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Cite as: [1957] AC 555, [1956] UKHL 6

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JISCBAILII_CASE_TORT

    Die Jovis, 20° Decembris 1956

    Upon Report from the Appellate Committee, to whom
    was referred the Cause Lister against Romford Ice &
    Cold Storage Company Limited, that the Committee had
    heard Counsel, as well on Monday the 5th, as on
    Wednesday the 7th, Thursday the 8th, Monday the 12th
    and Tuesday the 13th, days of November last, upon
    the Petition and Appeal of Martin Alfred Lister, of 35
    Hamlet Road, Romford, in the County of Essex, pray-
    ing, That the matter of the Orders set forth in the
    Schedule thereto, namely, two Orders of Her Majesty's
    Court of Appeal of the 26th of October 1955 and of the
    16th of January 1956 respectively, so far as therein
    stated to be appealed against, might be reviewed before
    Her Majesty the Queen, in Her Court of Parliament,
    and that the said Orders, so far as aforesaid, might be
    reversed, varied or altered, or that the Petitioner might
    have such other relief in the premises as to Her Majesty
    the Queen, in Her Court of Parliament, might seem
    meet; as also upon the printed Case of Romford Ice &
    Cold Storage Company Limited, lodged in answer to
    the said Appeal; and due consideration had this day
    of what was offered on either side in this Cause:

    It is Ordered and Adjudged, by the Lords Spiritual
    and Temporal in the Court of Parliament of Her
    Majesty the Queen assembled, That the said Orders
    of Her Majesty's Court of Appeal, of the 26th day of
    October 1955 and of the 16th day of January 1956
    respectively, complained of in the said Appeal, be, and
    the same are hereby, Affirmed, and that the said Petition
    and Appeal be, and the same is hereby, dismissed this
    House.

    Lister v.
    Romford Ice
    & Cold Storage
    Company
    Limited.

    Viscount
    Simonds

    Lord Morton
    of Henryton

    Lord
    Radcliffe

    Lord Tucker

    Lord

    Somervell
    of Harrow

    HOUSE OF LORDS

    LISTER

    v.
    ROMFORD ICE & COLD STORAGE COMPANY LIMITED

    Viscount Simonds

    20th December, 1956
    my lords,

    The facts in this case are not seriously in dispute, but they give rise to
    questions of considerable difficulty and importance.

    The Appellant, Martin Alfred Lister, was, in January, 1949, in the employ-
    ment of the Respondent Company as a lorry driver. He was then some
    twenty-seven years of age and had, apart from an interval during the war,
    been in that employment since he was seventeen. He had previously for a
    short time been employed by them as a general labourer. On the 28th
    January, 1949, accompanied as mate by his father, also named Martin Alfred
    Lister, whom I will call " Lister senior ", he drove his lorry into a slaughter-
    house yard off the Old Church Road, Romford, to collect some waste. In
    the yard he backed his lorry and in doing so knocked down and injured
    Lister senior, who had previously alighted from it.

    In June, 1951, Lister senior issued a writ against the Respondents claiming
    damages for the personal injuries suffered by him, alleging that they were
    due to the negligent driving of the Appellant and that the Respondents as
    his employers were vicariously liable. This action was tried by Mr. Justice
    McNair on the 29th January, 1953, and that learned Judge held that the
    Appellant had negligently driven the lorry in reverse without looking where
    he was going but that Lister senior was also at fault in failing to take proper
    care for his own safety, the relative responsibility being two thirds for the
    Appellant and one third for Lister senior. The responsibility of the
    Respondents was purely vicarious. The damage was assessed at £2,400 and
    judgment was entered for Lister senior for £1,600, two thirds of that amount,
    and costs.

    On the 26th January, 1953, three days before the trial of Lister senior's
    action, the Respondents issued the writ in the action, in which this appeal
    is brought, claiming against the Appellant " damages or in the alternative
    "... payment by way of indemnity or contribution in respect of such
    " damages as may be adjudged or agreed to be paid " to Lister senior in the
    first action and the Respondents' costs of that action.

    On the 12th May, 1953, the Respondents delivered their Statement of
    Claim in the present action. They pleaded the facts that I have stated,
    including the judgment which had by then been given; they alleged that
    they had paid the damages of £1,600 and were liable to pay the costs and
    that they had suffered loss and damage to the extent of such damages
    and costs by reason of the Appellant's negligence. They pleaded further
    or alternatively that it was an implied term of the contract of service of
    the Appellant that he would carry out his duties with reasonable care and
    skill and that he had failed to do so whereby they had suffered loss and
    damage. They claimed an order that they might be indemnified by the
    Appellant in respect of the sums they had paid to Lister senior and their
    costs of defending the first action and alternatively " damages for negligence
    "and/or breach of contract". I understand the first head of claim to be
    for a contribution of 100 per cent., that is, in effect an indemnity under the
    Law Reform (Married Women and Tortfeasors) Act, 1935, which I will
    call" the 1935 Act", and the second head of claim to be founded alternatively
    on tort or the breach of a contractual duty of care.

    The Defence of the Appellant, to which I must refer somewhat fully, put
    in issue the question of his negligence. It alleged that he was present in
    Court throughout the trial of the first action and was ready to give evidence

    2

    on behalf of the Respondents but that they did not allow him to do so, and
    that the judgment against them was, therefore, not due to his negligent driving
    but to their failure to call him as a witness. I do not think that your Lordships
    will take this plea very seriously. It cannot by any means be sustained.
    Something more formidable follows, raising, I think, a question of general
    importance. For it was then pleaded that it was an implied term of the
    contract of service that the Respondents would indemnify the Appellant
    against all claims or proceedings brought against him for any act done by
    him in the course of his employment, and, in the alternative, that it was
    an implied term that he would receive the benefit of any contract of insurance
    effected by the Respondents and covering their liability in respect of the first
    action, that the Respondents had in fact effected such insurance and that he
    claimed the benefit thereof. And it was further pleaded that there was no
    such implied term of service as the Respondents alleged, that he would carry
    out his duties with reasonable care and skill, but that on the contrary the
    Respondents by engaging him to drive a lorry on their behalf impliedly
    accepted him with all such faults and failings as he might possess and without
    any right or claim against him in respect of negligent acts arising out of and
    in the course of his employment. It was in this state of the pleadings,
    though they were amended when the case was heard by the Court of Appeal,
    that the matter came before Mr. Justice Ormerod for trial.

    I will at once state the conclusions to which that learned Judge came.
    After stating that the case had been put by counsel for the Respondents
    (Plaintiffs in the action) in two ways, first that upon the ordinary law of
    contract the servant was liable to his master for damage suffered by him
    for the servant's breach of contract, it being an implied term of his contract
    that he would use reasonable care in the performance of his work, and,
    secondly, that he was as a joint tortfeasor entitled to contribution under
    section 6 (1) (c) of the Act of 1935, the learned Judge said that he was con-
    strained by the words of Lord Justice Denning in the case of Jones v.
    Manchester Corporation and Others ([1952] 2 Q.B. 852 at p. 868) to consider
    the case from the point of view of the Act of 1935. He found as a fact that
    the Appellant had been guilty of negligence, rejected the contention that the
    claim for contribution could only be raised in the original action, and then
    proceeded to deal with what he regarded as the substantial defence, namely,
    that the contract of service was subject to the implied terms to which I have
    already referred. As to this he held, following the decision of Mr. Justice
    Finnemore in Semtex, Ltd. v. Gladstone [1954] 2 A.E.R. 206 (a case, I will
    interpolate, which was in my opinion rightly decided) that, while it must be
    an implied term that the employer would not require the servant to do any-
    thing illegal and therefore would comply with the provisions of the Road
    Traffic Act, 1930, in respect of insurance, there was no evidence to support
    any further implication. He rejected also the plea that the writ was prema-
    turely issued, and upon a consideration of the circumstances held that the
    Respondents were, under the Act of 1935, entitled to a contribution which
    would amount to a complete indemnity. He gave judgment for the Respon-
    dents accordingly.

    There has, I think, been some confusion in the course of the case between
    two wholly separate torts, (a) the tort for which the Appellant and, vicariously,
    the Respondents might be made liable to Lister senior and in respect of which
    the Respondents could claim contribution under the Act of 1935, and (b) the
    tort for which the Appellant might be made liable to the Respondents in
    respect of his breach of the common law duty of care. But I do not think
    that this now affects the issue, for, as I shall try to show, the deciding factor,
    whatever the cause of action, is whether or not certain terms are to be implied
    in the contract of service between the Appellant and the Respondents.

    The Appellant appealed to the Court of Appeal. At the outset of the
    hearing in that Court the Appellant took the preliminary point that the issue
    of the writ was premature, inasmuch as the liability of the Respondents to Lister
    senior had not been established: this was said to follow from the decision of
    this House in George Wimpey & Co. Ltd. v. British Overseas Airways Cor-
    poration
    [1955] A.C. 169. The Respondents' answer was that at any rate
    it was not premature so far as it was founded on breach of contract whatever

    3

    might be the position in regard to the claim to contribution under the Act
    of 1935. The Court of Appeal, in order that all the substantive matters in
    the appeal might be argued and decided, gave leave for a second action to
    be brought and consolidated with the first, the pleadings and evidence in the
    first action to stand as if they had taken place in the second action. This
    was duly done.

