Boyne Smelters Ltd v Workers' Compensation Board of Queensland

[1996] QCA 255

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No. 208 of 1995
Brisbane
[Workers’ Compensation Board of Qld. v. Boyne Smelters]
BETWEEN:

WORKERS’ COMPENSATION BOARD OF QUEENSLAND

(Third Party) Appellant

AND:

BOYNE SMELTERS LIMITED

(Defendant) Respondent

FITZGERALD P.

PINCUS J.A. WILLIAMS J.

Judgment delivered 02/08/1996

SEPARATE REASONS FOR JUDGMENT OF FITZGERALD P., PINCUS J.A. AND

WILLIAMS J. CONCURRING AS TO THE ORDER MADE.

Appeal dismissed with costs.

CATCHWORDS:	INSURANCE - right of indemnification - worker sustained personal injuries whilst performing work at premises owned and operated by respondent - liability not in issue - whether the Workers’ Compensation Board obliged to indemnify respondent with respect to judgment obtained against it by the injured worker - whether respondent deemed to be employer of injured worker at the material time - cl. 25 of the Schedule to the Workers Compensation Act 1916
ss. 8, 9A(1)(b) Workers’ Compensation Act 1916 Maroochydore Black Swan Rugby League Limited v. Workers’ Compensation Board of Queensland [1994] 2 Qd.R. 531
Counsel:	J.A. Griffin Q.C. for the Appellant R.G. Bain Q.C. with him M.J. Liddy for the Respondent
IN THE COURT OF APPEAL	[1996] QCA 255
SUPREME COURT OF QUEENSLAND	Appeal No. 208 of 1995
Brisbane
Before	Fitzgerald P. Pincus J.A. Williams J.

[Workers’ Compensation Board of Qld. v. Boyne Smelters]

BETWEEN:

WORKERS’ COMPENSATION BOARD OF QUEENSLAND

(Third Party) Appellant

AND:

BOYNE SMELTERS LIMITED

(Defendant) Respondent

REASONS FOR JUDGMENT - FITZGERALD P.

Judgment delivered 02/08/1996

The circumstances giving rise to this appeal are set out in the reasons for judgment of Williams J. I

agree with those reasons, and with the orders proposed by his Honour. I propose to add only one

comment.

Initially for the purposes of sale of goods legislation, and later for the purposes of other legislation,

especially that relating to consumer protection, it has been necessary to distinguish between contracts

for the sale of goods and various other contracts: see, for example, Benjamin’s Sale of Goods 4th ed.,

para. 1-030ff. One set of transactions which it has sometimes been necessary to distinguish from

contracts for the sale of goods comprise contracts for work and materials: see Benjamin, para. 1-041ff; Sutton, Sales and Consumer Law in Australia and New Zealand, 3rd ed., pp. 56ff. No such issue

arises in relation to cl. 25 of the Schedule to the Workers’ Compensation Act 1916, which is concerned

with whether the material contract or contracts were “for the execution of any work ...”, irrespective

of how such a contract might otherwise be categorised or described. The appellant’s entire case

depended on the proposition that cl. 25 of the Schedule to the Act had no operation if the contract was

a contract for the sale of goods, or if that was its dominant or substantial character. Since I am of

opinion that that view of cl. 25 ignores the purpose of the Act, which is broadly to provide a

comprehensive insurance scheme for injured workers, and is incorrect, the appeal must fail.

Solicitors:	McKenzie Forbes for the Appellant Minter Ellison for the Respondent
Date(s) of Hearing:	25 July 1996

REASONS FOR JUDGMENT - PINCUS J.A.

Judgment delivered 02/08/1996

As explained in the reasons of Williams J, the plaintiff Mr Mazzoni was injured while working

for a company on a crane at Boyne Island and is entitled to damages. That company was engaged on

work being done under contract with a second company, which had contracted with a third company

to do its work, which had contracted with the respondent to do its work.

Thus there was a chain of contracts with, so to speak, the respondent at the top and Mr

Mazzoni, the worker, at the bottom. It was contended that there was no proof that the work the

plaintiff was doing was part of the work which was required to be done under the contract to which the

respondent was a party; but there appears to me to be nothing in that contention.

Although as I have explained, here there is a chain of contracts involving four companies, the

point the appellant raises would be the same if there were only three - a principal, a contractor and a

sub-contractor. The appellant’s substantial argument is that under the relevant provision of the

Workers’ Compensation Act 1916, as at the date of the plaintiff’s accident, the respondent, at the

head of the chain, was not deemed to be the employer of the plaintiff, at the bottom of the chain. If that

is right, then although the respondent has been held liable to the plaintiff for damages incurred by him

in the course of his work, the Workers’ Compensation Fund would not be liable to pay the plaintiff his

damages under s. 9A(1)(b) of the Act - or, to put it in the way in which it was discussed before us, the

worker’s compensation policy would not cover these damages.

The relevant provision was, at the time of the accident, cl. 25 of the schedule to the Act, which

reads as follows:

"Where any person (herein called the "principal") contracts with any other person (herein called the "contractor") for the execution of any work by or under the contractor, and the contractor employs any worker thereon, the following provisions shall apply:-

(i)          Both the principal and the contractor shall be deemed to be employers of the worker.

