Brown v Smitt [1924] HCA 11: A Legal Case Summary

Brown v Smitt [1924] HCA 11; (1924) 34 CLR 160

Decided on: 14 May 1924
High Court of Australia
Knox C.J., Isaacs, Gavan Duffy, Rich and Starke JJ.
Rescission; misrepresentation; restitution in equity

This case, Brown v Smitt [1924] HCA 11, deals with significant issues concerning the rescission of a contract induced by fraudulent misrepresentation and the equitable adjustments required to restore the parties to their pre-contractual positions.

Facts

The respondent, Smitt, purchased a farm from the appellant, Brown, based on fraudulent representations that:

The farm was a first-class dairying property.
The soil was of good quality and volcanic.
120 acres of the farm had been cleared.

Upon discovering the falsity of these representations, Smitt sought rescission of the contract, return of the amount paid (£755 9s), and compensation for expenses incurred in improving the property.

The trial court found the representations to be false, fraudulent, and a direct inducement for the purchase, and ordered:

Rescission of the contract.
Repayment of £755 9s.
Additional compensation of £175 for improvements and losses.

Legal Issues

Entitlement to Rescission:

Whether the respondent was still entitled to rescission despite his delay in acting upon discovering the misrepresentation. Whether his actions, such as remaining in possession and expressing an intention to sell the property, constituted an election to affirm the contract.

Compensation Beyond Restitution:

Whether the additional compensation of £175 for improvements and expenses was justified under the principles of rescission and restitution.

Court’s Reasoning in Brown v Smitt

The court held that rescission was still permissible as the delay did not prejudice the appellant or involve third parties. The respondent’s actions were not unequivocal affirmations of the contract. The test for affirmation involves clear and intentional acts that confirm the validity of the contract, which were absent here.

The principle of rescission requires both parties to be restored to their pre-contractual positions. Equity permits adjustments for improvements or deterioration of the property, provided they are necessary and permanent.

The court found that some of the compensation awarded by the trial judge was for collateral losses (e.g., losses in business operations), which cannot be claimed in rescission. Such claims require a separate action for damages under deceit.

Improvements that enhance the value of the property, like clearing land or ensuring water supply, can be compensated, but allowances for non-permanent or personal enhancements are not justified.

Outcome:

Rescission of the contract was upheld.
Repayment of £755 9s was affirmed.
The award of £175 as compensation was overturned as it included improper allowances for collateral business losses and non-permanent improvements. The Court directed that an account be taken to assess the proper amount of compensation.

Legal Principles Affirmed (Brown v Smitt)

Fraudulent Misrepresentation: A contract induced by fraud can be rescinded, provided restitution is possible and no substantial prejudice arises.

Restitution in Equity: Rescission aims to place parties as close as possible to their pre-contractual positions, allowing compensation for necessary and permanent improvements but not for collateral losses.

Election and Affirmation: A party’s conduct must unequivocally affirm the contract to bar rescission.

Practical Implications

This case emphasizes the balance between equitable principles and contractual remedies, highlighting that fraudulent misrepresentation invokes a duty to undo the unjust enrichment without overcompensating or penalizing the defaulting party unfairly.

References:

https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1924/11.html

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Alati v Kruger [1955]: A Legal Case Summary

Alati v Kruger [1955] HCA 64; (1955) 94 CLR 216

Court: High Court of Australia
Date: November 29, 1955
Judges: Dixon C.J., Webb, Fullagar, Kitto, and Taylor JJ.
Rescission; Misrepresentation; Restitutio in integrum

Facts of the Case

The respondent (Alati) purchased a fruit business from the appellant (Kruger) for £700. The business was located on leased premises at Toowong, and the sale was induced by fraudulent misrepresentations made by the appellant and his agents regarding the business’s average takings. The appellant had falsely stated that the business was earning £100 per week, though it was actually earning much less. After taking over the business, the respondent discovered the takings were far lower than represented, leading to the deterioration of the business and eventual closure.