    Before I state the result of the appeal it is necessary to note that the
    Appellant was allowed to make substantial amendments of his Defence and,
    as they formed the basis of much argument in this House, I will remind your
    Lordships that by paragraph 7. A it was pleaded that it was an implied
    term that the Appellant would not be required to do anything unlawful and
    in particular would not be required to drive unless there was in force in
    relation to the use of the vehicle such a policy of insurance as would provide
    him with the indemnity required by section 36 (1) of the Road Traffic Act,
    1930, and by paragraph 7. B that it was an implied term of the contract
    that the Respondents' motor insurance should cover the Appellant against
    any third party liability which he might personally incur arising out of his
    driving the Respondents' vehicles in the course of his employment, and by
    paragraph 7. C that in breach of these implied terms or one of them the
    Respondents required the Appellant to drive a vehicle without there being
    in force in relation to his user thereof a policy which provided him with any
    indemnity either as required by the Road Traffic Act, 1930, or at all. The
    Appellant was also allowed to amend his defence by adding a plea that
    the accident whereby Lister senior suffered damage was solely caused or
    contributed to by the negligence of the Respondents. This plea had no
    substance whatever and I shall say nothing more of it.

    In order to explain the Appellant's defences which rested on the implied
    terms in regard to insurance and the Road Traffic Act, 1930, I refer to
    section 35 (1) of that Act, which provides that subject to the provisions of
    that Part of the Act it shall not be lawful for any person to use or to cause
    or permit any other person to use a motor vehicle on a road unless there is
    in force in relation to the user of the vehicle by that person or that other
    person, as the case may be, such a policy of insurance or such a security
    in respect of third party risks as complies with the requirements of that Part
    of the Act. Section 36 (1) states these requirements and, so far as material
    to this appeal, provides that such a policy must be a policy which insures such
    person or persons, or classes of persons as may be specified in the policy in
    respect of any liability which may be incurred by him or them in respect
    of the death of or bodily injury to any person caused by or arising out of the
    use of the vehicle on a road, but contains the proviso that such a policy shall
    not be required to cover liability in respect of the death arising out of and
    in the course of his employment of a person insured by the policy or of
    bodily injury sustained by such a person arising out of and in the course of
    his employment.

    It appears that in fact the Respondents had taken out just such a policy
    as the Act required excluding such death or injury as the proviso that I
    have read authorised it to exclude. The policy also provided that the
    indemnity given thereby should, subject to the provisions thereof, be
    extended to any person in the employ of the Respondents driving the vehicle
    on their order and for their purposes. They had also taken out a policy
    insuring them against their liability as employers. This fact is relevant only
    because the policy contained a term authorising the underwriters to
    " prosecute in the name of the Assured for their own benefit any claim
    " for indemnity or damages or otherwise ", and it has not been concealed
    that this action was brought by the underwriters in the name of the Respon-
    dents, who, if it lay with them, would never have brought it. I say that
    this fact is not otherwise relevant because the action remains the action
    of the Respondents and their rights are not greater or less than they would
    be if they were un-insured.

    Upon the appeal being heard the Court was divided, Lord Justice Denning
    being in favour of allowing the appeal and Lord Justice Birkett and Lord
    Justice Romer of dismissing it. It was accordingly dismissed.


    4

    It will be convenient to discuss first the question which divided the Court
    of Appeal, namely, what, if any, were the terms to be implied in the contract
    of service between the parties.

    It is, in my opinion, clear that it was an implied term of the contract
    that the Appellant would perform his duties with proper care. The proposi-
    tion of law stated by Willes, J. in Harmer v. Cornelius, 5 C.B.N.S. 236 at
    p. 246, has never been questioned: " When a skilled labourer ", he said,
    " artizan, or artist is employed, there is on his part an implied warranty
    " that he is of skill reasonably competent to the task he undertakes—Spondes
    " peritiam artis. Thus, if an apothecary, a watchmaker or an attorney be
    " employed for reward they each impliedly undertake to possess and exercise
    " reasonable skill in their several arts. . . . An express promise or express
    " representation in the particular case is not necessary ". I see no ground
    for excluding from, and every ground for including in, this category a
    servant who is employed to drive a lorry which driven without care may
    become an engine of destruction and involve his master in very grave
    liability. Nor can I see any valid reason for saying that a distinction
    is to be made between possessing skill and exercising it. No such distinction
    is made in the cited case: on the contrary. " possess" and " exercise"
    are there conjoined. Of what advantage to the employer is his servant's
    undertaking that he possesses skill unless he undertakes also to use it? I
    have spoken of using skill rather than using care, for " skill" is the word
    used in the cited case, but this embraces care. For even in so-called unskilled
    operations an exercise of care is necessary to the proper performance of
    duty.

    I have already said that it does not appear to me to make any difference
    to the determination of any substantive issue in this case whether the
    Respondents' cause of action lay in tort or breach of contract. But in
    deference to Lord Justice Denning I think it right to say that I concur in
    what I understand to be the unanimous opinion of your Lordships that the
    servant owes a contractual duty of care to his master, and that the breach of
    that duty founds an action for damages for breach of contract, and that this
    (apart from any defence) is such a case. It is trite law that a single act
    of negligence may give rise to a claim either in tort or for breach of a term
    express or implied in a contract. Of this the negligence of a servant in
    performance of his duty is a clear example.

    I conclude, then, the first stage of the argument by saying that the Appel-
    lant was under a contractual obligation of care in the performance of his
    duty, that he committed a breach of it, that the Respondents thereby suffered
    damage and they are entitled to recover that damage from him, unless it
    is shown either that the damage is too remote or that there is some other
    intervening factor which precludes the recovery. I should note in passing
    that it was urged on behalf of the Appellant that the Respondents had not
    proved the quantum of damage suffered by them by proving only that judg-
    ment had been given against them and that they had paid or were liable to
    pay the amount of the judgment and costs. This plea could not be sustained.
    It appears to me to be against reason and authority: see, for example, Green
    v. New River Co.
    4 Term Rep. 589.

    What, then, is to deprive the Respondents of their remedy? I do not
    think it can be said that the damages are too remote, for the injury to a
    third party and the ensuing liability of a master are events which the exercise
    of proper care is intended to avert. It is upon the implication of some
    implied term that the Appellant must rely, and to this question I now turn.

    My Lords, I cannot but be aware that any decision upon this question
    which has divided learned Judges in the Courts below and upon which your
    Lordships are also divided, in opinion may have far-reaching consequences,
    and I have myself had great difficulty in reaching a conclusion.

    I will refer first to the implied terms pleaded in the reamended Defence,
    for at the end of the day the argument for the Appellant was founded not
    upon them but upon the original pleas, or at least upon something very
    like them: the amended pleas can be shortly disposed of. As to para-
    graph 7. A, the valid answer was made, in general, that the Appellant

    5

    was not required by the Respondents to do anything unlawful, and, in
    particular, that the Road Traffic Act, 1930, does not require that a policy
    of assurance shall be taken out which provides the driver of a vehicle with
    an indemnity against all the consequences of his own negligence. And as
    to paragraph 7. B, it was answered that a policy taken out by the Respondents
    in fact covered the Appellant against third party claims but that it was not
    a third party claim that faced the Appellant in this action. No more need
    be said of these pleas, except that the variety and multiplicity of the
    suggested terms were naturally contrasted with the general principle that
    an implication must be precise and obvious. I return, then, to the original
    pleas. These, I remind your Lordships, were contained in paragraphs 4
    and 5 of the Defence and were alternatives. Paragraph 4 pleaded an implied
    term that the Respondents would indemnify the Appellant against all claims
    and proceedings brought against him for any act done by him in the course
    of his employment. Were it not that at one time this term appeared to
    hold first place in the Appellant's favour I should have thought that it might
    be summarily dismissed. It is all-embracing in its scope: whatever the
    degree of negligence, even of criminality, in his act: whether the Respondents
    were covered by insurance or not, whether the act gave rise to a third
    party claim, which ought by law to be covered, or not; in every case the
    Appellant would go free and the Respondents bear the burden. I can neither
    accept an implication in such general terms nor put into the mouth of the
    pleader qualifications which might make the plea less unacceptable. It was
    in paragraph 5 that the implied term was pleaded which has appeared to me
    most worthy of consideration. It was that the Appellant would receive the
    benefit of any contract of insurance effected by the Respondents and covering
    their liability in respect of the action brought by Lister senior. It would, it
    was said, be inconsistent with this term if the Respondents, having effected
    a policy and having been indemnified under it, then sought to recover
    damages from the Appellant either for breach of his contractual duty
    of care or under the relevant provisions of the Act of 1935. This is the
    plea which found favour with Lord Justice Denning, and the argument was
    put so simply and cogently by him that I venture to quote his judgment:

    " Take this very case ", he says, " where the insurers issue a writ in the
    " employer's name against the servant without consulting either the employer
    " or the servant beforehand. When the servant receives the writ he will
    " take it to his employer and say: 'Why are you suing me? Surely you
    " 'have got the money from your insurance company. So you cannot sue
    " 'me.' This natural comment between master and man throws a flood
    " of light on the implied understanding of the parties." And a little later
    he says: " This shows that there is an implied term in these cases whereby,
    " if the employer is insured, he will not seek to recover contribution or
    " indemnity from the servant."

