Maggiotto Building Concepts v Gordon

[2002] HCATrans 85

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S86 of 2001

B e t w e e n -

MAGGIOTTO BUILDING CONCEPTS PTY LIMITED

Applicant

and

DESMOND GORDON

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 MARCH 2002, AT 9.51 AM

Copyright in the High Court of Australia

MR R.J. ELLICOTT, QC:   I appear with MR J.S. DRUMMOND for the applicant.  (instructed by Michell Sillar)

MR D.A. WHEELAHAN, QC:   I appear with my learned friend, MR R.J. TAYLOR, for the respondent.  (instructed by Stoikovich Banfield Macri)

MR ELLICOTT:   Your Honours, there are two questions here.  One:  a question arises as to the nature of the statutory duty under regulation 73 of the Construction Safety Regulations; and the other is whether as between a head contractor and an independent contractor, you imply a term by operation of law and we say that both of those are very important issues.  Although there has been an Occupational Health Act 2000, cases under the previous regulations are still about.  Indeed, there are instances of another two and judgment in the last 12 months.  So, both matters are matters of ‑ ‑ ‑

GUMMOW J:   Does the implied term point have any connection with the change in the legislation?

MR ELLICOTT:   No, your Honour.  Indeed, there is very little analysis in that judgment in relation to implied term.

GUMMOW J:   It just appears at page 78, paragraph 48, of the judgment, does it not?

MR ELLICOTT:   Yes, it seems to have found its genesis in what Justice Mason said in Stevens v Brodribb but he said it in relation to tort and his Honour and the other Justices seized it and said, “In my opinion, the obligation to prescribe a safe system is ordinarily to be implied by the operation of law”.

One would have thought that before doing that his Honour would have considered that it had to be a class of contract and was this a class of contract whereby ‑ I think the test is reasonable necessity ‑ you would imply such a term.  There is no consideration of that.  That is it.  That is the reasoning which seems a very odd way in which to find in a new set of circumstances an obligation to prescribe a safe system of work.

So, we say that is highly suspect, that decision, in relation to implied term and in so far as it relies on Justice Mason in Stevens v Brodribb, well that, of course, was quite a different set of circumstances.

GLEESON CJ:   I just want to be clear about the relationship between the two issues, Mr Ellicott.  The regulation 73 issue was one basis of imposing liability.

MR ELLICOTT:   Yes.

GLEESON CJ:   Was that alternative to the implied term?

MR ELLICOTT:   It was in the case, yes, but the two are interrelated in a legal sense.

GLEESON CJ:   Yes, but it was enough for your opponent to succeed on either one.

MR ELLICOTT:   That is right.

GLEESON CJ:   You will have to succeed on both on the appeal.

MR ELLICOTT:   We have to succeed on both, yes, and the first point under regulation 73 is a very significant one and where the Court went wrong, in our submission, was picking up the dicta from what, on this particular issue, the two Justices, Mason and Jacobs, as they then were, were in the minority.

Now, your Honours will recall Buckman’s Case and it was held that those who were actually – the words were:

Any person who directly or by his servants or agents carries out any construction work –

and “construction work” was defined as including building work and building work clearly covered all the various activities that might go to erecting a building and the majority, consisting of Chief Justice Barwick, Justice McTiernan and Justice Stephen gave it an interpretation that, in effect, what the regulation did was fix on those who actually carried out the work.

So, you have the people who do the concrete work and you then look at the regulation and you find that they have an obligation, for instance, relevant here, to:

provide and maintain safe means of access to every place at which any person has to work at any time

That is in relation to that particular work.  Here, my client had subcontracted all the various aspects of the building.  All it was doing was co‑ordinating and at times co‑ordinating the various trades in its own protection overseeing the work but it had no control, no directional control and, of course, also supplying materials.

GLEESON CJ:   Mr Gordon was not doing any of the work relating to that part of the building where he fell down – I mean, he was not constructing the stairway?

