Gray v Coles Supermarkets Australia Pty Ltd; Coles Supermarkets Australia Pty Ltd v Chandler Macleod Group Ltd

[2020] NSWCA 209

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Gray v Coles Supermarkets Australia Pty Ltd; Coles Supermarkets Australia Pty Ltd v Chandler Macleod Group Ltd [2020] NSWCA 209

Hearing dates:

23 July 2020

Decision date:

04 September 2020

Before:

Leeming JA at [1];
Emmett AJA at [10];
Adamson J at [14].

Decision:

In CA 2020/6348:
1. Dismiss the appeal.
2. Order the appellant to pay the respondent’s costs.

In CA 2020/80241:
1. Dismiss the appeal.
2. Order the appellant to pay the respondent’s costs.

Catchwords:

TORTS — Negligence — Causation — appellant worker injured whilst working on respondent’s premises — where primary judge found respondent was not liable — finding that reasonable precautions postulated in particulars of negligence would not have avoided risk of harm to appellant worker — challenge to findings of fact at first instance — no error established

CONTRACTS — Construction — cross-claim on labour-hire agreement between appellant and respondent corporation — whether primary judge erred in finding contract did not entitle appellant corporation to damages or indemnity — no error established

EVIDENCE — Discretions — Exclusion of evidence — where plaintiff sought to tender new expert report at hearing — report rejected by primary judge — no error in exercise of discretion

Legislation Cited:

Civil Liability Act 2002 (NSW), ss 5B, 5C, 5D

Civil Procedure Act 2005 (NSW), ss 56, 57, 58

Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5

Workers Compensation Act 1987 (NSW), s 151Z

Cases Cited:

Australian Blue Metal Ltd v Hughes (1962) 79 WN (NSW) 498

Blatch v Archer (1774) 1 Cowp 63

Coles Supermarkets v Ready Workforce (a Division of Chandler Macleod) Pty Limited [2018] NSWCA 140

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35

Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142

Williams v Metcash Trading Ltd [2019] NSWCA 94

Category:

Principal judgment

Parties:

Roland Gray (Appellant in 2020/6348)
Coles Supermarkets Australia Pty Ltd (Respondent in 2020/6348)
Coles Supermarkets Australia Pty Ltd (Appellant in 2020/80241)
Chandler Macleod Group Ltd (Respondent in 2020/80241)

Representation:

Counsel:
B Dooley SC, M Best (Appellant in 2020/6348)
G Parker SC (Respondent in 2020/6348; appellant in 2020/80241)
J Catsanos SC (Respondent in 2020/80241)

Solicitors:
LHD Lawyers (Appellant in 2020/6348)
McCulloch and Buggy Lawyers (Respondent in 2020/6348; applicant in 2020/80241)
Holman Webb Lawyers (Respondent in 2020/80241)

File Number(s):

2020/6348; 2020/80241

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Citation:

Gray v Coles Supermarkets Pty Limited [2019] NSWDC 749

Date of Decision:

13 December 2019

Before:

Russell SC DCJ

File Number(s):

2018/131372

Judgment

1. LEEMING JA: I agree, for the reasons given by Adamson J, that Mr Gray’s appeal against Coles must be dismissed with costs.

2. I also agree with Adamson J, concerning Coles’ appeal against Chandler, that no question of issue estoppel or abuse of process arises, in the absence of any submission to that effect. However, the fact of the matter is that Coles cross-claimed against Chandler for damages and indemnity under the same service agreement arising out of the same class of loss (its liability for damages and costs to a worker employed at the Smeaton Grange Distribution Centre) in two separate proceedings in the District Court, and it has brought appeals from both. The two decisions are inconsistent, notwithstanding that in both cases the worker failed. In the Smith litigation, Coles established a breach but obtained nominal damages because it did not prove any costs. In the Gray litigation, heard 3 months later, Coles did not establish a breach (and, so far as I can see, also failed to prove any of its costs). The inconsistency inevitably continues in this Court, because in response to Coles’ appeal in the Smith litigation, Chandler does not challenge the finding of breach, but seeks to uphold the finding of no loss in response to Coles’ appeal in this litigation.

3. The same parties retained the same solicitors, and, in the case of Coles, the same counsel. Indeed, at one stage in closing addresses the trial judge raised with Mr Parker why in his submissions on his client’s cross-claim there was a reference to “Mr Smith”, and was told, candidly and accurately, that the submissions derived from the earlier litigation, at which point (and seemingly, only then) a copy of Gibb DCJ’s judgment was provided to his Honour.

4. Parties should not relitigate the same issues between them. Courts’ time should not be wasted by relitigation. Ordinarily, the rubric of rules associated with finality will prevent that from occurring. The judgment of the District Court constituted by Gibb DCJ on the cross-claim between Coles and Chandler created a res judicata and issue estoppels between those parties. True it is that Coles was dissatisfied with that judgment and, by the time the Gray litigation came to be heard before the District Court constituted by Russell DCJ, it had lodged a notice of intention to appeal. Indeed, it seems likely from Chandler’s stance in this appeal that it too was dissatisfied with the reasoning and judgment in the Smith litigation. Even so, that did not prevent both parties from being bound by what had been decided, subject to the possibility of the appeal being allowed.

5. There was, with respect, a great deal to be said for severing Coles’ cross-claim from Mr Gray’s action and letting its determination await the outcome of Coles’ appeal. That would prevent duplication of time and cost. It would also give Coles clarity on the issue which it disputed (and which I have, in the Smith appeal, rejected), namely, whether it was required to prove its irrecoverable costs which formed its claim for damages, and whether the Court needed to tell Coles that if it did not prove its costs, it would only obtain nominal damages.

6. Looking forwards, Coles and Chandler are bound by this Court’s determination of Coles’ appeals. If this Court took any other course than delivering judgment on both of Coles’ appeals against Chandler on the same day, then it would be necessary to permit Coles and Chandler to be heard as to the effect of this Court’s judgment on the reserved appeal. That in turn might lead to matters of substance turning on the happenstance of which judgment was delivered first.

7. As it happens, the Court was constituted by the same members and the appeals were heard on consecutive days. However, even so, that does not enable this Court to resolve all of the inconsistent outcomes between the same parties on the same contract.

8. All of the above is suggestive of something having gone awry in the ordinary processes of litigation. It explains why in the Smith litigation this Court’s order leaves in place a judgment for nominal damages in favour of Coles against Chandler, but in this appeal this Court’s order leaves in place a judgment in favour of Chandler against Coles.

9. Subject to the foregoing, I agree with Adamson J, for the reasons her Honour gives, that Coles’ appeal should be dismissed.

10. EMMETT AJA: These appeals arise out of an injury suffered on 1 May 2015 by the appellant in the first appeal, Mr Roland Gray (the Worker). The Worker injured his back when he lifted a carton containing bottles of water in the course of his duties as a picker/packer at a distribution centre operated by Coles Supermarkets Australia Pty Ltd (Coles) at Smeaton Grange (the Premises). The Worker sued Coles in the District Court of New South Wales.

11. The Worker was employed by Ready Workforce (A Division of Chandler Macleod) Pty Ltd, a related corporation of Chandler Macleod Group Limited. (Chandler). The Worker’s labour was provided to Coles pursuant to an agreement between Chandler and Coles by which Chandler agreed to provide labour to Coles (the Service Agreement). Coles filed a cross-claim against Chandler claiming indemnity and damages for breach of the Service Agreement.

12. A judge of the District Court directed the entry of judgment in favour of Coles on the Worker's claim and judgment in favour of Chandler on the cross-claim brought by Coles. The Worker and Coles have now appealed to this Court from the orders made by the District Court.

13. I have had the advantage of reading in draft form the proposed reasons of Adamson J for dismissing both appeals with costs. I agree with her Honour’s conclusions for the reasons proposed. I have also had the advantage of reading in draft form the proposed comments by Leeming JA concerning the operation of possible issues estoppel as between Coles and Chandler arising out of proceedings brought against Coles by another worker employed at the Premises and a cross-claim in those proceedings by Coles against Chandler. I agree with the observations made by Leeming JA.

14. ADAMSON J: On 1 May 2015, Roland Gray injured his back lifting a box of water at a depot at Smeaton Grange operated by Coles Supermarkets Australia Pty Ltd (Coles). At the time, he was employed by Ready Workforce (A Division of Chandler Macleod) Pty Ltd (Ready). Ready, which was associated with Chandler Macleod Group Limited (Chandler), was a labour hire company. Chandler and Coles had an agreement whereby labour would be provided to Coles.

