SUPREME COURT OF QUEENSLAND

1. McMURDO P:  The respondent plaintiff was injured at work first on 1 July 1994 and again on 17 September 1996.  He brought an action in the District Court against the appellant defendant, his employer, for damages for personal injuries, alleging both negligence and breach of an implied term in the contract of employment.^[1]

2. The learned trial judge found that only the first accident occurred through fault of the appellant; the appellant failed to take reasonable steps to provide a reasonably safe system of work; this failure constituted both negligence and a breach of contract; damages were assessed at $40,347; the respondent was 50 per cent contributorily negligent. As the appellant breached the contract of employment, his Honour did not reduce the damages for that breach to take account of the respondent's contributory negligence under s 10 Law Reform Act 1995: see Astley v Austrust Ltd.^[2]

3. The trial was heard on 22 and 23 March 1999 and judgment was reserved; his Honour indicated he planned to give judgment on 9 April 1999 and late on 8 April he circulated his draft reasons for judgment to counsel to enable them to check the mathematics and prepare any argument as to costs.

4. When the matter was called on for judgment, the appellant sought to amend the defence by adding the claim that:

"(a)It was an implied term of the contract of employment between the Plaintiff and the Defendant that the Plaintiff would carry out his duties:

(a)with due care and skill;

(b)in such a fashion as not to cause injury to any person, including himself; and

(c)in such a fashion as to take reasonable care for his own safety.

2. In breach of the said term the Plaintiff failed to carry out his duties with due care and skill and in such a fashion as to take reasonable care for his own safety particulars of which are given in paragraph 6 hereof.

3. By reason of the Plaintiff's said breaches the Defendant has suffered loss and damage in such amount of the Plaintiff's damages as the Court finds was caused by the Plaintiff's said breaches;  and

4. The Defendant claims to set off the amount of its said loss against such amount of damages for breach of contract, if any, as may be payable to the Plaintiff by the Defendant herein.

AND BY WAY OF COUNTERCLAIM:

The Defendant hereby counterclaims against the Plaintiff for damages for breach of contract on the grounds appearing in paragraph 8 hereof.

AND THE Plaintiff claims:

1. Damages for breach of contract.
2. Interest.
3. Costs."

5. Counsel for the respondent opposed the amendment; she had not been informed of the application to amend until shortly before the court hearing; the trial had not been conducted on that basis; she requested an adjournment to consider her position and to adequately research the point.

6. The learned trial judge gave ex tempore reasons refusing the appellant's application to amend; the law does not imply such a term into a contract of employment and the proposed amendment could not succeed.

7. As the damages awarded were less than the limit of the Magistrates Court jurisdiction, the appellant required leave to appeal under s 118 District Court Act 1967.^[3]  The appellant was given leave to appeal only as to his Honour's refusal to allow the amendment and was ordered to pay the costs of the application and of the appeal. 

Is there an implied term in a contract of employment to carry out the employment with due care and skill so as to take reasonable care for the employee's own safety.

8. Astley gives no direct guidance as to whether such a term is ordinarily implied in a contract of employment nor as to whether the employer is entitled to be indemnified by the employee against its liability for damages.  In Astley, Austrust Ltd, a trustee company, sued their solicitors, Astley and others, for both breach of contract and negligence in carrying out a retainer to give Austrust legal advice as to Austrust's intention to become a trustee of an existing trading trust involving a piggery.  Shortly after Austrust became a trustee, the piggery failed and Austrust became liable for the losses which exceeded the value of the piggery trust.  Astley was the senior partner and was primarily concerned with the advice given to Austrust.  Austrust was chaired by an experienced chartered accountant in private practice; the general manager had a background in commercial finance; members of staff included experienced trust officers; Austrust employed a qualified legal practitioner.  At first instance the solicitors were found to be negligent in failing to advise that Austrust would be personally liable in its dealings with the parties unless it limited its liability to the extent of the trust assets; Austrust was also found to be contributorily negligent in failing to make a proper assessment of the commercial risks.

The majority^[4] affirmed that a plaintiff may sue a solicitor in either contract or tort or both,^[5] and noted:

"Long before the imperial march of modern negligence law began, contracts of service carried an implied term that they would be performed with reasonable care and skill.  Persons who give consideration for the provision of services expect that those services will be provided with due care and skill.  Reliance on an implied term giving effect to that expectation should not be defeated by the recognition of a parallel and concurrent obligation under the law of negligence.  The evolution of the law of negligence has broadened the responsibility of professional persons and requires them to take reasonable care and skill even in situations where a contractual relationship cannot be established.  But given the differing requirements and advantages of each cause of action, there is no justification in recognising the tortious duty to the exclusion of the contractual duty."^[6]

The majority found that the apportionment legislation^[7] is concerned with claims in tort rather than claims in contract: "The subsection is designed to remedy the evil that the negligence of a plaintiff, no matter how small, which contributed to the suffering of damage, defeated any action in tort in respect of that damage."^[8]  Although the finding of contributory negligence on the part of Austrust reduced the assessment of damages in tort, it had no application to Austrust's claim for breach of contract.  Contributory negligence has never been a defence to an action for breach of contract,^[9] although a plaintiff's conduct might show there is no causal connection between a defendant's breach and that plaintiff's damages.^[10]

9. It was not contended that Austrust's fault constituted a breach of an implied term of the contract between Austrust and the solicitors but the Court noted:

"Absent some contractual stipulation to the contrary, there is no reason of justice or sound legal policy which should prevent the plaintiff in a case such as the present recovering for all the damage that is causally connected to the defendant's breach even if the plaintiff's conduct has contributed to the damage which he or she has suffered.  By its own voluntary act, the defendant has accepted an obligation to take reasonable care and, subject to remoteness rules, to pay damages for any loss or damage flowing from a breach of that obligation.  If the defendant wishes to reduce its liability in a situation where the plaintiff's own conduct contributes to the damage suffered, it is open to the defendant to make a bargain with the plaintiff to achieve that end.  Of course, the result of such a bargain may be that the defendant will have to take a reduced consideration for its promise to take reasonable care.  But the bargain will be the product of the parties' voluntary agreement to subject themselves to their respective obligations."^[11]