    It will be observed that the implied term which thus commended itself
    to the learned Lord Justice is limited in its scope. The driver is to be
    relieved from liability if his master is covered by insurance against the
    claim. If he is not covered, for instance, because the accident takes place
    not on a road but on private premises and the law does not require him
    to insure against such a risk, and he has not done so, then under this plea
    the driver must bear the consequences of his negligence if he is himself
    sued. This consideration led counsel to yet another variation of the plea.
    This was that the driver was entitled to be indemnified not only if the
    employer was in fact insured or was required by law to be insured, but
    also if he ought as a reasonable and prudent man to have been insured
    against the risk in question. It was in this final form, which approximates
    nearly to the plea in paragraph 4, that after much travail the implied term
    was submitted to your Lordships. No qualification of this general proposition
    was suggested. The driver might owe a duty of care to his employer, but
    for any dereliction from duty he was to be absolved from all responsibility.
    Nor was it suggested that in the present case there were any features which
    distinguished the relation of the Appellant and the Respondents from that
    of any other driver and his employer. That is why at the outset of this

    6

    Opinion I said that this appeal raises a question of general importance.
    For the real question becomes, not what terms can be implied in a contract
    between two individuals who are assumed to be making a bargain in regard
    to a particular transaction or course of business; we have to take a wider
    view, for we are concerned with a general question, which, if not correctly
    described as a question of status, yet can only be answered by considering
    the relation in which the drivers of motor vehicles and their employers
    generally stand to each other. Just as the duty of care, rightly regarded as
    a contractual obligation, is imposed on the servant, or the duty not to
    disclose confidential information (see Robb v. Green [1895] 2 Q.B. 315),
    or the duty not to betray secret processes (see Amber Size and Chemical
    Company, Limited
    v. Menzel [1913] 2 Ch. 239), just as the duty is imposed
    on the master not to require his servant to do any illegal act, just so the
    question must be asked and answered whether in the world in which we live
    today it is a necessary condition of the relation of master and man that the
    master should, to use a broad colloquialism, look after the whole matter of
    insurance. If I were to try to apply the familiar tests where the question is
    whether a term should be implied in a particular contract in order to give it
    what is called business efficacy, I should lose myself in the attempt to
    formulate it with the necessary precision. The necessarily vague evidence
    given by the parties and the fact that the action is brought without the assent
    of the employers shows at least ex post facto how they regarded the position.
    But this is not conclusive; for, as I have said, the solution of the problem
    does not rest on the implication of a term in a particular contract of service
    but upon more general considerations.

    My Lords, undoubtedly there are formidable obstacles in the path of
    the Appellant, and they were formidably presented by counsel for the
    Respondents. First, it is urged that it must be irrelevant to the right of
    the master to sue his servant for breach of duty that the master is insured
    against its consequences: as a general proposition it has not, I think, been
    questioned for nearly two hundred years that in determining the rights
    inter se of A and B the fact that one or other of them is insured is to be
    disregarded: see, for example, Mason v. Sainsbury, 3 Douglas 61. And this
    general proposition, no doubt, applies if A. is a master and B. his man.
    But its application to a case or class of case must yield to an express or
    implied term to the contrary, and, as the question is whether that term should
    be implied, I am not constrained by an assertion of the general proposition
    to deny the possible exception. Yet I cannot wholly ignore a principle so
    widely applicable as that a man insures at his own expense for his own
    benefit and does not thereby suffer any derogation of his rights against
    another man.

    Next—and here I recur to a difficulty already indicated—if it has become
    part of the common law of England that as between the employer and
    driver of a motor vehicle it is the duty of the former to look after the
    whole matter of insurance (an expression which I have used compendiously
    to describe the plea as finally submitted), must not that duty be more precisely
    defined? It may be answered that in other relationships duties are imposed
    by law which can only be stated in general terms. Partners owe a duty
    of faithfulness to each other; what that duty involves in any particular
    case can only be determined in the light of all its circumstances. Other
    examples in other branches of the law may occur to your Lordships where
    a general duty is presented and its scope falls to be determined partly by the
    general custom of the country which is the basis of the law and partly
    perhaps by equitable considerations. But even so, the determination must
    rest on evidence of the custom or on such broad equitable considerations
    as have from early times guided a Court of Equity.

    In the area in which this appeal is brought there is no evidence to guide
    your Lordships. The single fact that since the Road Traffic Act of 1930
    came into force a measure of insurance against third party risk is compulsory
    affords no ground for an assumption that an employer will take out a
    policy which covers more than the Act requires; for instance, a risk of
    injury to third parties not on the road but in private premises. There

    7

    is in fact no assumption that can legitimately be made what policy will
    be taken out and what its terms and qualifications may be. I am unable to
    satisfy myself that with such a background there can be implied in the
    relationship of employer and driver any such terms as I have indicated.
    And though, as I have said, I feel the force of the argument as presented
    by Lord Justice Denning, I must point out that at least in his view the
    indemnity of the driver was conditional on a policy which covered the risk
    having in fact been taken out. It may be that this was because his mind
    was directed to a case where such a policy was taken out and that he would
    have gone on to say that there was a further implication that the employer
    would take out a policy whether required by law to do so or not. But here
    we are in the realm of speculation. Is it certain that, if the imaginary driver
    had said to his employer: " Of course you will indemnify me against any
    " damage that I may do however gross my negligence may be ", the employer
    would have said: " Yes, of course! " For myself I cannot answer confidently
    that he would have said so or ought to have said so. It may well be that
    if such a discussion had taken place it might have ended in some agreement
    between them or in the driver not entering the service of that employer.
    That I do not know. But I do know that I am ever driven further from an
    assured certainty what is the term which the law imports into the contract
    of service between the employer and the driver of a motor vehicle.

    Another argument was at this stage adduced which appeared to me to
    have some weight. For just as it was urged that a term could not be
    implied unless it could be defined with precision, so its existence was denied
    if it could not be shown when it came to birth. Here, it was said, was a
    duty alleged to arise out of the relation of master and servant in this special
    sphere of employment which was imposed by the common law. When,
    then, did it first arise? Not, surely, when the first country squire exchanged
    his carriage and horses for a motor car or the first haulage contractor
    bought a motor lorry. Was it when the practice of insurance against third
    party risk became so common that it was to be expected of the reasonable
    man or was it only when the Act of 1930 made compulsory and therefore
    universal what had previously been reasonable and usual?

    Then, again, the familiar argument was heard asking where the line is
    to be drawn. The driver of a motor car is not the only man in charge
    of an engine which, if carelessly used, may endanger and injure third parties.
    The man in charge of a crane was given as an example. If he, by his
    negligence, injures a third party who then makes his employer vicariously
    liable, is he entitled to assume that his employer has covered himself by
    insurance and will indemnify him however gross and reprehensible his
    negligence? And does this depend on the extent to which insurance against
    third party risks prevails and is known to prevail in any particular form
    of employment? Does it depend on the fact that there are fewer cranes
    than cars and that the master is less likely to drive a crane than a car?

    It was contended, too, that a term should not be implied by law of which
    the social consequences would be harmful. The common law demands
    that the servant should exercise his proper skill and care in the performance
    of his duty: the graver the consequences of any dereliction, the more
    important it is that the sanction which the law imposes should be maintained.
    That sanction is that he should be liable in damages to his master: other
    sanctions there may be, dismissal perhaps and loss of character and difficulty
    of getting fresh employment, but an action for damages, whether for tort
    or for breach of contract, has, even if rarely used, for centuries been avail-
    able to the master, and now to grant the servant immunity from such an
    action would tend to create a feeling of irresponsibility in a class of persons
    from whom, perhaps more than any other, constant vigilance is owed to the
    community. This was, I think, an aspect of the case which made a special
    appeal to Lord Justice Romer. It cannot be disregarded.

    Finally, it was urged that the implication of the suggested term in the
    contract between employer and driver would have the effect of denying to
    the insurer the right of subrogation given to him either expressly by the
    policy of insurance or by the implication of law. This would no doubt be

    8

    the result. But I do not attach much importance to this. For if the implied
    term is imposed by law, not in respect of a particular contract but as a
    legal incident of this kind of contract, the insurer may be assumed to know
    it as well as anyone else. It may surprise him, but he should study the law.