MR ELLICOTT:   No, but if he was doing the fit‑out, as he had contracted to do as an independent contractor, then he was responsible to fulfil the statutory duty in relation to the fit‑out work and that included:

provide and maintain safe means of access to every place at which any person has to work at any time

Now, he goes to the building, which is half complete, and he goes to the door and there is a six‑foot void in front of him which will ultimately be occupied by stairs which will be provided by another subcontractor.  On his right there is a door going into a bedroom and he, with his experience, said, “I can tell what materials are needed by just looking at it”.

GLEESON CJ:   You mean that if he had an employee  ‑ ‑ ‑

MR ELLICOTT:   Yes, as he did.

GLEESON CJ:    ‑ ‑ ‑ it would have been his obligation for the benefit of his employee to get the employee safely across the void?

MR ELLICOTT:   Yes, he had that obligation, as did all the other subcontractors and let us face it, the void is not an unusual thing in building operations – it might be below the roof or the people working up above.  If it is down below it is six foot.  He steps across into a doorway but then rather foolishly, to look at another bedroom that is on a split level a little higher up, he goes across a wall of three or four feet where there is only a ledge and the gyprock on the wall so there is nothing to hang on to and he grabs the floor of the other section in a very foolhardy way and then lifts himself up, has a look, “Yes, I need so much”, then he tries to put his foot back on a ledge that he is seeking to walk across to get there, he misses his footing and he falls to the floor.

All he had to do, as we know – it is not just hindsight, your Honour, it should be obvious to a carpenter, that you should have a ladder when you are doing things like that and that is all you need and maybe the means of access would have been a ladder which you went down into the void and got up the other side.  But, be that as it may, the critical thing is that he already had the statutory duty.

Now, that means that so far as Buckman’s Case is concerned, all the various trades split up over the whole of the job had the various duties in relation to that particular work and he had it, of necessity, under Buckman majority in relation to that.  Now, the minority – I call them the minority, they all came to the same view in the end – said that you could have two people responsible and it was all over the question of what the word “agents” meant and the Chief Justice said it did not include an independent contractor, which might seem to be correct, and, indeed, they found it to be correct by majority and Justice Stephen agreed and Justice McTiernan in a separate judgment came to the same conclusion.  But Justice Mason elaborated and his view was that the independent – because it used the words “by his servants or agents” the word “agent” was wide enough to cover an independent contractor and often could in these sorts of operations.  That was the broad distinction between the two judgments.

GLEESON CJ:   Now, in the light of that decision, how did Justice Ipp deal with this question?

MR ELLICOTT:   Well, what he did, in our respectful submission, he took out of context statements in the minority judgment and they start at page 69, line 19:

Gordon, in the written argument advanced on his behalf, relied on remarks made by Mason J and Jacobs J in the same case.

So, it is all erected on what they said, but as a general proposition can I say this, that when you analyse each of these statements they are part of reasoning which is based on their being, not as the majority said, a duty that was sliced up, if I can put it in that indelicate way, but there could be dual duties in relation to the same building work.

That is where the error is in this judgment and at the foot of 69, for instance, it picks up what Justice Mason said and it is not clear how his Honour used this, but it used the words “by act or approval”.  Now, what he was aiming this discourse at was to get – I am not saying he did this deliberately, but what it is aimed at is to result in a conclusion that any preliminary work is not delegated unless it is expressly delegated and, therefore, the head contractor still has the liability in relation to it.

GUMMOW J:   Well, he talks about a gap in the security net.

MR ELLICOTT:   Yes.  Now, under the majority doctrine, there is no gap.  There it is, and that subregulation to “provide and maintain safe means of access” is a good illustration of it.  But, one can apply the others.  Subsection (1) says:

provide suitable and safe scaffolding –

There are 17 of them and there is not time to go through them all but the point is that if the majority approach was adopted then there would be nothing left and that was pointed out by the Chief Justice.  His view, and it is fundamental, of course, to the case, is at 427 of the judgment:

For my part, I perceive that the Act and regulations purpose to place particular responsibilities upon the person actually carrying out the particular building work, that is to say, doing it himself personally, or by his servants or by those whose acts are in law his acts.  This seems to me an eminently practical and workable scheme of legislation.