10. The relationship between employer and employee is essentially contractual; the employer promises to take reasonable care to provide a safe system of work for the employee: see Smith v Baker & Sons,^[12] Wright v TNT;^[13] Matthews v Kuwait Bechtel Corp,^[14] Toth v Yellow Express Carriers Ltd^[15]  and Stubbe v Jensen & Anor.^[16] 

11. Similarly, the employee has an obligation to perform the work agreed with reasonable and appropriate care and skill; the acceptance of employment in any position involves an implied promise to perform the employment with reasonable care: see Astley,^[17] Rowell v Alexander;^[18] Janata Bank v Ahmed,^[19] Davenport v Commissioner of Railways,^[20] Kashemije Stud P/L v Hawkes,^[21] Lister v Romford Ice and Cold Storage Co Ltd^[22] and A R Griffiths  Sons Pty Ltd v Richards.^[23]  Breach of that condition at common law could sometimes justify dismissal.^[24]

12. The implication of such a term arises from the nature of the relationship of employer and employee in a contract of employment; it differs from the implied terms referred to in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council^[25] and Codelfa Construction Pty Ltd v State Rail Authority of New South Wales^[26] where Mason J (as he then was) succinctly explained this difference:

"I am speaking of an implied term necessary to give business efficacy to a particular contract, not of the implied term which is a legal incident of a particular class of contract of which Liverpool City Council v Irwin [1977] AC 239 is an example.  The difference between the two categories of implied term was mentioned by Viscount Simmonds in Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555, 576, where he referred to the search for the second category of implied term as being based 'upon more general considerations', a comment endorsed by Lord Wilberforce in Irwin."

13. There is ordinarily an implied term in a contract of employment that an employee will carry out the employment with due care and skill; on the Judge's findings, the respondent in this case breached that duty.

Is the employer entitled to be indemnified by the employee against its liability for damages caused by the employer's negligence.

14. Mr Keane QC, who appears with Mr Morton for the appellant, contends that the learned trial judge's findings of fact were effectively that the respondent breached the duty to carry out the employment with due care by his own negligence and that this breach was the contractual cause of the respondent's injuries; the respondent's claim in damages for breach of contract should have been dismissed; the appellant is no longer counterclaiming for damages from the respondent.

15. There has been some judicial questioning as to whether Lister v Romford Ice & Cold Storage remains good authority for the propositions that there is no implied term in a contract of employment that an employee is entitled to the benefit of an insurance policy held by the employer or that the employer is entitled to be indemnified by the employee against any liability for negligent conduct in the course of employment.  In Rowell v Alexander Mackie College of Advanced Education,^[27] Samuels JA was inclined to think that there was implied in every contract of employment under which a person is required to drive his employer's motor vehicle as a matter of law a term

"… to the effect that the employer would maintain in force an insurance policy in standard form covering both the employer's and the employee's liability for loss of or damage to the property caused by the negligent driving of the insured motor vehicle by the employee in the course of his employment and any damage so occasioned to the employer's own property; and to the further effect that the employer would exhaust its rights under the policy before seeking any recovery from the employee.  This conclusion would be contrary to Lister.  But … there is no ground for regarding that case as determinative of industrial conditions at the other end of the world 30 years after it was decided."^[28]

16. Lister was followed by the majority (Mackenzie and Helman JJ) in the Queensland Court of Appeal in A R Griffiths & Sons Pty Ltd v Richards.^[29]  Fitzgerald P dissented and noted:

"Lister should, in my opinion, now be considered in this State as a decision which related to a different setting, in terms of time, place, social attitudes and legislative context, the majority view which has never, so far as I have discovered, been accepted as correct by the High Court as an integral part of its reasoning or by any other Australian appellate court, but has been questioned and on occasions criticised.  In my opinion, the material terms of the contract of employment between the employer and the negligent employee should be decided by the application of the principles concerning the implication of contractual terms established by the High Court, in the context of the Workers' Compensation Act and the Law Reform (Tortfeasors Contribution, etc) Act and prevailing industrial attitudes and employer/employee relations in the Queensland community."^[30]

17. The legal principles established in Lister allowing an employer to sue an employee for damages arising out of the employee's mere negligence were also criticised by Fox J in Marrapodi v Smith-Roberts.^[31]  Legislative intervention in a number of jurisdictions (although not Queensland) has clarified the position.^[32]

18. Lister was distinguished in McGrath v Fairfield Municipal Council,^[33] Kelly v Alford,^[34] Wight v State Electricity Commission^[35] and Sykes & Anor v Colson & Ors.^[36]

19. It is not necessary, however, to determine the matter which is not argued before us. Here, both the appellant and the respondent have breached implied terms of the contract of employment; whilst it is an implied condition that an employee has a general duty to exercise reasonable care in carrying out employment, it is also an implied condition that the employer will take reasonable care to provide a reasonably safe system of work for the employee. As Mr Keane points out, the question for determination is which breach caused, in the contractual sense, the respondent's injuries.^[37]

Causation in Contract

20. The learned primary judge in considering liability as to the first incident found that:

"… the real cause of the plaintiff's injury on the first occasion was that the plaintiff was in a place of danger, that is between the stack of four bolsters on the ground and the bolster hanging from the crane which he then moved towards himself.  Once the suspended bolster had moved half way across the face of the welding bay, the accident was inevitable.  Given the braking characteristics, or lack of them, of this crane, it would inevitably run on to the point where the plaintiff was standing if he merely took his finger off the button. … It seems extraordinary that the plaintiff put himself in such a position, the danger of which does not seem to have occurred to him until it was too late to move out of the way, but that must have been how the accident happened.  The crane did not do anything except respond to his deliberate manipulation of the controls.