    My Lords, I have come to the conclusion that the considerations which
    I have discussed do not permit me to imply a term such as is pleaded in
    any of the alternative forms adopted in the original and amended Defence
    or advanced in argument at the bar, and that the appeal so far as it is
    founded on an implied term in the contract of service must fail.

    I do not find it necessary to discuss at any length the alternative claim
    under the Act of 1935. If under the first head of claim the Respondents
    can recover damages for breach of contract, they can do no more. I will
    only say that I see no reason to doubt that under the Act, and probably
    apart from the Act (see Pearson v. Skelton, 1 M. & W. 504, Adamson v.
    Jarvis, 4 Bing. 66), the Respondents would be entitled to recover contribution
    from the Appellant to the extent of 100 per cent. Ryan v. Fildes and Others
    [1938] 3 A.E.R. 517, was, I think, rightly decided. But, if the Respondents
    cannot recover damages for breach of contract, they are, in my opinion,
    precluded from obtaining contribution from the Appellant; if they claim
    under the Act, by its express language (see section 6(1) (b)) and. if they claim
    apart from the Act, by the principles upon which the rule in Merryweather
    v. Nixan (8 T.R. 186) has been consistently applied.

    In the result, the appeal, in my opinion, cannot succeed and must be
    dismissed.

    Lord Morton of Henryton

    MY LORDS,

    I believe your Lordships are all of opinion that this appeal must fail
    unless the Appellant can make good one or more of the special pleas
    set out in paragraphs 4, 5 and 7. A, B and C of the reamended Defence,
    delivered as reamended on the 4th July, 1956. For this reason I shall
    deal briefly with the other issues in the action, though they are of con-
    siderable importance, and shall then turn to the pleas just mentioned.

    The Appellant injured his father and fellow-worker by reversing a motor
    lorry when his father was behind it. Ormerod, J. found as a fact that
    the Appellant " was negligent in the way in which he reversed that motor
    " lorry ", and that this negligence " was responsible for the injuries which
    " his father suffered ". That finding of fact clearly could not be successfully
    challenged in your Lordships' House, and in my opinion the Appellant was
    under an implied contractual obligation to take reasonable care in driving
    the vehicle which he was employed to drive. I agree entirely with the views
    already expressed on this point by the noble and learned Lord on the
    Woolsack and by Birkett and Romer, L.JJ. in the Court of Appeal. Prima
    facie,
    therefore, the Appellant is liable in contract to pay to the Respondents
    any damages which they have suffered as a result of his failing to take
    reasonable care on the occasion in question.

    The next question which arises is, was there evidence before Ormerod, J.
    establishing that the Respondents had suffered damage, by reason of the
    negligent act of the Appellant, to the amount of £1,600 and costs; that
    being the sum for which McNair, J. gave judgment for the Appellant's father
    in the action which he brought against the Respondents. The Respondents
    called evidence of negligence which satisfied Ormerod, J. but they relied
    solely upon the judgment of McNair, J. to establish the damage which
    they had suffered. Counsel for the Appellant submitted that that judgment was
    not relevant evidence, in the present action, of the quantum of damage;
    the Appellant was not a party to the action brought by his father, and the
    decision of McNair, J. was in no way binding upon him. Counsel for the
    Respondents pointed out that by paragraphs 5 and 6 of their Statement
    of Claim in the present action the Respondents pleaded the judgment of

    9

    McNair J. and the fact of payment of the damages awarded against them,
    and these paragraphs were admitted by the Appellant. He did not contend
    that the judgment and payment were conclusive evidence as against the
    Appellant of the quantum of damage suffered by the Respondents; but he
    submitted that they were at least prima facie evidence, and no rebutting
    evidence was given by (he Appellant.

    My Lords, I feel no doubt that this submission is correct, and it is
    supported by the observations of the Court in Green v. New River
    Company,
    4 Term Rep. 589 at 590 med. and of Baron Parke in Yeomans
    v. Legh, 2 Meeson & Welsby 419 at p. 421. In the latter case the defendant
    was sued, in an action on the case, for negligent driving by his servant
    whereby the plaintiff suffered injury. The servant was called as a witness,
    and the question was whether he was a competent witness without a release.
    Baron Parke said: "I think the witness was competent without a release.
    " The effect of the clause in the Statute" (3 & 4 William IV Cap. 12
    section 26) " is to make the witness competent, where the only interest is
    " that the verdict may be used for or against the witness. In this case
    " there is no interest, except that the verdict might be used against him in an
    " action by his master, to show the amount of the damages recovered ".

    It was further submitted by counsel for the Appellant that the damages
    now claimed are too remote to be recoverable. My Lords, in my view
    there is no substance in this argument. The liability of the Respondents
    to pay damages to the Appellant's father arose directly out of the negligent
    act of the Appellant which constituted the breach of his contract with the
    Respondents.

    If I am right so far, it is clear that, in the absence of the special pleas
    already mentioned, this appeal must fail, since the Respondents would be
    entitled to receive, as damages for breach of contract, the sum awarded
    to them by Ormerod, J. and the Court of Appeal. In considering these pleas
    I find it convenient to turn first to paragraphs 7. A, B and C of the reamended
    Defence, which are as follows:—

    " 7.A. It was an implied term of the Defendant's employment that
    " he should not be required by the Plaintiffs to do anything unlawful".

    So far, my Lords, I would agree—see Gregory v. Ford and Others [1951]
    1 A.E.R. 121, but the paragraph continues—

    " and in particular that he should not be required to drive unless there
    " was in force in relation to the use of the vehicle such a policy of
    " insurance as would provide him with the indemnity which Sec. 36 (1)
    " of the Road Traffic Act 1930 requires. The said term is to be
    " implied by law."

    This part of the paragraph seems to be based on a misconception. The
    Road Traffic Act, 1930, does not compel the employer to provide an indemnity
    for the driver personally. See John T. Ellis v. Walter T. Hinds [1947] 1 K.B.
    475 at p. 484 and Lees v. Motor Insurers Bureau [1952] 2 A.E.R. 511.

    Paragraphs 7. B and 7. C are as follows: —

    " B. Further it was an implied term of the Defendant's employment
    " that the Plaintiffs' motor insurance should cover the Defendant against
    " any third party liability which he might personally incur arising out
    " of his driving the Plaintiffs' vehicles in the course of his employment.

    " C. In breach of the aforesaid implied terms or of one of them the
    " Plaintiffs required the Defendant to drive the said vehicle without
    " there being in force in relation to his user thereof any policy which
    " provided him with any indemnity either as required by the Road Traffic
    " Act or at all."

    I need not consider whether or not paragraph 7. B is well-founded, for it
    does not appear that any third party has made any claim against the
    Appellant. The only claim against him is the employer's claim in the present
    action.


    10

    I now come to the alleged implied terms set out in paragraphs 4 and 5
    of the reamended Defence, which are as follows: —

    " 4. It was an implied term of the Defendant's contract of employ-
    " ment with the Plaintiffs that the Plaintiffs would indemnify him
    " against all claims or proceedings brought against him for any act
    " done by him in the course of his said employment. In the premises
    " the Plaintiffs are not entitled to bring these proceedings against the
    " Defendant.

    " 5. In the alternative it was an implied term of the said contract
    " that the Defendant would receive the benefit of any contract of insur-
    " ance effected by the Plaintiffs and covering their liability in respect
    " of the action above referred to. The Plaintiffs have effected such
    " insurance and have been fully indemnified and the Defendant claims
    " the benefit thereof."

    Counsel for the Appellant sought to find some justification for implying
    one or other of these terms in the particular circumstances of the Appellant's
    employment with the Respondents, but I can find nothing in these circum-
    stances which should differentiate the Appellant from any other young man
    who, having passed the necessary driving test, is employed to drive a
    motor lorry. I add that the Appellant had been driving motor lorries for
    the Respondents for about ten years before the accident happened.

    If any such term is to be implied in this case, it must surely be implied
    in all cases where an employee is employed to drive any kind of vehicle
    which might cause damage to third parties. And the implied term cannot
    be limited to cases where the vehicle is being driven on a public highway,
    for the accident in the present case occurred in a yard. Surely it must
    logically extend to cases such as a crane driver in factory premises, and
    many other cases come to mind which cannot logically be distinguished
    from the present case.

    Such an obligation might have been imposed on the employer by statute,
    and it is perhaps of some significance that the Legislature did not take this
    course when the law was so strikingly altered by the Road Traffic Act, 1930.
    It cannot be said, in my view, that the implication of either of these terms
    is necessary in order to give " to the transaction such efficacy as both parties
    " must have intended that at all events it should have ". (The Moorcock,
    14 P.D. 64 at p. 68).

