A. Introduction
The Federal Court in its recent decision of Hemraj & Co Sdn Bhd v Tenaga Nasional Berhad clarified that there are two categories of non-delegable duty of care.
The first category is where the acts delegated to a third party contractor is “exceptionally dangerous whatever precautions are taken”.
The second category is where a special relationship exists between the claimant and the defendant, giving rise to an assumption of duty by the defendant.
B. Background Facts
The plaintiff (appellant in this case), TNB, claims for costs and expenses incurred for emergency repairs and replacement of its underground cable which was damaged due to excavation works. These excavation works were carried out by independent third party contractors hired by the defendants (1st defendant being the respondent in this case). The works were done in front of a house belonging to the defendants to connect the septic tank of the house to the main public sewerage system.
The 2nd defendant is the director of the 1st defendant together with his mother and sister. The defendants took out third party proceedings for indemnity against the contractors hired for the excavation works.
The issue before the court is whether the defendants owe a non-delegable duty of care to the plaintiff, a personal duty to ensure that reasonable care was taken by the third party contractors during the excavation works.
The High Court found the 1st defendant to owe a non-delegable duty of care to the plaintiff. The 1st defendant was made liable to the plaintiff for the loss and expense incurred for the repair works and replacement. The High Court also found the independent contractors to be liable for indemnity against the 1st defendant.
The Court of Appeal affirmed the High Court’s decision. However, the Court of Appeal went a step further and held that the 1st defendant owes “a positive duty to protect TNB underground cables and subsequently to the public, who are users of electricity distributed / transmitted via the underground cable“.
C. Leave Questions Before the Federal Court
The following leave questions were posed before the Federal Court:
(i) Whether as a matter of policy, routine residential construction work carried out by a homeowner through its independent contractors is so extraordinarily hazardous as to impose a non-delegable duty of care on the homeowner to a public utilities company, namely TNB for the negligence of those independent contractors?
(ii) If the answer to the 1st question is in the negative, whether there is a special relationship between the homeowner and TNB which satisfies the criteria of the “2nd category” described in Woodland v Essex County Council [2014] 1 All ER 482 such as to impose a non-delegable duty of care on the homeowner in respect of the negligence of its independent contractors?
(iii) Whether non-delegable duty of care is a cause of action that must be expressly pleaded particularizing the basis on which the duty is said to arise or whether it is a matter of law which may be raised during submissions?
The Federal Court answered the 1st question in the negative and declined to answer the 2nd and 3rd questions as (i) question 2 does not reflect the Court of Appeal decision; and (ii) question 3 is fact driven depending on how the case is pleaded.
D. Federal Court’s Decision
Historical Background of Non-Delegable Duty of Care
Non-delegable duty of care is a common law tort, where a defendant who delegates the performance of its integral duty to an independent contractor is held liable for the negligence of the said contractor. This duty of care imposes a personal duty on the defendant to procure the careful performance of the work delegated to others.
The scope of non-delegable duty of care was first laid down in the English case of Pickward v Smith [1861] 10 CB (NS) 470, where such a duty of care arose where a danger or risk had been created. However, this scope of duty of care is criticised as being too wide, without specifying any indication of the circumstances in which such a duty will arise.
The English Court of Appeal in its subsequent decision of Honeywill & Stein v Larkin Bros [1934] 1 KB 191 limited the application of a non-delegable duty of care where the act was “ultra-hazardous” in its intrinsic nature. The Honeywill approach is criticised for being broad, uncertain and irrational. In particular, this approach is criticised by the Australian courts due to the difficulty of ascertaining what is extra hazardous and what is not.
The effect of Honeywill was subsequently watered down by the English Court of Appeal in its decision of Biffa Waste Services Ltd v Maschinenfabrik Ernsk Hese GMBH [2009] 3 WLR 3242. The scope of non-delegable duty of care is now narrower – it only arises when the acts are “exceptionally dangerous whatever precautions are taken”.
Scope of Non-Delegable Duty of Care
The Federal Court adopts this Biffa approach as it “alleviate the difficulties of distinguishing activities that are inherently dangerous and one which are not“.
The Federal Court further referred to the UK Supreme Court decision in Woodland v Essex County Council [2013] UKSC 66 where Lord Sumption laid down two broad categories of cases where the non-delegable duty of care is imposed.