The propensity of the crane to run on was unsatisfactory, but in my opinion it was not a cause of this accident. …^[38]

There was no training or instruction given to the plaintiff about the proper operation of the crane, either when he started work for the defendant or subsequently.  He just learned how to use the crane by watching others.  The evidence of Mr Edwards was to the same effect.  I accept this evidence, and it follows that there was no system of work implemented in relation to the safe operation of the crane by the defendant. …^[39]

If the employer had provided training and instruction in the operation of the crane which included a requirement that the load not be moved towards the operator (which is really an instruction as to where an operator should position himself when operating the crane) and if that system of operation had been established and enforced within the factory, this accident would not have happened unless the plaintiff had, on this particular occasion, chosen to disregard it.  Once an employee had developed habits of working safely, he would probably have followed them, at least ordinarily, but if the employer does not, by imposing a safe system of work, cause the habits of working safely to develop, it is, I think, not difficult to see that the failure to work safely on a particular occasion was caused by the failure to establish and maintain that system of work. …^[40]

In the present case, there is evidence of what the employer could have done; it could have instituted and maintained a practice of following the load rather than leading the load, that is for the operator to position himself so that the load was not moving towards him.  This is a practice recognised by the Australian Standard, recommended by Mr King, and, it seems to me an obvious enough practice for an employer to institute, and one which if followed in this case, would have avoided the accident. …^[41]

The position is simply that the defendant failed to establish and maintain safe work practices for the use of the gantry crane, relevantly the practice of not moving the load towards the operator.  If there had been such a practice and if it had been followed in this case, the accident would have been avoided. … therefore the failure to establish the practice was a cause of the accident … ."^[42]  (my emphasis)

21. His Honour then considered the issue of contributory negligence and found that:

"… the danger of standing where he was standing would have been obvious to a reasonable employee in his position, and such an employee taking reasonable care for his own safety would not have put the crane into operation to move the load towards him while he was standing in that position.  Indeed, given the behaviour of this crane I think it was an extremely foolish thing for the plaintiff to do, and an example of serious negligence on his part.  It is difficult to accept that he was unaware of the pile of bolsters behind him, but if this is true it is a serious failure to be aware of his surroundings and what was in the path of the load he was moving.  It was really his negligence which was the cause of the accident, the employer being also liable only because it has a duty to institute a system of work to guard against such negligence by employees, and had not done so.  In these circumstances, I would apportion responsibility for the plaintiff's injury equally to the plaintiff and the defendant."^[43] (my emphasis)

22. His Honour then considered the effect of Astley before dealing with the appellant's liability in contract concluding (without making any further reference to the issue of causation): "… that the plaintiff is entitled to damages in respect of the injuries suffered in the first incident as damages for breach of contract."^[44]

23. The case was, it seems, the first in Queensland to apply Astley so as to decline to reduce damages for personal injuries arising out of a breach of contract of employment for the employee's contributory negligence. His Honour prepared a summary,^[45] which was apparently delivered contemporaneously with the reasons. The summary included the following:

"3.The first accident was found to have happened because of failure on the part of the defendant to take reasonable steps to provide a reasonably safe system of work, which amounted to negligence and a breach of contract on its part.

4.The first injury was also caused by a failure on the part of the plaintiff to take reasonable care for his own safety, so that there was also contributory negligence on his part.  Responsibility for the first accident was apportioned equally between the plaintiff and the defendant."

24. None of the Judge's findings are disputed on this appeal.

25. Mr Keane contends that on these findings the only operative or real cause of the respondent's injuries was his failure to perform his work with reasonable and appropriate care and skill; he relies on portions of the relevant reasons which I have set out. As the amendment was not allowed his Honour did not deal with the issue of competing contractual causes of the damage. In considering contributory negligence he found that the respondent's injuries were caused equally by the breaches of both appellant and respondent.

26. Mr Keane rightly points out that the finding of contributory negligence on the part of the employee in tort and an apportionment of that negligence under the relevant legislation does not definitively decide causation as to breach of contract, a different cause of action with different elements.^[46]

27. The onus is normally on a plaintiff to show that the loss leading to compensable damage was caused by the breach.^[47]  But where both plaintiff and defendant have breached the contract it is for the defendant to establish that the plaintiff's breach was not a cause of the loss for it is not necessary that the breach of contract in question be the exclusive cause of the loss: see Simonius Vischer & Co v Holt & Thompson;^[48] Samuels JA, with whom Moffit P and Reynolds JA agreed on this point, stated:

"It was, of course, sufficient for the plaintiffs to establish that the defendants' breaches were a cause of the loss notwithstanding that there may have been other concurrent causes.  Hence, the defendants' argument must show that the plaintiffs' lack of care was the sole cause of the loss, to the exclusion of any causative influence exerted by the defendants' breaches.  I take the correct principle to be that stated in Chitty on Contracts, General Principles, 23rd ed., p. 670, par. 1448:

'If a breach of contract is one of two causes, both cooperating and both of equal efficacy in causing loss to the plaintiff, the party responsible for the breach is liable to the plaintiff for that loss.'

This statement is supported by the authority of Devlin J., as he then was, in Heskell v Continental Express Ltd [1950] 1 All ER 1033 at 1046-1048, and the cases there cited.  In particular, I refer to what was said by Lord Wright with whom Lord Atkin agreed, in Smith Hogg & Co Ltd v Black Sea and Baltic General Insurance Co. Ltd [1940] AC 997 at 1007.  His Lordship's remarks, although delivered in a context different from that which obtains here, are of undoubted application.  Lord Wright said:

'The sole question apart from express exception, must then be: 'Was that breach of contract "a" cause of the damage.' 

It may be preferred to describe it as an effective or real or actual cause though the adjectives in my opinion in fact add nothing.  If the question is answered in the affirmative the shipowner is liable though there were other cooperating causes, … ".^[49]

28. His Honour's findings make it clear that the appellant's breach of contract in maintaining an unsafe system of work was certainly "a" cause of the respondent's injuries. The appellant is liable unless the chain of causation was broken. It is foreseeable that an unsafe system of work involving inadequate training for the respondent and the operation of the crane may result in the respondent risking his own safety by performing his work negligently; the respondent learned how to use the crane in the course of his employment merely by watching others; the chain of causation was not broken by the respondent's negligence. The position is analogous to the unseaworthy ship which finally flounders because of another contributing cause such as perils at sea or fire as in Smith, Hogg & Co v Black Sea & Baltic General Insurance Co.^[50]  The appellant's breach in this case was a cause and indeed "an effective or real or actual cause" of the respondent's injuries, despite the other cooperating cause of the respondent's breach: cf  Read v Nerey Nominees Pty Ltd^[51] and Smith v Baker & Sons.^[52]

29. The learned primary judge correctly concluded that the appellant's breach of the contract of employment caused the respondent's injuries and that the appellant was liable in damages for breach of contract; consistently with Astley, the respondent's contributory negligence had no application in apportioning damages for the breach of contract. The appellant was not prejudiced by the primary judge's refusal to grant the amendment sought as the amendment could have no effect on the outcome of the case.

