065-NLR-NLR-V-55-T.-H.-I.-DE-SILVA-Appellant-and-TRUST-CO.-LTD.-Respondent.pdf
QRATXAKK J.—T. H. I. do Silva v. Trust Co., Ltd.
241
1953Present : Gratiaen J. and H. A. de Silva J.T. H. r. DE SILVA, Appellant, and TRUST CO., LTD.,Respondent
S. C., 229—D. C. Colombo, 23,098
Delict—Master and servant—Distinction between “ servant ” and “ independent con-tractor ”—Servant vested with discretion as to how he should carry out his duties—
Negligence—Scope of master's liability—■“ Course of employment ”.
An employer cannot escape liability for his servant’s torts by pleading that hehad vested in the servant a discretion as to how he should carry out his duties.Tn distinguishing between a servant and an independent contractor, “ theultimate question is not what specific orders, or whether any specific orders,were given but who is entitled to give the orders as to how the work should bedone ”,
The owner of a vehicle may be responsible for the consequences of the negli-gence of a person who was driving it if the owner had an interest in the journeybeing undertaken, i.e., if the vehicle was “ being used wholly or partly on theowner’s business cr for the owner’s purposes ”.
Plaintiff, when he was travelling in a motor car belonging to the defendantinsurance Company, was seriously injured when the car went off the road inconsequence of the negligent driving of one of the occupants of the car. Therewas evidence that the car had been placed by the Company at the disposal ofan employee under a “ contract of loan ” but that, at the time of the accident,the employee was travelling in the car together with the plaintiff on theCompany’s business. There was also evidence that the Company had vestedin the employee a discretion as to how he should carry out his duties.
Held, that the defendant Company was liable to compensate the plaintifffor the injuries which he sustained in the accident.
Appeal from a judgment of the District Court, Colombo.
N. E. Weerasooria, Q.C., with H. W. Jayewardene and D. R. P.Goonetilleke, for the plaintiff, appellant.
H. V. Perera, Q.C., with P. Navaratirnrajah and W. D. Gunasekera,for the defendant, respondent.
Cur. adv. vult.
October 29, 1953. Gratiaen J.—
The plaintiff is a medical practitioner. On 27th April, 1950, he wastravelling from Colombo to Jaffna in a Ford motor-car belonging tothe defendant Company which does business in life insurance. The otheroccupants of the car were J. A. Pereira (an employee of the Companyperforming the duties of a “ field-officer ”), E. Holsinger (a free-lanceinsurance “ canvasser ”) and a chauffeur directly employed by Pereira.Pereira, Holsinger and the chauffeur took turns at driving and, shortly
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GRATIAEN J.—T. S. I. de Silva v. Trust Oo;,Jjtd.
before the car reached Anuradhapura, when Holsinger was driving, itsuddenly went off the road and the plaintiff was seriously injured.Holsinger had apparently fallen asleep at the wheel.
It is no longer disputed that Holsinger’s negligence was the effectivecause of the accident. The learned District Judge assessed the damagespayable to the plaintiff (in the event of the Company being held liable)at Its. 50,000, and no complaint has been made against this assessment.The only issue which therefore calls for our decision is whether or not,in the circumstances of this case, the Company is vicariously responsiblefor the consequences of Holsinger’s negligence.
The plaintiff had since about November, 1949, been engaged fromtime to time to examine persons proposing to take out policies of lifeinsurance with the Company. He was paid a fee of Rs. 15 by the Companyfor each case, and as a general rule the examinations were carried outin his own place of business.
The plaintiff alleged in his plaint that the Company had “ engaged(his) services to proceed to Jaffna to examine certain prospective (clients) ”and that the accident occurred while he was being conveyed in theCompany’s motor-car for that purpose.' The Company in its answeradmitted “ that the plaintiff went to Jaffna on the day in question forthe purpose of examining certain prospective (clients) in the NorthernProvince for the defendant Company ”, but denied liability. Inparticular, it pleaded that the car belonged in truth to J. A. Pereirawho was “ in control and possession of it ” at the relevant time andthat the driver (i.e., Holsinger) was “ under the employ of Pereira ”.With regard to the terms on which the plaintiff was engaged to examinethe Company’s proposed clients, the Company alleged that “ theplaintiff had to proceed to their residences at his own cost and expense ”,and that on this particular occasion “ Pereira had lent the car to him,together with a driver, in order that the plaintiff’s travelling expenses mightbe reduced as much as possible ”.