    Turning now to another branch of the argument for the Appellant, I
    cannot see that any events which have occurred in modern times, such as
    the passing of the Road Traffic Act, 1930, could justify your Lordships in
    holding it to be the law today that one or other of the implied terms now
    under discussion forms part of every contract whereby a man is employed
    to drive a vehicle. No provision of the Act of 1930 suggests to me that
    the terms to be implied in such a contract immediately after the Act
    became law should differ in any respect from the terms to be implied
    immediately before the Act became law. This matter is fully dealt with
    in the Opinion about to be delivered by my noble and learned friend Lord
    Tucker, which I have read, and I need only say that I entirely agree with
    his views upon it.

    Counsel for the Appellant finally suggested that some such term ought
    to be implied because in its absence the employee was placed in a most
    unfortunate position. It is, however, your Lordships' task to decide what
    the law is, not what it ought to be. In saying this I am far from suggesting
    that either of the terms now under discussion ought to be implied.

    As to paragraph 4, the words " all claims or proceedings " would seem
    wide enough to cover, for instance, a fine imposed on the Appellant under
    the Road Traffic Act, 1930; and the words "any act" would appear to
    cover reckless as well as careless acts. So read, this alleged term might
    well be void as being against public policy. I shall, however, assume in
    favour of the Appellant that the term should be construed more narrowly,
    so as to read "would indemnify the Appellant against any civil
    "liability for accidental injury or damage done by him in the course of
    his said employment". Even so, it seems to me hardly consistent with

    11

    the duty of a driver to take reasonable care in driving his employer's vehicle.
    That duty has been recognised in many cases, but no such implied term
    was ever suggested. As I have said, such a term is not necessary to give
    efficacy to the contract, and indeed it seems to me doubtful if an employer
    would agree to it. If so it cannot be implied.

    My reasons for rejecting the implied term set out in paragraph 4 of the
    reamended Defence apply also to the implied term set out in paragraph 5,
    with one exception; I do not think that the latter term, or any possible
    construction of it, could be held to be void as against public policy. It
    has, however, this somewhat surprising result—insurers who had paid the
    employer in a case of this kind would apparently be deprived of their right of
    subrogation by reason of an implied term in a contract to which they were
    not a party.

    The result is, my Lords, that I am unable to accept any of the implied
    terms which have been pleaded, and I apprehend that no other implied term
    comes before your Lordships' House for consideration.

    I feel, my Lords, that I ought not to end without making further reference
    to the judgment of Ormerod, J. That learned Judge felt himself bound
    by authority not to decide the Respondents' claim for damages for breach
    of contract. His decision in favour of the Respondents was given in the
    exercise of his discretion under section 6 (2) of the Law Reform (Married
    Women and Tortfeasors) Act, 1935. In the eyes of the law the Respondents
    were joint tortfeasors with the Appellant, since the Appellant was their
    employee and his negligent act was done in the course of his employment.
    Ormerod, J., therefore, had to consider whether the Respondents ought to
    recover contribution from the Appellant, and if so, what the amount of the
    contribution should be. After considering and rejecting submissions by
    counsel for the Appellant that the contribution should be reduced by reason
    of certain defects in the lorry provided by the Respondents, he said: " I am
    " afraid here that the negligence was the negligence of the Defendant, and
    " in those circumstances he is not entitled to anything by way of mitigation,
    " and there must be a contribution here for the full amount." The learned
    Judge and I have thus arrived at the same result, although by a different
    route. I think it is only right to say that in my opinion this alternative
    route was open to the Respondents in the present case, the reasoning of
    the learned Judge was correct, and his exercise of his discretion was entirely
    proper.

    I would add that there may have been yet another routs by which the
    Respondents might have achieved success. Counsel for the Respondents
    submitted that his clients could have sustained an action in tort against
    the Appellant, apart altogether from the provisions of the Law Reform
    (Married Women and Tortfeasors) Act, 1935, notwithstanding the well-
    known decision of Lord Kenyon, C.J. in Merryweather v. Nixan (1799) 8
    Term Rep. 186. He referred to A damson v. Jarvis (1827) 4 Bingham 66,
    Pearson v. Skelton (1836) 1 M & W. 504, and Palmer v. Wick and
    Pulteneytown Steam Shipping Company, Limited
    [1894] A.C. 318. and to
    observations of Lord Coleridge, in W. H. Smith & Sons Ltd. v. Clinton and
    Harris
    ;(1908) 99 L.T. 840. In the first of these cases Best, C.J. said, in
    regard to the rule laid down in Merryweather v. Nixan: " From reason,
    " justice, and sound policy, the rule that wrong-doers cannot have redress
    " or contribution against each other is confined to cases where the person
    " seeking redress must be presumed to have known that he was doing an
    " unlawful act"; and this saying was approved by Lord Herschell, L.C.
    and other Members of this House in the third of the cases just mentioned.
    Counsel for the Respondents submitted that his clients, though joint tortfeasors
    with the Appellant in the eyes of the law, were only liable vicariously for
    the wrongful act of their servant and were not debarred at common law
    from bringing an action for damages against him. My Lords, this is an
    interesting point, which may some day fall for decision by this House; but
    I express no opinion upon it, as it has not been considered in the Courts
    below and I am of opinion that the Respondents are entitled to succeed upon
    other grounds.

    I would dismiss the appeal.

    12
    Lord Radcliffe

    My lords,

    In my opinion the appeal ought to be allowed and an order made dismissing
    the Respondents' action. Although the argument of the case necessarily
    travelled over a number of interesting points, there are only two issues which
    present themselves to me as essential to its decision. I confine myself to them
    accordingly. The first question is: Did the Appellant incur any and, if so,
    what liability to the Respondents by virtue of the fact that while acting as
    their employee he drove their lorry negligently and thereby injured a third
    party? The second is: Are the Respondents entitled to enforce any such
    liability by legal action against the Appellant, having regard to the circum-
    stances of his employment and in particular the statutory scheme of compul-
    sory insurance against third party risks which related to his employment?

    On the first point I think it plain that the law does impute to an employee
    a duty to exercise reasonable care in his handling of his employer's property.
    It is the fact of such employment that places the property within his control;
    and if, as must be the case, he owes a general duty to all concerned not to be
    negligent in his exercise of that control, it would be a surprising anomaly that
    merely because there was also a contractual relationship between himself and
    his employer the standard of his obligation to his employer were to be some-
    how lower than the standard of his obligation to the outside world.

    I cannot see any good reason why we should uphold the existence of such
    an anomaly. If the contract of employment is viewed as a general legal
    relationship in which the law imputes certain rights and responsibilities to
    each side, it would assign a very undignified position to the employee
    to suppose that the employer takes him " with all faults" and that the
    employee does not by virtue of his engagement impliedly undertake to use
    all reasonable care in the conduct of his employer's affairs. To say this is
    to say nothing new in the law. I am satisfied that from early times the law
    has consistently recognised the existence of this duty. I need not lengthen
    my Opinion by reciting the authorities, some of which are noticed by others
    of your Lordships.

    Nor does any different result appear if we attend to the circumstances
    of this particular employment. Certainly the Appellant was a youth of seven-
    teen when he began to drive for the Respondents. But he was required to
    take and did take his driving test before he took up the job, and there is
    nothing in the relationship which excludes an expectation of reasonable skill
    and care. Actually, I should regard the implications of his present employment
    as being determined by the circumstances in which he was re-employed after
    the end of the late war. He " came back as a full-time driver ".

    It was much canvassed in argument before your Lordships whether, if
    there was some such duty on the Appellant, it was anything more than the
    general duty he owed the world to avoid the tort of negligence. On one
    view of the case this would indeed be a question of some importance in
    respect of costs. Since I take a different view as to the proper result of the
    case anyway, I do not need to dwell on this part of it. It is perhaps sufficient
    if I say that in my view this question is a somewhat artificial one. The exis-
    tence of the duty arising out of the relationship between employer and
    employed was recognised by the law without the institution of an analytical
    inquiry whether the duty was in essence contractual or tortious. What
    mattered was that the duty was there. A duty may exist by contract, express
    or implied. Since in any event the duty in question is one which exists by
    imputation or implication of law and not by virtue of any express negotiation
    between the parties, I should be inclined to say that there is no real disinction
    between the two possible sources of obligation. But it is certainly, I think,
    as much contractual as tortious. Since in modern times the relationship
    between master and servant, between employer and employed, is inherently
    one of contract, it seems to me entirely correct to attribute the duties which
    arise from that relationship to implied contract. It is a familiar position
    in our law that the same wrongful act may be made the subject of an action

    13

    either in contract or in tort at the election of the claimant, and, although the
    course chosen may produce certain incidental consequences which would not
    have followed had the other course been adopted, it is a mistake to regard
    the two kinds of liability as themselves necessarily exclusive of each other.

    I have said this much out of respect to that part of the judgment of
    Denning, L.J. in the Court of Appeal which deals with this topic. I do
    not agree with him that " the action against a servant must be founded on
    " tort", and I do not think that his citation of authorities proves this point.