30. Conclusion

1. There was an implied term in the contract of employment that the respondent employee would carry out the employment with due care and skill.

2. The respondent employee breached that implied term.

3. The appellant employer also breached the contract of employment by failing to take reasonable steps to provide a reasonably safe system of work.

4. The appellant's breach was a cause of the respondent's injuries and the appellant  was liable in damages for beach of contract.

5. Those damages could not be reduced for the respondent's contributory negligence.

Comment

31. Since Astley, where an employee suffers injury in the workplace caused by the employer's breach of contract of employment, damages will no longer be able to be reduced because of the employee's contributory negligence. The commendable spirit of modern workplace health and safety legislation^[53] requires that employer and employee cooperatively work together to develop and maintain a safe workplace. It is not inconsistent with that spirit to require workers to be accountable for their own negligence consistent with their tortious obligations and apportionment legislation.  The effect of Astley goes well beyond cases involving personal injury in the course of employment. But it is for the legislature, not the courts, to consider whether the law should be changed to reflect the position generally thought to exist before Astley.

Order

32. I would dismiss the appeal. I note the appellant has already been ordered to pay the respondent's costs of this appeal and of the application for leave to appeal. The appeal should be dismissed with costs to be assessed.

33. THOMAS JA:   The plaintiff brought an action in the District Court for damages sustained by him in an accident at work on 1 July 1994.  He was operating an overhead crane.  He operated the controls in such a way that a bolster hanging from the crane swung against him causing personal injury.

34. The learned trial judge found that there was no training or instruction given to the plaintiff and no system implemented in relation to the safe operation of the crane. His Honour was also of the view that the plaintiff unnecessarily and negligently put himself in a very dangerous position. In the result his Honour held that insofar as the action was one of damages for negligence, the defendant employer was guilty of negligence and the plaintiff was guilty of contributory negligence which he assessed at 50 per cent.

35. The plaintiff's pleading, as is common in such cases, was based upon "breach of contract and/or negligence". Insofar as the action was based upon breach of contract, his Honour, in reliance upon Astley v Austrust Ltd^[54] held that no deduction was available for any contributory negligence of the plaintiff, and in the result granted judgment for the plaintiff for the full amount of damages assessed ($40,347) and a further sum for interest and costs.

36. Before giving judgment the learned trial judge refused the defendant's application to amend the defence to plead an implied term in the contract of employment, namely:

"… that the Plaintiff would carry out his duties

1. with due care and skill

2. in such a fashion as not to cause injury to any person, including himself; and

3. in such a fashion as to take reasonable care for his own safety."

On the basis that such a term existed, the defendant wished to allege breach of it by the plaintiff in failing to carry out his duties with due care and skill and in such a fashion as to take reasonable care for his own safety, and to counterclaim for damages for such breach, presumably for the amount that would otherwise have been deducted from the judgment by reason of the finding of contributory negligence.  Leave was refused on the ground that no such term could be implied.

37. On the appeal, however, Mr Keane QC for the appellant employer did not seek to support the above somewhat diffuse implied term, or the counterclaim. Instead he submitted that the respondent employee owed a contractual obligation to carry out his duties with due care and skill, and formulated the employee's duty as one to use reasonable care in the course of his duties. He submitted that having regard to the nature of the breaches found to have been committed by both parties, his Honour should have found that the true cause of the plaintiff's damage was his own lack of care rather than that of his employer. In short his principal submission was that the breach by the employer was not the cause of the plaintiff's damages. He further submitted that the contemporary relatively undemanding test of causation in negligence cases^[55] which developed after the apportionment legislation does not apply when the cause of action is for breach of contract.^[56] 

38. The consequence if these submissions are correct is that the plaintiff fails in his cause of action based upon contract, but succeeds in negligence. On that basis the appellant employer is entitled to the familiar reduction for contributory negligence under the relevant legislation dealing with contributory negligence,^[57] in this case a reduction of 50 per cent.

Whether election between remedies is necessary

39. In employer-employee cases, professional negligence cases and no doubt many others, a plaintiff's claim may be based on negligence or breach of contract. There are many respects in which the result may be very different according to whether the plaintiff's rights are based in contract or in tort. Such differences may include different limitation provisions, differences in the date upon which the relevant cause of action accrues,^[58] different principles in the assessment of damages and different entitlements in the award of interest.^[59]  Now, since Astley, a further and very significant difference has been identified in that a plaintiff will avoid any liability for contribution by reason of his or her own fault if the action can be based on contract rather than negligence.

40. During argument the question was raised whether a plaintiff should be required to elect which remedy he or she is pursuing before the giving of judgment. If Mr Keane's submissions are correct an election in a situation like the present one would be something of a gamble because an election for the contractual remedy would subject the plaintiff to greater risk on the issue causation than is the case in negligence. A plaintiff would, similarly to the position that obtained before the apportionment legislation was introduced, obtain all or nothing. Such a plaintiff, if obliged to elect, might prefer the safer though potentially reducible award obtainable in negligence upon application of the apportionment legislation.

41. A "waiver of tort" had long been recognised as being necessarily involved when plaintiffs brought certain actions of assumpsit. However the modern explanation of waiver of tort was identified by Viscount Simon LC in United Australia v Barclays Bank Ltd^[60]  in the following way:

"Where "waiving the tort" was possible, it was nothing more than a choice between possible remedies derived from a time when it was not permitted to combine them or to pursue them in the alternative, and when there was procedural advantages in selecting the form of assumpsit."^[61]

In that case the mere bringing of an action based on contract was held not of itself to amount to a bar to a second action in tort.  It would only be judgment and satisfaction in the first action which would constitute a bar.

