A cleverly structured claim in which an injured Plaintiff alleged the Council occupier, its garbage collection subcontractor, and his actual employer each owed a duty of care analogous to that of the employer (that was initially successful and resulted in a large award in the Supreme Court) has been overturned on Appeal.
This decision will be of interest to all MakDap clients entering subcontracts and labour hire Agreements generally, and deals with the duty of care where there remains elements of supervision and/or control in those relationships.
Facts
The Plaintiff (Mr Healey) was initially employed by Usshers as a garbage collector and then following a restructure, was employed by a related company, Solid Waste.
Usshers was an independent subcontractor retained by Penrith City Council (the Council) to empty on a daily basis small street bins and large wheeled garbage bins. Usshers’ contract with the Council was not assigned to Solid Waste, but Usshers and Solid Waste were related companies and Usshers remained involved in the subcontract. The evidence established the bins belonged to the Council, who was responsible for their maintenance.
Mr Healey sustained a serious shoulder injury on 29 November 2004 in the course of his employment (by that time) with Solid Waste whilst emptying a heavy and damaged Council bin. The medical evidence agreed Mr Healey could not return to his pre-injury work, but he did not meet the 15% whole person impairment threshold under section 151H of the Workers’ Compensation Act 1987 to bring a claim for damages against his employer (Solid Waste).
Accordingly, Mr Healey initially commenced proceedings in negligence against the Council alleging it was involved in determining the manner in which his services were provided. He claimed that made the Council a “quasi employer” and alleged it therefore owed him a duty of care and breached that duty because it failed to:
- repair damaged bins within a reasonable time; and
- ensure its independent contractor employed enough personnel to help with the work.
The Council accepted it owed a duty of care to repair damaged bins within a reasonable time, but otherwise denied the alleged breach on the basis it had in place systems sufficient to discharge its duty.
Mr Healey was unable to seek damages against his employer at the time of the accident (Solid Waste) because he did not meet the minimum 15% whole person impairment threshold. However, Usshers held public liability insurance with GIO. Accordingly, upon Usshers’ deregistration as a company, Mr Healey commenced proceedings against GIO as Usshers’ insurer under section 601AG of the Corporations Act 2001 alleging Usshers were negligent and the GIO public liability Policy indemnified Usshers for their negligence.
Mr Healey’s claim against GIO (Usshers) was based upon the nature and conditions of his employment from 1 December 2004. He alleged that although he was by then employed by Solid Waste, Usshers continued to carry out the contract with the Council and maintained direction and control over his work and therefore Usshers continued to owe him a duty of care that was the same, or analogous, to that of his employer. Mr Healey alleged Usshers was in breach of that duty and their public liability policy with GIO was activated and covered Usshers for his claim.
Initial determination
The Supreme Court of NSW found both the Council and GIO (Usshers) liable to Mr Healey. Justice Adams found Mr Healey’s injuries were mainly caused by lifting heavy and damaged bins which the Council was responsible for repairing and in circumstances where it retained significant control over the performance of the contract.
The Court also held that after 1 December 2004 when Mr Healey’s employment transferred to Solid Waste, Usshers still retained a measure of involvement and supervision in the contract sufficient to impose a duty of care and which it breached by exposing Mr Healey to an unreasonable risk of injury by the nature and conditions of his employment. Justice Adams found the Usshers’ GIO public liability Policy was triggered and exclusion clauses in the Policy did not apply. Mr Healey was awarded damages against the Council for in excess of $650,000 plus interest and costs, and against GIO for more than $455,000 inclusive of interest, but plus costs.
Both Penrith City Council and GIO successfully appealed
Council: the Court of Appeal found the medical evidence did not establish Mr Healey’s injuries were mainly caused by a frank injury on 29 November 2004 lifting a heavy and damaged bin. It found the medical evidence established the general nature and conditions of his employment (including problems caused by damaged bins) caused his injuries.
Relying upon Stevens v Brodribb [1986] HCA, the Court of Appeal found that although the Council owed a duty of care to retain a competent contractor and also to repair damaged bins, it did not breach that duty. Although there was evidence the Council maintained a degree of supervision in the contract (and therefore some control over Usshers), that supervision was of Usshers itself and not Mr Healey in his day to day work. The Council had almost no contact with Mr Healey at all. Further, the evidence did not establish that the Council knew, or ought to have known, of the damaged bin and therefore Mr Healey failed to establish the bin had been damaged for long enough without repair to establish breach of the Council’s duty of care. Alternatively Emmett AJA also allowed the Council’s Appeal, finding the subcontract contained no obligation to supervise an independent contractor’s employees.
GIO: in a majority decision from Basten JA and Emmett AJA, but with differing reasons, the Court of Appeal also allowed GIO’s Appeal. Simpson JA dissented, dismissing GIO’s Appeal.
Basten JA allowing the Appeal found once that Mr Healey’s employment was transferred to Solid Waste, Usshers nevertheless retained an obligation to supervise the work. The contract with the Council was never assigned to Solid Waste, and Usshers remained responsible for carrying out the work. Solid Waste provided Mr Healey’s labour to Usshers, who continued to supervise that work. However, because Solid Waste provided labour to Usshers and the work was partly under Usshers’ care, control, direction and supervision, exclusion clause 13 in Usshers public liability Policy wording applied, and that Policy did not respond to any liability of Usshers.
Emmett AJA also allowed GIO’s Appeal, but for different reasons. He found GIO was not entitled to rely on the exclusions in the Policy wording, but that once Mr Healey’s employment transferred to Solid Waste on 30 November 2004, Usshers did not owe a duty of care analogous to that of an employer, and therefore there was no negligence by Usshers.
Simpson JA was in dissent and dismissed GIO’s Appeal, finding that Usshers continued to owe Mr Healey a duty of care after his employment shifted to Solid Waste on 1 December 2004 and that there was ample evidence of breach of Usshers’ duty of care. Justice Simpson also found that the exclusion clause 13 in the GIO Policy wording did not apply and therefore GIO was liable to indemnify Usshers.
Conclusion
Although a cleverly constructed claim on behalf of the Plaintiff and one that initially resulted in a large award in his favour, the Court of Appeal has ultimately overturned the decision.
This decision will be of interest to all MakDap clients entering subcontracts and labour hire Agreements generally, and deals with the duty of care where there remains elements of supervision and/or control in those relationships. Care must be taken in the drafting and interpretation of subcontract and labour hire Agreement, and in gathering evidence on the operation of subcontracts and labour hire Agreements with regard to making clear the relationship between the parties and transferring exposure to other parties in tort and contract.
