The campaign to reduce road transport accidents is being tackled not only by the introduction of the much published Chain of Responsibility legislation but also through the use of occupational health and safety (“OHS”) legislation. A recent WorkCover prosecution in NSW of a director of a road transport company [Inspector Campbell v James Hitchcock [2004] NSWIRComm 87 (21 October 2004)] provides important lessons for all road transport companies. This decision follows recent driver fatigue related prosecutions in Queensland (Harker Transport Services) and in Western Australia (LC Bonners Transport).

James Hitchcock, director of Sayogi Pty Ltd (trading as Jim Hitchcock Haulage), was charged with offences under the New South Wales OHS Act (“OHS Act”) arising out of an accident involving two articulated lorries in Grafton on 1 September 1999. One of the drivers of the articulated lorries, Mr Darri Haynes, an employee of Sayogi, died in the accident. Hitchcock was charged with failing to ensure that persons are not exposed to risks to their health and safety arising from the conduct of the company’s undertaking, namely road haulage. Sayogi wasn’t prosecuted because it went into liquidation after the accident.

The Court found that:

• the driver had been making deliveries up and down eastern Australia, fuelled by methamphetamine and was struggling to adhere to a timetable imposed by the company, afraid he would lose his job if he complained;
• in a 48 hour period before the accident, the driver had a maximum continuous break of not more than 3 hours and 5 minutes;
• in the week prior to the accident, the driver had done more than 5,400 kilometres;
• the company did not have any policy in relation to driving hours or rest stops, apart from the logbook regime, which was frequently falsified by drivers with the knowledge of the company;
• the company did not discuss driving hours, rest breaks or sleep with any of its employed drivers and had no information as to their working or driving hours or rest breaks, other than the duplicate logbook pages, which it did not review
  drivers were under pressure to keep driving in breach of the regulation rest breaks;
• the company’s system of work impeded effective fatigue management by leaving matters of fatigue management solely in the hands of the drivers, while at the same time, providing incentives to drive for longer hours at the expense of rest hours; and
• the company had not warned any of its drivers of the danger of fatigue in the context of long haul truck driving.

Under the OHS Act’s deeming provisions (which holds directors liable for offences committed by a company) Hitchcock was found guilty of all charges. In his judgement, Vice President Justice Walton noted:

“The evidence painted a sobering picture of the risk for long distance truck drivers of driving when fatigued, the very real danger attendant upon that risk of a haulage company which paid little (if any) heed to the risk either to its employed drivers or to anyone else at risk of an accident due to proximity to a fatigued truck driver. On the contrary … instead of ensuring against the risk, as it was legally obliged to do under the Act, the systems of work operated by the company (which did not include any effective fatigue management measures) exacerbated them.”

Hitchcock was sentenced on 28 February 2005 and fined $42,000.00.

The lesson from this prosecution for road transport companies, particularly those engaged in long haulage, is that operators must have fatigue management systems in place - and actively manage them. At a minimum, the systems should include:
a policy on driving hours and rest breaks;
a regular review mechanism of drivers’ log books to ensure drivers are complying with log book regulations;
consultation with drivers about their driving hours, rest breaks, sleep or whether they are getting adequate rest;
the preparation of driving rosters to take into account the effects of fatigue and sleep deprivation; and
the provision of training information to drivers about fatigue management.

For further information please contact Paul Cooley on +61 3 9608 2238 or p.cooley@cornwalls.com.au

The High Court of Australia recently considered whether parties should be bound by exclusion clauses contained in a transport company's contract terms.

FACTS
An importer imported influenza vaccine into Australia for supply by a pharmaceutical distributor. A transport company was engaged by the importer to collect the vaccine on arrival in Australia and warehouse. The importer suggested to the distributor that they also use the transport company to deliver the vaccine to the distributor's customers, to reduce handling of the vaccine which was highly sensitive to temperature.

Goods intended for delivery to the distributor's customers were exposed to incorrect temperatures whilst in the transport company's possession.

THE CONTRACTUAL ARRANGEMENTS
When the importer recommended to the distributor that they also use the transport company to transport the vaccine from the warehouse to its customers, the distributor agreed but left it to the importer to make arrangements with the transport company. The distributor had no direct dealings with the transport company.

The transport company's sent a letter stating that they were “… not common carriers and all cartage is subject to the conditions as stated on the reverse side of our consignment note, a copy of which is attached.” The consignment note was not attached. However, the letter went on to state that the importer needed to complete a credit application and sign the application accepting “ … our Rates and Conditions …”. At a later meeting, the credit application document was provided to a representative of the importer who signed the document and returned it. Immediately above the place where the document was signed, the following words appeared:

"Please read “Conditions of Contract” (overleaf) prior to signing."

The importer's representative did not read the conditions of contract.

They included clauses to the following effect:

• A warranty: The importer warranted that it entered into the contract on its own account and also as agent for its associates, the definition of which extended to the distributor.
• An exclusion clause: That the transport company would not be responsible for any damage to the goods.
• An indemnity: The importer agreed to indemnify the transport company in respect of any demand or claim bought on behalf of other parties, such as the distributor.
  

THE PROCEEDINGS
The distributor sued the transport company for damages in negligence.

The importer and the distributor claimed that they were not bound by the exclusion clause because the conditions of contract on the reverse side of the application for credit did not form part of the terms of the contract with the transport company. Secondly, the distributor denied that the importer contracted as agent for the distributor.

The basis for the argument that the terms and conditions on the credit application did not form part of the contract was that the importer's representative had not read them.

The High Court found that the importer's representative signed a document which invited him to read the terms and conditions on the reverse side before signing it but he chose not to do so. He was not rushed or tricked into signing the document and could have read it had he wished.

The Court held that (absent a vitiating element such as misrepresentation) a person who signs a document which is known by that person to contain contractual terms is bound by those terms and it is immaterial that the person has not read the document.

The Court also had to determined whether or not the importer was acting as the distributor’s agent. It was not in dispute that the distributor had agreed to the importer arranging the transportation on its behalf. However, it claimed that the importer did not have its authority to enter into this contract, or more particularly, a contract containing exclusion clauses.

The Court found that the evidence compelled the conclusion that the distributor authorised the importer to contract with the transport company to arrange the transportation. Provided that the terms and conditions to which the importer agreed were the transport company's standard terms and conditions, the importer was acting within its authority. Accordingly, the Court found that the distributor was bound by the conditions of contract.

CONCLUSION
This decision is clear authority that:

1. a party to a contract will be bound by the terms and conditions of the contract even if the party signs the document without reading it (unless there has been some misrepresentation regarding the document);
2. there is no special requirement to draw attention to particular clauses of the contract ( such as exclusion and indemnity clauses) where the contract is signed, and the party given the opportunity to read it; and
3. a party can be bound by the terms of a transport agreement where another party has arranged transportation of the goods on their behalf.

For further information please contact Caroline Dew on
+61 3 9608 2216 or c.dew@cornwalls.com.au