42. Even though it is only comparatively recently that an alternative claim in tort was recognised to exist in the area of professional negligence,^[62] the alternative causes of action in breach of contract and negligence have long been recognised in damages cases brought by an employee against an employer.^[63]  It seems to me that a plaintiff is entitled to bring an action claiming alternative remedies as this plaintiff has done, and ask for the most favourable judgment that may flow from either cause of action.^[64]  Under the present state of the law, this will usually mean that the contractual claim is the one upon which the judgment will be based.  It is only if it fails that the judgment will be based upon the alternative claim in negligence.  A plaintiff might, of course, at any stage of an action elect to pursue one or other remedy, but there is no obligation upon a plaintiff to do so.

Causation

43. For the appellant employer it was submitted that the test of causation in a case based on breach of contract is tantamount to that which was in place before the apportionment legislation was introduced. At that time courts looked for "the effective cause" of the injury.^[65]  In the area of contract law however I do not think that current notions of causation are as strict as the position described in the Leyland Shipping Company^[66] case in 1918.  Courts have wisely refrained from attempting to define what is necessary in this area, observing that "there is no more difficult area of our law than causation" and opining in both negligence and breach of contract cases that a judge is on safer ground to rely on the indefinable commodity of common sense.^[67] In March v Stramare Mason CJ, with whom Toohey J and Gauldron J agreed, referred to the effect of the apportionment legislation upon the approach of the courts to causation.  Having noted the former prevalence of the "effective cause" test, his Honour continued:

"… the courts are no longer as constrained as they were to find a single cause for a consequence and to adopt the 'effective cause' formula.  These days courts readily recognise that there are concurrent and successive causes of damage on the footing that liability will be apportioned as between the wrongdoers."^[68]

His Honour then noted that the end result of the apportionment legislation was to abolish not only the defence of contributory negligence but also persuade courts to abolish the last opportunity rule.  His Honour and all other members of the court except McHugh J rejected the "but for" test in favour of a broader test based on common sense and experience, into which considerations of policy and value judgments might properly enter.

44. The approach which seems to have found greatest acceptance in contract cases, both in the United Kingdom and in Australia is that of Devlin J in Heskell v Continental Express Ltd:^[69]

"It may be that the term 'a cause' is, whether in tort or in contract, not rightly used as a term of legal significance unless it denotes a cause of equal efficacy with one or more other causes.  Whatever the true rule of causation may be I am satisfied that if a breach of contract is one of two causes, both cooperating and both of equal efficacy, as I find in this case, it is sufficient to carry judgment for damages."

and

"… the cause of loss has to be ascertained by the standard of common sense of the ordinary man.  Common sense is a blunt instrument not suited for probing into minute points, and I cannot believe that if the ordinary man thinks that two causes are of approximately equal efficacy, he cannot say so without being interrogated on fine distinctions."^[70]

45. It is enough in a breach of contract case that defendant's act be a cause of the damage.^[71]  In Alexander v Cambridge Credit Corporation Limited^[72]  it was held that there was no causal connection between the auditor's breach of contract and the damage suffered by Cambridge after a defective auditor's report in 1971.  Various competing causes were advanced to explain the additional losses of Cambridge between 1971 and 1974.  If the auditor had presented an appropriate report it was highly probable that a receiver would then have been appointed.  It was contended for Cambridge that the cause of its subsequent losses was the fact that it continued to trade, which it would not have done had the auditors properly performed their duties.  For the auditors it was contended that Cambridge's losses over the ensuing period were caused by government policies, the collapse of a land boom, and Cambridge's own business decisions.  A majority of the court (Mahoney and McHugh JJA) held that there was no causal connection between the breach of contract and the damage.  A different majority (Glass and McHugh JJA) held that the ultimate test was whether, as a matter of common sense, the relevant act or omission was a cause of the damage. 

46. In theoretical formulation, it is difficult to see any difference between the very general common sense tests of causation that have been formulated with respect to both tort and breach of contract. It is true that there is a practical and contextual difference in addressing the question of breach of duty, because in contract cases one starts with the terms of the agreement that bind the parties, while in negligence one starts with a duty which either exists or fails to exist according to the relationship, proximity and activity of the parties. But once a breach has been identified, it is difficult as a matter of principle to see why a fact finding tribunal (judge or jury) should apply any different test or level of causation in deciding whether that breach caused the damage of which the plaintiff complains.

47. A difficulty is however created by the concession in March v Stramare that the reason for the easing of the test in negligence cases was the apportionment legislation.  That provides ample reason for relaxing the test in negligence cases, but no reason at all in contract cases, as Astley clearly demonstrates.  The dilemma is between the undesirability of having different standards of causation applicable according to whether the claim is in negligence or breach of contract, and the fact that the "effective cause" test, which has much to commend it, particularly in a highly litigious society, has been understandably watered down in negligence cases because of the availability of the remedy of contribution.  Why should the test be similarly watered down in contract where there is no similar remedy of contribution?

48. This court lacks the authority to provide a solution. It seems to me however, from reference to decided cases, that despite the rather similar expression of common sense tests for both causes of action, in cases where there are concurrent or competing causes of the damage the test is more readily held to be satisfied in negligence cases than in breach of contract cases. This may be because the test based on the words of Devlin J (as he then was) in Heskell v Continental Express Limited has continued to be used and applied in the contract cases but not in the field of negligence.   In contract cases where competing causes exists it seems to be recognised that liability will be found only if the defendant's acts can be regarded as of equal or close to equal potency with other causes.  By contrast one sometimes finds in negligence cases an employer being held liable in circumstances where not only the fault of the plaintiff but also its causative potency would seem to have been  substantially greater than that of the employer. Causative potency and fault are often of the same level, though this is not necessarily so.  They are however the only identifiable factors in determining "the claimant's share in the responsibility for the damage".^[73]  Whatever the explanation, in practice findings of causation have in my view tended to be more readily made in cases where the power of apportionment exists.  On the present state of authority, for the purposes of the present contract-based case, I am content to apply the tests stated by the majority in Alexander v Cambridge Credit Corporation Limited and by Devlin J in Heskell v Continental Express Limited.  I see no inconsistency in the approaches taken in those cases.

49. I turn then to application of this test to the present circumstances. The relevant extracts from his Honour's judgment are set out in the reasons of the President which I have had the advantage of reading, and it is unnecessary to restate them. The fact that the learned trial judge assessed contributory negligence at 50 per cent does not necessarily mean that the factors of causation are evenly balanced. Mr Keane for the appellant submitted that one must look for the cause of the loss "as a matter of contract". He referred to the principle that each party to a contract is entitled to perform his obligations on the assumption that the other party will also perform his or her obligations. He did not however suggest that this was a breach which would prevent performance by the employer of its obligations or which would suspend the employer's duties. The argument was confined to causation.

