obligation on the employer to take out a policy
which
will cover the personal liability of the servant while
driving in the course
of his employment—cf. John T. Ellis
v. Walter T. Hinds [1947] 1 K.B. 475,
and Lees v.
Motor Insurers Bureau [1952] 2 A.E.R. 511, the correctness
of
which decisions has not been challenged.
Paragraph
7. B seeks to impose contractually a wider obligation than
Parlia-
ment thought fit to impose when the Road Traffic Act,
1930, was passed.
But, my
Lords, apart from these objections which make it impossible for
me
to accept any of the pleaded implied terms, the case raises questions
of
importance going beyond the precise language used in this case
by the pleader.
Some
contractual terms may be implied by general rules of law.
These
general rules, some of which are now statutory, for example,
Sale of Goods
Act, Bills of Exchange Act, etc., derive in the main
from the common law by
which they have become attached in the
course of time to certain classes of
contractual relationships,
for example, landlord and tenant, innkeeper and
guest, contracts
of guarantee and contracts of personal service. Contrasted
with
such cases as these there are those in which from their
particular
circumstances it is necessary to imply a term to give
efficacy to the contract
and make it a workable agreement in such
manner as the parties would
17
clearly
have done if they had applied their minds to the contingency
which
has arisen. These are the " officious bystander "
type of case, to use Lord
Justice Mackinnon's well known words. I
do not think the present case
really comes in that category, it
seems to me to fall rather within the first
class referred to
above.
Without
attempting an exhaustive enumeration of the duties imposed in
this
way upon a servant, I may mention:
the duty
to give reasonable notice in the absence of custom or
express
agreement;
the duty
to obey the lawful orders of the master;
the duty
to be honest and diligent in the master's service;
the duty
to take reasonable care of his master's property entrusted
to him
and generally in the performance of his duties;
to
account to his master for any secret commission or remunera-
tion
received by him;
not to
abuse his master's confidence in matters pertaining to his
service:
cf. Robb v. Green [1895] 2 QB 1 and 315.
It would,
I think, require very compelling evidence of some general change
in
circumstances affecting master and servant to justify the Court in
intro-
ducing some quite novel term into their contract, for
example, a term
absolving the servant from certain of the
consequences of a breach of his
recognised duty to take care, or
as to the provision of insurance covering the
servant's liability
to third parties or his master. I find it difficult to under-
stand
what, if any, are the limitations of this theory. Is it to be
confined to
the relationship of master and servant with reference
to motor cars, or is it to
extend to all those employed in
industry or transport who, in the very nature
of things, are
engaged on work in which negligence on their part may result
in
widespread and grievous damage amounting to thousands of pounds
for
which they may be liable to their employers and in respect of
risks which it
was customary for the employer to insure against
long before the advent of
the motor car?
It is said
that the passing of the Road Traffic Act, 1930, has created the
new
situation which gives rise to the necessity for these implied terms.
It
is common knowledge that for many years before 1930 the great
majority
of prudent motor car owners protected themselves by
insurance. Sections
35 and 36 of the Act were not passed for the
protection of the bank balances
of car owners, or the life savings
of their employees, but simply and solely to
ensure that persons
injured by the negligent driving of motor cars who
established
their claims in Court might not be deprived of compensation by
reason
of the defendants' inability to satisfy their judgments.
Again, it
is said that the passing of the Act has admittedly resulted in
the
introduction of one implied term, namely, that the servant
shall not be
required to drive a motor vehicle the user of which
has not been covered by
insurance as required by the Act. This is
merely the application of an existing
term to the situation
created by the Act. It has always been an implied
term that the
master will indemnify the servant from liability arising out
of an
unlawful enterprise upon which he has been required to embark
without
knowing that it was unlawful. When the Road Traffic Act
required the user
to be covered by insurance, a journey which
would previously have been
lawful became unlawful in the absence
of the required cover. My Lords,
I cannot accept the view that the
impact of this Act on the previously existing
obligation of the
master is in any way comparable to the implied terms which
it is
now sought to introduce into the contract of service.