GLEESON CJ:   I understand the reasoning of Justice Ipp to be first of all that he thought that the most helpful judgment was that of Justice Jacobs.

MR ELLICOTT:   Yes.

GLEESON CJ:   And if you look at page 70, line 30, Justice Jacobs says whether or not “the direct obligation” is on “the head contractor” in a “particular case” “will depend upon the circumstances”.  Then, if you look to page 75, paragraph 36, Justice Ipp says, in the circumstances of this case:

Maggiotto co‑ordinated and supervised the different trades . . . and supplied the materials –

So, he said this is different, for example, from a home owner who gets in a carpenter to do this work and a tiler to do that work and a plumber to do some other work and an electrician to do some other work again, and that factual circumstance produced the consequence that, according to Justice Ipp, “Maggiotto was” “performing building work” and therefore bound by the regulations.

MR ELLICOTT:   Well, we, of course, say that that was wrong and when he said in that passage at page 70:

“It will generally be found in the case of an employee and it will often be found in the case of a sub‑contractor that, though performance of the acts necessary to performance of some statutory duties may properly be delegated to them, the performance of other acts and the compliance with other statutory duties will remain the direct obligation of the employer –

Now, that reasoning is in a context where Justice Jacobs is holding, contrary to the majority, that you can have dual duties, that is to say not only the independent contractor has it but also the head contractor and, therefore, he is able to say, may properly be delegated to them.  Under the majority theory there is no duty in the head contractor at all, none at all.  There is nothing to delegate because all the parts of the operation are sliced up and, therefore, the duties attach to the various people actually doing the work.

GLEESON CJ:   Where is the regulation?  Where do we see that?

MR WHEELAHAN:   Page 66, your Honour.

GLEESON CJ:   Thank you.  So, going back to Justice Ipp at page 75, paragraph 36, he says if Maggiotto was performing building work within the definition of section 3 of the Act then regulation 73 applies to Maggiotto.

MR ELLICOTT:   Yes.

GLEESON CJ:   And it is not to the point to say that it might also apply to Mr Gordon, vis-à-vis his employees.

MR ELLICOTT:   Well, that would be contrary, actually, to what Justice Mason found and I would have to take your Honours to page 443 of Buckman.  The first answer to that is what I have already said, your Honours, and that is that there is no duty on the head contractor at all and that this area called co‑ordination and supervision is merely something that is not the construction work at all.  It is outside the construction work.  It is simply saying, “You come in at this time and you come in at that time”.  It is co‑ordinating.  It is not doing construction work.  The construction work is the actual work of constructing the building and that is the definition.  Now, at 443 two thirds of the way down:

Once this view is accepted, it is evident that the respondent cannot succeed on the causes of action based on breach of pars (1) and (16) or reg. 73.  In each instance, assuming a breach by the appellants, it was a breach which was brought about by the respondent’s failure to comply with the particular requirement.  The erection of the steelwork was his responsibility under the contract; he was experienced in the work; and the evidence falls short of indicating any participation by the appellants in his guying of the vertical steel column –

Now, in this case, in the Maggiotto Case, Gordon, the subcontractor, had an employee and he, Gordon, had a duty to provide a safe means of access and

that is what this debate was all about.  He had a duty to do it just like the gentleman, Flanagan, had a duty to do it in this case.

GLEESON CJ:   Well now, it is put against you, as I understand it, that all these interesting questions have been overtaken by legislative amendment.

