Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account v Ashcroft Supa IGA Orange Pty Ltd

[2020] NSWCA 36

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account v Ashcroft Supa IGA Orange Pty Ltd [2020] NSWCA 36

Hearing dates:

16 December 2019

Date of orders:

10 March 2020

Decision date:

10 March 2020

Before:

Ward CJ in Eq at [1];
Leeming JA at [2];
Payne JA at [3].

Decision:

(1)   Appeal dismissed.
(2)   Appellant to pay the costs of the appeal.
(3)   Cross-appeal allowed.
(4)   Order 1 made on 5 April 2019 by the primary judge on the plaintiff’s claim set aside and in lieu thereof order that:
(a)   Ashcroft Supa IGA Orange Pty Ltd pay Mr Paul $613,864.24.
(5)   Order 1 on made on 5 April 2019 by the primary judge on the cross claim set aside and in lieu thereof order that:
(a)   Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account pay Ashcroft Supa IGA Orange Pty Ltd $613,864.24.
(6)   Appellant/second cross-respondent to pay the costs of the cross-appeal.

Catchwords:

TORTS – Negligence – apprentice worker required to insert sausage mince into a machine and link sausages - failure properly to clean the meat room floor by another employee – apprentice worker slips on a piece of sausage mince - Contributory negligence - failure of the apprentice worker to clean the meat room floor

 

TORTS – Negligence – Apportionment of responsibility and damages - apprentice worker employed by a third party – liability of employer for non-delegable duty of care - apportionment pursuant to s 151Z Workers Compensation Act 1987 (NSW)

  INSURANCE – Exclusion clause – Shopping Malls Combined Liability Policy - exclusion of liability for injury to a person under a contract for the provision of labour only services to the insured - whether injured apprentice worker employed by a third party a person under a contract for the provision of labour only services to the insured

Legislation Cited:

Civil Liability Act 2002 (NSW), ss 5B, 5D, 5R
Workers Compensation Act 1987 (NSW), s 151Z(2)

Cases Cited:

J Blackwood and Son v Skilled Engineering [2008] NSWCA 142
Smith v Zhang [2012] NSWCA 142; (2012) 60 MVR 525
Wallaby Grip Ltd v QBE Insurance (Australia) Ltd; Stewart v QBE Insurance (Australia) Limited (2010) 240 CLR 444; [2010] HCA 9
Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang (2016) 93 NSWLR 561; [2016] NSWCA 370

Category:

Principal judgment

Parties:

Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account (Appellant/Second Cross-Respondent)
Ashcroft Supa IGA Orange Pty Ltd (First Respondent/First Cross-Respondent)
Mathew Philip Paul (Second Respondent/Cross Appellant)

Representation:

Counsel:
M T McCulloch SC, R Perla (Appellant/Second Cross-Respondent)
D A Lloyd, T B Jones (First Respondent/First Cross-Respondent)
D R J Toomey SC, P Kirby (Second Respondent/Cross Appellant)

  Solicitors:
Wotton & Kearney (Appellant/Second Cross-Respondent)
Toby Tancred Solicitor (First Respondent/First Cross-Respondent)
Baldock Stacy & Niven (Second Respondent/Cross Appellant)

File Number(s):

2019/132417

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Citation:

[2019] NSWDC 101

Date of Decision:

05 April 2019

Before:

Russell SC DCJ

File Number(s):

2015/292258

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 10 October 2012 Mr Paul, the second respondent, sustained injuries whilst working as an apprentice butcher at the premises of Ashcroft IGA, the first respondent. At the time of his accident, Mr Paul was employed by Skillset Ltd which had placed him at Ashcroft IGA’s premises to complete his apprenticeship. Mr Paul was under the day to day direction and control of Ashcroft IGA.

At the trial, Mr Paul alleged that his accident and injury was caused by the negligence of Ashcroft IGA. The primary judge found that Ashcroft IGA breached a duty of care to Mr Paul and awarded damages. The primary judge found that Mr Paul was guilty of contributory negligence to the extent of 10%. The primary judge apportioned 10% of damages against Skillset Ltd under s 151Z of the Workers Compensation Act 1987 (NSW).