Legal Issues

The primary issue was whether the contract could be rescinded due to fraudulent misrepresentation. The respondent sought rescission of the contract, return of the purchase money, and damages. The appeal centered on whether the respondent was entitled to rescind the contract despite not being able to restore the business exactly as it was at the time of purchase.

Judgment in Alati v Kruger

The High Court of Australia upheld the trial judge’s decision to allow the respondent’s rescission of the contract based on the fraudulent misrepresentation. The Court found the appellant had made false representations about the business’s average weekly takings, which the respondent had relied upon. The business’s actual takings were significantly lower than what was represented.

The Court further noted that while the respondent could not restore the business in the exact condition it was in at the time of the contract due to its deterioration, equity allows for the rescission of contracts induced by fraud even when precise restitutio in integrum (restoration to the original position) is not possible. This is particularly true if equity can do what is practically just between the parties, restoring them substantially to their status quo through the exercise of its powers.

The relief granted included:

1. A declaration of lawful rescission of the contract.

2. Orders for the respondent to return the business premises and related property to the appellant.

3. Repayment of the £700, with interest, and damages for the respondent’s conveyancing costs and stamp duty.

4. A reasonable rental for the period the respondent held the business.

5. An order for the appellant to pay the respondent’s legal costs.

Legal Principles

Fraudulent Misrepresentation: A contract can be rescinded if induced by fraudulent misrepresentation, even if precise restoration of the status quo is not possible.

Rescission in Equity: Equity permits rescission of contracts induced by fraud even if complete restitutio in integrum is not possible, as long as a practical and just remedy can be achieved.

Damages and Restitution: The Court held that the respondent was entitled to damages for any loss suffered due to the fraud and could recover the purchase price and related costs.

Conclusion (Alati v Kruger)

The High Court ruled in favour of the respondent, granting rescission of the contract and ordering the return of the purchase price, damages, and other associated costs. This case is significant in its application of equitable principles in cases of fraud and misrepresentation, emphasizing fairness even when exact restitution is not feasible.

List of references:

https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1955/64.html

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Zuijs v Wirth Brothers Pty Ltd [1955]: A Legal Case Summary

Case name & citation: Zuijs v Wirth Brothers Pty Ltd [1955] HCA 73; (1955) 93 CLR 561

Court: High Court of Australia
Date: 15 December 1955
The bench of judges: Dixon CJ, McTiernan, Williams, Webb and Taylor JJ
Appellant: Constantin Zuijs
Respondent: Wirth Bros. Pty. Ltd. (circus proprietors)

What is the case about?

In Zuijs v Wirth Brothers Pty Ltd, the key issue revolves around whether the appellant, an acrobat performing at a circus, should be considered a “worker” under the Workers’ Compensation Act 1926-1948 (N.S.W.). The appellant sought compensation after sustaining injuries during a performance and argued that he was either employed under a contract of service or that he should benefit from Section 6(3A) of the Act.

Section 6(3A) establishes a deemed employment relationship under certain conditions, such as when a contractor does not operate an independent trade or business and performs work exceeding five pounds in value.

Initial decision in Zuijs v Wirth Brothers Pty Ltd

The Workers’ Compensation Commission ruled that Zuijs was not employed under a contract of service, nor did he fall within the purview of Section 6(3A), denying him compensation.

This decision was appealed to the Supreme Court of New South Wales, which upheld the Commission’s findings. Further, the case was escalated to the High Court of Australia.

Judgment of the High Court

The High Court found that the appellant was working under a contract of service, meaning he was an employee of the circus.

The decision of the Supreme Court of New South Wales was overturned, and the matter was remitted for further consideration in line with the High Court’s interpretation.

Reasoning (Zuijs v Wirth Brothers Pty Ltd)

Even though the acrobatics themselves require a high degree of individual skill and personal performance, the circus, as the employer, had control over other aspects of the job. These included decisions about the schedule of performances, rehearsals, safety measures, costumes, and conduct. The employer’s ability to control these ancillary aspects suggests a relationship of employment, rather than independent contracting.