(ii)         In the case of sub-contracts, the expression "principal" shall extend to and include not only the original principal, but also each contractor who constitutes himself a principal with respect to a sub-contractor by contracting with him for the execution by him of the whole or any part of the work; and the expression "contractor" shall extend to and include not only the original contractor, but also each sub-contractor".

The argument advanced for the appellant Board is that there was no contract for the

performance of work, but only one for the sale of goods. The contract at the top of the chain was for

the execution of works involving the construction of a smelter and that at the bottom of the chain, in the

performance of which the plaintiff was engaged, was one to provide and commission an overhead crane.

The argument assumed, without any development of the point, that one or both of these contracts was

for the sale of goods, rather than a contract for work and materials: Chitty on Contracts 26th ed. Vol.

2, p.1138.

Let it be assumed in favour of the appellant that the relevant contract was one properly

characterised as being for the sale of goods. By way of illustration of the effect of the submission, it

follows from it, as counsel contended, that if there were a contract to construct a house with built-in

prefabricated cupboards then workers installing the cupboards, under the cupboard sub-contract, would not be within the protection of cl. 25. Acceptance of this contention would restrict what one

might have thought to be the intended scope of cl. 25.

The point is whether a "person . . . contracts . . . for the execution of any work . . . ", within the

meaning of cl. 25, if looking at the contract as a whole it is properly to be characterised as one for the

sale of goods, albeit that work has to be done under it. (I reiterate that I proceed on the assumption

that the relevant contract here was one for the sale of goods, without so deciding). The characterisation

of such a contract as not being one for the execution of any work depends on reading the words I have

quoted as if, after them, there were inserted "unless the work is being done under a contract the

principal obligations created by which are other than the performance of work". Short of such a judicial

emendation, I cannot see how the argument could be accepted.

To return to the example just given, a person who contracts to supply cupboards and to install

them "contracts for the execution of any work", although the contract also imposes obligations to supply

cupboards. That is, the natural meaning of the expression "contracts for the execution of any work" is

such as to catch a contract which requires work to be done, whatever else it requires. The appellant

did not contend that if there is anything promised by a contract other than work, it is outside cls. 25;

the argument so far as I understood it seemed to be that if the main promise under a contract is not to

do work but rather to, e.g. supply cupboards, the fact that the contract also creates obligations to do

substantial work does not bring it within cl. 25.

My view is that if the contract in question is one under which the contractor promises to execute

any work, it is accurately described as one under which the promisor "contracts . . . for the execution

of any work", whatever other promises are included in the same document. It was suggested for the

appellant that this construction would in some instances produce surprising or inconvenient results and

that therefore cl. 25 should be read down; but the way in which it should be read down was not, I feel

obliged to observe, made at all clear.

I should add that, holding that the work in question was within cl. 25, the primary judge then

took the further step of applying the decision in this Court in Maroochydore Black Swan Rugby League

Limited v. Workers’ Compensation Board of Queensland [1994] 2 Qd.R. 531; that step is not

challenged.

The appeal must be dismissed with costs.

REASONS FOR JUDGMENT - WILLIAMS J

Judgment delivered the 2nd day of August 1996

Enzo Mazzoni, the plaintiff, sustained personal injuries on 23 May 1984 whilst performing

certain work at the aluminium smelter at Boyne Island owned and operated by the respondent, Boyne

Smelters Limited. The plaintiff brought an action against the respondent claiming damages for personal

injuries and liability was admitted. Damages were assessed in the sum of $1,233,438.20.

At all material times the plaintiff was employed by a French company Electrification Charpente

Levage ("ECL"). In 1979 the respondent had entered into a construction contract with Calliope

Constructions Limited ("CCL") for the construction of an aluminium smelter at Boyne Island. C.C.L.

entered into a contract with International Bechtel Incorporation ("Bechtel") for the latter to perform

certain engineering works in connection with the construction of that smelter, and in turn Bechtel

contracted with ECL for that company to provide and commission an overhead crane.

At the time of the plaintiff's accident the crane had been installed but had not been fully

commissioned. During tests it had been malfunctioning, and attempts were being made to correct those

matters before final commissioning and the handing over of the crane to the respondent.

In those circumstances the respondent contended that pursuant to its insurance policy with the

Workers' Compensation Board of Queensland (the appellant) pursuant to the Workers' Compensation

Act, the appellant was obliged to indemnify the respondent with respect to any judgment obtained

against it by the plaintiff. As the appellant was not prepared to admit liability the respondent

commenced third party proceedings in the action claiming a declaration that the appellant was obliged

to indemnify the respondent with respect to the plaintiff's claim. In paragraphs 6(a) and (b) of the

statement of claim by the respondent against the appellant it was alleged that the respondent moved in or about 1979 to establish an aluminium smelter at Boyne Island consisting of an aluminium reduction

plant and associated facilities and to that end it entered as principal into a construction contract with

CCL as contractor for the execution of works involving the construction of the smelter. Those matters

were admitted by the appellant in its defence to the third party proceedings. It was also alleged and

admitted in those pleadings that CCL subsequently entered into a contract, as principal, with Bechtel

as contractor, for the execution of certain engineering work by the latter in respect of the construction

of the smelter.