15. Mr Gray commenced proceedings in the District Court, claiming damages against Coles for negligence. Coles filed a cross-claim against Chandler seeking indemnity and damages under the labour-hire agreement for the claim made against it by Mr Gray. Mr Gray’s claim and Coles’ cross-claim were heard together by Russell DCJ over 5 days on 4, 5, 6, 7 and 8 November 2019. On 13 December 2019, the primary judge ordered judgment and costs in favour of Coles on Mr Gray’s claim and judgment and costs in favour of Chandler on the cross-claim. His Honour also assessed damages and apportionment on a theoretical basis.

Mr Gray’s appeal on liability

16. By amended notice of appeal filed on 17 March 2020 Mr Gray appealed on liability only. Before turning to the grounds, I propose to summarise the evidence adduced at the trial in so far as it is necessary having regard to the findings of the primary judge on the claim. This task has been made considerably easier by the concession made by Mr Dooley SC, who appeared with Mr Best on behalf of Mr Gray at trial and on appeal, that he did not challenge any of the findings of fact made by the primary judge which were set out in [106] of his reasons.

The evidence at trial

Evidence adduced on behalf of Mr Gray

Mr Gray’s evidence

17. Mr Gray gave evidence and was cross-examined. He had worked at the depot from 13 November 2013 until 1 May 2015, when the accident happened.

18. The version of how the injury was sustained which the primary judge accepted was that which had been given to Ms Whitby, the expert relied on by Mr Gray (see below). Mr Gray confirmed, in cross-examination, that he had told Ms Whitby how the accident occurred, which she recorded as follows (the references to “DPM” are to a Double Pallet Mover which Mr Gray was operating):

“35.   Mr Gray parked his DPM forward of the pick bay. Both pallets in the pick bay contained the same product. There were five units on the pallet located at the right of the pick bay and two units on the pallet to the left. However, one of the units on the left pallet had been broken and bottles had rolled to the floor and across the left pallet. None of the (plastic) bottles had been broken and there was no water seepage on the floor or pallet. A sketch of the layout of the work area is included at Appendix 4.

36.    Before attempting the pick the order, Mr Gray kicked the water bottles on the floor out of the way. He then transferred the five units from the right side pallet to the DPM.

37.    The final (6th) unit required for the order was located at the mid position at the rear of the left pallet. However the broken unit was at the face of the pallet with several bottles strewn across the pallet. Mr Gray moved some of these loose bottles to the side to make space so he could get to the unit at the rear of the pallet.

38.    Mr Gray stepped onto the pallet - his left foot remained at the front right hand corner of the pallet and his right foot was placed mid pallet. Mr Gray then adopted a lunge and reached forward and down, rotating the shelf tray of 24 water bottles counterclockwise to bring it closer before grasping and lifting the unit.

39.    As Mr Gray raised his trunk, he shifted his right foot backwards and stepped off the pallet with his left foot. Then as he turned counter-clockwise to clear the racking above and resume an upright posture, his low back went into spasm. Mr Gray immediately dropped the product onto the pallet.”

19. It was common ground that Mr Gray could not reach the box of water without putting at least one foot on the pallet. He said that he could not get closer to the box of water and that he thought that he was “close enough”. He accepted that he had “made the mistake to overreach”. Mr Gray explained that while he was lifting the box, he was “concentrating on not hitting [his] head”. He explained that the racks above the pick bays where the water boxes were located were less than head height (for him) but the bays where the chips were had higher racks which allowed him to walk erect underneath them. Mr Gray confirmed that he first felt pain when he turned and stepped off the pallet “at the end of the lift”.

20. Mr Gray said that he had been taught two methods of lifting in the course of his induction by Coles at the depot, squatting and lunging, and said that he had had no problems implementing either of those techniques. He admitted that he had been trained in accordance with the Coles manual, LOG027, which said:

“Always check your destination point and that the path of travel is clear prior to attempting to move the load and determine best technique to safely lift or move the object e.g. squat, semi-squat, lunge etc.

Always get as close to the load as possible before you handle it.

Always bend your knees, not your back, brace your abdominal muscles and place your feet apart for good balance. Always ensure the task/load does not require high force action.

Always grasp the load securely with both hands and keep it evenly balanced and close to your body. Always raise your head and then lift the load to waist level by straightening your legs and using smooth movements.

Never twist your body whilst handling the load. Turn by moving your feet.”

21. Mr Gray accepted that he had been instructed to get as close to the item to be picked up before handling it. He also accepted that he had been taught in accordance with the first three items from the Coles manual extracted below:

“First Level Picking

Before lifting heavy cartons/objects, assess the weight and determine the most suitable lifting technique to use. (ie. full squat, semi-squat or lunge position) .

Always use correct manual handling techniques when working with the equipment.

If the carton/object is too heavy, seek assistance from another person or use appropriate lifting equipment.

Use pick sticks instead of overreaching for stock, do not lift and rattle the gravity feed.

Report any products that require excessive force to move or poor packaging (e.g. too much glue, too heavy).

When spills and/or damage occurs, ensure the area is safe (ie. place signage etc) and notify your Line Manager.

Beware of pallet condition (missing boards, nails, splintering).”

22. Mr Gray said that he did not know what a pick stick (referred to in the fourth item above) was, that he had never been provided with one when he worked at the depot and he had not been given any instruction as to its use when he was at the depot. This evidence was not challenged, either in cross-examination or by other evidence.

23. Mr Gray also said that if there were breakages, workers were told to leave them and report them to the “clean-up” people by calling on the phones throughout the warehouse. Mr Gray denied that if he saw damaged packaging, it was his obligation to repack the items. Mr Gray insisted, “[my] job was to pick boxes”.

24. Mr Gray also gave evidence about the bonuses given to workers who achieved a particular pick rate, as follows:

“Q.   Is there some sort of speed or something you have to achieve?

A.    Yes, for Chandler Macleod to give me more shifts I had to stay above their 100% rate.

Q.    To your understanding what was the 100% rate?

A.    100% is you had to work pretty hard to get there. The younger guys and faster guys could pick above it and they earned bonuses.

…

Q.    Were you during the day able to work out whether you were achieving at 100% rate or below or is it only at the end of the day you know whether you've achieved it?

A.    [To] My knowledge [you] only knew when you signed off it would tell you your percentage.”

25. The evidence did not reveal how many items Mr Gray was required to pick every hour or the weight of the various items he was required to pick.

Andrew Farr’s evidence

26. Andrew Farr, a co-worker, also gave evidence in Mr Gray’s case. Mr Farr said that, when he was unpacking items towards the back of the pallet, he would use a lunge lift. Sometimes he would have one foot on the pallet and the other foot on the depot floor but for items at the back of the pallet, he would have both feet on the pallet. He could not stand erect on the pallet because of the height of the rack above the pick bay.

27. Mr Farr said that when he observed broken packaging on the pallets, he would either ring for the cleaners or just move it aside and keep picking “because you’re in a fast pick rate”. He explained:

“… because you had to go by a pick rate and keep above 100, so if you wanted to keep 100, you wouldn't worry about the stuff that was there, you just push it to the side and then keep picking.”

Louise Whitby’s expert evidence

28. Mr Gray also tendered two reports of Louise Whitby, an ergonomist, dated 25 April 2018 and 11 April 2019, who was not required for cross-examination. Ms Whitby had visited the depot in 2009 and 2011 in relation to two other matters (and had retained photographs from those visits). She had not visited the depot since 2011.

29. Ms Whitby said in her report of 25 April 2018 under the heading, “Strategy for prevention”:

“106.   A key prevention strategy would have been to turn pallets when the face of the pallet projects beyond the midpoint of the pallet. Pallet turning involves a pallet jack to extract the pallet from the pick bay, rotating it through 180 degrees and then returning it to slot in the pick bay.

107.   There were pallet jacks at the Distribution Centre, so there [w]as no cost for equipment. However, the practice generally involves allocating workers to this task rather than interrupting the work of pick packers to perform the turning task. As well as having significant postural benefits, turning pallets through 180 degrees reduces the reach distance to stock and eliminates the need for workers to walk in over the pallets, which reduces the time required to perform this work. The increased picking efficiency could offset the labour costs for this work.

108.   Pallet turning is a strategy that has been around for many years and is recommended in order-picking guides from workplace safety regulators in the UK and Australia.”

30. Although paragraph 108 was footnoted, the documents referred to in the footnotes were not tendered with the report. Subsequently, on 5 November 2019, the second day of the hearing, Mr Parker sought to tender the whole of a document issued by Worksafe Victoria entitled “Manual Order Picking”, page 11 of which was referred to in the footnote to paragraph 108. Page 9 of that document was annexed to Ms Whitby’s report of 11 April 2019 (referred to below) and was admitted without objection. His Honour rejected the tender of the balance of the document on the ground of late service. This ruling was not challenged on appeal. Accordingly, there was no substantiation of paragraph 108 of Ms Whitby’s first report.