There was no challenge on appeal to the primary judge’s findings about the liability of Ashcroft IGA to Mr Paul.

Ashcroft IGA, by cross-claim, sought indemnity from its public liability insurer, Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account, the appellant in these proceedings, for the amount it was liable to pay Mr Paul. The appellant agreed that Mr Paul’s injury was otherwise within the coverage under the policy, but relied on an exclusion clause. The primary judge found that the exclusion clause did not apply and ordered the appellant to indemnify Ashcroft IGA for the payment it had been ordered to make to Mr Paul.

The issues in the appeal were:

i) the correct construction of the appellant’s policy of insurance with Ashcroft IGA, specifically whether an exclusion clause applied;

ii) the primary judge’s assessment of contributory negligence;

iii) the primary judge’s assessment of the notional contribution of Skillset under s 151Z of the Workers Compensation Act; and

iv) whether, if the appeal was dismissed, the damages calculation made by the primary judge was incorrect.

The Court (per Payne JA, Ward CJ in Eq and Leeming JA agreeing) held, dismissing the appeal:

Issue 1

1. The appellant bore the onus of proving that the exclusion clause in the policy applied: at [48].

Wallaby Grip Ltd v QBE Insurance (Australia) Ltd; Stewart v QBE Insurance (Australia) Ltd (2010) 240 CLR 444; [2010] HCA 9 applied.

2. The exclusion clause provided:

“This Policy does not cover …

16.5.   Employers’ Liability

Liability for injury to any person under a contract of employment, service or apprenticeship with or for the provision of labour only services to the Insured where such injury arises out of the execution of such contract.”

3. The use of the word “or” in the second line of the exclusion clause divided two separate limbs addressed by the clause. The first limb was liability for injury to a person under a contract of employment, service or apprenticeship with the insured. The second limb was liability for injury to a person under a contract for the provision of labour only services to the insured: at [50].

4. It was the second limb of the exclusion clause that was here relevant: at [50]-[53].

5. The primary judge erred in concluding that Mr Paul had to be a party to the contract referred to in the second limb for the exclusion clause to apply: at [53].

6. On its proper construction, however, the contract between Skillset and Ashcroft IGA was not a contract for the provision of “labour only” services: at [71].

7. Accordingly, the conclusion of the primary judge that the exclusion clause did not apply was correct: at [72]-[73].

Issue 2

8. The 10% allowance for contributory negligence was open to the primary judge. That finding should not be disturbed by this Court: at [80], [84].

Issue 3

9. No basis had been shown to interfere with the finding made by the primary judge that the relevant contribution from Skillset to Mr Paul was 10%: at [88].

Issue 4

10. The appellant agreed that, if the appeal was dismissed, the calculation of damages by the primary judge was incorrect based on a decision of this Court in J Blackwood & Son v Skilled Engineering [2008] NSWCA 142: at [93]. Accordingly, the Court ordered that the damages award should be increased and Ashcroft IGA be ordered to pay Mr Paul $613,864.24 and the appellant be ordered to pay Ashcroft IGA the same amount: at [97].

J Blackwood and Son v Skilled Engineering [2008] NSWCA 142 applied.

Judgment

1. WARD CJ in Eq: I agree with Payne JA.

2. LEEMING JA: I agree with Payne JA.

3. PAYNE JA: On 10 October 2012, Mr Paul, the second respondent, sustained injuries whilst working as an apprentice butcher at the premises of Ashcroft Supa IGA Orange Pty Ltd (“Ashcroft IGA”), the first respondent. At the time of his accident, Mr Paul was employed by Skillset Ltd (“Skillset”), which had placed him at the first respondent’s premises to complete his apprenticeship. At the time of the accident, Mr Paul was under the day to day direction and control of the first respondent.

4. At the trial, Mr Paul alleged that his accident and injury was caused by the negligence of the first respondent. The primary judge found that the first respondent breached a duty of care to Mr Paul and awarded damages. There was no challenge on the appeal to the primary judge’s findings about liability.

5. The primary judge found that Mr Paul was guilty of contributory negligence to the extent of 10%. The appellant, but not the first respondent, challenged that finding.