The vital issues on which the parties went to trial on the question asto the disputed liability of the Company were as follows :
“ 4. Was the defendant Company the owner of the car on theday in question 1
(a) Was the said car at the time being driven by an employee ofthe defendant Company %
(b) (as eventually amended). Was the said employee acting inthe course of and within the scope- of his employment andfor the benefit of the said Company ?”
The learned District Judge answered these issues against the plaintiffupon the evidence placed before him, and took the view that the- casewas on all fours with that which came before the Court of Appeal ofSouth Africa in Colonial Mutual Life Insurance Co. v. Macdonaldx.The plaintiff’s action was accordingly dismissed with costs.
i (1931) S. A. A. D. H2.
GRATIAEN J.—T. H. I. de Silva v. Trust Go., Ltd.
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The version of each party as to the circumstances in which theplaintiff happened to be a passenger in the motor-car, and as to therelationship between the Company, Pereira and Holsinger in regardto the driving of the motor-car, was placed before the trial Judge, andit is implicit in his judgment that Holsinger’B evidence has been rejectedwherever it came into conflict with that of the plaintiff. Pereira himself,although available as a witness, was not called to support the plea thathe had lent the car to the plaintiff for the purposes of the journey.
Certain questions immediately call for an answer. For instance, whatwas the precise relationship between the Company on the one hand andPereira and Holsinger respectively on the other ? What were the cir-cumstances in which the Company’s car was placed at the disposal ofPereira ? And what were the circumstances in which the plaintiff wasa passenger in the car at the time of the mishap 1 It is conceded thatPereira had authorised Holsinger to drive the car. Did he do so in cir-cumstances which rendered the Company liable to compensate the plaint-tiff for the injuries which he sustained in the accident ?
The Secretary of the Company has explained how its business affairswere conducted during the relevant period. There was a Board ofDirectors, but no Managing Director. The Secretary supervised thework in the office, and the “ field work ” was entrusted to three personsdesignated “ field officers ”, one of whom was Pereira. These “ fieldofficers ” were salaried employees, and each of them received as additionalremuneration an “ over-riding commission ” on the amount of businessintroduced by him. They were “ answerable to the Secretary ” in ageneral way, but were given “ complete discretion as to the manner inwhich they set about bringing in business, and …. completediscretion to employ canvassers on a commission basis ”. Holsingerwas one of the canvassers whom Pereira had engaged in the exerciseof this authority. Among the duties of a “ field officer ” was that of“ supervising and controlling ” the work of canvassers engaged by him.
A medical certificate was required in the case of every person proposingto insure his life with the Company, and, explained the Secretary, “ fieldofficers were told that they should select doctors who would examinecarefully in the interests of the Company ”. The plaintiff was one ofthe doctors selected by Pereira and Holsinger to examine cases introducedby them, and, whenever he was professionally engaged by them for anyparticular case, he was brought into contractual relationship with theCompany for that occasion.
It is clear enough, I think, that Holsinger could not, in relation to hisfunctions as a canvasser, be regarded as a servant of the Company.Although he. was Jiable, in a certain sense, to be “ supervised and con-trolled ” by Pereira, he was nevertheless his own master. He was intruth an independent contractor, so that the Company could not, undernormal circumstances, be held responsible for any torts committed byhim qua canvasser. His position was similar to that of the commercialtraveller in Eqgington v. Reader 2.
1 (1936) 52 T. L. R. 212.
244
G-RATIAEN .T.—T. H. X. de Silva v. Tru-tt Go., Ltd.
The learned District Judge took the view that “ even Pereira was nota servant of the Company in the sense in which that term- is used in orderto fix liability upon the master ”. The reason given for this conclusionwas that “ no instructions were given to field officers as to where theproponent is to be examined and who the doctor to be employed is ;that was entirely within their discretion The judgment proceeds asfollows on this issue :
“…. it is quite clear that all that the Company was con-
cerned with was the results of Pereira’s efforts. They had no controlover the manner in which he set about his employment or the meansby which he accomplished the results obtained. ”
With respect, I do not accept this line of reasoning. An employer cannotescape liability for his servant’s torts by pleading that he had vested inthe servant a discretion as to how he should carry out his duties—Mersey Docks and Harbour Board v. Goggins & Griffith (Liverpool) Ltd.x.