On the
question of these alleged implied terms I find myself in
complete
agreement with Mr. Justice Ormerod and Lords Justices
Birkett and Romer.
I do not think there is any substance in the
subsidiary matters relied upon
by counsel for the Appellant with
regard to the claim not having been made
by way of third party
procedure or as to the inadmissibility in evidence in
the present
action of the judgment for damages in the suit by the injured
man
against the present Respondents.
In the
result I would dismiss the appeal.
18
Lord
Somervell of Harrow
MY LORDS,
The
Defendant, hereinafter called " the driver", was a lorry
driver
employed by the Plaintiffs, hereinafter called " the
employers ". On 28th
January, 1949, the driver, while driving
in the course of his employment,
injured his father who was in the
same employment. The father, whom
I will call " the third
party ", claimed damages from the employers based
on the
alleged negligence of the driver. The claim succeeded though
the
third party was held also to have been negligent. Judgment was
entered
against the employers for £1,600 and costs. The
employers in the present
proceedings claim (1) an indemnity or
contribution under the Law Reform
(Married Women and Tortfeasors)
Act, 1935; (2) the £1,600 and costs as
damages for breach
(a) of an implied term of the contract of service that
the
driver would exercise reasonable care, (b) of a duty at common
law to
take care.
It is not
now disputed the driver was negligent. As an answer to all or
any
of these claims the driver relied on an implied term that the
employers
would cover his, the driver's, liability to third
parties and other damage
by insurance, and that the present claim
seeking to make him personally
liable for the damages due to the
third party was inconsistent with that
term. There were other
issues, some of which are not now maintained and
some which do not
arise on the view which I take.
Ormerod.
J. held in favour of the employers on the 1935 Act. This was
affirmed
by the Court of Appeal, Denning, L.J. dissenting. He held
that
servants were not normally under a contractual duly to their
masters to
exercise reasonable care in the performance of their
duties. That left a
liability in tort. But for the Act of 1935 the
employer could not as a joint
tortfeasor claim indemnity or
contribution. He can claim under that Act.
Denning. L.J. held, and
I am summarising, that the employer being insured
there was an
implied term that he would not seek to recover contribution
or
indemnity from the servant.
On the
alleged contractual duly to carry out the duties of his
employment
with reasonable care, cases were cited to us which were
not, I think, cited
to the Court of Appeal. The earliest I need
refer to is Green v. The New
River Company, 4 Ter. R. 589.
The Plaintiffs house had been damaged
by the bursting of one of
the Defendant's pipes. Lord Kenyon held that
negligence must be
proved. A witness was called who said that some hours
before the
burst he had drawn the attention of the Defendant's turncock
to
oozing water, the suggestion being that the turncock was negligent
in
failing to attend to the matter. The Defendant's counsel
offered to call
the turncock. The Plaintiff objected to his giving
evidence without a release.
Lord Kenyon was of opinion that the
turncock was an incompetent witness
as he came to disprove his own
negligence, which, if established by the
verdict, would be the
ground of an action against himself by his employers.
The failure
to attend to the matter would be, I think, a contractual and
not a
" tortious " failure.
In Harmer
v. Cornelius, 5 C.B.N.S. 236, 246, Willes, J. said: "When
a
" skilled labourer, artisan or artist, is employed, there
is on his part an
" implied warranty that he is of skill
reasonably competent to the task
"' he undertakes—spondes
peritiam artis. Thus, if an apothecary, a watch-
" maker
or an attorney be employed for reward, they each impliedly under-
"
take to possess and exercise " (my italics) "
reasonable skill in their several
" arts."