Regarding the applicability of Section 6(3A), it was found that the provision requires a contract involving work worth more than five pounds. However, it is clear that the trapeze artist’s role, being part of a touring circus, involves repeated acts for a weekly wage, not a one-off task or a contract based on specific, measurable work. Therefore, the provision that requires a contract for a particular task with a defined value does not apply here.

In this regard, the judges stated as under:

“In our opinion this provision is entirely inappropriate to the kind of contract in question in this case. That is shown by the opening words, “Where a contract to perform any work exceeding five pounds in value”. You cannot satisfy this condition by a contract of indefinite duration for repeated performances of an act on a trapeze.”

Significance

This case highlights the importance of interpreting the nature of employment contracts carefully, especially in situations involving specialized work like that of an acrobat.

References:

https://jade.io/article/65112

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Stevens v Brodribb Sawmilling Co Pty Ltd (1986)

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Stevens v Brodribb Sawmilling Co Pty Ltd (1986)

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) is a case of workplace negligence. The case revolves around the distinction between an employee and an independent contractor. Given below are the case details:

Case name & citation:	Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
The concerned Court:	High Court of Australia
The bench of judges:	Mason, Wilson, Brennan, Deane and Dawson JJ.
Decided on:	13 February 1986
Area of law:	Employment status under labour law

Facts of the case (Stevens v Brodribb)

Brodribb Sawmilling Co Pty Ltd had a large sawmill in eastern Victoria and conducted extensive logging activities in the nearby area. The company hired people to do the requisite tasks such as felling, snigging (loading), and truck driving. Grey was hired to use a tractor that he supplied himself to push or drag felled logs to a loading ramp and then load the logs onto a truck. On the other hand, Stevens was engaged to drive the timber load to the sawmill. He was to use his personal truck for this purpose.

A “bush boss” who was an employee of Brodribb oversaw the logging activities. On the day of the incident, Gray was having trouble loading a short log onto Stevens’ truck. In an attempt to assist, Stevens used a chain to secure the log to the tractor blades. But before he walked away from there, Gray moved the tractor dislodging the log which rolled down the ramp and hurt Stevens accidentally. He sustained severe injuries and filed a claim for damages against both Gray (for his negligence) and Brodribb Sawmilling Co Pty Ltd.

Issue

The main issue, in this case, was to determine the employment status of Gray and Stevens. Whether they should be classified as employees or independent contractors?

Judgment of the Court in Stevens v Brodribb

Brodribb Sawmilling Co Pty Ltd was concerned about the legal implications of classifying the two men as either employees or independent contractors. If Gray and Stevens were deemed independent contractors, the sawmilling company could avoid vicarious liability for Gray’s negligent actions nor would it be personally liable to Stevens for breach of employer’s duty to provide adequate equipment and a safe system of work.

The High Court of Australia decided that Gray and Stevens were independent contractors. But it also established that even in cases where an individual is classified as an independent contractor, the principal may still owe a duty of care to him pursuant to the general principles of negligence. This means that the sawmilling company still had a responsibility to take reasonable precautions to ensure the safety of Stevens. Though in this specific case, on the issue of liability to the injured (Stevens), the High Court found that Brodribb had not breached its duty of care.

Employee vs Independent Contractor

In deciding the employment status of Gray and Stevens, the judges considered that the element of control alone is not the sole criterion to determine the relationship of employment. Several other factors were listed for example:

mode of remuneration of the workers
provision and maintenance of equipment (who provides the equipment)
hours of work and provision for holidays or leave
obligation to work at the employer’s direction
the deduction of income tax
payment of significant business expenses from remuneration
the creation of goodwill or saleable assets
delegation of work or sub-contracting
work involving a specialized profession or trade

Quotes from the case

Mason J said as under:

“…the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it as merely one of a number of indicia which must be considered in the determination of that question … Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.”

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Sweeney v Boylan Nominees Pty Ltd [2006]: A Summary

Sweeney v Boylan Nominees Pty Ltd [2006] is a famous labour law case from Australia.