“ It is true ”, said Lord Porter, “ that in most cases no orders as to howa job should be done are given or required : the man is left to do his ownwork in his own way. But the ultimate question is not what specificorders, or whether any specific orders, were given but who is entitled togive the orders as to how the work should be done ”. Applying this test,I would hold that the functions of Pereira, qua “ field agent ” of theCompany, were those of a servant under a “ contract of service ” asdistinguished from those of an independent contractor under a “ contractfor services ”. He was answerable to the Secretary of the Company,and the unlimited discretion or authority which he was given as to howhe should perform his “ field duties ” for the benefit of his employercould have been withdrawn or curtailed at any moment. It has noteven been suggested that the Company had contracted itself out of itsright to give him particular directions (if it so desired) as to how he shoulddischarge his duties in the future. In my opinion, the learned Judgemisdirected himself as to the true relationship between Pereira and theCompany.■
I shall now examine the circumstances in which the Company’s motor-car was made available to Pereira. The Secretary admitted, and it isobvious, that “ a field officer cannot function efficiently without a car ”.Accordingly, the Company purchased this particular vehicle and a loaned ”it to Pereira “ with a view to helping him to discharge his obligations(as a field officer) ”—vide the formal agreement D2 dated 30th July, 1948,in terms of which Pereira was handed possession of the car.
The auestion at once arises whether the Company could under anycircumstances have been held responsible for the negligence of a persondriving the vehicle at a time when it was in Pereira’s possession underthe “ contract of loan ” D2. The learned Judge seems to have thoughtthat no such liability could ever attach because “ the control ….
remained with Pereira and to all intents and purposes Pereira was theowner ”. In my opinion, this proposition goes too far. The authorities
* {1947) A. C. 1.
GRATIAEN J.—T. H. I. de Silva v. Trust Co., Ltd.
245
indicate that, in certain instances, the Company might well be liable forthe negligence of the driver of the car because of the special relationshipsubsisting between Pereira and the Company. The judgment of thePrivy Council in Canadian Pacific Railway Co. v. Lockhart1 establishesthat, if the motor-car had been negligently driven on any occasion inthe course o*. a journey “ for the purposes of, and as a means of executionof the work of ” Pereira as an employee of the Company, the Companywould have been liable to compensate a third party injured by reasonof that negligence. Pereira’s general duties as a field officer necessitatedand involved his presence as the Company’s representative in manyplaces, and if he was travelling in the car in order to perform any of theseduties, “ the means of transport used by him was clearly incidental tothe execution of that which he was employed to do”. In Lockhart’scase, the car belonged to the servant and not to the employer. In additionthe servant had been expressly forbidden to use a vehicle which was notinsured against third-party risks. Nevertheless, the employer was heldresponsible for the servant’s negligence while driving an uninsured vehiclein the course of and for the purposes of his employment, because “ theprohibition did not limit the sphere of his employment ”. How muchstronger would be a situation in which Pereira was engaged in travellingon the Company’* business in a motor-car which had primarily beenplaced at his disposal for that very purpose ?
A recent decision of Devlin J. in Ormrod v. Crossville Motor ServicesLtd. et al. 2, which was upheld by the Court of Appeal—(1953) 2 A. E. R.753—illustrates that the owner of a vehicle may be responsible for thenegligence of a person who was driving it if the owner had (or even sharedwith that other person) an interest in the journey being undertaken—or,as Denning L.J. put it, if the vehicle was “ being used wholly or partlyon the owner’s business or for the owner’s purposes ”.
I concede that Pereira was not precluded by the terms of the “ contractof loan ” from using the vehicle for his private purposes if he so desired.If, therefore, the ear were negligently driven while Pereira was travellingto his golf-club, the Company could not have been held responsible.But if, on the other hand, an accident occurred while he was engagedon the Company’s business in the performance of his legitimate dutiesas the Company’s employee, the position would have been entirelydifferent.