MR ELLICOTT:   We would submit not.  There are examples of two cases:  Almeida’s Case, which was attached – No 8 in the volume – and Zahner’s Case, each within, in effect, the last 12 months or 15 months and these cases are still in the pipeline.  This one started – the events occurred in 1993 and it is an area that still governs the liabilities of people, apart from the current Act, in relation to what was done prior to the Occupational Health Act 2000.  So, we would submit it is still a matter of general importance.  It was certainly so under Buckman’s Case and it is certainly so, we would submit, now and for those reasons we would submit this is an appropriate case in which your Honours should grant leave.

GLEESON CJ:   Thank you, Mr Ellicott.  Yes, Mr Wheelahan.

MR WHEELAHAN:   May it please the Court.  Your Honours, the trial judge forgot that the plaintiff had a claim in respect of breach of statutory duty.  When reminded of that he dealt with the matter at page 52 of the application book in eight lines.  The trial judge forgot that the respondent had a claim in respect of breach of contract and when reminded of that disposed of it in ten lines at page 52.

What the trial judge overlooked in relation to his rejection of the application of the statutory count was that he had found all the necessary facts to ground that statutory count when he found that the respondent was entitled to the benefit of a breach of a common law duty of care, all of which elements satisfied the breach of statutory duty.

He did this at 50 of the application book.  He went straight to Stevens v Brodribb and he said, at line 43:

I am satisfied that this is a case, on the evidence given by the plaintiff and also by Mr Zambalone, that falls within the views expressed by Mason J, which I referred to previously:

“If an entrepreneur engages independent contractors to do work which might as readily be done by employees –

and I interpolate there to record, your Honours, that that is clearly the type of work that Mr Gordon was doing –

in circumstances where there is a risk to them of injury arising from the nature of the work, and where there is a need for him to give directions as to when and where the work is to be done and to co‑ordinate the various activities –

and I interpolate, your Honours, to record that that is exactly what the trial judge found that Mr Maggiotto, through himself and Mr Zambalone, was doing –

he has an obligation to prescribe a safe system of work.

Now, of course, this is the unanimous view of this Court in Stevens.

The fact that they are not employees, or that he does not retain a right to control them in the manner in which they carry out their work –

we interpolate, your Honours, that that again is clearly the case.  He could not tell Mr Gordon how to hammer a nail or apply the lick of paint –

should not affect the existence of an obligation to prescribe a safe system.  Brodribb’s ability to prescribe such system was not affected by its inability to direct the contractors as to how they should operate their machines”.

Then his Honour makes the fundamental finding in this case –

The lack of a safe system in this case was the failure of the defendant to have provided, in accordance with the evidence of Mr Tozer, a safe access in leaving the scaffolding in situ as it had been for previous trades on this site.

GLEESON CJ:   Mr Wheelahan, is the reason this matters that there was some contributory negligence?

MR WHEELAHAN:   Yes, your Honour.  It was a finding of his Honour Judge Delaney that there had been a 50 per cent contribution.

GLEESON CJ:   I understand that.

MR WHEELAHAN:   So, the plaintiff not being an employee is entitled ‑ ‑ ‑

GLEESON CJ:   So, that is why you want the statutory ‑ ‑ ‑

MR WHEELAHAN:   He is entitled to the benefit of the statutory count, no contributory negligence.  Had he been an employee, as a result of the changes to the system of that type of compensation, your Honour, as your Honour would have recalled prior to 1988, then the employee would have been entitled to the benefit of a statutory count, no contributory negligence.  After 1988 an employee could be guilty of contributory negligence notwithstanding the breach of a statutory duty.

Mr Gordon happily being out of that context, namely that of employee, was entitled to the benefit of a statute, entitled to the benefit of an undiscounted verdict if the head contractor had been guilty of a statutory duty.

GLEESON CJ:   Or of a breach of contract.

MR WHEELAHAN:   Or of a breach of contract.  Now, your Honours, what we say is that the findings of the trial judge at 50 and 51 demonstrate that every element of the breach of statutory duty, namely the failure to provide a safe means of access, had been found by the trial judge.