30. In her supplementary report dated 11 April 2019, Ms Whitby gave further evidence about pallet-turning in response to that of Dr Fairfax, the expert on whose report Coles relied. Ms Whitby clarified that a worker, who was not engaged in pick packing, would be specifically assigned to the task of pallet turning in each aisle or pair of aisles. She said that she did not propose that the pallets would be turned by DPCs (vehicles which would appear to be the same as DPMs) which Dr Fairfax said would not be workable, since they would be too long. Instead she proposed a single fork-lift to undertake pallet-turning.

31. Ms Whitby also addressed the suitability of pick sticks under the heading “Strategy for prevention” in her report of 25 April 2018. She opined at [109]:

“While pick sticks can assist by pulling stock across a pallet or shelf, they are only recommended for small, cartonised loads with very low mass – a shelf tray with a mass of 12 kgs would not be considered a light load.”

33. Ms Whitby’s third report, dated 3 November 2019, was sought to be tendered but was rejected by the primary judge as it was served on the first day of the hearing. This ruling is the subject of ground 6 of the notice of appeal.

34. Although there was mention during the hearing of the experts meeting in conclave, preparing a joint report and giving concurrent evidence, this did not occur. Ultimately, neither was required for cross-examination.

Evidence adduced on behalf of Coles

Peter Tryhuba’s evidence

35. Coles called Peter Tryhuba, the assistant manager for Coles at the depot. In cross-examination he confirmed that his title was systems manager. He said that the racking had been manufactured and fit for the purpose of the depot. As far as Mr Tryhuba knew, the racking was installed in 1999 and had remained in its configuration since that time. He confirmed that the height of the first level beams had remained the same and that almost all of them were 2.1m from the ground to the top of the beam. The depth of the beam constituting the rack was 110mm, leaving a clearance between the ground and the rack of 1.99m. He confirmed that the standard height of a pallet was 15mm, which left a clearance between the surface of the pallet and the first rack of 1.84m.

36. Mr Tryhuba said that any adjustment to the height of that rack would require consultation with an engineer because of the implications for the forces on the rack of the combined weights of all the articles stored above the rack. Mr Tryhuba said that there were significant changes made to the depot in 2014 although not to the height of the first rack above the ground.

37. Mr Tryhuba said that the aisles beside the pick bays were approximately 3m wide. He also said that, on average, 3,000 pallets per day would be delivered to the depot. Double pallet movers were used for moving stock. In addition, there were about six hand pallet jacks at the depot.

38. It was common ground that the pallets were square and measured 1.165m x 1.165m. The uncontroverted evidence of Dr Fairfax (referred to below) was that the pick bays were 2.74m wide and that two pallets could be accommodated side-by-side in each pick bay but that the space between them did not allow for access by workers.

Sally Paguirigan’s evidence

39. From May 2014, Sally Paguirigan was employed by Chandler as an onsite consultant at the Coles depot at Smeaton Grange. In November 2014 she ceased employment with Chandler and commenced employment with Coles as a team manager. While she was at the depot, her role was to manage the casual workers employed by Ready. For example, if Coles told her that it needed 20 people to start at a particular time, she would book in 20 people to start at that time. While she was at the depot, Ms Paguirigan would make a “safety observation” of the workers she had contacted to attend the depot. She would also be made aware of workers who were not meeting the “appropriate performance level” which I understand to be a reference to the pick rate. She confirmed that she did not have anything to do with the training of workers who were provided to Coles.

40. Ms Paguirigan said that Coles would prescribe and monitor the pick rate and determine whether workers were picking at an acceptable rate. If a worker was not picking at an acceptable rate, someone from Coles would take it up with a representative of Chandler. When she was working for Chandler at the Coles depot, she would walk the floor of the depot to try to talk to all of the Ready employees to make sure that they were there, working, complying with the pick rate and to confirm their future availability to fulfil Coles’ requests for labour. Ms Paguirigan was not aware of any independent assessment by Chandler of what was an appropriate pick rate for its workers.

41. It was common ground that there was no material change in the system between November 2014, when Ms Paguirigan left the depot, and 1 May 2015 when Mr Gray was injured.

Dr Fairfax’s report

42. The report of Dr Fairfax dated 26 February 2019 was tendered. She was not required for cross-examination. Dr Fairfax had inspected the depot for the purposes of providing her opinion.

43. Dr Fairfax considered the lunge method to be “an acceptable manual handling method for lifting the pack of bottled water”. She did not consider that, had Mr Gray approached the box on an angle (because of the broken packaging), he would have had to adopt an ergonomically unsafe posture. She estimated the force required to slide a 12.5kg box across a wooden pallet to be about 5kgs. She disagreed with Ms Whitby’s opinion that Mr Gray had to lift the box in an unsafe way because he was required to reach to gain access to it and said that, although Mr Gray reached for the box, he did not lift it until it was close to him. Thus, Dr Fairfax said that, to the extent to which Ms Whitby’s calculations were based on an assumed lifting reach of 700mm, they were inconsistent with the facts. Dr Fairfax considered it to be unlikely that the weight of the box of itself caused the injury and that it is “very likely” that Mr Gray’s spine was flexed and rotated as he straightened up and felt the spasm in his back. Thus, she considered that Mr Gray’s posture was the “major risk factor”.

44. Dr Fairfax set out her objections to the suggestion made by Ms Whitby that pallet-turning was a reasonable precaution in the following extract from her report:

“What would be involved in turning a pallet around?

192   When a Picker/Packer came across a pallet in a pick bay that was half picked he would have to drop off one of his partially packed pallets from his pallet truck (pallet 1) into the aisle. He would then drive back to the pallet in the pick bay (pallet 2) and drive his tynes under it, lift it and then drive back into the aisle and park pallet 2 in the aisle somewhere. That is now two pallets parked in the aisle.

193   He would then drive his pallet truck to the opposite side of pallet 2, drive the tynes under, lift it and then drive pallet 2 back into the pick bay. It has now been rotated.

194   He would then drive to pallet 1, slide his tynes back under, lift it and continue on picking and fulfilling his order.

195   Clearly rotating a pallet is not a quick task nor is it simple!

196   I consider that pallet rotation would cause congestion in the aisles and there would be many more accidents. Drivers would have to wait to access pick bays that were obstructed by parked pallets and drivers would have to weave their way down cluttered aisles.

197   From a safety perspective, I could not recommend pallet turning for floor pallets.”

[Footnotes omitted.]

45. Dr Fairfax did not address the question of pick sticks in her report.

The parties’ submissions at trial

46. Mr Dooley submitted that Mr Gray was injured while he was lifting the box of water because Coles had failed to instruct him that the lunge lift should not be used if it required him to reach beyond 630mm from his centre of gravity. He contended that the following were reasonable precautions which would have avoided the injury: adequate instruction; provision of mechanical assistance in the form of a pick stick; or pallet-turning, which would have the effect of bringing items from the back of the pallet to the front.

47. Mr Dooley took issue with Dr Fairfax’s opinion and contended that the primary judge should accept Ms Whitby’s evidence that it was dangerous to lift the article because it was more than 630mm from Mr Gray’s centre of gravity (which was not identified), although it appeared to be at the approximate midpoint of the ankles. He submitted that the evidence of Ms Whitby established that, had Mr Gray been properly instructed, or had pick sticks been provided or pallets turned, the accident would not have occurred and thus causation had been established under s 5D of the Civil Liability Act 2002 (NSW).

The primary judge’s reasons

The factual findings on Mr Gray’s claim

48. The primary judge made the following findings, which were not challenged by Mr Gray, as to Mr Gray’s duties and the way in which the injury was sustained:

“(1)   The plaintiff was employed by Ready Workforce as a picker packer at the Smeaton Grange warehouse of the defendant.

(2)   He commenced working at Smeaton Grange in November 2013.

(3)   The plaintiff went through a two-day induction course. The first day was theory, during which the plaintiff was taught how to lift and manually handle goods in the warehouse. This included the plaintiff being taught how to do squats and lunges.

(4)   The plaintiff operated a DPM [double pallet mover]. He was directed by means of a voice pick system, operated and provided by the defendant, to drive the DPM up and down the aisles at Smeaton Grange.

(5)   The plaintiff was directed by the voice pick system to select goods which were stored in pallet bays, manually handle those goods and place them on a pallet on his DPM.

(6)   The voice pick system told the plaintiff where to go and what to put on the DPM.

(7)   After the plaintiff finished making up an order carried on a pallet on his DPM, he wrapped it in plastic.