6. The second respondent was employed by Skillset at the time of his accident and Skillset owed a duty of care to Mr Paul. Skillset, however, was not a party to the proceedings. Section 151Z(2) of the Workers Compensation Act 1987 (NSW) nevertheless applied. The primary judge held that Skillset was a party who, if sued by Mr Paul, would have been liable to him. It was thus necessary to apportion damages. His Honour found that appropriate apportionment was 10% as against Skillset. The appellant, but not the first respondent, challenged that finding.

7. At the time of the accident the first respondent held a policy of insurance with the appellant, Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account (“the policy”). The policy was styled a Shopping Malls Combined Liability Policy. By a cross-claim, the first respondent sought indemnity from the appellant under the policy in respect of its liability to Mr Paul. The appellant declined indemnity, relying on an exclusion clause (cl 16.5) in the policy:

“This Policy does not cover …

16.5.   Employers’ Liability

Liability for injury to any person under a contract of employment, service or apprenticeship with or for the provision of labour only services to the Insured where such injury arises out of the execution of such contract.”

8. The primary judge found that the exclusion did not apply. The appellant challenged that finding and submitted that it was not liable to indemnify the first respondent under the policy. This was the principal subject matter of the appeal. The first respondent relied on a notice of contention seeking to support the conclusion of the primary judge on other grounds.

9. There was also a cross-appeal by Mr Paul limited to one aspect of the calculation of damages. The primary judge awarded damages in the amount of $578,689.11. Mr Paul challenged that calculation and submitted that if the appeal was dismissed the correct amount of damages to be awarded on the findings made should have been $613,864.21. The cross-appeal was filed out of time. Leave to rely on the cross-appeal out of time was granted at the hearing of the appeal. The appeal was heard by the Court sitting in Orange on 16 December 2019.

Decision of the primary judge

10. On 10 October 2012, Mr Paul was working as an apprentice butcher. He was 20 years of age. He registered with Skillset on 18 February 2012 and had been placed by Skillset with the first respondent later in February 2012. He started work at the Ashcroft IGA store in Orange operated by the first respondent on 27 February 2012. Mr Paul worked in the meat section, processing meat and making sausages. The meat section was a separate section of the store where meat processing occurred and was not open to the public.

11. Mr Paul had commenced work at 4:00am on 10 October 2012. He was initially directed to cut up lamb. Later that morning, Mr Paul was instructed to work on the sausage filling machine. This required him to insert sausage mince into the machine and then link the sausages. He was required to twist the rope of sausage material so as to form sausages which could then be sold. At the time of his accident he was working with meat on a trolley with wheels.

12. Detailed findings of fact were made at [46] of the primary judgment which were not challenged on the appeal:

1. on 18 February 2012, Mr Paul registered with Skillset, seeking to obtain a position as an apprentice butcher;

2. on 22 or 23 February 2012, Mr Paul and Skillset entered into a signed written contract by which Mr Paul became an employee of Skillset;

3. on 27 February 2012, Skillset conducted a work induction;

4. by a signed written agreement dated 27 February 2012 between the first respondent and Skillset, the first respondent agreed to “host” Mr Paul during his TAFE studies in meat retailing;

5. under that contract Skillset provided Mr Paul’s services to the first respondent to work in the first respondent’s meat room, under the supervision of Mr McLennen, a senior employee of the first respondent;

6. under that contract the first respondent was obliged to provide a safe and supportive work environment for Mr Paul as an apprentice butcher;

7. under that contract Skillset was providing not only the services of Mr Paul to the first respondent, but the services of recruitment, vocational training management, OHS and workers compensation, payroll and administration services, and support to the first respondent and Mr Paul as an apprentice;

8. under that contract the first respondent was required to support structured training for Mr Paul as an apprentice and provide paid time off to attend approved training;

9. on 10 October 2012, Mr Paul arrived to work at the first respondent’s meat room at about 4:00am;

10. when he arrived for his shift there was sausage mince scattered on the floor of the meat room;

11. Mr Paul spent the first two hours of his shift working at a fixed work bench cutting up lamb, with his back to the meat room;

12. at some time in those two hours, a butcher employed by the first respondent cleaned up the sausage mince on the floor of the meat room;