Now, when your Honours come to consider the matter of whether or not this is an appropriate case for the grant of special leave, my learned friend points out that other cases were, as he says, in the pipeline. We respond rhetorically by saying, “So what?”  This case was decided in the Court of Appeal in March 2001 and the subject legislation, the Construction Safety Act and the regulations that were dependent upon the existence of that Act, were repealed and that repeal became effective on 1 September 2001, that is just six months ago, hence this inquiry, this exercise in determining whether or not the Construction Safety Act provides the benefit of a statutory duty in the context of head contractor and subcontractor is an interesting but, we now submit, sterile argument.  That is number one.

Number two, your Honours, is as the Chief Justice, with great respect, correctly pointed out.  If the respondent prevails in respect of either of these episodes then this application must fail.  Your Honours, as I pointed out, the learned trial judge, when reminded of the contractual count, said that the contract did not apply. 

As was pointed out by the trial judge at pages 50 and 51 that I have already read, he found that there was a contract, in effect, and found that the applicant was in breach of it, namely when he applied the principles established by Justice Mason in Flanagan v Buckman.

Also, your Honours, the learned counsel for the applicant in the Court of Appeal did not dispute that an obligation to prescribe a safe system of work would ordinarily be implicit in such a contract.  That is at the application book, page 78, paragraph 49.

GUMMOW J:   Lines 30 and 31.

MR WHEELAHAN:   That is so:

Counsel for Maggiotto did not dispute that an obligation to prescribe a safe system of work would ordinarily be implicit in such a contract.

Go back to 51.  The trial judge found, in view of that concession, that the applicant had failed to provide a safe means of access, therefore was in breach of the implied term in a contract, the existence of which was conceded or not argued ‑ ‑ ‑

GLEESON CJ:   Now, just a moment.  Justice Ipp rejects a submission by your opponents on the bottom of 78 that there was an express term contrary to the implied term.

MR WHEELAHAN:   Correct.

GLEESON CJ:   Well, on what basis did he reject your argument?

MR WHEELAHAN:   That there was an express term?

GLEESON CJ:   Yes.

MR WHEELAHAN:   Your Honours, really it was our argument that there was an implied term.  We had a subsidiary debate as to whether or not there was an express term but he rejected the question ‑ ‑ ‑

GLEESON CJ:   Was that the only argument put against your argument of an implied term?

MR WHEELAHAN:   That there was no express term.

GLEESON CJ:   So, a challenge to the decision of the Court of Appeal would have to depend upon persuading us that there was an express term of this contract that eliminated the implied term?

MR WHEELAHAN:   Precisely.  That would exclude the finding of an implied term and, your Honours, the finding by the Court of Appeal that there was a sufficient basis for the finding of that implied term, without being unkind to the applicant in this matter, is fundamentally a finding of fact.  The learned justice in the Court of Appeal took the express findings of the trial judge and undisputed matters of fact in the court below, the application by the trial judge of his view that Stevens v Brodribb applied

and, therefore, a contract existed between – and, of course, that was conceded, that a contract existed between Maggiotto and Gordon.

The question then arose, “Well, given that there is a contract, what implied terms are there?”  Stevens v Brodribb says one of them is that the head contractor will provide a safe means of access.  Judge Delaney says that is precisely what the head contractor failed to do here, namely provide a safe means of access, ergo verdict for the plaintiff.

GLEESON CJ:   The argument in the Court of Appeal and the argument we are listening to today does not involve any of the issues about damages that arose in the case?

MR WHEELAHAN:   No, no.  That is probably fortunate in a number of ways, your Honour, but no.  We respectfully submit that both of these findings are fundamentally findings of fact.  Was Maggiotto performing construction work under regulation 73?  The Court of Appeal said it was.  That has nothing to do with an inquiry as to whether or not regulation 73 says that if you are an entrepreneur organising the whole range of activities on the building site, that you can or cannot be performing construction work because their Honours found, in the circumstances of this case, that the activities in which Maggiotto engaged constituted the performance of construction work.