Case name & citation: Sweeney v Boylan Nominees Pty Limited [2006] HCA 19; (2006) 227 ALR 46; (2006) 226 CLR 161
The concerned Court: High Court of Australia
Decided on: 16 May 2006
Area of law: Employment status under labour law; Vicarious liability

Given below are the case facts.

Facts of the case (Sweeney v Boylan Nominees)

Mrs. Sweeney sustained injuries when a refrigerator door at a service station fell off and smacked her on the head. Earlier in the day on which Mrs. Sweeney was hurt, the owners of the service station had already informed Boylan, who owned the refrigerator, that there was a problem with the door. Mr. Comninos, a mechanic, was dispatched to the service station to undertake repairs. The trial judge determined that Mr. Comninos failed to exercise reasonable care, which resulted in Mrs. Sweeney’s injuries. This finding was not challenged on appeal.

Mrs. Sweeney filed a lawsuit against the owners of the service station and Boylan.

Issue that arose

The main issue of the case was the nature of Boylan’s engagement with Mr. Comninos. That is, whether he was an employee or an independent contractor.

Boylan had six employees in its service department, three field service employees who performed repairs at Boylan’s clients’ locations, and two contractors (including Mr. Comninos) who did the same work as the field service employees. Although Mr. Comninos worked for Boylan on a regular basis, the contractors were only required to work when the field service personnel were fully occupied. Mr. Comninos was referred to as “our mechanic” in Boylan’s service reports, and he was empowered to collect the amount due when repairs were finished. Boylan also referred to Mr. Comninos as “our mechanic” in a report to its public liability insurer.

Unlike the field service personnel, Mr. Comninos was not obligated to accept jobs from Boylan, wore no Boylan uniform, was not based on Boylan’s premises, and invoiced Boylan for the hours he worked. Mr. Comninos also possessed his own trade certificate and contractor’s license, as well as his own public liability and workers’ compensation insurance, and drove his own van with his own firm name on it.

Judgment of the Court in Sweeney v Boylan Nominees

Trial judge:

Mrs. Sweeney’s claim against the owners of the service station was dismissed in the District Court of New South Wales. And this claim was not pursued further on appeal. Mrs. Sweeney, on the other hand, prevailed in her case against Boylan on the grounds that it was vicariously liable for the negligence of Mr. Comninos. The trial judge determined that the mechanic was acting as a servant or agent of Boylan, and he had the approval and authority from Boylan to carry out the work in question. In reaching this, the trial judge gave significant weight to the various documents that referred to Mr. Comninos as “our mechanic.”

Court of Appeal:

The New South Wales Court of Appeal overturned the trial judge’s decision and ruled that the relationship between Boylan and the mechanic, Mr. Comninos, was not that of an employment relationship. The Court of Appeal cited several reasons to support this finding:

Boylan did not exert control over Mr. Comninos in his day-to-day work activities.
There was no mutual obligation between Boylan and Mr. Comninos to provide and accept work.
Mr. Comninos conducted his work under his own name.
Mr. Comninos supplied his own equipment and tools for the tasks and bought his own spare parts.
Boylan paid Mr. Comninos based on a piecework basis.
Mr. Comninos issued his own invoices to Boylan.
Mr. Comninos provided his own insurance coverage and managed his superannuation.

All of these factors distinguished his independence from Boylan’s direct employment. This indicated that he was an independent contractor and not an employee.

High Court:

The High Court upheld the decision of the New South Wales Court of Appeal.

The majority underlined the importance of distinguishing between employees and independent contractors in determining the scope of vicarious liability. It moved away from relying solely on the control test and preferred to consider the totality of the relationship between the parties as articulated in Hollis v Vabu Pty Ltd (2001).

The Court accepted that the facts did not support a finding that Mr. Comninos was an employee. Therefore, Boylan was not held vicariously liable for Mr. Comninos’ actions, and Mrs. Sweeney’s claim against Boylan was not upheld based on vicarious liability.

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Cassidy v Ministry of Health [1951]: Facts and Principles

Cassidy v Ministry of Health [1951] is an important tort and labour law casethat deals with the concept of Res Ipsa Loquitur (Latin for “the thing speaks for itself”) and the liability of a hospital for the negligence of its employees.