    When I turn to the second issue with which I wish to deal it seems unlikely
    that any decided authority will be of direct assistance. For the critical point
    is that we have to deal with an employment which it was illegal for the
    employer to authorise or for the employed to pursue unless insurance cover
    had been provided against third party liability. What are the necessary
    consequences of that legal requirement upon the respective rights and liabilities
    of employer and employed?

    That there were some consequences has been common ground throughout
    this case. It is accepted that the law must impute a term to the effect
    that the employee could not be required to carry out any order that would
    involve him in doing something that was illegal, even, though, but for the
    illegality, the thing required would have been within the normal scope of
    his duties. Put into non-theoretical language, that means that because of the
    Road Traffic Act, 1930, the Appellant could not be employed to drive the
    Respondents' lorry for them on the road unless there existed a policy of
    insurance complying with the conditions of the Act and so providing cover
    to indemnify any third party who might suffer actionable damage from the
    Appellant's driving of the lorry.

    Now the insurance policy required could not come into existence of its
    own motion. One of the two parties, employer and employed, had to assume
    responsibility for taking it out or keeping it running and for paying up the
    necessary premiums to buy the cover. To which of them ought we to
    attribute that responsibility, having regard to the relationship of the parties?
    In my view, to the employer. I cannot suppose that, short of special
    stipulation, any other answer would be given in such a case. So far as it is
    relevant, all the evidence given at the trial, both by the Appellant and by
    Colonel Howis, the Respondents' managing director, confirms that this would
    be the right answer.

    Is it, then, consistent with such an arrangement that, if the driver does
    cause third party damage by negligence and the person injured sues and
    recovers damages from the employer on the ground of his vicarious responsi-
    bility for the act of his servant, the employer should be able to recover over
    the damages that he has had to pay by suing the driver? In my opinion
    that is the simple question on which this appeal turns, but, of course, it is in
    practice impossible to keep it simple owing to the complications which
    emerge in any well-argued case. I will try briefly to notice some of them.
    It is not that I do not think that they involve difficulties, but the difficulties
    do not present themselves to me as being such as should affect the final result.

    In the first place I do not think that it matters whether the employer is
    really or only ostensibly the plaintiff. In this case we know, because no
    secret has been made of it, that the real plaintiff is one of the two insurance
    companies concerned. But the defendant's point, if it is a good one at all,
    is equally good whether it is his employer who is claiming against him or the
    insurers by subrogation. To each his reply is the same—" I and my employer
    recognised that a fund of money had to be secured by insurance to take
    care of any third party liability that my driving might involve us in, and we
    arranged that he should pay for and provide the insurance policy that would
    produce the money. It follows from that that he cannot now look to me to
    find all or part of that money ". If that answer is a good reply to the
    employer, it is good against insurers who are subrogated to him. I do not
    at all understand the idea that it is somehow hard on the insurers that they
    should be affected by an implied term that bound the person to whose rights
    they are claiming to be subrogated.

    14

    Secondly, it is, I think, true that it would not have been illegal in the
    circumstances of this particular accident if there had been no insurance policy
    against third party liability. I assume, though we did not have any detailed
    argument about it, that the yard in which the accident took place was not
    a "road" within the meaning of the Road Traffic Act, 1930; and also
    that the Act does not make it compulsory to provide insurance against injury
    caused to another servant of the same employer. But if we take it, as in my
    view we must, that the existence of compulsory insurance under the Act
    involved that it was a term of the employment that the driving should be
    covered by a policy against third party liability, I do not think that the term
    postulated should be tied down to all the complications and qualifications
    which arise on a strict interpretation of the Act. What mattered to the
    parties was that while the lorry was being driven on the employer's business
    someone might be injured in circumstances that entitled him to recover
    damages from either employer or employee or both of them. From that
    point of view it did not signify whether the accident occurred on a road or in
    a yard that turned off it or whether the person injured was or was not in the
    employer's service. Any other view would leave it to the employee to take
    out his own policy to cover the residual risks, and this does not seem to me
    a reasonable arrangement to impute to the parties.

    In fact, as we know, the employer provided insurance at his own expense
    by means of two separate policies, and these between them secured cover
    without excepting accidents off a road or injury to a fellow employee. More-
    over, the motor vehicle policy took what is certainly not the uncommon form
    of including a " Third Party Extension ", the effect of which was that the
    driver was equipped with his own direct right to call for indemnity from the
    insurers if he became liable to a third party for damages caused while driving
    the Respondents' lorry.

    I must call attention to this last point because it illustrates the almost
    intolerable anomalies which are involved in the Respondents' argument. The
    situation is this. If an accident takes place through negligence, the person
    injured can sue either employer or employed or both of them. If he sues
    the employee alone, the latter calls on the insurance company for the cover
    which the employer has bought him; the insurance company has to provide
    the fund of damages required; neither the wages nor the savings of the
    employee can be touched to reimburse the insurers for the risk that they have
    underwritten. But if the injured person takes a different course, one which
    neither employer, employee nor insurance company can control, and sues the
    employer either alone or jointly with the employee, the position of the
    employee is, apparently, much worse and the position of the insurance com-
    pany, apparently, much better. For now the latter can indemnify itself for
    the money it finds by getting it back from the employee in the employer's
    name and the former, instead of getting the benefit of the insurance which his
    employer was to provide, is in the end the one who foots the bill. I should
    be very much interested to know how the premium required by an insurance
    company is adjusted to the risk of these alternative situations.

    My Lords, on this part of the case I take the same view as that taken by
    Denning, L.J. I agree with what he says at p. 192 of his judgment as
    reported in L.R. [1956] Q.B. 180 Romford Ice & Cold Storage Company
    Limited
    v. Lister, and I do not think it possible to escape the force of his
    reasoning. If we assume any understanding at all between the Appellant and
    Respondents as to insurance against third party liability, to the Appellant's
    enquiry as to who was to provide it the Respondents must have answered:
    " We will see to that and the expense of providing it will fall on us ": but the
    result of this appeal depends upon which of the following alternatives they
    must be taken to have added. One would be to this effect—" but, of course,
    " you understand that although we are going to secure the monies required to
    " pay the injured person in the first instance, you will have to make them
    " good ultimately, either to us or to the insurance company. " The other would
    be—" and, of course, it is understood that, since we are providing for the fund
    " that will indemnify the injured person, that closes any question of our
    " calling upon you at any time to contribute to that fund." I can only say

    15

    that to me the first alternative seems a contradiction of what is involved in
    the Respondents' undertaking to pay for and provide the fund. The second
    seems to be the natural exchange to take place between the company and their
    lorry driver.

    I am, therefore, in favour of allowing the appeal. I think it a very difficult
    point and I well understand the difference of approach that leads us in this
    House to different conclusions. I ought, however, to say something about
    two considerations which have been advanced on behalf of the Respondents
    but which are to me unpersuasive. It is said that to imply such a term as I
    propose is in effect to contradict the general duty of the employee to exercise
    reasonable care in carrying out his employer's work. I do not think that this
    is so. The general duty remains and it will have its legal effect on all acts
    of the employee which do not touch this question of insurance against third
    party liability. It is the special system whereby this form of insurance is a
    necessary condition of the employment which brings about the special result.

    Then it is sought to show that the term in question cannot exist in law
    because it has never been heard of before this case. When did it first enter
    into the relations of employer and employed? Could it really have existed
    since the Road Traffic Act, 1930, if it did not exist before it? My Lords, I
    do not know because I do not think that I need to know. After all, we need
    not speak of the master's action against his servant for negligence as if it
    had been common fare at the law for centuries. Economic reasons alone
    would have made the action a rarity. If such actions are now to be the usual
    practice I think it neither too soon nor too late to examine afresh some of their
    implications in a society which has been almost revolutionised by the growth
    of all forms of insurance. No one really doubts that the common law is a
    body of law which develops in process of time in response to the develop-
    ments of the society in which it rules. Its movement may not be perceptible
    at any distinct point of time nor can we always say how it gets from one
    point to another; but I do not think that, for all that, we need abandon the
    conviction of Galileo that somehow, by some means, there is a movement
    that takes place.

    Lord Tucker

    MY LORDS,

    I am of opinion that a servant employed to drive a vehicle in the course
    of his employment by his master owes a duty to his master to take reasonable
    care in the driving and management of the vehicle, that for breach of this
    duty an action founded on contract can be brought by the master
    against the servant, and that damages which have been awarded against the
    master by reason of the servant's negligence or breach of this duty are not
    too remote to be recoverable in the master's action against his servant claiming
    damages for breach of contract.

    The reasons for reaching these conclusions, which are in accord with the
    views of the majority of the Court of Appeal, have already been stated. I
    agree with them and do not wish to add anything thereto.

    I will accordingly confine myself to the question of the terms which the
    Appellant contends should be implied in his contract of service which, if
    accepted, would have the result of relieving him from the financial conse-
    quences of his breach of his contractual duty in so far as such breach might
    result in injury to the person or goods of a third party when he was driving a
    motor vehicle on his master's business.

