Havas v. Standard Knitting Mills Pty. Limited [2001] NSWCA 295

Reported Decision : 52 NSWLR 293

New South Wales Court of Appeal

CITATION : Havas v. Standard Knitting Mills Pty. Limited [2001] NSWCA 295 FILE NUMBER(S) : CA 40534/00 HEARING DATE(S) : 29 August 2001 JUDGMENT DATE : 7 September 2001

PARTIES : Ernie Havas - appellant Standard Knitting Mills Pty. Limited - respondent JUDGMENT OF : Stein JA at 1; Heydon JA at 2; Hodgson JA at 3

LOWER COURT JURISDICTION : District Court LOWER COURT DC 4043/98 FILE NUMBER(S) : LOWER COURT Garling DCJ JUDICIAL OFFICER :

COUNSEL : Mr. L. King SC with Mr. P. McGuire for appellant Mr. D. Hooke with Miss E. Beilby for respondent SOLICITORS : Carroll & O'Dea, Sydney for appellant Curwood & Partners, Sydney for respondent CATCHWORDS : PERSONAL PROPERTY - Possession - Immediate right to possession - Entitlement thereto - Whether in owner or bailee or both - TORTS - Negligence - Motor accident - Plaintiff's employer in possession of vehicle - Whether "owner" within meaning of Motor Accidents Act 1988. D. LEGISLATION CITED : Motor Accidents Act 1908 ss.3, 59 Genders v. Ajax Insurance Co. Ltd. (1950) 81 CLR 470 CASES CITED: Nominal Defendant v. Morgan Cars Pty. Ltd. (1974) 131 CLR 22 Central London Property Trust Ltd. v. High Trees House Ltd. [1947] KB 130 DECISION : See par.28 of judgment

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40534/00 DC 4043/98 STEIN JA HEYDON JA HODGSON JA

Friday 7th September 2001 HAVAS V. STANDARD KNITTING MILLS PTY. LIMITED

Judgment 1 STEIN JA: I agree with the orders proposed by Hodgson JA. I also agree with Heydon JA, whose draft judgment I have had the benefit of reading. 2 HEYDON JA: I agree with the orders proposed by Hodgson J and the reasons he gives for them, save that I would base the entitlement of Universal to possession only on giving notice not on estoppel, but on an express contractual term inferred from the circumstances or on an implied contractual term. In the pleadings the respondent raised the ownership point by way of defence, and the appellant did not file a reply. In consequence, neither a contractual term nor an estoppel was pleaded. In final address the appellant sufficiently flagged an argument of the type accepted by Hodgson JA, and the respondent did not either at trial or on appeal say that the argument was not open because of the state of the pleadings. That argument is easily supported by analysing the arrangements between Universal and the respondent as contractual. It is easy to infer from the circumstances an express term providing for notice, or to imply into the contract a term providing for notice in order to give the contract business efficacy. It is less easy to find an estoppel and the appellant below did not argue in terms that there was any estoppel. 3 HODGSON JA: On 30 June 2000, Garling DCJ made orders disposing of a claim brought by the appellant against his employer the respondent, in respect of personal injuries arising out of an accident at work. On that day, the primary judge gave a verdict for the respondent, and ordered the appellant to pay the respondent's costs. We are now dealing with an appeal brought from that judgment. 4 The accident in question occurred on 14 June 1995. The appellant was driving a forklift truck at the respondent's premises, and using it to assist in the lifting of a very heavy knitting machine onto a truck. The forklift moved on to rough ground, the load tilted, and the knitting machine hit the appellant and injured him. 5 The primary judge found that the appellant's injury was caused by the negligence of the respondent, namely a breach of its duty of care owed to the appellant as its employee, broadly the duty to provide a safe system of work and safe premises for work. The primary judge also found the appellant guilty of contributory negligence, justifying a 15 per cent reduction in the amount of any damages. 6 It is common ground that the forklift was a motor vehicle within the meaning of the Motor Accidents Act 1988. The appellant claimed that the respondent was the owner, within the meaning of that Act, of the motor vehicle, and that accordingly the damages sought by the appellant were damages for "injury to a person caused by the fault of the owner … of a motor vehicle in the use or operation of the vehicle" within s.59(1) of the Motor Accidents Act. This would mean that the damages sought by the appellant were "damages to which Pt.6 of the Motor Accidents Act 1988 applies" within s.151E(1) of the Workers Compensation Act 1987. This in turn would mean that the appellant was not precluded by s.151A of the Workers Compensation Act from pursuing his claim for common law damages, notwithstanding that he had elected to receive permanent loss compensation for his injury under ss.66 and 67 of the Workers Compensation Act. Otherwise, he would be. 7 The only aspect of this contention contested by the respondent was the appellant's claim that the respondent was the owner of the motor vehicle. The motor vehicle was in fact registered in the name of Universal Dye Works Pty. Limited (Universal), another company in the same group of companies as the respondent, although the vehicle was used and garaged by the respondent. The appellant's claim of ownership required consideration of definitions contained in the Motor Accidents Act. Section 3(1) of that Act, as at 14th June 1995 and today, defines "owner, in relation to a motor vehicle" to mean a person who is the owner of the vehicle by virtue of ss.(3) to (5) of that section. Those subsections were as at 14 June 1995, but not today, in the following form: (3) For the purposes of this Act: (a) in the case of a motor vehicle which is registered, the owner is: (i) the person in whose name the vehicle is registered, unless the person has sold or ceased to have possession of the vehicle; or (ii) if the person in whose name the vehicle is registered has sold or ceased to have possession of the vehicle – any person who solely or jointly or in common with any other person is entitled to the immediate possession of the vehicle; or (b) in the case of a motor vehicle which is unregistered, the owner is any person who solely or jointly or in common with any other person is entitled to the immediate possession of the vehicle; or (c) in the case of a motor vehicle to which a trader's plate is fixed, the owner is the trader to whom the trader's plate is issued.