(8)   The plaintiff would then set off to make up his next order, in accordance with the voice pick instructions.

(9)   At about 6.30pm on 1 May 2015 the plaintiff drove the DPM into the aisle in which bottled water was stored.

(10)   He parked the DPM adjacent to a two-pallet pick bay containing boxes of bottles of water. In each box there were 24 500ml bottles of water. Each box weighed just over 12 kilograms.

(11)   The plaintiff was directed to pick up six boxes of bottled water and place them on his DPM.

(12)   The plaintiff picked up five boxes of bottled water from the right-hand pallet in the pick bay and placed them on the DPM, without incident.

(13)   The sixth box of bottled water was on the left-hand pallet in the pick bay.

(14)   The box which the plaintiff wished to retrieve was located at the rear of the pallet.

(15)   Near the front of the pallet there was a broken box of bottled water. Some of the loose bottles had fallen onto the floor of the warehouse, adjacent to the pallet. Some were lying on the pallet itself. There were some bottles still in the broken box. The plaintiff moved the water bottles lying on the floor of the warehouse out of the way with his foot. He moved them up against the pallet.

(16)   The plaintiff did not take any steps to move the broken box or the loose bottles which sat on the pallet.

(17)   The plaintiff stepped onto the pallet. He placed his left foot at the right front corner of the pallet and stepped forward while lowering his body. This brought his right foot towards the target box of bottled water.

(18)   By doing this the plaintiff was adopting a lunge position. The lunge position was the method taught to him by the defendant during his induction. It was the approved method for manually handling goods which were stored at the rear of the pallet or in a confined space.

(19)   There was insufficient room for the plaintiff to stand straight up on the pallet, without a risk of striking his head. In this regard I accept the evidence of the plaintiff and Mr Farr that it was not possible to stand up on the pallet without from time to time striking one's head. This necessitated the use of the lunge position rather than the squat lift.

(20)    The plaintiff put his right hand into the handhold on the box of bottled water but had trouble reaching the left handhold, as the box was on an angle away from him.

(21)    The plaintiff dragged the left-hand side of the box toward himself, but whether he did this with the box on the pallet, or did it during the course of the lift I cannot say. In any event, it does not matter.

(22)    The plaintiff could have positioned himself closer to the box of bottled water by stepping further forward with his right foot. The plaintiff could have brought himself closer to the box of bottled water, as he had been instructed to do during the induction by the defendant.

(23)    While still in the lunge position the plaintiff moved backwards, while carrying the box, with his torso bent approximately parallel to the ground.

(24)    The plaintiff stepped off the pallet.

(25)    After stepping off the pallet the plaintiff started straightening up and turned to his left during the course of straightening his back.

(26)    This part of the manoeuvre was contrary to safe practice and contrary to the way in which the plaintiff had been trained in manual handling by the defendant.

(27)    Since both feet were off the pallet at that point, the plaintiff had no restriction in standing up, as he was clear of the overhead racking.”

Further findings made by the primary judge on Mr Gray’s claim

49. The primary judge found, at [109], that there was a risk of sustaining an injury to the lumbar spine if unsafe and adverse postures or movements were adopted and that this risk was foreseeable and was in fact known to Coles. His Honour found that the risk was “not insignificant”.

50. The primary judge addressed the matters in s 5B(2) of the Civil Liability Act and found that there was a significant probability that harm would occur if care were not taken and that the likely seriousness of the harm was that “a person can suffer a serious and debilitating lower back injury”. His Honour found that the social utility of the activity which created the risk of harm was not relevant because Coles was conducting a commercial operation for profit.

51. The primary judge addressed the particulars of negligence as part of his assessment of the burden of taking precautions to avoid a risk of harm. Because of the limited challenge made to this aspect of his Honour’s judgment, it is necessary only to address the following particulars of the allegation of breach of duty in paragraph 12 of the pleading:

“…

e.    Requiring the Plaintiff to adopt adverse postures and movements associated with the moving of the pack of water underneath the pallet racking;

f.    Requiring the Plaintiff to manual handle the pack of water bottles underneath the pallet racking when it was unsafe to do so;

g.    Failure to rotate the pallets onto which the water bottles were placed to ensure that the water bottle could be picked by the Plaintiff in close proximity to the front of the pick bay so as to avoid the risk of injury to the Plaintiff;

…

q.    Failure to provide the Plaintiff with a hook or hoe to latch onto the pack of water bottles, so that they may be brought towards the front of the pick bay and enable easier access for the Plaintiff to pick the order;

…”

52. The primary judge’s reasons for finding that there was no evidence to support particular e. were:

“the plaintiff was required to adopt appropriate safe postures and movements when handling the box of water. Both of the experts agreed that the lunge technique was the appropriate method for handling the box.”

53. In finding that particular f. had not been made out, the primary judge said:

“There was nothing in the evidence to suggest that the height clearance under pallet racking was unsafe, or that it was unsafe to manually handle the box of water bottles while adopting the lunge technique because of the restricted height under the pallet racking.”

54. In finding that particular q. had not been made out, his Honour said:

“There was no evidence that a hook or hoe or latch was an appropriate instrument to use to pull a 12 kilogram box of water bottles towards the front of the pallet. Neither expert said that it was necessary. Both experts said that the lunge technique was an appropriate way to lift an item which was at the back of [the] pallet.”

55. The primary judge addressed particular g. in more detail. His Honour noted that pallet turning was the “solution” proposed by Ms Whitby. His Honour rejected the submission that pallet turning was a reasonable precaution within the meaning of s 5B(1)(c) and (2) on two bases. First, the primary judge said:

“… there was no evidence as to whether or not a lunge technique would still be necessary to access goods which, for example, were half way back along the depth of the pallet. Further, there was no evidence that the squat lift, which could be used from the front of the pallet, was any more or less safe than the lunge lift used to access goods at the rear of the pallet.”

56. Secondly, his Honour found that there was no evidence to analyse the burden of implementing a system of pallet-turning, including, how many additional workers would be required, whether the depot would need to be re-designed and the extent to which such a system would increase the risk of collisions between forklifts and workers and associated personal injury. Accordingly, the primary judge concluded that there was no evidence that pallet turning would have avoided the risk of harm to Mr Gray and was not satisfied that a reasonable person in the position of Coles would have implemented a system of pallet turning.

57. As none of the methods postulated by Mr Gray in the particulars of negligence had been shown to amount to a reasonable precaution which would have avoided the risk of harm to Mr Gray, the primary judge found that he had not proved that Coles was liable and ordered judgment in favour of Coles.

Mr Gray’s grounds of appeal

Ground 1

58. Mr Gray alleged, in ground 1, that the primary judge had erred in failing to find that the lift which he was required to undertake exposed him to a foreseeable, unnecessary risk of injury which required precautions to be taken and that the trial judge had failed to refer to all the evidence.

59. Mr Dooley sought, on appeal, to put a case that Coles was obliged to advise workers such as Mr Gray that a lift of 12kg was unsafe in the circumstances, in any event, but particularly if a lunge lift was the only available lifting technique. This case was inconsistent with the case put at trial and appeared to rely on the third report of Ms Whitby, which was rejected. Further, Mr Dooley submitted that, in accepting the version which Mr Gray had given Ms Whitby of how he had suffered the injury, his Honour must be taken to have accepted Ms Whitby’s diagram in her report as to the extent of Mr Gray’s reach. I reject this submission. The diagrams were admitted as assumptions only and were not established by Mr Gray’s version.

60. As referred to above, the primary judge found that the risk of injury was foreseeable. As a matter of law, a foreseeable risk required reasonable precautions to be taken. However, Mr Gray, as the plaintiff, bore the onus of proving causation: namely that had Coles taken reasonable precautions, the risk would have been avoided and he would not have been injured. In order to discharge the onus, Mr Gray had to show what those reasonable precautions were and address the matters set out in s 5B of the Civil Liability Act. It was not enough for Mr Gray to allege that Coles failed to provide a safe system of work. Mr Gray bore the onus of proving what Coles could, and should, have done which would have avoided the injury. Ground 1 has not been made out.

Grounds 2, 3 and 5

The relationship between the grounds

61. Grounds 2, 3 and 5 can conveniently be dealt with together since they are related. They are:

“2    The trial judge erred in not finding that the risk of injury could have been averted by:

a)    warning of the risk of injury;

b)    provision of an implement to allow the movement of the load forward towards the appellant;

c)    rotation of the pallet.

3    The trial judge erred in finding that;

a)    that [sic] an implement was not necessary to move the package of water bottles forward to the front of the pallet; and/or

b)    rotation of pallets was too burdensome upon the respondent;

and in doing so the trial judge failed to refer to all relevant evidence .. and failed to provide sufficient reasons for such findings, took into account matters which were not in evidence and failed to deal with the expert evidence on this subject.