The case details are as follows:

Case name & citation:	Cassidy v Minister of Health [1951] 2 KB 343
Court and jurisdiction:	Court of Appeal; England and Wales
The bench of judges:	Somervell, Singleton and Denning, L.JJ.
Area of law:	Employment status under labour law; vicarious liability

Facts of the case (Cassidy v Ministry of Health)

The plaintiff underwent medical surgery for his two stiff fingers at a hospital run by the defendant. As a result of the negligence of one of the doctors involved in the operation, the plaintiff’s hand became stiff affecting majorly all of his fingers. The plaintiff brought a lawsuit against the hospital authority, alleging negligence and seeking to establish vicarious liability.

The defendant contended that the doctors or the staff operating were not considered as its servants as it did not exercise control over how they performed their duties. Hence, it should not be held vicariously liable.

Issue

Whether the hospital authority was liable for the negligence on the part of its doctors.

Judgment of the Court in Cassidy v Ministry of Health

The Court held that the hospital authority was responsible for the negligence of its doctors. The doctor operating the surgery (or doctors involved in the incident) was to be categorized as a servant of the defendant because the defendant had chosen him/her for the job and the person was fully integrated into the defendant’s organization. Their selection was not based on the patient’s choice. Therefore, the defendant was held liable for the negligent actions of the doctors during the course of their employment at the hospital.

Applying the doctrine of Res Ipsa Loquitur

In this case, the doctrine of Res Ipsa Loquitur was applied.

The plaintiff said, “I went into hospital to be cured of two stiff fingers. I have come out with four stiff fingers and my hand is useless. This should not have happened if due care had been used. Explain it if you can.”

Given this, it was established that since the plaintiff had suffered an injury during a medical procedure performed by the hospital staff and the exact cause/particular employee responsible for the negligence cannot be identified by him, the hospital authority will be presumed to be negligent unless it proves that none of its employees had acted negligently during the treatment. In other words, the doctrine of Res Ipsa Loquitur was applied. This doctrine allows the court to infer negligence on the part of the hospital authority based on the nature of the accident itself, even without direct evidence of negligence. The circumstances surrounding the case were such that the injury could not have occurred without some degree of negligence on the part of the hospital or its staff.

Quotes from the case

Denning LJ gave the following views:

“I take it to be clear law, as well as good sense, that, where a person is himself under a duty to use care, he cannot get rid of his responsibility by delegating the performance of it to someone else, no matter whether the delegation be to a servant under a contract of service or to an independent contractor under a contract for services.”

“……Whenever they accept a patient for treatment, they must use reasonable care and skill to cure him of his ailment. The hospital authorities cannot, of course, do it by themselves: they have no ears to listen through the stethoscope, and no hands to hold the surgeon’s knife. They must do it by the staff which they employ; and if their staff are negligent in giving the treatment, they are just as liable for that negligence as is anyone else who employs others to do his duties for him.”

Conclusion

The level of control exercised by a superior over his subordinates plays a major role in determining an employer-employee relationship. However, since the case of Cassidy v Minister of Health, it has been evident that relying solely on the control test can be inadequate, especially in a hospital setting. This case established that hospitals can be held liable for the negligence of doctors who are employed on a full-time basis by them. The control test alone cannot be sufficient to determine liability in such situations. Because in the case of a professional employee such as a doctor, the employer may lack knowledge of the specific field and may not be able to exert direct control over the doctor’s practice.

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Case Summary of Hollis v Vabu Pty Ltd (2001)

Case name & citation: Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 181 ALR 263; (2001) 207 CLR 21

The concerned court: High Court of Australia

Decided on: 09 August 2001

The bench of judges: Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne & Callinan JJ

Area of law: Employment status under labour law

What is the case about?

Hollis v Vabu (2001) is a famous Australian case on employment law. The nature of the employee-employer relationship was the primary focus of this case. The issue was whether the claimant was an employee or an independent contractor. Given below are the case details.