50. The employer's duty is a very general one to take reasonable care for the safety of the employee in all the circumstances of the case.^[74]  Certain aspects of the duty were carefully formulated by the High Court in O'Connor v Commissioner for Government Transport. ^[75]  The duty of the employee which may properly be regarded as a contractual duty, was to carry out his duties with due care and skill.  I accept the reasons of the President on this point as sufficient support for that conclusion.  Breaches of the respective duties occurred on the part of both parties.  The assumption referred to by Mr Keane that the employer was entitled to assume that the employee would perform his obligations does not in any way cut down the employer's duty to its employee.  Insofar as causation is concerned, the reasoning of the learned trial judge shows the acts and omissions of the employer to have been of equal potency with those of the employee in producing the accident.  On this basis, the test of Devlin J (as he then was) and the tests applied in other contract cases such as Simonius Vischer v Holt, ^[76]Alexander v Cambridge Credit Corporation Limited,^[77] Banque Keyser S.A. v Skandia (UK) Insurance^[78] and County Limited v Girozentrale Securities^[79]are properly satisfied and the plaintiff is entitled to succeed.

51. It is to be noted that the appellant's argument was confined to absence of causation. No separate argument was developed to the effect that the plaintiff's breach of his contractual duty equally satisfies the causation test, and that it has caused damages to be awarded against the employer and has caused the employer to be made liable to the plaintiff. Nor was any further argument addressed on the question that the plaintiff's breach of duty at least caused the damages to be increased by the amount that would otherwise have been deducted. I express no view on such questions at this stage.

Conclusion

52. I agree that there is an urgent need for consideration by the legislature concerning the vast alterations in liability for damages and economic consequences produced by Astley in a range of cases including those between employer and employee and those involving professional negligence.

53. It is noted that leave to appeal was granted on an undertaking by the appellant to pay the costs of the appeal in any event. Accordingly the order should be appeal dismissed with costs.

54. AMBROSE J:  I have had the advantage of reading the draft reasons for judgment of McMurdo P and Thomas JA. I am content to accept their analyses of fact and issues argued upon appeal.

55. Upon the evidence, the negligence of the employer in failing to establish a safe system of work preceded the negligence of the employee leading to his injury.

56. With respect to liability in both tort and contract at the moment of injury it was the combined negligence of both employer and employee which led to that injury; without the negligence of each the injury would not have occurred.

57. As it is observed in Hart and Honoré – Causation in the Law (2^nd edition) at 308 –

“Finally liability in contract is more often based on the notion of risk than in tort: a defendant is then obliged to pay compensation for having by a breach of contract provided the occasion for harm though he would ordinarily be said to have caused it.”

58. In my view the harm inflicted upon the respondent may be attributed to the employer’s breach of both its tortious and contractual obligations owed to its employee – in the sense that its breach provided the opportunity for its employee to suffer the damage in respect of which he brought his action.

59. Stated shortly, in this case negligence amounting to breach of a term of the contact of employment on the part of the employer resulted in physical injury to the employee which was compensable in damages recoverable in both tort and contract.

60. The interesting question in this case is what effect should be attributed to the undoubted negligence on the part of the employee in the absence of which he would not have sustained injury.

61. For the employer it is contended that the real cause of the employee’s injury when considered in the context of the employer’s breach of the employment contract was the employee’s own negligent behaviour. It was contended on behalf of the appellant, that in considering causation of damage resulting from breach of the contract of employment, the breach by the employer really only provided “the occasion for harm”. The system of work that had been in place for so long, albeit dangerous, was one involving merely a failure to implement and enforce a system which would have required that the employee walk behind the moving load rather than in front of it. As it was held by the learned trial judge, it must have been absolutely obvious to the employee that he was for no understandable reason engaging in an unnecessarily dangerous activity which led eventually to his injury.

62. A century and a half ago when contributory negligence on the part of a plaintiff was a defence available to a defendant also guilty of negligence causing injury to the plaintiff, the courts developed what became termed the “last opportunity rule”. In Davies v Mann (1842) 10 M. & W. 546, 152 E.R. 588, it was held on the facts of that case that although the plaintiff had been negligent in leaving a donkey with its legs tied up on a highway where it was later run over by the defendant in his wagon, the defendant was liable – notwithstanding that the donkey would not have been injured but for the negligence of its owner – on the ground that the defendant had a sufficient opportunity to avoid the danger created by the plaintiff’s negligence had he driven his wagon with reasonable care. This rule was approved and applied by the House of Lords in Radley v London NW Railway [1876] 1 AC 754 and by Lord Parmoor in Grayson Ltd v Ellerman Line Ltd [1920] AC 466 at 477-8.

63. In those cases it seems to have been determined that the “real cause” for the purpose of tortious liability in any event, where arguably both plaintiff and defendant had been guilty of negligence which could be said to be “a cause” of the damage ultimately suffered by the plaintiff was the act of the person who by reasonable care could have avoided the risk created by the other. That approach however is no longer acceptable for the reasons given in March v Stramare (E. & M.H.) Pty Ltd (1990-1) 171 C.L.R. 506.

64. The argument advanced on behalf of the appellant in this case on the question of causation of injury resulting from negligence on the part of both plaintiff and defendant to my mind is analogous to the approach adopted so long ago in Davies v Mann, Radley v London NW Railway and Grayson Ltd v Ellerman Line Ltd which is no longer taken.

65. Stated shortly, it is the contention of the appellant that albeit the opportunity for the employee’s injury was attributable to the failure of the employer to require him to walk behind the load as it moved rather than in front of it, the real cause was the plaintiff’s election to walk in front of the load when it was quite unnecessary to do so and when a moment’s thought would have persuaded any reasonable employee not to do so.

66. In Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196 the question for determination was whether a war risks clause in a charter party exonerated the owners of a vessel for liability to the charterers having regard to the unseaworthiness of the vessel at the time of the charter.