…

5.   The trial judge erred in finding that the appellant was not required to adopt adverse postures and movements in moving the pack of water and in doing so failed to refer to all relevant evidence.”

62. In substance, Mr Gray sought to challenge the findings on particulars g. and q. There was no particular of negligence which alleged that Coles had failed to warn Mr Gray of the risk of injury although there was extensive evidence of the training and instruction he had been given about the correct method of lifting, which the primary judge accepted. For this reason, ground 2(a) has not been made out.

63. The balance of ground 2 and the whole of ground 3 relate to the issues of reasonable precautions and causation. In order to prove that Coles was liable, it was necessary for Mr Gray to prove that the matters he relied on amounted to reasonable precautions. This required attention to be given to s 5C of the Civil Liability Act, including (a), that “the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible”. Further, a defendant is not required to do something which would merely have the effect of substituting one risk for another, potentially greater, risk.

64. Thus, to make out his case, for example, that pallet turning was a reasonable precaution, Mr Gray had to prove that the benefit of pallet-turning, in terms of the reduction of risk associated with lifting items from the back of the pallet, outweighed the increased risks to workers associated with doubling pallet movements. Even if the risks associated with pallet-turning were fewer (which was not established), there would also be the question of the additional cost and whether it was disproportionate to any reduction in risk.

65. He was also required to prove, among other matters, factual causation in accordance with s 5D(1) of the Civil Liability Act: that the negligence was a necessary condition of the occurrence of the harm. In the context of the present case, this required Mr Gray to prove, on the balance of probabilities, that training in the limits of lunge lifting; use of pick sticks; or pallet-turning were reasonable precautions, which, if adopted by Coles, would have avoided the injury to Mr Gray: see the authorities cited in Williams v Metcash Trading Ltd [2019] NSWCA 94 at [47] (White JA, Meagher JA and Simpson AJA agreeing).

Training as a reasonable precaution

66. Mr Gray acknowledged that he had been trained in lunge lifting in accordance with the manual set out above. Ms Whitby’s third report was rejected and the assumptions in her first and second reports about Mr Gray’s stance were not otherwise proved. In addition, Mr Dooley did not challenge the findings at (18) and (22) in the extract of findings set out above. It follows from these findings that, having been trained correctly in how to do a lunge lift, Mr Gray acted contrary to the training he had received. Thus, training was a reasonable precaution but the evidence demonstrated that Coles had taken this precaution in training its workers, including Mr Gray, in safe methods of lifting. No error has been shown in his Honour’s rejection of Mr Gray’s case in so far as it was based on training.

The pallet-turning case

67. Grounds 2(c) and 3(b) both relate to Mr Gray’s case that pallet turning would have averted the risk of injury. The primary judge’s findings have been set out above. Mr Dooley submitted that his Honour failed to have regard to relevant evidence in rejecting pallet turning as a reasonable precaution. Mr Dooley relied on the evidence of Ms Whitby referred to above.

68. His Honour took into account this evidence and referred to it specifically in the reasons. However, the questions raised by his Honour have not been answered by Mr Dooley. His Honour was concerned that, although turning the pallets would bring items which had been at the very rear of the pallet, to the very front, it would have a much lesser impact on items close to the middle of the pallet. But for the items that were close to the middle of the pallet, the evidence did not establish that a lunge lift would not still be necessary, rather than the squat lift which would be available for items at the front edge of the pallet. Thus, turning the pallet might make, as far as the evidence revealed, little, or no, difference to the method available to the worker to lift it. No error has been shown in his Honour’s finding that, on this ground, pallet turning did not qualify as a reasonable precaution.

69. As to the second basis on which the primary judge was not satisfied that pallet turning amounted to a reasonable precaution, Mr Dooley was unable to point to the type of evidence which his Honour described as being apt to prove the burden of implementing a system of pallet-turning. It is plain from the terms of s 5B of the Civil Liability Act that the burden of taking precautions to avoid the risk of harm is relevant to the determination of whether precautions are reasonable. His Honour was entitled to prefer the evidence of Dr Fairfax on the practical issues of pallet turning to Ms Whitby’s evidence on the topic which was neither substantiated, nor informed by a more recent visit to the depot than occurred in 2011. It was plain that pallet-turning would require additional staff and additional equipment (it being common ground that the DPMs were not suitable for this task) and be of dubious benefit, having regard to the matters raised by his Honour, including the marginal effect on the lifting of items located in the middle of the pallet, and the increased risks associated with increased traffic in the aisles. Neither ground 2(c) nor ground 3(b) has been made out.

The mechanical aid/pick stick case

70. Grounds 2(b) and 3(a) relate to Mr Gray’s case that provision of an implement would have avoided the risk of injury. In support of these grounds, Mr Dooley argued that the primary judge failed to have regard to the Coles manual which prescribed the use of a mechanical aid wherever possible and the use of pick sticks to avoid overreaching.

71. The difficulty for Mr Gray was that his own expert, Ms Whitby, opined that a pick stick would not have been suitable for the task required to be performed by him: namely to move a box of water which weighed in excess of 12kgs. In these circumstances, the primary judge’s statement that no expert said that such an instrument was appropriate in these circumstances accorded with Ms Whitby’s evidence and was correct. In these circumstances, no error has been shown in the primary judge’s finding that the provision of a pick stick or other similar implement was not a reasonable precaution within the meaning of s 5B of the Civil Liability Act. Neither grounds 2(b) nor 3(a) has been made out.

72. I note that ground 4 is no longer pressed.

Ground 5

73. In ground 5, Mr Gray alleged that:

“The trial judge erred in finding that the appellant was not required to adopt adverse postures and movements in moving the pack of water and in doing so failed to refer to all relevant evidence.”

74. As referred to above, Mr Gray accepted the primary judge’s findings of fact set out above. It follows that Mr Gray accepted that he dragged the box towards himself, that he could have moved closer to the box of water before he lifted it, as he had been trained to do ((22)) and that, when he stood up and turned to the left, he was clear of the overhead racking ((25) and (27)). It was open to the primary judge, in light of this evidence, to find that:

1. Mr Gray was able to drag the box of water closer to where he was standing and that the forces involved (equivalent to lifting 5kgs) were, on the basis of Dr Fairfax’s report, not particularly great;

2. whatever impediments were posed by the height of the racking and the broken packaging did not prevent Mr Gray from doing a lunge lift, with one foot on the ground and the other on the pallet;

3. when Mr Gray had both feet on the ground, he could stand erect without impediment;

4. the injury was sustained when he suffered pain, following the twisting movement after he stood up, with both feet on the ground.

75. This sequence of movements made the obstacles with which Mr Gray was confronted (insufficient room between the floor of the pallet and the height of the racking to permit him to stand and the presence of broken items on the pallet) irrelevant to whether he could lift the box of water safely. This ground would appear to relate more to the case Mr Dooley wanted to put on the basis of Ms Whitby’s third report (referred to below) than to the case that was actually put. I am not satisfied that ground 5 has been made out.

Ground 6

76. As referred to above, Mr Dooley sought to tender a report of Ms Whitby dated 3 November 2019, which was served on 4 November 2019, the first day of the hearing. The primary judge rejected the report. His Honour considered that the third report went beyond the opinions expressed in the first two reports and noted that there had been no explanation as to why the opinion expressed in the third report had not been included in the first two reports. Further, the primary judge noted that Dr Fairfax, Coles’ expert, had not had a chance to consider the report and found that Coles “should not be expected to meet that additional material”.

77. The opinion expressed by Ms Whitby in the third report was that if the worker’s hips (as depicted on the diagram in the report) were more than 630mm from the object to be lifted, no load would be safe to lift and that if the worker’s hips were 600mm from the object, the maximum recommended weight would be 7.7kgs. Thus, her opinion, as expressed in the third report was that, once Mr Gray had to use a lunge lift to pick up the box of water which weighed more than 12kgs, there was no safe way of lifting it. The primary judge confirmed with Mr Dooley that the effect of the third report was that there was no safe way to lift a load of 12kgs. Mr Dooley accepted that this was not specifically included in the particulars of negligence.

78. In the course of argument on the question of admissibility of the report, the primary judge put to Mr Dooley that the opinion expressed in Ms Whitby’s previous report was that lifting a load which weighed in excess of 9kgs more than 60 times over a two-hour period from a height below the knee was high risk. His Honour put that the opinion (which came from a single page of a WorkCover Victoria manual dealing with manual order picking) was inconsistent with the proposition that lifting a weight more than 9kgs at a lesser frequency was high risk. This appears to have been the basis on which the primary judge, in my view, correctly, assessed the third report as constituting a significant expansion of Mr Gray’s case.