Facts of the case (Hollis v Vabu)

Vabu conducted business under the name of ‘Crisis Couriers’ and it had 20 to 30 bicycle and motorcycle couriers. In December of 1994, a pedestrian, Mr. Hollis was on his way out of a building where he had just picked up a parcel. After stepping onto the footpath, he was injured as a result of being knocked down by a cyclist who was wearing a jacket marked with the Crisis Couriers logo.

Mr. Hollis thus brought a claim against the company for damages. He claimed that the courier was working for the company and acting as its employee and agent when he was riding the bicycle.

Issue

Was the courier an employee? If yes, was Vabu vicariously liable?

Judgment of the Court in Hollis v Vabu

When determining the true nature of a relationship of employment in the past, control was the only factor that was taken into account. However, the High Court ruled that the totality of the relationship between the parties must be taken into account. This includes factors such as remuneration (including whether there are invoices, whether the contractor is registered for GST, and whether tax is being withheld), who decides the hours that the contractor will work, who provides the equipment, and so on.

Ultimately, the High Court, by majority, decided that the bicycle courier was an employee of Vabu, and as a result, Vabu was found to be vicariously liable for the act of the courier who knocked down Mr. Hollis.

Factors considered in the decision

The judges of the High Court issued a joint judgment in which they applied the multi-facet test. In this test, they not only considered the contractual terms that were in place between Vabu and the couriers, but they also investigated “the system which was operated thereunder and the work practices imposed by Vabu.” This was done in order to determine the entirety of the relationship that existed between the two parties.

The following factors were taken into account:

the courier was not operating an independent business of his own
the courier did not provide skilled labour or labour that required special qualifications
the couriers did not have much say in the manner in which their work was performed
the courier company had significant actual control over the activities of the couriers
as a method of identification, the company uniform was required to be worn by the couriers, and they were presented to the general public and people who used the courier service as emanations of the company
the company supplied the uniforms and radios that the couriers used to communicate with the company
the company supervised the finances of the couriers, making deductions for unsubstantiated charges and for insurance, and fining the couriers when they caused damage to company property or failed to return it
there was no room for the couriers to negotiate the rate of their remuneration
the company decided when and how often couriers could take leave, and leave was not available during certain times of the year that were particularly busy, such as Christmas and Easter

The joint judgment presented the view that it couldn’t be said that the couriers were independent contractors simply because they owned their own bikes, bore the expense of running them, and supplied many of their own accessories. There was nothing contrary to the relationship of employment. This was even more so because the capital outlay was relatively small and because bicycles are not tools that are inherently capable of being used only for the courier/delivery work, but rather offer a means of personal transportation as well as a means of recreation outside of working hours.

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Williams v Compair Maxam Ltd [1982]: Facts and Principles

Case name & citation: Williams v Compair Maxam Ltd [1982] IRLR 83; [1982] ICR 156

Court and jurisdiction: Employment Appeal Tribunal, England and Wales

Decided on: 22 January 1982

The learned judge: Browne-Wilkinson J

Area of law: Redundancy; unfair dismissal

What is the case about?

When an employer is contemplating having to lay off employees, he or she cannot cherry-pick the employees they wish to retain. Instead, they must have appropriate redundancy criteria from which to select the employees who are at risk of being made redundant or laid off. This requirement for redundancy criteria was established in Williams v Compair Maxam Ltd.

Case facts (Williams v Compair Maxam Ltd)

In this case, Compair Maxam Ltd was experiencing a drop in business and recognized the need to implement cost-cutting measures. Its departmental managers decided to select a team of core staff members who they deemed necessary to retain to ensure the continued viability of the business. They did not have any particular criteria for redundancy and instead chose based on personal preference; the Union was not consulted at any point. As a consequence of this, the remaining staff members were dismissed on the grounds of redundancy.

After that, a few of the employees attempted to file claims for unfair dismissal. They were unsuccessful at the tribunal, which found that the managers’ preference was a reasonable way of doing the job. They filed an appeal against this on the grounds that it was unfair, and their appeal was ultimately successful. It was held by EAT that there was an error of law when the tribunal reached the conclusion and that the dismissal selection was unfair.