    My Lords, the terms which it is alleged are to be implied in this contract
    are to be found in the Appellant's Defence after amendment and reamend-
    ment. Throughout the hearing of this appeal counsel for the Appellant
    has been content to adhere to the terms as pleaded and has not sought leave
    to make any further amendment notwithstanding various alternatives ten-
    tatively suggested by some of your Lordships during the hearing. In these

    16

    circumstances I propose, and indeed I feel myself bound, to confine my
    observations to the implied terms which have been pleaded. They are as
    follows: —

    Paragraph 4 of the Defence: " It was an implied term of the
    " Defendant's contract of employment with the Plaintiffs that the Plain-
    " tiffs would indemnify him against all claims or proceedings brought
    " against him for any act done by him in the course of his said employ-
    " ment."

    Paragraph 5: "In the alternative it was an implied term of the said
    " contract that the Defendant would receive the benefit of any contract
    " of insurance effected by the Plaintiffs and covering their liability in
    " respect of the action above referred to. The Plaintiffs have effected
    " such insurance and have been fully indemnified and the Defendant
    " claims the benefit thereof."

    Paragraph 7. A: " It was an implied term of the Defendant's employ-
    " ment that he should not be required by the Plaintiffs to do anything
    " unlawful and in particular that he should not be required to drive
    " unless there was in force in relation to the use of the vehicle such a
    " policy of insurance as would provide him with the indemnity which
    " Section 36 (1) of the Road Traffic Act 1930 requires. The said term is
    " to be implied by law."

    Paragraph 7. B: "Further it was an implied term of the Defendant's
    "employment that the Plaintiffs' motor insurance should cover the
    " Defendant against any third party liability which he might personally
    " incur arising out of his driving the Plaintiffs' vehicles in the course of
    " his employment."

    Apart from the difficulty on general principles, to which I shall refer
    later, of accepting any implied terms of this kind, those pleaded seem to
    me on their face to be open to serious objection. Paragraph 4 is far wider
    than anything which could reasonably be required on any view and would
    result in completely nullifying the effect of the duty of care which the servant
    owes to his master and to give him a licence to be as negligent as he liked.

    Paragraph 5, to be effective, must purport to deprive the insurance com-
    pany of their right on payment of the claim to be subrogated to the rights
    and remedies of their insured, which right exists independently of any express
    term in the contract of insurance. Alternatively, it may mean that the
    insured who has paid damages to the injured person out of his own pocket
    and received payment by way of indemnity from his insurance company must
    pay out of his own pocket the same sum to his servant to enable him to
    meet a claim brought against him by the insurance company by virtue of their
    right of subrogation.

    Paragraph 7. A is based on the erroneous assumption that the Road Traffic
    Act, 1930, imposes an obligation on the employer to take out a policy which
    will cover the personal liability of the servant while driving in the course
    of his employment—cf. John T. Ellis v. Walter T. Hinds [1947] 1 K.B. 475,
    and Lees v. Motor Insurers Bureau [1952] 2 A.E.R. 511, the correctness of
    which decisions has not been challenged.

    Paragraph 7. B seeks to impose contractually a wider obligation than Parlia-
    ment thought fit to impose when the Road Traffic Act, 1930, was passed.

    But, my Lords, apart from these objections which make it impossible for
    me to accept any of the pleaded implied terms, the case raises questions of
    importance going beyond the precise language used in this case by the pleader.

    Some contractual terms may be implied by general rules of law. These
    general rules, some of which are now statutory, for example, Sale of Goods
    Act, Bills of Exchange Act, etc., derive in the main from the common law by
    which they have become attached in the course of time to certain classes of
    contractual relationships, for example, landlord and tenant, innkeeper and
    guest, contracts of guarantee and contracts of personal service. Contrasted
    with such cases as these there are those in which from their particular
    circumstances it is necessary to imply a term to give efficacy to the contract
    and make it a workable agreement in such manner as the parties would

    17

    clearly have done if they had applied their minds to the contingency which
    has arisen. These are the " officious bystander " type of case, to use Lord
    Justice Mackinnon's well known words. I do not think the present case
    really comes in that category, it seems to me to fall rather within the first
    class referred to above.

    Without attempting an exhaustive enumeration of the duties imposed in
    this way upon a servant, I may mention:

    1. the duty to give reasonable notice in the absence of custom or
      express agreement;

    2. the duty to obey the lawful orders of the master;

    3. the duty to be honest and diligent in the master's service;

    4. the duty to take reasonable care of his master's property entrusted
      to him and generally in the performance of his duties;

    5. to account to his master for any secret commission or remunera-
      tion received by him;

    6. not to abuse his master's confidence in matters pertaining to his
      service: cf. Robb v. Green [1895] 2 Q.B. 1 and 315.

    It would, I think, require very compelling evidence of some general change
    in circumstances affecting master and servant to justify the Court in intro-
    ducing some quite novel term into their contract, for example, a term
    absolving the servant from certain of the consequences of a breach of his
    recognised duty to take care, or as to the provision of insurance covering the
    servant's liability to third parties or his master. I find it difficult to under-
    stand what, if any, are the limitations of this theory. Is it to be confined to
    the relationship of master and servant with reference to motor cars, or is it to
    extend to all those employed in industry or transport who, in the very nature
    of things, are engaged on work in which negligence on their part may result
    in widespread and grievous damage amounting to thousands of pounds for
    which they may be liable to their employers and in respect of risks which it
    was customary for the employer to insure against long before the advent of
    the motor car?

    It is said that the passing of the Road Traffic Act, 1930, has created the
    new situation which gives rise to the necessity for these implied terms. It
    is common knowledge that for many years before 1930 the great majority
    of prudent motor car owners protected themselves by insurance. Sections
    35 and 36 of the Act were not passed for the protection of the bank balances
    of car owners, or the life savings of their employees, but simply and solely to
    ensure that persons injured by the negligent driving of motor cars who
    established their claims in Court might not be deprived of compensation by
    reason of the defendants' inability to satisfy their judgments.

    Again, it is said that the passing of the Act has admittedly resulted in the
    introduction of one implied term, namely, that the servant shall not be
    required to drive a motor vehicle the user of which has not been covered by
    insurance as required by the Act. This is merely the application of an existing
    term to the situation created by the Act. It has always been an implied
    term that the master will indemnify the servant from liability arising out
    of an unlawful enterprise upon which he has been required to embark without
    knowing that it was unlawful. When the Road Traffic Act required the user
    to be covered by insurance, a journey which would previously have been
    lawful became unlawful in the absence of the required cover. My Lords,
    I cannot accept the view that the impact of this Act on the previously existing
    obligation of the master is in any way comparable to the implied terms which
    it is now sought to introduce into the contract of service.

    On the question of these alleged implied terms I find myself in complete
    agreement with Mr. Justice Ormerod and Lords Justices Birkett and Romer.
    I do not think there is any substance in the subsidiary matters relied upon
    by counsel for the Appellant with regard to the claim not having been made
    by way of third party procedure or as to the inadmissibility in evidence in
    the present action of the judgment for damages in the suit by the injured
    man against the present Respondents.

    In the result I would dismiss the appeal.

    18

    Lord Somervell of Harrow

    MY LORDS,

    The Defendant, hereinafter called " the driver", was a lorry driver
    employed by the Plaintiffs, hereinafter called " the employers ". On 28th
    January, 1949, the driver, while driving in the course of his employment,
    injured his father who was in the same employment. The father, whom
    I will call " the third party ", claimed damages from the employers based
    on the alleged negligence of the driver. The claim succeeded though the
    third party was held also to have been negligent. Judgment was entered
    against the employers for £1,600 and costs. The employers in the present
    proceedings claim (1) an indemnity or contribution under the Law Reform
    (Married Women and Tortfeasors) Act, 1935; (2) the £1,600 and costs as
    damages for breach (a) of an implied term of the contract of service that
    the driver would exercise reasonable care, (b) of a duty at common law to
    take care.

    It is not now disputed the driver was negligent. As an answer to all or
    any of these claims the driver relied on an implied term that the employers
    would cover his, the driver's, liability to third parties and other damage
    by insurance, and that the present claim seeking to make him personally
    liable for the damages due to the third party was inconsistent with that
    term. There were other issues, some of which are not now maintained and
    some which do not arise on the view which I take.

    Ormerod. J. held in favour of the employers on the 1935 Act. This was
    affirmed by the Court of Appeal, Denning, L.J. dissenting. He held that
    servants were not normally under a contractual duly to their masters to
    exercise reasonable care in the performance of their duties. That left a
    liability in tort. But for the Act of 1935 the employer could not as a joint
    tortfeasor claim indemnity or contribution. He can claim under that Act.
    Denning. L.J. held, and I am summarising, that the employer being insured
    there was an implied term that he would not seek to recover contribution
    or indemnity from the servant.