(4) For the purposes of subsection (3), a person shall be taken not to have ceased to have possession or, as the case may be, not to have acquired possession of a motor vehicle where a change of possession occurs by way of: (a) any hiring (not being a hiring under a hire-purchase agreement) or lending of a vehicle for a period not exceeding 3 months; or (b) the passing of the possession of the vehicle to a bailee for the purpose of sale or disposal or for the purpose of alteration, repair, renovation, garaging, storing or other like purpose not involving the use of the motor vehicle for the benefit of the bailee.

(5) In the application of any provision of this Act to and in respect of a motor vehicle to which a trader's plate is fixed (whether or not with the authority of the trader), a reference in any such provision to the owner shall be read as a reference to the trader, and a reference to the third-party policy in relation to that motor vehicle shall be read as a reference to the third-party policy in relation to motor vehicles to which the trader's plate is fixed (whether or not with the authority of the trader). 8 On the basis of these provisions, the primary judge held that the respondent was not the owner of the motor vehicle and thus that the appellant was precluded by his election under the Workers Compensation Act from claiming common law damages. 9 The following facts in relation to this matter were either common ground or clearly established. 1. The forklift was purchased on 31 March 1989 by Universal and paid for by Universal. 2. Universal maintained the forklift as an asset in its accounts and depreciated them on its own account until it was fully written off for accounting purposes on 30 June 1995. 3. In April 1989, Universal entered into a service contract for the maintenance of the forklift, and until 27 August 1997, all invoices for service and repairs were addressed to Universal. 4. After purchase, the forklift went to the respondent's premises (which were distinct from Universal's premises) where it was used and permanently garaged. From this time, the respondent and its employees had physical possession of the vehicle and its keys, and exclusive use of the vehicle, and the vehicle was used in the respondent's commercial operations. 5. Invoices for maintenance of the vehicle were marked with initials identifying the respondent, and according to a past employee of the respondent called at the hearing by the appellant, this meant (at least during the time of her employment from 27 January 1997 to 21 January 2000) that the cost of these services was borne by the respondent. 6. The respondent did not call any witness or tender any documents (apart from the service agreement and accounting records) to clarify the terms on which the forklift was held and used by the respondent. 10 The primary judge gave the following reasons for his decision that the respondent was not the owner of the vehicle (in these reasons, the "Knitting Mill" is the respondent, and "Dyeworks" is Universal): And it is argued that the evidence clearly establishes that the Knitting Mill acquired possession of the vehicle as a bailee under a gratuitous bailment, thus satisfying the test for change of possession in s.3(4)(b), and I have considered that argument. I disagree with it. I do not think it is right. It seems to me that in the end, the plaintiff simply cannot succeed, for a very simple reason. The plaintiff cannot succeed against this defendant because the Dyeworks always had the right to immediate possession of the vehicle. In other words, what happens is, there are a number of vehicles purchased by one company, used by various companies in the group, but the company who purchases them at all times has the right to do what they want to do with the vehicle. For instance, to sell it, simply by saying, we are taking possession of that vehicle and we are selling it. I cannot see any evidence at any stage that the type of control that would be necessary to deem ownership has ever passed from the Dyeworks. On the evidence before me at all times I am satisfied, that the Dyeworks are entitled to the immediate possession of the vehicle and therefore the plaintiff cannot succeed, under the provisions of the Motor Accidents Act, which is the only way the case can be brought, against the defendant they chose to proceed against. 11 In my opinion, it is clear that Universal was the beneficial owner of the forklift, and the respondent was a bailee. In some circumstances, possession of a chattel by a bailee may not be inconsistent with its possession by the bailor as well, because the bailee's possession may be considered to be possession as the bailor's agent. However, in my opinion this was clearly not the case here. The forklift was used for the respondent's commercial purposes. In the absence of evidence from the respondent of any change of practices concerning payment for maintenance of the vehicle, the inference that at all material times the respondent paid for its maintenance is in my opinion overwhelming. For these reasons, the respondent's possession of the forklift was not as agent for Universal, and accordingly at material times Universal did not have possession of the forklift. I would infer that, at the time of purchase, Universal obtained possession of the forklift, at least through agents, so that it is correct to say that, at the time of the accident, Universal had ceased to have possession of the forklift. 