13. whoever was responsible for the cleaning of the floor failed to remove a piece of sausage mince which sat on the floor underneath the tray of a mobile work trolley;

14. after finishing his job cutting lamb, Mr Paul took a 10 minute break, and was then directed by Mr McLennen to link sausages;

15. Mr Paul stood next to a tray sitting on top of a mobile trolley;

16. the wheels at the foot of each leg had no braking or locking mechanism;

17. Mr Paul then commenced to link sausages which were in the tray on top of the mobile trolley;

18. after he commenced work, another employee in the meat room placed a tray of meat on a lower level of the trolley;

19. this caused the trolley to move away from Mr Paul, rolling down the gradual gradient of the meat room floor;

20. sausages started to fall off the back of the trolley;

21. Mr Paul stepped forward towards the rolling trolley in order to catch it and catch the sausages;

22. in doing so he stepped onto a piece of sausage mince which had been underneath the trolley when it was in a stationary position; and

23. Mr Paul slipped on that sausage mince, fell against the wall and injured his back.

13. The primary judge recorded that the first respondent did not dispute that it owed a duty of care to Mr Paul. His Honour identified the risk of harm as being the risk that a person might slip on sausage mince left on the meat room floor and addressed the other matters relevant under s 5B of the Civil Liability Act 2002 (NSW). His Honour concluded that Mr Paul demonstrated that a reasonable, indeed necessary, precaution was to ensure the floor of the meat room was free from wet and slippery substances (particularly sausage mince). That precaution was not taken. No submissions were made on the subject of causation but the primary judge addressed the matters relevant to s 5D of the Civil Liability Act and made findings that the negligence of the first respondent was a necessary condition of the occurrence of harm and it was appropriate for the first respondent’s liability to extend to the harm so caused.

14. The primary judge described contributory negligence under s 5R of the Civil Liability Act as the “real issue on liability in the case”. The critical findings of the primary judge on this issue were:

1. looking for spilt sausage mince, and cleaning it up, was not a complex task;

2. Mr Paul knew of the risk that a person might slip on sausage mince left on the meat room floor and knew how to take precautions for his own safety against the risk;

3. Mr Paul, and every other worker in the meat room, was responsible for cleaning any mince on the floor of the meat room;

4. the meat room floor looked to be clean and Mr Paul saw no reason to question whether the qualified butcher who had cleaned the floor had done a good job of cleaning or not;

5. the primary responsibility for the accident lay with the first respondent. A qualified butcher had cleaned up the meat room in the period immediately prior to Mr Paul’s accident and had not done a thorough job by checking under the trolley and cleaning up anything under the trolley;

6. the floor underneath the trolley should have been checked by whoever it was who did the cleaning. Anyone working in the meat room might have needed that trolley to be moved, and once it was moved that person was going to be exposed to the risk of the sausage mince on the floor;

7. Mr Paul’s assumption that the floor had been cleaned by a qualified butcher and was thus free of a contaminant was an understandable one; and

8. Mr Paul was liable for contributory negligence to the extent of 10%.

15. In relation to the issue arising under s 151Z(2) of the Workers Compensation Act, the primary judge made the following findings:

1. there was a non-delegable duty of care owed by Skillset to Mr Paul;

2. this was a casual act of negligence by the first respondent;

3. the meat room was entirely within the control of the first respondent, through its supervisor and its qualified employees;

4. the relevant danger was one created early in the morning of 10 October 2012 and, on the evidence, on one occasion only;

5. Skillset’s field officer made periodic visits to the first respondent’s meat room and there was no evidence that on those occasions there was ever a dangerous or slippery floor; and

6. by reason of the non-delegable character of Skillset’s duty of care the appropriate apportionment of liability to Skillset under s 151Z was 10%.

16. His Honour calculated damages payable by the first respondent to Mr Paul as being $578,689.11.

17. In relation to the cross-claim by the first respondent against the appellant, the primary judge recorded the agreement of the parties that, subject to the correct operation of cl 16.5 of the policy, the first respondent was entitled to indemnity under the policy.

18. Both parties invited his Honour to address the question of construction of the policy by reference to the method described in Zhang v ROC Services (NSW) Pty Ltd (2016) 93 NSWLR 561; [2016] NSWCA 370.