79. The ruling by a trial judge on an expert report which has been served, without explanation, outside the time provided for by the rules is a discretionary judgment. The ruling was unexceptional. The primary judge appears to have taken into account matters that were relevant under Part 6 of the Civil Procedure Act 2005 (NSW), and in particular those matters referred to in ss 56 to 58. Although Mr Dooley argued that the report ought to have been admitted, he was unable to identify any basis on which it could be put that it was not open to the primary judge to reject the report or any basis on which the discretion could be said to have miscarried. Further, Mr Dooley did not identify any exceptional circumstances within Uniform Civil Procedure Rules 2005 (NSW) r 31.28(4)(a). This ground has not been made out.

Coles’ appeal against the judgment on the cross-claim

80. As referred to above, the primary judge ordered judgment for Chandler on the cross-claim. The evidence on the cross-claim comprised the agreement between Coles and Chandler; the Coles manual which contained the various procedures which it imposed on those working at the depot; and the evidence on the principal claim in so far as it established that Mr Gray was at fault when lifting the box of water and had failed to comply with particular instructions in the Coles manual. The appeal by Coles is limited to the primary judge’s rejection of its claim for damages for breach of the agreement and for indemnity under the agreement.

The agreement between Coles and Chandler

81. Before turning to the primary judge’s reasons, it is convenient to set out the relevant terms of the agreement.

The agreement

82. The agreement, which is entitled “Services Agreement” has two parties: Coles and Chandler. The latter is defined as “Service Provider”. The commercial purpose of the agreement was to govern the provision by Chandler of labour to Coles. Of present relevance, cl 1.1 of the agreement contains the following defined terms:

“Agency Personnel means a candidate whom Coles has selected to perform an Assignment;

…

Assignment means the specific work assignment and related services to be performed by the Agency Personnel for Coles;

...

OH&S Requirements means the Coles occupational health and safety requirements set out in Schedule 2 (OH&S) as amended from time to time.

Services means the supply of recruitment services for temporary labour by the Service Provider to Coles and any services incidental to those services or to the performance of the service provider’s obligations under this agreement. The parties acknowledge that despite any other provision in this Agreement, supplied temporary labour will be under Coles direction and supervision and that the Service Provider is not responsible for the work done by the temporary labour supplied by it, or the end-products of that work.”

83. It was common ground that the definition of “Sites” included the Smeaton Grange depot.

84. Clause 3, entitled “Services”, relevantly provides:

“3.1    Engagement of Service Provider

Coles engages the Service Provider as an independent contractor on a non-exclusive basis, as an employment agency to provide Coles with the services of casual staff who are employed or contracted by the Service Provider.

3.2    Compliance

In providing the Services the Service Provider must comply with:

…

(b)    all reasonable directions of Coles;

(c)    when on the Sites, the OH&S Requirements and any other reasonable on-site procedures;

…”

85. Clause 13, entitled “Indemnities”, relevantly provided:

“13.1   Indemnities

The Service Provider releases and indemnifies Coles in respect of any loss, damages, claims, expenses (including legal costs on a solicitor and own client basis) that may be suffered or incurred by Coles, directly in connection with:

(a)    the failure by the Service Provider and/or the Agency Personnel to perform any of its obligations under the terms of this Agreement;

(b)    any breach by the Service Provider and/or the Agency Personnel of any provision of this Agreement;

(c)    any breach of warranty or negligence or other claim with respect to goods and services sold or provided by Service Provider and/or the Agency Personnel;

…

(f)    any negligent act or omission or wilful misconduct of the Service Provider or its employees, agents or Subcontractors and/or the Agency Personnel in connection with this Agreement; or

…

except to the extent that the loss is directly attributable to the negligence or wrongful act or omission of Coles.

13.2    Inclusions

The Indemnity set out in clause 13.1includes an indemnity in connection with:

…

(b)   the injury to or death of any person; and

…”

86. Clause 16(g) relevantly provides that the “Service Provider will be liable for Services or other obligations under this agreement that are performed or discharged by its subcontractors or agents.” It was common ground that Chandler would be liable for any relevant breach by Ready.

The schedules to the agreement

Schedule 2: OH&S

87. Schedule 2, which is referred to in the definition of OH&S Requirements in cl 1.1, is entitled “OH&S”. It commences with an “overview” which provides:

“1.0    This Schedule addresses occupational health and safety issues that may arise in procurement contracts for Services and Goods.

1.1    It imposes obligations upon the Supplier in order to ensure, so far as is reasonably practicable, that the Supplier complies with all of its OHS Legal Obligations.”

88. Clause 1.8 of sch 2 provides that the schedule applies to a “wide range of agreements that are used by a number of different corporate entities for their procurement purposes. The name of the procuring party under these agreements may therefore vary.” I took it to be common ground that “the Supplier” in sch 2 was a reference to Chandler, which is the Service Provider under the agreement.

89. Clause 1.15 of sch 2, entitled “Release and Indemnity” provides:

“1.15    Having regard to the above, the Supplier/Contractor releases and indemnifies the Principal and/or Other Persons in respect of any loss, damages, claims or expenses (including legal costs on a solicitor and own client basis) that may be suffered by the Principal and/or Other Persons, in connection with :

(a)    the steps taken, or omitted to be taken by the Supplier/Contractor, in its purported discharge of its OHS Legal Obligations under the Agreement;

(b)    any breach by the Supplier/Contractor of any of its OHS legal Obligations …”

90. Clause 1.16 of sch 2 provides that the release and indemnity (in cl 1.15) is to be read as “complementary to any other release and indemnity in the Agreement and subject to the limitations of liability in clause 13 of the Services Agreement.”

91. Clause 1.18 of sch 2 provides that, relevantly, Chandler and its Personnel (which were accepted to include Mr Gray) must comply with “all OHS Legal Obligations”. Clause 2.1(b) of sch 2 provides that Chandler is “responsible to ensure that all Works undertaken comply with the OHS Legal Obligations and are otherwise undertaken in a manner which is acceptable to” Coles.

92. Section 6 of sch 2 comprises a dictionary of terms used in the schedule and includes the following:

“OHS Legal Obligations:

A reference to OHS legal Obligations includes any obligation imposed under:

•    the common law relating to health and safety in the work environment

•    legislation relating to specific aspects of workplace safety…

•    any obligations relating to health and safety imposed under this Contract (these latter requirements when referred to separately in order to distinguish them from the broader definition of OHS Legal Obligations are referred to as ‘The Principal's Requirements’).

...

Supplier:

Includes a person or company who supplies Services and Non-Merchandise Goods to the Principal and any person who is a supplier within the meaning of any OHS Legal Obligation.

Works:

The physical activities performed on site in accordance with the specifications and other requirements agreed in writing between The Principal and the Contractor. The term Works exclude [sic] non-physical activity (eg consultancy services).”

Schedule 3 - Specifications

93. Clause 5 of sch 3 relevantly provides:

“…

Coles will contact the contractor from time to time to provide agency casual labour to work in Coles Distribution Centres (DC). Coles will provide a brief of the roles required, number of staff and the requirement to work regular day shift, afternoon shift, Saturday, Sunday or Public Holidays.

…

The Contractor must;

•    Ensure all casuals terms and conditions reflect relevant site EBA

•    Ensure casuals are adherent to all rosters including arrival at the DC and breaks at the specified time

•    Ensure all casuals undergo Coles two day classroom induction as negotiated with Coles

…

•    be present on site for all shift start and shift change overs

•    Provide on site supervision for duration of shift for 10 or more casuals for any given shift

•    monitor performance of casuals on Coles sites. Eg. pick rate, error rate etc

•    Provide personal protective equipment PPE to casuals

…”

The cross-claim

94. In its cross-claim, Coles claimed indemnity under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). As there is no appeal from the primary judge’s rejection of that claim, it is not necessary to address that part of the cross-claim. The decision on the cross-claim which is the subject of the appeal is the primary judge’s rejection of Coles’ claims for damages for breach of the agreement and for indemnity under the agreement.

95. Coles claimed indemnity against Chandler pursuant to cl 13.1 of the agreement and cl 1.15 of sch 2 to the agreement.

96. It alleged various breaches by Chandler of the agreement. In paragraph 14 of its cross-claim, Coles alleged that Chandler had breached cl 3.2(c) of the agreement because Chandler and Ready had failed to comply with its on-site procedures. The particulars of the procedures comprised Coles Standard Operating Procedures for “Manual Handling – General Lifting Principles”, “Reporting and Removing Damaged Stock” and “Stock Selection”, as well as the Coles Logistics Safe Work Practice Manual Handling LOG027.