The first category is where the defendant employs an independent contractor to perform some work which is either inherently hazardous or extraordinarily hazardous or liable to become so in the course of his work.
The second category is where there is a special relationship between the principal and the victim such that the principal is not allowed to delegate his duty to an independent contractor. The defining features which may give rise to such a special relationship are not set out in this decision but extracted by the author below from the judgment in Woodland:
(i) the claimant is a patient or a child, or for some other reason is especially vulnerable or dependent on the protection of the defendant against the risk of injury;
(ii) there is an antecedent relationship between the claimant and the defendant which places the claimant in the actual custody, charge or care of the defendant; and from which it is possible to impute on the defendant the assumption of a positive duty to protect the claimant from harm and not just a negative duty to refrain from conduct which could foreseeably damage the claimant;
(iii) the claimant has no control over how the defendant performs its obligations, either by itself or through its agents;
(iv) the defendant has delegated to a third party a task which forms an integral part of the positive duty it has assumed towards the claimant;
(v) the third party has been negligent not collaterally but in the performance of the function assumed by the defendant and delegated to him.
The Federal Court then reconciled the principles in Biffa and Woodland and held as follows. In determining whether there is a non-delegable duty of care, the courts have to first determine is the case falls under the first or second category in Woodland.
If it falls under the first category, the principles in Biffa come into play. It needs to be determined if the acts in question are “exceptionally dangerous whatever precautions are taken”.
Otherwise, the remaining question is whether, based on the defining features in Woodland, the case falls under the second category where a special relationship exists between the claimant and the defendant, giving rise to a non-delegable duty of care.
First Leave Question – Whether as a matter of policy, routine residential construction work carried out by a homeowner through its independent contractors is so extraordinarily hazardous as to impose a non-delegable duty of care on the homeowner to a public utilities company, namely TNB for the negligence of those independent contractors?
This leave question is answered in the negative. The Federal Court held that the Biffa approach is preferred, and it is time to do away with the categorisation of what is extraordinarily hazardous (the Honeywill approach).
On the facts, the precautionary measure that ought to be taken by the third party contractors is the utility mapping exercise before carrying out the excavation works. This would indicate the presence of the TNB underground cable. This precautionary measure was clearly not carried out. Based on the Biffa approach, this case does not fall within the first category, where the act has to be proven to be “exceptionally dangerous whatever precautions are taken”. The Federal Court held that the Court of Appeal did not apply the Biffa approach and instead focused on the fact that the present case involves an unlawful and illegal excavation on public road.
The author also found it interesting that the Federal Court referred to the Singapore Court of Appeal case in Ng Huat Seng v Munib Mohamad Madni [2017] SGCA 58 and the Australian High Court cases in Stevens v Brodribb and Leichhart Municipal v Montgomery [2007] 230 CLR 22. The legal position in these jurisdictions is slightly different.
(i) The Singapore Approach
In Singapore, the Biffa approach is expanded. Additional factors are to be considered in determining whether the act is “exceptionally dangerous whatever precautions taken”. The courts need to determine if:
(i) the persistence of material risk of exceptionally serious harm to others arising from the activity in question;
(ii) the potential extent of harm if the risk materializes; and
(iii) the limited ability to exclude this risk despite exercising reasonable care.
The Federal Court held that even if these principles were to be applied, “the persistence of risk of damage to TNB cables in the course of sewage connection works is very rare”.
(ii) The Australian Approach
In Australia, the test to impose a non-delegable duty of care is whether “the extent of a duty of care will depend upon the magnitude of the risk involved and its degree of probability”. Once it is determined that the activity is extra-hazardous, higher standard of care is imposed, in that liability will only be imposed on the principal if a special relationship is established between the principal and the victim.
The Federal Court held that even if these principles were to be applied, “the magnitude of the risk is minimal and the degree of probability of the risk is rare”. The Federal Court further held that the Court of Appeal failed to take into account any of the relevant factors from the Singapore and Australian cases before imposing the duty of care for the excavation works on the defendants.
While the Federal Court did consider (and apply to a certain extent) the legal position in Australia and Singapore, the author opines that the position to be adopted in Malaysia remains to be the UK position in Woodland and Biffa.
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