Now, that has nothing to do with an inquiry here as to whether or not regulation 73 only applies to the hammering of the nail or the application of the lick of paint and clearly, what the Court of Appeal did was decide that the various activities either conceded or established in the court at first instance proved that they were engaged in the performance of construction work.  It is as plain as that, your Honours, we say.

GLEESON CJ:   Yes, Mr Ellicott.

MR ELLICOTT:   Your Honour, in relation to the first question, we say that there are potentially – I mean we cannot prove the number, but there are potentially a number of years of cases that can arise in relation to this duty.  It must be out there ‑ ‑ ‑

GLEESON CJ:   Mr Ellicott, let me tell you what is concerning me at the moment.  In order to succeed in this appeal, you have to win on the contract point.

MR ELLICOTT:   Yes.

GLEESON CJ:   There was a concession that there would ordinarily have been an implied term of the kind relied on in the present case and the argument to the contrary was that in this particular case there was an express term that eliminated the implied term.  The reasoning against you on that question was entirely factual, was it not?

MR ELLICOTT:   Your Honour, the concession my junior is not aware of.  I did not appear, of course.

GLEESON CJ:   Well, it is recorded here.

MR ELLICOTT:   It is stated there.

GLEESON CJ:   Yes.

MR ELLICOTT:   But let us put that aside for the moment.  This is a term that is implied by law and below, on my instructions, what they were arguing was a Codelfa implication and you have no finding on the part of the Court of Appeal that there was a Codelfa implication based on business efficacy and a very relevant matter would be, did these people have duties under regulation 73.  The two things are interrelated and you do not find any discussion of that.

All you find is a reference to Stevens v Brodribb and what was Stevens v Brodribb about.  It was about the interrelation between subcontractors and co‑ordinating their work and Justice Mason said, in that context a duty can arise to provide a safe system of work between them.  In other words, you do not have the tilers up top working and throwing the odd tiles down while the carpenters are down below fixing out the room.  That is pretty simple stuff, but that is what that is about.

But so far as any argument that would purport to analyse whether this should, as a class of contracts, be implied by operation of law, which was not the issue argued but the issue which Justice Ipp decided on, that is obviously, we would submit, clearly suspect, that finding, and it is so important; by itself it is a ground for granting special leave.

It interrelates with the other question because if you are going to imply by operation of law you are going to ask what duties do these people have in other respects and you would be looking at regulation 73.  You would be saying, “If we imply this duty by operation of law, it means that we are going against Buckman’s Case and its decision in relation to regulation 73 because we’re giving the head contractor a responsibility or a duty where, under regulation 73 as found by the Court, it has no duty”.

Your Honour, we would submit that the whole of the issues are such that the question of implication does not go off on a question of concession.  The question of implication was argued on a Codelfa basis, never decided

on that basis and we say unfortunately decided by operation of law, almost by a brush of the pen.

We would submit that it should not stand in the judgment.  It is immensely important to find that a particular term should be implied by operation of law between a head contractor and a subcontractor and that issue alone should entail special leave and with it should go the other issue.  If the Court pleases.

GLEESON CJ:   In order to succeed in an appeal, the applicant would need to succeed in relation to two issues:  the first concerning the operation of regulations under the Construction Safety Regulations 1950 (NSW) which have since been repealed; and the other relating to the question of implication into the contract between the parties of a certain term. 

Having regard to the way in which the case was conducted below and to the reasoning on which the Court of Appeal found against the applicant in relation to the implied term, the Court is of the view that there are insufficient prospects of success of an appeal to warrant a grant of special leave and the application is refused with costs.

MR WHEELAHAN:    May it please the Court.

AT 10.30 AM THE MATTER WAS CONCLUDED