97. Coles also alleged that Chandler had breached sch 3 of the agreement by failing “to supervise or monitor the performance of the Plaintiff so as to ensure that he carried out his lifting tasks safely”; that Chandler had breached cll 1.14 and 1.21 of sch 2 by failing to “monitor and manage the safety performance of the Plaintiff”; that Chandler had breached cl 2.1(d) of sch 2 by failing to supervise its workers so as not to place Mr Gray at risk; and that it had breached cl 13.2.1 of sch 2 by failing to maintain a clean and tidy worksite.

The primary judge’s reasons

98. The primary judge rejected the allegation that Chandler breached cl 3.2(c) of the agreement and found that it was Coles which had created and imposed the operating procedures for the depot and that Chandler had not required its workers to do other than comply with them. His Honour found that Chandler’s obligation to provide on-site supervision for casual workers supplied to Coles and monitor their performance did not require it to ensure that each worker carried out lifting tasks safely and that there was, accordingly, no breach by Chandler of sch 3 of the agreement.

99. As to the alleged breach of cl 1.22 of sch 2, the primary judge found that there was no evidence that Chandler had failed to monitor its workers other than in accordance with Coles’ requirements and that breach of this clause or cl 2.1(d) of sch 2 had not been established.

100. The primary judge also rejected the allegation of breach of cl 13.2.1 of sch 2 and said:

“In relation to the broken box of bottles on the pallet, and the loose bottles which had fallen out of that box, the evidence which I have accepted shows that it was the responsibility of the cross-claimant itself to send its cleaners to remove such objects. This was the way the contract worked in practice. There can be no suggestion that, when the cross-claimant chose to operate Smeaton Grange in that fashion, it can now allege a breach by the cross-defendant of cl 13.2.1. Such allegation flies in the face of the cross-claimant's on site requirements. Further, to give such a broad operation to cl 13.2.1 would, as Senior Counsel for the cross-defendant put it, make the cross-defendant responsible even if in some other part of the factory a person unassociated with Ready Workforce had broken or spilled a product.”

101. For these reasons, the primary judge found that Coles was not entitled to indemnity pursuant to cl 1.15 of sch 2. On the same basis, his Honour found that Coles was not entitled to indemnity under cl 13.1 or for damages for breach of contract, no breach having been established.

102. The primary judge found that there was a further reason why Coles was not entitled to indemnity: namely, that the indemnity only operated when Coles incurred expenses “directly in connection” with certain failures by Chandler. His Honour referred to this Court’s decision in Coles Supermarkets v Ready Workforce (A Division of Chandler Macleod) Pty Limited [2018] NSWCA 140 (the 2018 decision), which concerned a claim for indemnity under cl 13 of the same agreement between the same parties.

103. The primary judge referred to [109] of the 2018 decision where White JA (Basten JA and Simpson AJA agreeing) said:

“The costs and expenses incurred by Coles in defending the litigation were incurred not as a direct result of Ready Workforce’s negligence (as found) but as a result of Ready Workforce’s bringing a claim for indemnity under s 151Z(1)(d).”

104. The primary judge applied the 2018 decision and said:

“[219]   Placing due emphasis upon the phrase ‘directly in connection with’ in cl 13.1, the same reasoning runs in this case. The legal costs incurred by the cross-claimant (as defendant) in defending the litigation brought by the plaintiff were incurred not as a direct result of any breach by Ready Workforce of the allegations under the Services Agreement, but as a result of Mr Gray bringing a claim for damages against the cross-claimant (as defendant}.

[220]    Adopting the reasoning of the Court of Appeal, the Cross-Claim in the present case fails, as the cross-claimant has not incurred legal costs ‘directly in connection with’ any failure to comply with the terms of the Services Agreement or any negligence. In any event, I have already found that there was no breach of the agreement and no negligence by the cross-defendant.”

105. The primary judge also addressed and rejected the argument put by Coles that Chandler was in breach of the agreement by reason of the failure on the part of Mr Gray to comply with Coles’ procedures. His Honour found that the definition of “Services” in cl 1.1 of the agreement led to the conclusion that the agreement was only referring to recruitment services provided by Chandler (or Ready) to Coles and that it did not make Chandler responsible for the way in which casual labour it supplied to Coles performed the work for Coles.

106. His Honour rejected the construction for which Coles contended and said at [232]:

“If the intention of the parties to the Services Agreement had been that a one-off failure to follow safe lifting practices was enough to constitute a breach of contract by the cross-defendant, it would have been easy to say so. Nowhere does the contract make this plain, and it requires some verbal gymnastics to contemplate that as an end result. Further, if that was the intention of the parties, one wonders how the cross-defendant could have possibly performed that obligation under the contract. Was it expected to have a supervisor shadowing the plaintiff as he did every lift? ...”

The grounds of appeal

107. Coles raises eight grounds of appeal. Each of the grounds, apart from ground 4, raises an issue relating to the construction of the agreement. Ground 3 raises an additional issue about the consequences of a disparity between the procedures in Coles’ manual and the actual practice in the warehouse. It is convenient to address all grounds apart from grounds 3 and 4 together.

Grounds 1-2 and 5-8

108. In substance, Coles argued that the primary judge was in error in failing to find that it was entitled to indemnity pursuant to cl 13.1 of the agreement, or cl 1.15 of Sch 2 to the agreement or that it was entitled to damages for breach of cl 3.2(c) of the agreement. The parties’ submissions were addressed to the construction of the agreement generally and did not envisage that the grounds were discrete or ought be dealt with separately. In these circumstances, the convenient course is to address the arguments on the question of construction before returning to the separate grounds, if necessary.

109. It is plain from the definition of “Services” in cl 1.1 that the intention of the parties was that Chandler, as Service Provider, would not be liable for the work done by the temporary labour supplied by it, or the end-products of that work. It was common ground that references to Chandler also included Ready as it was Chandler’s subcontractor. The agreement contemplated that it was Coles and not Chandler which had the right to direct persons such as Mr Gray how to do their work. In my view, the primary judge was correct to regard the agreement as one which regulated the provision of temporary labour to Coles and which defined the respective rights and obligations of Coles and Chandler when providing such labour to Coles. The agreement expressly provided, in the definition of “Services” in cl 1.1, that it was for Coles, and Coles alone, to determine how the work was to be performed. It is evident, from the extracts from the Coles manual which were tendered, that Coles issued standard operating procedures and guidelines which were wont to change from time to time.

110. The effect of Coles’ submissions on the cross-claim is that Chandler is liable for any breach by one of the casual staff it provided to Coles of any requirement under any of Coles’ operating procedures and guidelines which Coles can change at any time. It is noteworthy that none of these documents was appended to, or incorporated by reference, in the agreement. I regard this construction as inconsistent with the definition of “Services” in cl 1.1 of the agreement. Further, such a construction would be inconsistent with the purpose and object of the agreement, which was for Chandler to supply to Coles casual labour to carry out tasks for Coles as directed by Coles: see Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). It would be an odd construction for Chandler to be liable for the way in which its casual labour complied with Coles’ own requirements, when it had, by reason of the definition of “Services”, no power to direct such labour and no responsibility for the work performed by casual workers it had supplied. The construction for which Coles contended would expose Chandler to breach in circumstances where it had no power to protect itself from such exposure, except perhaps by continuous supervision of its workers by reference to Coles’ requirements from time to time.

111. It is significant that cl 3.2 imposed an obligation on the Service Provider (which was accepted to apply to Chandler and to Ready) but not on the Agency Personnel. Nor did it impose an obligation on the Service Provider to ensure that the Agency Personnel complied. Clause 3.2 applied to persons such as Ms Paguirigan who was on-site at the depot and was responsible for ensuring that casual workers undertook Coles’ induction courses, attended for work at the depot as required and kept to the performance standards (pick rate etc) imposed by Coles.

112. Mr Parker accepted that the agreement in the present case was in identical terms to that considered by this Court in the 2018 decision and that the parties to the 2018 decision were, relevantly, the same as the parties to the appeal against the judgment on the cross-claim. Mr Parker did not contend that the 2018 decision had been wrongly decided. However, he sought to distinguish it on the basis that, in that case, it was the employer, Ready, which had sued Coles for contribution under s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW) and not the worker who had sued Coles for damages in negligence. I do not accept that this is a basis for distinguishing the 2018 decision from the present case. An action under s 151Z(1)(d) gives rise to the same issues as arise when a worker claims damages in tort against a third party tort-feasor such as Coles: namely, has the worker suffered injury as a result of a breach of duty which the third-party tort feasor owed to the worker?