12 Furthermore, in my opinion Universal had ceased to have possession in circumstances not covered by s.3(4). If one classifies the transaction between Universal and the respondent as a lending of the vehicle, then plainly the lending was for a period much in excess of three months, thus taking the matter outside par.(a). Further, the purpose of the transaction did involve the use of the forklift for the benefit of the respondent, thus taking the matter outside par.(b). 13 However, this is not sufficient to establish that the respondent was the owner of the forklift. Even though Universal had ceased to have possession, it could still have been the owner as a person entitled to the immediate possession of the forklift, and that could be sufficient to show that the respondent was not the owner of the vehicle. This was in fact the ground on which the primary judge decided the case, and the matter on which the appeal was fought. In relation to this matter, there were two broad contentions advanced for the appellant. 1. Even if it be accepted that, as between Universal and the respondent, Universal was entitled to the immediate possession of the forklift, nevertheless the respondent was entitled to the immediate possession of the vehicle as against the rest of the world, and this was sufficient. 2. The Court could and should infer that in fact the terms on which the respondent had possession of the forklift were such that Universal was not entitled to the immediate possession of the forklift. 14 I will deal in turn with those two contentions.

COULD THERE BE TWO OWNERS? 15 Mr. Hooke for the respondent submitted that the definition of "owner" does not permit there to be two owners both entitled to immediate possession. Apart from the special case of joint ownership or ownership in common, one right to immediate possession must prevail over any other alleged right to immediate possession; and it is the person with that right who is entitled to the immediate possession of the motor vehicle. Mr. Hooke referred to Genders v. Ajax Insurance Co. Limited (1950) 81 CLR 470, and in particular to the following passage at 480: The definition of owner in "owner" is so constructed that it is not possible for some individual to fulfil the description of owner as defined and at the same time for the Commonwealth of Australia to fulfil that description. 16 Mr. Hooke also referred to Nominal Defendant v. Morgan Cars Pty. Limited (1974) 131 CLR 22. The question in that case was whether the respondent in that appeal, the owner of a car subject to a hiring agreement, was an owner for the purposes of the Motor Traffic Act 1909, which relevantly defined owner to mean "any person who solely or jointly or in common with any other person is entitled to the immediate possession of the motor vehicle". At p.25, Menzies J (with whom Barwick CJ and McTiernan J agreed), said that the question in the case was whether the respondent in the case was the person entitled to immediate possession of the motor vehicle. 17 In my opinion, the case of Genders was dealing with the special case of ownership of a vehicle by the Commonwealth, where the Act in question contemplated a different regime for cars owned by the Commonwealth; and it has no direct application to this case. As regards the quote from Morgan, Menzies J does not give any justification for substituting the word "the" for the word "any", the latter being the word used in the definition, and I would not read the passage referred to as displaying a considered opinion that there can only be one such person. 18 I prefer the simpler view that, if a person is lawfully in actual possession of a motor vehicle, then that person has the immediate possession of the vehicle and is entitled to that possession, and so falls within the description "any person entitled to the immediate possession". To my mind, it would not matter that another person, who does not have actual possession, may also be entitled to the immediate possession of the vehicle in the sense that that person is entitled to retake possession at any time. Until the latter person has sought to exercise that entitlement, the person lawfully in actual possession is entitled to be in actual possession, and is fairly described as being entitled to the immediate possession of the vehicle, that being the possession which that person lawfully has. 19 For that reason, in my opinion, the respondent did fall within the definition of owner, and accordingly was properly sued by the appellant under the Motor Accidents Act. That alone would justify the appeal being allowed.