67. There was a significant delay in the course of the voyage which was attributable to the vessel’s unseaworthiness and the question was what was the “effective cause” of the failure to effect a timely discharge of the cargo at the designated port – the unseaworthiness of the vessel or the direction of the British Admiralty after the vessel had eventually been made seaworthy prohibiting the delivery of the cargo in Sweden because of outbreak of war.

68. At 225-226 Lord Wright observed –

“The Lord President relied on the decision of this House in Smith Hogg & Co Ltd v Black Sea & Baltic General Insurance Co Ltd [1940] AC 997 in which case the loss of a vessel which occurred through the negligence of the Master operating on conditions of unseaworthiness existing since the commencement of the voyage was held to be caused by breaches of the warranty of seaworthiness and recoverable accordingly.  There was an exception of negligence:  negligence could be regarded as a co-operating cause no different in principle from any physical and tangible cause.  As this House, however, said at 1005 ‘no distinction can be drawn between cases where the negligent conduct of the Master is the cause and cases where any other cause such as perils of the sea is a co-operating cause’.  ‘A negligent act is as much a co-operating cause if it is a cause at all as an act which is not negligent.’  What was being there emphasised was that a voluntary act (negligent or not) of a human agent is not generally an independent or a new cause for this purpose which breaks the chain of causation as it is called so as to exclude from consideration the causal effect of the unseaworthiness.  It is well established that unseaworthiness if it is to be a relevant factor of liability must be ‘a cause’ of the damage or loss.  That is necessary because unseaworthiness might take many different forms in the same vessel so that before any one form can be relied upon it must be a cause of damage;  for instance the failure to carry a proper medical chest if it is a breach of the warranty might have no relevance to the loss of a vessel by perils of the sea.  But a different result follows if the breach is a cause of the loss.”

69. In Stansbie v Troman [1948] 2 KB 48 the Court of Appeal considered a claim by a plaintiff against a decorator, retained to decorate the plaintiff’s house who had been left working and in charge of the house by the plaintiff’s wife who went out.  He had left the house unlocked when he left it to obtain materials to use in decorating the house and during his absence thieves broke into the house and stole property.  The decorator was held liable to the plaintiff for breach of contract and Tucker LJ observed at, 52–

“The act of negligence itself consisted in the failure to take reasonable care to guard against the very thing that in fact happened.”

The additional cause of loss to the plaintiff in that case of course was the crime committed by the thieves.  In the present case the “intervening act” was the negligence of the plaintiff employee – which was the very thing the employer was required to foresee and guard against by having in operation a safe system of work.

70. On the other hand in Quinn v Burch Bros. (Builders) [1966] 2 QB 370 the defendant was a building contractor who had contracted with the plaintiff to perform certain building work.  In breach of contract the defendant had failed to supply a step ladder to him.  As a consequence he had to use a trestle from which he fell and injured himself.  In the Court of Appeal it was held that the defendants were not liable because the defendants’ breach of contract in failing to provide a step ladder for use of the plaintiff did not itself cause the accident but merely gave the plaintiff the opportunity to injure himself by the use of unsuitable equipment.  Sellers LJ at 390-391 observed that the defendants’ obligation as contractor to supply a ladder to the plaintiff sub-contractor did not arise “by virtue of a master and servant relationship and was not as if the defendants had provided a faulty step ladder”.

71. There have been many cases where consideration has been given to whether damage accruing to one party to a contract has been “caused by” a breach of that contract by the other. It would be unprofitable in the circumstances of this case to attempt an in depth analysis of those cases.

72. With respect to tortious liability, it was observed in Alford v Magee (1951-2) 85 C.L.R. 437 at 460 of “the rule of last opportunity” that it is -

“is a sound ‘rule’, only if it is framed in the terms in which it was originally framed by Salmond, and if it is recognised that it does not cover the whole ground. If it is expanded in a hopeless attempt to meet cases to which it is inappropriate, and subjected to innumerable refinements, it becomes not merely unsound but unintelligible.”

73. Once apportionment legislation was introduced in the 1950s, it became unnecessary to make reference to “the rule” of last opportunity in actions for negligence – even as a test of causation.

74. Nevertheless it is contended for the appellant in this case that insofar as one must determine the cause of the employee’s injury in contract, for which undoubtedly the employer was liable in tort, the “real cause” was the negligent conduct of the employee.

75. In Astley v Austrust Ltd (1999) 73 ALJR 403, the High Court was not required to consider whether the negligent performance of the appellant solicitors’ work for the respondent in breach of both their general duty in tort and their particular contractual duty to the respondent was “the real cause” of the contractual loss suffered by the respondent trustee company.

76. That case dealt only with the applicability of apportionment legislation to damages recovered by a plaintiff in an action brought in contract for breach of an implied term to perform professional duties with reasonable care. Indeed in the course of the majority judgment in that case at 417-C, reference was made to a decision of Pritchard J in Rowe v Turner Hopkins & Partners [1980] 2 NZLR 550 where he observed –

“Before the enactment of the Contributory Negligence Act, the defence of contributory negligence was a complete defence in tort:  it was not a defence in contract – where the issue was more likely to be simply causation.”

Their Honours seem to have adopted this statement as correct at 417 para G-A where they observed –

“Since as his Honour accepts the fault of the party was never a defence to an action for breach of contract the direction to apportion made by the substantive provision of the legislation is inoperative in cases of contract.”

At 422 para 85 their Honours observed:-

“The terms of the contract allocate responsibility for the risks of the parties’ enterprise including the risk that the damage suffered by one party may arise partly from the failure of that party to take reasonable care for the safety of that person’s property or person.  Ordinarily that risk is borne by the party whose breach of contract is causally connected to the damage.  Rarely do contracts apportion responsibility for damage on the basis of the respective fault of the parties.  Commercial people in particular prefer the certainty of fixed rules to the vagueness of concepts such as “just and equitable”.  That is why it is commonplace for contracts to contain provisions regulating liability for breach of a duty to take reasonable care, whether by excluding liability altogether or limiting it in some other way.”