    On the alleged contractual duly to carry out the duties of his employment
    with reasonable care, cases were cited to us which were not, I think, cited
    to the Court of Appeal. The earliest I need refer to is Green v. The New
    River Company,
    4 Ter. R. 589. The Plaintiffs house had been damaged
    by the bursting of one of the Defendant's pipes. Lord Kenyon held that
    negligence must be proved. A witness was called who said that some hours
    before the burst he had drawn the attention of the Defendant's turncock
    to oozing water, the suggestion being that the turncock was negligent in
    failing to attend to the matter. The Defendant's counsel offered to call
    the turncock. The Plaintiff objected to his giving evidence without a release.
    Lord Kenyon was of opinion that the turncock was an incompetent witness
    as he came to disprove his own negligence, which, if established by the
    verdict, would be the ground of an action against himself by his employers.
    The failure to attend to the matter would be, I think, a contractual and
    not a " tortious " failure.

    In Harmer v. Cornelius, 5 C.B.N.S. 236, 246, Willes, J. said: "When a
    " skilled labourer, artisan or artist, is employed, there is on his part an
    " implied warranty that he is of skill reasonably competent to the task
    "' he undertakes—spondes peritiam artis. Thus, if an apothecary, a watch-
    " maker or an attorney be employed for reward, they each impliedly under-
    " take to possess and exercise " (my italics) " reasonable skill in their several
    " arts."

    It was suggested that in this passage Willes, J. was laying down that a
    servant warranted only possession of skill and was not undertaking to
    exercise it with reasonable care. I think this is wrong. The learned Judge
    is saying that the skilled labourer of the first sentence is under the same
    contractual obligation to his master as those mentioned in the sentence
    are to their customers or clients. The obligation to exercise reasonable
    care is assumed.

    19

    There is, however, no authority binding on your Lordships' House.

    Most of the statements against too readily implying terms are in judgments
    in cases where one party is seeking to imply a term into a written and
    often detailed contract which is effective and covers the obligations of the
    parties in normal circumstances without the addition of the term sought
    to be implied. The position is different when the contract, written or oral,
    is silent as to matters which have to be settled one way or the other if the
    contract is to be effective. In the past, as today, goods are often sold,
    the parties dealing expressly only with the identification of the goods physic-
    ally or by description and the price. The buyer claims that the goods are
    defective. The Court has in such a case to imply terms. It would be doing
    so if it had allowed no exceptions to the warning caveat emptor. Sections
    12 to 14 of the Sale of Goods Act, 1893, set out the terms which over
    the preceding years the Courts had implied when the parties were themselves
    silent. Other examples of this process can be found in the terms to be
    implied in tenancies. A classic example of the process is Holt, C.J.'s
    judgment in Coggs v. Bernard, 2 Lord Raym, 909.

    It may be that in the case of sales of goods and tenancies the ground
    has been covered. I would not expect the ground to have been covered
    in the case of weekly wage earners who would seldom be worth suing. In
    any case, new circumstances may present new problems which have to be
    dealt with in the same way.

    I think it is right to imply a duty on the part of the servant to take
    reasonable care in the carrying out of his duties. There would be a breach
    although there were no damage, and happily most acts of negligence do not
    cause damage. In the case of a chauffeur it would not, of course, be confined
    to driving, but would apply to the care of the car and other matters.

    I therefore accept the submission on behalf of the employer that there is
    normally a contractual duty on a servant to take care. I now turn to the
    implication submitted on behalf of the driver as to the personal liability
    of the driver of a lorry or car for damage caused by negligent driving.

    Soon after motor cars came into use it became obvious that the risk of
    accidents due to negligence causing serious injuries and damage was very
    much greater than when vehicles were drawn by horses. Many years before
    1930 no reasonable man allowed himself to be in a position where if negligent
    he would be liable to pay out of his own resources third party damages.
    He insured. Though this case is concerned only with third party liability
    it would, I think, be found that the normal policy also covered damage to
    himself and his car.

    When a man is engaged as a chauffeur or a lorry driver the question
    whether his resources are at risk should he cause damage through his
    negligence is as important to him as it is to an owner driver. Nothing
    was said in this case and I dare say nothing is usually said. If when such
    a contract was being negotiated the question had been raised, it is obvious,
    I think, that the driver would have stipulated for the usual cover that an
    owner driver provides for himself. If nothing is said it is, in my opinion,
    for the employer to see that the driver's resources are protected by insurance.
    It is inconsistent with such an obligation that the employer should seek
    by action to make the driver personally liable as in the present case.

    I instanced during the argument the case of an owner who drives himself
    at times and at other times employs a chauffeur. " Unreasonable " would
    be too mild an epithet if the owner had protected his own resources if he
    was negligent but had failed to ensure the protection of his driver or, of
    course, made it clear to him that he must insure himself. If the present
    claim succeeds that would be the position.

    I find it easier to imply this term than the obligation of the driver to
    take care. This term seems to me to be necessary for the efficacy of the
    contract. No driver would undertake the work if he was told his resources
    might be liable for damage caused by a negligent act or omission.


    20

    It is suggested that such a term would not be precise. It would, I think,
    be as precise as the " i" or the " f " in a c.i.f. contract. The policy tendered
    in a c.i.f. contract must be upon the " terms current in the trade "—Biddell
    Brothers v. E. Clemens Horst Company
    [1911] 1 K.B. 214, 220. If a policy
    is taken out in the ordinary terms that is sufficient.

    I have not referred to the provisions of the Road Traffic Act, 1930, which
    makes third party insurance obligatory. This greatly strengthens the argu-
    ments for the term which I have implied, but I think myself the arguments
    would have been strong enough apart from that Act, which was directed
    to protecting the public.

    I think the term which I have implied is covered by the pleadings.

    I must say a word about Digby v. General Accident Fire and Life Assur-
    ance Corporation, Limited
    [1943] A.C. 121. It was assumed in the earlier
    proceedings before du Parcq, J. that the owner could bring an action against
    her driver for damages caused to the owner. The driver then claimed against
    the insurance company in respect of his liability to his owner. It is not, at
    any rate, clear that the owner was seeking to make the driver personally liable.
    It may have been that the driver was sued in order that the damages, if any,
    against him could be ascertained in order to test the liability of the insurers.
    In any event, the point does not appear to have been taken in the proceedings
    before du Parcq, J. Lord Atkin at p. 138 says that the proceedings against
    the driver were no doubt taken " with a view of eventual recovery from the
    " insurance company ".

    It is fair to the Plaintiffs to state that these proceedings are brought in
    their name but without their knowledge or, I think, approval. They are
    brought by an insurance company, which ultimately paid the third party,
    under alleged rights of subrogation contractual or in law.

    It was suggested that the term which I have implied is unenforcible unless
    agreed to by the insurers of the employer. This point was not pleaded and
    I cannot think it is right. The insurer, when he has paid, succeeds to such
    rights as the assured possesses. The assured is not, as I see it, fettered in
    any way as to the terms on which he contracts with his driver.

    A good deal of argument was based on the fact that there were two insur-
    ances, one being an employer's liability policy and the other a motor vehicle
    policy. The former paid the third party, the latter making, I think, a payment
    said to be ex gratia of £200. There was a dispute, but this cannot throw
    any light on the contract between employer and driver.

    It follows that in my opinion Semtex Limited v. Gladstone [1954] 2 A.
    E.R. 206 was wrongly decided.

    The implied term is an answer to the claim for damages and also to the
    claim for indemnity or contribution under the 1935 Act. Both claims seek
    to make the driver personally liable in respect of damages to a third party,
    which is plainly of the kind to be anticipated and covered.

    It is said that this would have far-reaching consequences. So, I think,
    would the decision of the Court of Appeal. With respect, I think that deci-
    sion is not only far-reaching but also anomalous. One may take as an example
    an accident causing damage which is within the compulsory provisions of
    the Road Traffic Act, 1930. If a driver was sued direct it seems clear the
    insurers would have to pay and there would be an end of it. If, however,
    the employer is sued the insurers again pay but can by subrogation recover
    against the driver and levy execution on his savings. This would, I think,
    be anomalous. It would also mean that any driver who realised what the
    law was would have to take out a policy to cover this risk.

    Romer, L.J. at the end of his judgment said that it was not in the public
    interest that drivers should be immune from the financial consequences of
    their negligence. The public interest has for long tolerated owners being so
    immune, and it would, I think, be unreasonable if it was to discriminate

    21

    against those who earned their living by driving. Both are subject to the
    sanction of the criminal law as to careless or dangerous driving. The driver
    has a further sanction in that accidents causing damage are likely to hinder
    his advancement.

    The terms which I have implied might, I agree, apply to other cases. The
    question would be whether the damage sought to be recovered from the
    servant was damage which any reasonable person would cover by insurance.
    There would be the further question whether the employment was such that
    the servant, if nothing was said, was entitled to assume that the master
    would arrange the insurance. This is plain enough in car or lorry cases,
    as the owner has to have a policy under statute. In other cases it might
    be a question of evidence.

    Other points were argued which do not arise on the view which I have
    formed.

    I would allow the appeal.

    (32737) Wt. 8124—114 35 1/57 D.L./P.A/19


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