113. In my view, the primary judge’s construction of the agreement was correct, for the reasons given in his Honour’s careful and considered judgment. Further, the 2018 decision was indistinguishable and his Honour was bound to apply it. The primary judge did so without error. I am not persuaded that Coles has made out any of grounds 1, 2, 5, 6, 7 or 8 of its appeal against the judgment on the cross-claim.

Additional matters

114. It is not necessary to address whether there was an issue estoppel against Coles on its claim from indemnity arising from the 2018 decision. Nor is it necessary to address whether it was an abuse of process for Coles to seek to re-litigate the same issue which had been decided against it in previous litigation: see Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142 (which concerned different parties but the same issue) at [23]-[29] (Handley JA, Mason P and Heydon JA agreeing). These matters were not raised either in the Court below or in this Court.

115. Nor is it necessary to determine whether the District Court had jurisdiction to make an order for indemnity since this matter was raised neither in the Court below nor in this Court.

Ground 4: whether factual finding was erroneous

116. Ground 4 relates to a factual finding which, even if it were decided in favour of Coles, would not affect the result of the appeal. The ground is as follows:

“The primary judge erred in the inferring from the absence of evidence in chief from Mr Tryhuba that the Appellant accepted that the practice at Smeaton Grange was that the picker packer should call a cleaner to attend to clean up any spillage or breakage.”

117. The passage in the primary judge’s reasons which is relevant to this ground is as follows at [105]:

“I have found that Mr Farr was a witness of truth. In particular, I accept his evidence that while the Coles written procedure may have been that damaged stock should have been collected by the picker packers and returned to a repack area, the practice at Smeaton Grange was that the picker packer should call a cleaner on a telephone, and the cleaner would attend to clean up any spillage or breakage. This was also the evidence of the plaintiff. Mr Tryhuba, who was called by the defendant, did not give evidence to the contrary and was not asked about that topic. He would have been in the best position to say, if it were the case, that the written procedure in relation to cleaning up breakages was followed as a matter of practice at Smeaton Grange.”

118. There is a slight disparity between the finding as expressed in ground 7 (that Coles accepted the practice) and what the primary judge actually found (what the practice actually was) the significance of which is not apparent. It would seem to me that, if the practice in the depot was not to comply with a particular procedure in the manual and that practice was tolerated or acquiesced in, the inference would be open that Coles accepted the practice.

119. The Coles manual (Coles Logistics Safe Work Practice LOG023) specified the following procedure:

"If you encounter a spill, ask another team member to obtain safety signage and appropriate cleaning equipment while you stand near the hazard. And if no one is available, ensure that the area has been made safe before you leave to obtain the required equipment."

120. The relevant extract from SOP0145G, a document produced by Coles outlining its standard operating procedures, was as follows:   

Damaged stock

•   Transfer any damaged stock from the DC floor to the repack area

•   Damaged stock that can be repaired must be securely wrapped and selected

121. Both Mr Gray and Mr Farr denied that there was any such practice, as set out in Coles’ procedures set out above, while they were working at the depot. Their evidence as to the practice appears from the passage from the primary judge’s reasons extracted above. Mr Tryhuba did not give evidence on the topic.

122. Mr Parker argued that, although Mr Tryhuba was described as an “assistant manager” by the primary judge, he was a “systems manager”. He contended that Mr Tryhuba’s duties were not such as to give rise to an inference that he could give evidence on the topic and that the absence of questions to Mr Tryhuba could not reasonably be construed as reflecting a concern about his answers. Mr Parker also relied on there being no issue on the pleadings between Coles and Chandler which would alert Coles of the need to adduce evidence on the topic.

123. An unexplained failure to adduce evidence from a witness may give rise to an inference that the uncalled evidence would not have assisted the party’s case: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418 (Handley JA). This principle is associated with the rule in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 that an unexplained failure to call a witness in the party’s camp may give rise to an inference that the witness’s evidence would not have assisted the party’s case. The inference is available but not mandatory. Another basis for the adverse inference was available. If Mr Tryhuba did not know anything of the practice, presumably Coles could have called another witness from the depot who did. Thus, it could be inferred from Coles’ failure to call a witness on this topic that no such witness would have assisted its case: Australian Blue Metal Ltd v Hughes (1962) 79 WN (NSW) 498 at 513 (Jacobs J). It was plainly within Coles’ power to call evidence on the attitude of its managers at the depot towards non-compliance with its procedures in this respect: Blatch v Archer (1774) 1 Cowp 63 at 65 (Lord Mansfield CJ).

124. In the absence of evidence from Mr Tryhuba on the subject of how pickers were expected to deal with broken items on pallets, the only evidence on the subject comprised the Coles manual on the one hand; and the evidence of Mr Gray and Mr Farr on the other. Both Mr Gray and Mr Farr said that a picker who encountered broken goods on a pallet would call a cleaner, or simply move it out of the way. Mr Gray had worked at the depot since November 2013. Mr Farr worked at the depot from 2012 to 2015. They were both adamant that the system outlined in the Coles manual was not followed.

125. As referred to above, Mr Tryhuba was called by Coles. A question arose during his evidence in chief as to whether he had expertise to give an opinion on pallet-turning. In submissions on this question, Mr Parker described Mr Tryhuba as “the man that [sic] runs the place [the depot]”. Ultimately, this question was resolved against Coles on the basis that it had not served an expert report, which would be required under the rules.

126. If, notwithstanding that he ran the depot, Mr Tryhuba was not in a positon to say whether the procedures regarding broken goods outlined in the manuals were adhered to or whether, as Mr Gray and Mr Farr would have it, they were honoured in the breach, he could have given evidence to that effect. In that circumstance, no inference would have been available since his not giving evidence on the subject would not have been unexplained.

127. It is possible that Mr Gray’s and Mr Farr’s evidence about the practice in the warehouse took Mr Parker by surprise. However, common law trials where evidence in chief is given orally are, by their nature, dynamic and, as long as a matter falls within the pleadings and particulars and does not amount to expert evidence (which requires notice to be given), counsel ought be prepared to deal with such evidence as is adduced.

128. For these reasons, I am not persuaded that ground 4 has been made out.

Ground 3

129. Ground 3 alleges:

“The Primary Judge erred in finding that SOP014SG was ‘observed in the breach’ that the standard operating procedure was ‘supplanted by how the [Appellant] ran the warehouse in practice’. The conclusion was contrary to the express written terms of contract. (Ex DX 3 conditions 21.4, 21.6 and 21.7.”

130. Mr Parker accepted, in oral argument, that any breach by Mr Gray of the procedures relating to cleaning was not causative of his injury. It was not clear from his concession whether this ground was pressed. However, it can be addressed briefly.

131. The primary judge’s finding which was said to be erroneous was as follows:

“While SOP014SG was observed in the breach, this was how the cross-claimant chose to run the Smeaton Grange warehouse in practice, and it could not be said that through the cross-claimant failing to follow and enforce its own procedures, the cross-defendant and Ready Workforce had failed to adhere to those procedures. The written Standard Operating Procedure in this case was supplanted by how the cross-claimant ran the warehouse in practice, in relation to reporting and removing damaged stock.”

132. In substance, Coles argued that it was immaterial to the question of whether Chandler breached the agreement that Coles chose not to enforce its own procedures. It relied on three clauses of the agreement: cl 21.4, which provided that the agreement was an entire agreement; cl 21.6, which provided that no amendment to the agreement would be of any force unless in writing and signed by an authorised representative of each party; and cl 21.7, which provided that a failure of a party to require performance of any obligation under the agreement did not constitute a waiver. For the reasons given above, the operational obligations on workers under Coles’ own procedures did not thereby become legal obligations with which Chandler and Ready had to comply. Therefore the procedures concerning cleaning up spillages or broken items, and whether Coles enforced its procedures in the depot, could not affect the content of Chandler’s obligations to Coles.

133. The issue raised by ground 3 serves to highlight the commercial unreality of the construction of the agreement for which Coles contended. That construction would make Chandler responsible whenever a worker which it supplied to Coles failed to comply with an edict in the Coles manual, including one which Coles itself had chosen for what might have amounted to good practical reasons, not to enforce. Ground 3 has not been made out.

Proposed orders

134. For the reasons given above, I propose the following orders:

In CA 2020/6348: Gray v Coles Supermarkets Pty Ltd

1. Dismiss the appeal.

2. Order the appellant to pay the respondent’s costs.

In CA 2020/80241: Coles Supermarkets Pty Ltd v Chandler Macleod Group Limited

3. Dismiss the appeal.

4. Order the appellant to pay the respondent’s costs.

**********

Decision last updated: 04 September 2020