Absent some contractual stipulation to the contrary there is no reason of justice or sound legal policy which should prevent the plaintiff in a case such as the present recovering for all the damage that is causally connected to the defendant’s breach even if the plaintiff’s conduct has contributed to the damage which he or she has suffered.  By its own voluntary act the defendant has accepted an obligation to take reasonable care and, subject to remoteness rules, to pay damages for any loss or damage from a breach of that obligation.  If the defendant wishes to reduce its liability in a situation where the plaintiff ‘s own conduct contributes to the damage suffered, it is open to the defendant to make a bargain with the plaintiff to achieve that end.  Of course the result of such a bargain may be that the defendant will have to take a reduced consideration for its promise to take reasonable care.  But the bargain will be the product of the parties’ voluntary agreement to subject themselves to their respective obligations.”

77. As the authorities presently stand, in my view, it is strongly arguable that it was an implied term in the contract of employment that the employee would not so negligently perform the work he was employed to do as to render his employer liable in negligence or contract to suffer economic loss. It is a short step to imply a term that he would not so negligently perform the work he was employed to perform as to subject his employer to the economic loss involved in paying him damages should he institute proceedings of the sort he instituted in the present case. I can find no reason in logic or principle to confine the operation of such a term to economic loss claimed by third parties only and not by the employee.

78. The law relating to the implication of such terms was stated in Lister v Romford Ice and Cold Storage Co [1957] AC 555.

79. I can find nothing in Astley v Austrust Ltd inconsistent with the implication in the contract of employment between employer and employee in this case a term that the employee will take reasonable care in the performance of his work not to perform it negligently and so subject his employer to economic loss as a consequence.

80. If such a term be implied in my view it is arguable that his injury loss and damage resulted in part from his own negligence and from his breach of contract of employment and it would be open to the employer to counterclaim an indemnity from the employee which on the facts of this case would be at least to the extent of the contribution found against him in his action in tort or perhaps the whole of its liability to him.

81. That was not however a matter which was argued upon the present appeal and like Thomas J.A. I will refrain from giving further consideration to it. However, I am unpersuaded that it is necessary in the interests of defendants for the Legislature to amend apportionment legislation to provide expressly for the reduction of damages recovered in an employee’s action for breach of contract of employment to the same extent as damages may be reduced under that legislation in an action brought in negligence. Prima facie, in my view, the same result may be achieved by a counter-claim in contract for at least part of assessed damages to the extent to which the employee’s negligence caused his loss. It may be that the whole of assessed damages would be recoverable by the employer; if so, an amendment of the apportionment legislation might be required in the interests of negligent plaintiffs who might otherwise find themselves in the position of plaintiffs before apportionment legislation was introduced in the 1950s. Indeed that might conceivably be the ultimate result in the present case.

82. The real, indeed only, issue in this case argued on behalf of the appellant was whether it was the employer’s negligence considered as a breach of contractual obligation to the employee, or the employee’s negligence which was the “real cause” of the employee’s injury, loss and damage.

83. Unfortunately this issue does not seem to have been addressed at trial. The apportionment made was made only on the basis of the plaintiff’s contributory negligence in his action in tort which in my view does not assist in the determination of whether it was the respondent’s negligence or the appellant’s breach of contractual duty which was the “real cause” of the respondent’s injury. That matter needed to be determined separately and independently from the apportionment for contributory negligence.

84. Upon the facts of this case an approach along the lines of the last opportunity rule would be of little assistance in determining whether the real cause of the plaintiff’s injury, loss and damage was the employer’s negligence amounting to breach of an implied term in the contract of employment or the employee’s negligence amounting to a breach of a somewhat similar term in that contract. In my view the negligence of each was a concurrent cause of equal significance in contract in that their co-existence was essential to the employee’s injury. There were in fact two “real causes” of the employee’s injury. In coming to this conclusion I am comforted by the observations of Mason CJ in March v Stramare (E. & M.H.) Pty Ltd (1990-91) 171 C.L.R. 506 at 518-9 and of McHugh J in that case at 534.

85. The only object of determining the cause or causes of the employee’s injury is to determine the legal responsibility of each party to the contract of employment for their antecedent acts or omissions which resulted in that injury.

86. It will sometimes be the case that an employee’s injury is the consequence of a number of acts or omissions by both employer and employee – some or perhaps all of which may be categorised as constituting breaches of the contract of employment by the parties to it.

87. On the facts of this case assuming I am correct in concluding that it was an implied term of the contract of employment that the employee would not perform the contract negligently and so expose the employer to economic loss there were breaches of the contract of employment by each of the employer and employee which combined to cause the employee’s injury and ultimately the employer’s economic loss resulting from the judgment obtained against it in respect of that injury.

88. One might ask would the breach by the employer in failing to implement a safe system by giving adequate instructions etc have led to the employee’s injury without the employee’s negligent performance of his task as employee. It clearly would not.

89. On the other hand one might ask would the negligence of the employee have led to his injury without any breach by the employer of its obligation to implement a safe system of work to avoid the obvious danger to him in performing his task the way he was when he suffered his injury.

90. There was a specific finding that the employer gave no training or instruction to the employee about the proper operation of the crane and that he learnt to operate it by watching the way other employees operated it. The learned trial judge found that had the employee been properly instructed and developed habits of working safely he would probably have followed them and thus avoided the injury he suffered.

91. The trial judge specifically held however that it was not relevant to consider whether had the employee been given a warning about the unsafe system he was adopting or the danger of working the way he was at the time of his injury he would have acted differently. In my view this was not irrelevant to the determination of whether had the employer not breached his contractual obligation to the employee, the employee would probably have avoided his injury for the purpose of determining fault under the apportionment legislation. However, it is not relevant to the determination of the issue under appeal.

92. On my evaluation of the evidence and the findings of the learned trial judge and paying no regard to the apportionment of 50/50 in respect of negligence under the Apportionment Legislation I regard the breach of both tortious and contractual obligations on the part of the employer and the employee’s breach of the obligation to take care of himself by his negligent performance of his work as being concurrent causes of the employee’s injury for the purpose of determining the question of causation argued on behalf of the employer. I would hold that the employer’s breach of contractual duty was a real and substantial cause of the employee’s injury sufficient to support the judgment for breach of contract under appeal.

93. The employer has not to date sought relief against the employee for breach of any implied term to not by his negligence make his employer liable for economic loss. It is unnecessary and undesirable therefore to express any concluded view on that matter.

94. I would dismiss the appeal.