WAS UNIVERSAL'S ENTITLEMENT CONDITIONAL ON NOTICE? 20 In case I am wrong on the view I have just expressed, I will also consider the second question. 21 On this question, Mr. King SC for the appellant submitted that the circumstances supported an inference that the terms on which the respondent had possession of the vehicle were such that Universal was not entitled to retake possession without notice, and accordingly did not have an entitlement to immediate possession. The respondent chose to call no evidence on this question, and so the Court could confidently draw that inference. On this question, Mr. King relied on Morgan, in which the High Court held that the owner in that case was not entitled to immediate possession, even though the hiring agreement in question entitled the owner at any time to require the hirer to return the vehicle to the owner's premises. 22 Mr. Hooke submitted that the case of Morgan was distinguishable, because that case concerned a hiring for a fixed period, and the relevant term of the hiring agreement did not entitle the owner to take possession of the vehicle at any time but merely entitled the owner to require the hirer to take the vehicle back to the owner's premises. Mr. Hooke submitted that there was no basis for finding that the bailment in this case was other than a bailment at will, with the bailor retaining entitlement to immediate possession. 23 I accept Mr. Hooke's submission that Morgan is distinguishable, for the reason he advanced. However, in my opinion there was evidence from which an inference could be drawn that the respondent had the forklift on terms such that some notice, even if just (say) one hour's notice, would be required before Universal was entitled to retake possession, whether this requirement was by reason of an express or implied term of a contract or by reason of High Trees estoppel (Central London Property Trust Limited v. High Trees House Limited [1947] KB 130). 24 The evidence showed that for several years the forklift was in the possession of the respondent, on its premises, used in its commercial operations (including loading of heavy equipment of the kind involved in the accident the subject of these proceedings), and maintained (and presumably fuelled) at the respondent's expense. There is a clear inference available that the respondent's day-to-day operations were planned and scheduled on the basis that this equipment was available. The location of the forklift on the respondent's property is not sufficient in my view of itself to negative an entitlement to immediate possession in Universal, but all the factors to which I have referred support an inference that Universal was not entitled to disrupt the respondent's operations scheduled or actually being carried out, without giving notice which would give the respondent a reasonable opportunity to make an alternative arrangement. 25 It appears that submissions along those lines were put to the primary judge, but those submissions were not dealt with in his judgment. It is a matter of inference from primary facts, which an appellate court can in appropriate cases deal with. Having regard to the circumstance that the respondent chose not to give any evidence on this matter, I think the primary judge should have drawn the inference in question, and I think that this Court should do so. Even the necessity to give one hour's notice, whether by reason of an express or implied term of a contract or by reason of High Trees estoppel, would in my opinion mean that Universal was not a person entitled to immediate possession. 26 For that reason also, the appeal should be allowed.

CONCLUSION 27 It is common ground that if the appeal is allowed, there should be judgment for the appellant in the sum of $138,629.00. 28 I propose the following orders: 1. Appeal allowed with costs. 2. Judgment for the appellant against the respondent in the sum of $138,629.00, to be entered as at and to bear interest from 30 June 2000. 3. Respondent to pay appellant's costs of the proceedings. 4. Respondent to have a Suitors Fund certificate in relation to the appeal costs if otherwise entitled. ************

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