At the trial the respondent tendered documents establishing the contract between Bechtel and

ECL. The initial document was in the form of a Purchase Order but it comprised some 38 pages in all.

In it the scope of the work was defined, technical specifications and other data provided, and general

conditions relating to the contract set out. The "goods" the subject of the Purchase Order were

described as "Cathode Transport Crane". The documentation provided that the supply of the crane

included the "provision of services of Installation and Commissioning Engineer as required." Further

specific clauses of the contract dealt with the Guarantee to be provided by ECL, and the work involved

on ECL's part in the commissioning of the crane. Those clauses specifically referred to ECL providing

"a competent installation and/or commissioning engineer to supervise the installation". That was the role

being performed by the plaintiff at the time he sustained his injuries.

Apart from the plaintiff the only relevant witness called at the trial was AP Milan, an engineer

employed at the time by CCL. He was working with the plaintiff at the time of the accident. Under

cross-examination by counsel for the appellant two contemporaneous statements by Milan were

tendered. In exhibit 16 Milan referred to "extensive remedial work" being carried out on the crane "by

ECL/CCL to correct the machine's tendency to jam on the runway." In exhibit 17 he said: "During the period between then (14 May) and the date of the accident we worked every day on the crane except

Sunday 20 May."

It was in those circumstances that the learned trial judge had to determine whether or not the

appellant was obliged to indemnify the respondent.

Section 8 of the Workers' Compensation Act as at the date of the accident required "every

employer" to take out insurance with the appellant "against all sums for which, in respect of injury to any

worker employed by him, he may become legally liable" to pay by way of damages. Employer was

defined as including "a person deemed by this Act to be an employer for the purposes of this Act."

Relevantly that brought cl. 25 of the Schedule to the Act into play; materially it provides:-

"Where any person (herein called the "principal") contracts with any other person (herein called the "contractor") for the execution of any work by or under the contractor, and the contractor employs any worker thereon, the following provisions shall apply:-

(i)          Both the principal and the contractor shall be deemed to be employers of the worker.

(ii)         In the case of sub-contracts, the expression "principal" shall extend to and include not only the original principal, but also each contractor who constitutes himself a principal with respect to a sub-contractor by contracting with him for the execution by him of the whole or any part of the work; and the expression "contractor" shall extend to an include not only the original contractor, but also each sub-contractor."

The learned trial judge referred to the decision of this court in Maroochydore Black Swan

Rugby League Limited v. Workers' Compensation Board of Queensland [1994] 2 Qd. R. 531, a

decision on cl. 25. Thereafter his Honour reasoned:

"Here the defendant entered into a contract with CCL, which sub-contracted with Bechtel which sub-contracted with ECL. In the performance of those contracts, Mr Mazzoni was injured on the defendant's premises. By virtue of the definitions in cl. 25, the defendant is deemed to be an employer of Mr Mazzoni, so the third party becomes liable to indemnify the defendant."

It is the contention of the appellant on this appeal that the learned trial judge erred in so finding.

Senior counsel for the appellant conceded during argument that the plaintiff was doing "work"

at the material time, but he submitted that "he was never employed to do work within the meaning of

cl. 25". That submission was primarily based on the proposition that the contract between Bechtel and

ECL was a contract of sale of goods and therefore was not a contract of the type contemplated in cl.

25. He submitted that the contract between Bechtel and ECL did not oblige the latter "to do any

particular work". It appears that the rationale behind that submission is that the dominant nature of the

contract was one of sale and the work the plaintiff was doing was incidental to that sale; in particular

it was work done under a warranty contained in a contract of sale.

In the course of argument counsel for the appellant sought to limit the scope of operation of cl.

25 by putting forward examples of work done under a warranty where, on his submission, it would be

inappropriate for cl. 25 to apply. It is not necessary in this case for this court to define the limits, if any,

within which cl. 25 may operate. Further, it is not necessary for this court to express an opinion upon

the hypothetical issues raised by the examples referred to in counsel's argument. The simple question

here is whether or not, given the work being done by this plaintiff, and the terms of the various contracts

referred to, cl. 25 operated so that the respondent was deemed to be the employer of the plaintiff at the

material time.

The contract between Bechtel and ECL expressly provided for ECL (through its employees)

to do work. It further provided that some of that work, namely installation and commissioning, should

be carried out at the respondent's premises at Boyne Island. Clause 25 is in wide terms; it speaks of

"the execution of any work", and there is no reason why those words should not be held to apply to

installation and warranty work carried out in the circumstances which existed here.

The unchallenged evidence, and the findings of the learned trial judge, established a chain of

contracts which, given the terms of cl. 25, resulted in the respondent being deemed to be the employer

of the plaintiff at the time he was carrying out the work in question.

The learned trial judge was clearly right in making the finding which he did.

The appeal should be dismissed with costs.