It was
suggested that in this passage Willes, J. was laying down that
a
servant warranted only possession of skill and was not
undertaking to
exercise it with reasonable care. I think this is
wrong. The learned Judge
is saying that the skilled labourer of
the first sentence is under the same
contractual obligation to his
master as those mentioned in the sentence
are to their customers
or clients. The obligation to exercise reasonable
care is assumed.
19
There is,
however, no authority binding on your Lordships' House.
Most of
the statements against too readily implying terms are in judgments
in
cases where one party is seeking to imply a term into a written
and
often detailed contract which is effective and covers the
obligations of the
parties in normal circumstances without the
addition of the term sought
to be implied. The position is
different when the contract, written or oral,
is silent as to
matters which have to be settled one way or the other if the
contract
is to be effective. In the past, as today, goods are often sold,
the
parties dealing expressly only with the identification of the goods
physic-
ally or by description and the price. The buyer claims
that the goods are
defective. The Court has in such a case to
imply terms. It would be doing
so if it had allowed no exceptions
to the warning caveat emptor. Sections
12 to 14 of the Sale
of Goods Act, 1893, set out the terms which over
the preceding
years the Courts had implied when the parties were themselves
silent.
Other examples of this process can be found in the terms to
be
implied in tenancies. A classic example of the process is Holt,
C.J.'s
judgment in Coggs v. Bernard, 2 Lord
Raym, 909.
It may be
that in the case of sales of goods and tenancies the ground
has
been covered. I would not expect the ground to have been covered
in
the case of weekly wage earners who would seldom be worth suing.
In
any case, new circumstances may present new problems which have
to be
dealt with in the same way.
I think it
is right to imply a duty on the part of the servant to
take
reasonable care in the carrying out of his duties. There
would be a breach
although there were no damage, and happily most
acts of negligence do not
cause damage. In the case of a chauffeur
it would not, of course, be confined
to driving, but would apply
to the care of the car and other matters.
I
therefore accept the submission on behalf of the employer that there
is
normally a contractual duty on a servant to take care. I now
turn to the
implication submitted on behalf of the driver as to
the personal liability
of the driver of a lorry or car for damage
caused by negligent driving.
Soon after
motor cars came into use it became obvious that the risk of
accidents
due to negligence causing serious injuries and damage was very
much
greater than when vehicles were drawn by horses. Many years
before
1930 no reasonable man allowed himself to be in a position
where if negligent
he would be liable to pay out of his own
resources third party damages.
He insured. Though this case is
concerned only with third party liability
it would, I think, be
found that the normal policy also covered damage to
himself and
his car.
When a man
is engaged as a chauffeur or a lorry driver the question
whether
his resources are at risk should he cause damage through
his
negligence is as important to him as it is to an owner driver.
Nothing
was said in this case and I dare say nothing is usually
said. If when such
a contract was being negotiated the question
had been raised, it is obvious,
I think, that the driver would
have stipulated for the usual cover that an
owner driver provides
for himself. If nothing is said it is, in my opinion,
for the
employer to see that the driver's resources are protected by
insurance.
It is inconsistent with such an obligation that the
employer should seek
by action to make the driver personally
liable as in the present case.
I
instanced during the argument the case of an owner who drives
himself
at times and at other times employs a chauffeur. "
Unreasonable " would
be too mild an epithet if the owner had
protected his own resources if he
was negligent but had failed to
ensure the protection of his driver or, of
course, made it clear
to him that he must insure himself. If the present
claim succeeds
that would be the position.
I find it
easier to imply this term than the obligation of the driver to
take
care. This term seems to me to be necessary for the efficacy of
the
contract. No driver would undertake the work if he was told
his resources
might be liable for damage caused by a negligent act
or omission.
20
It is
suggested that such a term would not be precise. It would, I
think,
be as precise as the " i" or the " f "
in a c.i.f. contract. The policy tendered
in a c.i.f. contract
must be upon the " terms current in the trade "—Biddell
Brothers
v. E. Clemens Horst Company [1911] 1 KB 214, 220. If a
policy
is taken out in the ordinary terms that is sufficient.