Let me now examine the circumstances in which the plaintiff happenedto be travelling in the motor-car at the time of the accident. On thatissue, the trial Judge had before him only the conflicting versions of theplaintiff and Holsinger. Pereira’s exclusion from the witness-box issignificant, and it is not unreasonable to presume that if the Companyhad chosen to call him as a witness, he could not have truthfully carriedthe defence anyJ further. The difficult questions. which the learnedJudge was called upon to resolve would not have arisen at all if he believedthat the plaintiff had merely borrowed the ear for his own exclusivebenefit in order to fulfil an undertaking to travel to Jaffna at his owncost and expense. Indeed, Mr. H. V. Perera conceded that the? acceptance
1 (1942) A. C. 591.
2*J. N. B 32S04 (1/54)
(1953) 1 W. L. R. 409.
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of the plaintiff’s evidence on this aspect of the case is implicit in thejudgment under appeal. I shall therefore summarise this evidence,which is to the following effect:
On earlier occasions, Pereira and Holsinger had (except in -one instance)taken the plaintiff in this identical car to the proposed client’s residenceif it was not convenient to bring the client to the plaintiff’s place ofbusiness. The arrangement arrived at with Holsinger, in the presenceand with the approval of Pereira, was “ for the Company to provide thetransport With regard to the particular journey with which thiscase is concerned, Holsinger who had previously gone to Jaffna withPereira on a canvassing tour, wrote a letter P 2 dated 19th April, 1950,on business note paper belonging to the Company, saying “ We are atpresent working at Jaffna, and as promised we are going to give you allthe business up here, which would be a very large number of exams.You will have to spend four days -with us as the volume of work is goingto be large In due course, Holsinger and Pereira arrived at the plain-tiff’s house and took him away in the car. It was in the courseof this journey that the accident occurred by reason of Holsinger’snegligence. .
The plaintiff expressly denied that he had “ borrowed ” the car fromPereira for the purposes of the trip, and explained that, if he had under-taken to provide his own transport (which he did not) he could verywell have used his private motor-car. On the contrary, he said, he hadmade it clear that he would not go unless he was provided with transport“ because it was not worth while to go in my car ”—the distance involvedbeing 248 miles each way.
It seems to me that, upon tne facts as I have set them out, the Com-pany’s liability has been clearly established. The resemblance betweenthe present case and that which was considered in Colonial Mutual LifeInsurance Co. v. Macdonald (supra) is only superficial, and disappearswhen one appreciates (a) the true relationship between Pereira and theCompany, and (&) the responsible part which Pereira had himself playedin the transaction. He had a discretion as to the selection of the doctorwho was to examine the cases in Jaffiua ; he exercised that discretionin favour of the plaintiff. He was a party to the negotiated arrangementthat, as a term of the plaintiff’s engagement to examine the cases inJaffna, he should be provided with transport; and he did in fact providethe transport. He had a right to select the person who should drivethe car during any stage of the journey ; he selected Holsinger. Hehad the right to decide whether or not, in the Company’s interests, noless than in his own, he should accompany Holsinger and the plaintiffon the trip ; and he accompanied them.
At no relevant stage had Pereira divested himself qf his character asa servant authorised by the Company to act on its behalf. Throughoutthe journey, therefore, the car was, through Pereira’s instrumentality,being used on the Company's business. If through Holsinger’s negligence,a pedestriap had been injured during the course of the trip, the Companywould have been liable. For, in addition to the contractual arrangementto convey the plaintiff to Jaffna, the car was without doubt being used
Somapala v. Sirr
247
as “ a means of transport which was dearly incidental to the executionof that which (Pereira) was employed to do He was engaged on theCompany's business while he was travelling to Jaffna.
The duty which was owed to the plaintiff as a passenger in the carcannot logically he placed on a lower plane. He had stipulated thathe should be conveyed to Jaffna by the Company, which, through itsaccredited representative, had engaged him to undertake professionalwork on its behalf at the other end. Even if that accredited represen-tative, i.e., Pereira, had (unknown to the plaintiff) been prohibited ex-pressly from agreeing to provide such transport, it would have madeno difference whatsoever, because a master is responsible for the“ unauthorised act of a servant done in the course of an authorisedemployment ”—Citizens Life Association Co. v. Brown1.
In my opinion the judgment under appeal should be set aside. Ithas not been argued that the learned Judge’s estimate on the issue ofdamages is excessive. I would therefore enter a decree in favour of theplaintiff for Rs. 50,000 with costs in both Courts.
H. A. de Silva J.—I agree.
Appeal allowed.