The principles of redundancy

In the given case of Williams v Compair Maxam Ltd, the Employment Appeal Tribunal (EAT) outlined some guidelines that a reasonable employer should adhere to in the event that they intend to dismiss an employee on the basis of redundancy. It was emphasized by the EAT that these were not legal precepts but rather standards of conduct. They served as important guidance on the selection of employees for redundancy.

These principles are:

1. Notice of impending redundancies:

The employer would do their best to provide employees and their representatives with as much advanced notice as possible when there was going to be a redundancy.This will enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider the possibility of alternative solutions, and, if necessary, find alternative employment either within the undertaking or elsewhere.

2. Consultation with the union:

The employer will have a discussion with the union about the most effective ways by which the desired management result can be accomplished in a way that is fair to the employees and causes them as little hardship as possible. In particular, the employer would consult with employee representatives to establish selection criteria.

3. Objective criteria:

The selection criteria would be based, as much as possible, not on the personal opinion of the person making the selection, but on objective criteria. That is, the criteria should be such that it can be judged against things such as attendance record, efficiency at the job, experience, or length of service.

4. Selection based on criteria:

The employer would make every effort to ensure that the selection is made fairly based on these criteria. And it will take into account any representations or suggestions that the union may make regarding the selection.

5. Alternative employment:

Instead of dismissing the employees, the employer will look into providing them with alternate employment opportunities. He would see whether he could offer alternative employment.

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A Case Summary of Lane v Shire Roofing Co (Oxford) Ltd [1995]

Case name & citation: Lane v Shire Roofing Co (Oxford) Ltd [1995] IRLR 493; [1995] EWCA Civ 37

Court and jurisdiction: Court of Appeal of England and Wales

Decided on: 16 February 1995

The bench of judges: Nourse LJ, Henry LJ and Auld LJ

Area of law: Personal injury under employment law

What is the case about?

This is a UK labour law case concerning the scope of employment to determine the duty of care for the health and safety of employees.

Facts of the case (Lane v Shire Roofing Co)

Mr Lane was a roofer by trade. He carried out operations as a one-man firm and was considered to be self-employed for tax purposes. Shire Roofing made the decision to hire him on a “payment by job” basis. Since Shire Roofing was a new company, it did not want to commit to hiring a large number of long-term employees and instead mostly employed people for individual jobs.

Mr Lane preferred to work from his own ladder but had provided no materials. He was re-roofing a house when he had an accident that caused him to fall off his ladder and sustain serious injuries. If he was employed by Shire Roofing, the company owed a duty of care to look out for his health and safety. The High Court decided that he was an independent contractor; as a result, the company was found not liable. The plaintiff appealed.

Issue

Was Shire Roofing Co (Oxford) Ltd liable for the injury sustained by Mr Lane?

Judgment of the Court in Lane v Shire Roofing Co (Oxford) Ltd

The Court of Appeal decided otherwise.

The question that was most important to the Court of Appeal was whether or not Mr Lane worked for Shire Roofing as an employee or whether he was self-employed or an independent contractor. The Court took note of the fact that there are some perceived benefits that come with the relationship between workers and employers when it is not one of employment (for the worker tax advantages; and for the employer the avoidance of legal duties to employees).

Henry LJ held that there are therefore “good policy reasons in the field of safety at work to ensure that the law properly categorizes between employees and independent contractors.”

His Lordship believed that elements such as “control” or “was the workman carrying on his own business, or was he carrying on that of his employers?” should be taken into consideration. These questions need to be addressed in the context of who is accountable for the overall safety of the man performing the work in question. In this instance, it was Shire Roofing Co (Oxford) Ltd, and hence Mr Lane was employed by them and they were therefore liable.

The reasoning behind the decision

The Court found that it’s possible that the control test (i.e., who lays down what is to be done and how it is to be done, who provides the materials and plant, etc.) may not be conclusive, especially in the case of highly skilled workers who have the discretion to choose how their work should be done. In situations like this, the question that needs to be asked is: Whose business was this? Whether the workman was conducting his or her own business, or that of his or her employers?