I have not
referred to the provisions of the Road Traffic Act, 1930, which
makes
third party insurance obligatory. This greatly strengthens the
argu-
ments for the term which I have implied, but I think myself
the arguments
would have been strong enough apart from that Act,
which was directed
to protecting the public.
I think
the term which I have implied is covered by the pleadings.
I must say
a word about Digby v. General Accident Fire and Life Assur-
ance
Corporation, Limited [1943] A.C. 121. It was assumed in the
earlier
proceedings before du Parcq, J. that the owner could bring
an action against
her driver for damages caused to the owner. The
driver then claimed against
the insurance company in respect of
his liability to his owner. It is not, at
any rate, clear that the
owner was seeking to make the driver personally liable.
It may
have been that the driver was sued in order that the damages, if
any,
against him could be ascertained in order to test the
liability of the insurers.
In any event, the point does not appear
to have been taken in the proceedings
before du Parcq, J. Lord
Atkin at p. 138 says that the proceedings against
the driver were
no doubt taken " with a view of eventual recovery from the
"
insurance company ".
It is fair
to the Plaintiffs to state that these proceedings are brought
in
their name but without their knowledge or, I think, approval.
They are
brought by an insurance company, which ultimately paid
the third party,
under alleged rights of subrogation contractual
or in law.
It was
suggested that the term which I have implied is unenforcible
unless
agreed to by the insurers of the employer. This point was
not pleaded and
I cannot think it is right. The insurer, when he
has paid, succeeds to such
rights as the assured possesses. The
assured is not, as I see it, fettered in
any way as to the terms
on which he contracts with his driver.
A good
deal of argument was based on the fact that there were two
insur-
ances, one being an employer's liability policy and the
other a motor vehicle
policy. The former paid the third party, the
latter making, I think, a payment
said to be ex gratia of £200.
There was a dispute, but this cannot throw
any light on the
contract between employer and driver.
It follows
that in my opinion Semtex Limited v. Gladstone [1954] 2
A.
E.R. 206 was wrongly decided.
The
implied term is an answer to the claim for damages and also to
the
claim for indemnity or contribution under the 1935 Act. Both
claims seek
to make the driver personally liable in respect of
damages to a third party,
which is plainly of the kind to be
anticipated and covered.
It is said
that this would have far-reaching consequences. So, I think,
would
the decision of the Court of Appeal. With respect, I think that
deci-
sion is not only far-reaching but also anomalous. One may
take as an example
an accident causing damage which is within the
compulsory provisions of
the Road Traffic Act, 1930. If a driver
was sued direct it seems clear the
insurers would have to pay and
there would be an end of it. If, however,
the employer is sued the
insurers again pay but can by subrogation recover
against the
driver and levy execution on his savings. This would, I think,
be
anomalous. It would also mean that any driver who realised what
the
law was would have to take out a policy to cover this risk.
Romer,
L.J. at the end of his judgment said that it was not in the
public
interest that drivers should be immune from the financial
consequences of
their negligence. The public interest has for long
tolerated owners being so
immune, and it would, I think, be
unreasonable if it was to discriminate
21
against
those who earned their living by driving. Both are subject to
the
sanction of the criminal law as to careless or dangerous
driving. The driver
has a further sanction in that accidents
causing damage are likely to hinder
his advancement.
The terms
which I have implied might, I agree, apply to other cases.
The
question would be whether the damage sought to be recovered
from the
servant was damage which any reasonable person would
cover by insurance.
There would be the further question whether
the employment was such that
the servant, if nothing was said, was
entitled to assume that the master
would arrange the insurance.
This is plain enough in car or lorry cases,
as the owner has to
have a policy under statute. In other cases it might
be a question
of evidence.
Other
points were argued which do not arise on the view which I
have
formed.
I would
allow the appeal.
(32737)
Wt. 8124—114 35 1/57 D.L./P.A/19