On this basis, the Court of Appeal determined that Mr Lane was an employee of Shire Roofing. The Court reasoned that, while the level of control exercised by the company would depend on the need to supervise and direct Mr Lane, it was clear that the job at the house was the company’s business, not Mr Lane’s. The Court felt that the facts were much closer to a situation in which an employer hires men simply to do labouring work than to a situation in which a specialist subcontractor is hired to perform some part of a general building contract.

Conclusion

This decision demonstrates that when a court is considering the issue of whether or not a person is an employee in the context of health and safety at work, the court may take a broad view of what constitutes employment.

The judgment in Lane v Shire Roofing Co (Oxford) Ltd stated:

“When it comes to the question of safety at work, there is a real public interest in recognizing the employer/employee relationship when it exists, because of the responsibilities that the common law and statutes place on the employer.”

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Walker v Northumberland County Council [1995]

Case name & citation: Walker v Northumberland County Council [1995] 1 All ER 737

Jurisdiction: England and Wales

Year of the case: 1995

The learned judge: Colman J

Area of law: Personal injury under employment law; risk of psychiatric injury

What is the case about?

Walker v Northumberland County Council is a UK labour law case concerning stress at work and related injury.

Although claims for occupational stress have been acknowledged for a considerable amount of time in other common law jurisdictions, particularly USA and Australia, it wasn’t until the case of Walker v Northumberland County Council that a precedent was established in the UK for the first time.

Facts of the case (Walker v Northumberland County Council)

The claimant, Mr Walker worked for Northumberland County Council. He was an experienced Area Social Services Officer who was responsible for the management of four teams of Social Services field workers in a region that had a significant number of issues related to childcare. Population growth in the 1980s led to a large increase in the number of cases referred to him. He repeatedly made requests to the management team for assistance in the form of additional staff or guidance on how the workload should be distributed, but neither was available. He had a mental breakdown in November 1986 and was unable to work until March 1987, on medical advice.

Following his return to the workplace, it was decided that an assistant will be made available to him. Despite this, the agreement was not adhered to. Consequently, the claimant was faced with a rapidly increasing workload and the responsibility of addressing a substantial backlog of paperwork. He had a second nervous breakdown in September 1987, roughly six months after he had returned to work following his previous one. In February 1988, his employers terminated his employment on the grounds of ill health.

He filed a claim for damages against the employer, alleging that they had violated their duty of care to him as his employer. They failed to take reasonable steps to prevent him from being exposed to a workload that could be detrimental to his health.

He argued that his immediate superiors knew that social work was particularly stressful, that such stress could lead to mental illness, and that his workload was such that it would impose increasing stress on him. He also argued that his employers ought to have reasonably foreseen that there was a real risk of him becoming mentally ill if they did not take steps to alleviate the impact of that workload on him.

Issue

Was the employer responsible for the mental harm/injury caused to the claimant?

Judgment of the Court in Walker v Northumberland County Council

Colman J, who heard the case at first instance, ruled in favour of the claimant.

When he was giving his judgment, he acknowledged that even though the initial breakdown was brought on by his employers’ failure to provide adequate resources, it was not reasonably foreseeable at that time that the workload to which he was exposed would give rise to a material risk of mental illness.

However, as far as the second breakdown was concerned, the court determined that it was reasonable to foresee that the claimant would experience a risk of him once more becoming mentally ill if he was subjected to the same or a similar workload that was comparable to the one, he was previously under.

Therefore, the court held that the Council breached its duty of care by failing to take reasonable precautions to protect Mr Walker from mental harm.

Significance of the case

Because of the Walker case, it was accepted that an employer has a duty of care towards their employees to not only ensure that they don’t suffer a physical injury but also any mental harm or injury, including psychiatric injury. Where it is reasonably foreseeable that an employee’s health may be harmed as a result of stress in the workplace, the employer has a duty to take “practicable steps” to avoid causing injury to the employee.

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