19. As to the grammatical meaning of cl 16.5, the primary judge observed that the clause did not yield an easily discernible grammatical construction. His Honour regarded the difficulty as arising from the insertion of the words “with or for” in the middle of the sentence.

20. His Honour found that the exclusion in cl 16.5 of the policy contemplated there being either a contract of employment, service or apprenticeship with the insured or a contract for the provision of labour only services to the insured. The person referred to must be subject to (or under) a contract with the insured. Here, the primary judge found, Mr Paul was not under a contract with the first respondent.

21. The primary judge found that the contract between the first respondent and Skillset was a contract for the provision of labour only services. This finding was the subject of the first respondent’s notice of contention.

16. The contract between Skillset and the first respondent was held to be a contract for the provision of labour only services because such contracts usually involve providing a service over and above merely sending the worker along to the host employer’s place of business, being screening and interviewing candidates and ascertaining whether people are qualified and/or suited to a particular position. His Honour regarded it as significant that the host employer received the benefit of a person working for them, without having to bear themselves the impost of workers compensation insurance. That is usually paid by the supplier of the services, as it was in this case.

17. This was not the end of the analysis. His Honour found as a matter of grammatical construction, that the “person” means “a person under (meaning a party to, and subject to obligations under) a contract of employment, service or apprenticeship with the insured, or under a contract for the provision of labour only services to the insured.” His Honour’s conclusion was that:

“[130] As previously recited, and as is common ground, the plaintiff was not under a contract of employment, service or apprenticeship to the insured. Nor however was he a person under a contract for the provision of labour only services to the insured. The plaintiff had no contract to provide labour only services to the defendant.

[131] While as a matter of grammatical construction, it can be discerned that clause 16.5 applies to a contract of employment, service or apprenticeship with the insured, or a contract for the provision of labour only services to the insured, both types of contracts have to be tied back to identify a person who is under a contract of employment, services or apprenticeship with the insured, or who is under a contract for the provision of labour only services to the insured.

[132] Further, the search for identification of the ‘person under a contract’ referred to in clause 16.5, is assisted by considering the opening words which speak of ‘liability for injury to any person’ under such contract. It is nonsensical to speak of any injury to Skillset as a contracting party. The injury in this case was suffered by [Mr Paul]. If clause 16.5 is to operate to exclude liability under the policy, what it excludes is liability for injury to [Mr Paul], and further, that it is [Mr Paul] who is under (meaning subject to) one of the two kinds of contract identified in the clause.”

(Emphasis in original.)

24. The primary judge then addressed the legal meaning of the clause. His Honour concluded that cl 14.3 of the policy provided that the indemnity granted to the insured would extend to a firm which provided labour only services to the insured. This, his Honour found, tended in favour of a construction that cl 16.5 should be read in a way which afforded indemnity to the first respondent. His Honour concluded:

“[150] I find that exclusion clause 16.5 means that the insurer does not provide indemnity for:

(1)   liability for injury to any person under a contract of employment, service or apprenticeship with the insured, where such injury arises out of the execution of such contract; or

(2)   liability for injury to any person under a contract for the provision of labour only services to the insured, where such injury arises out of the execution of such contract.”

25. On the application of the legal meaning to the facts as found, his Honour concluded:

“[155] This step in the analysis is the only easy step. [Mr Paul] was not a person under a contract to provide labour only services to the [first respondent]. In those circumstances the exclusion clause does not apply. On my interpretation of the clause, it would only have applied if [Mr Paul] himself had contracted with the [first respondent] for the supply of his labour to it. On the facts, that did not occur.”

Appellant’s submissions

26. The appellant submitted that cl 16.5 sought to exclude a class of risk which could arise in two ways. The class was the same, being the risk of a work- related injury giving rise to a claim for damages.

27. Clause 16.5 excludes liability for injury to any person under a contract of employment, service or apprenticeship. There follows an easily understandable, grammatically reasonable, complete sentence excluding liability for injury to a person under a contract for the provision of labour only services to the insured.

28. It was submitted that “under a contract” means “pursuant to” a contract. The sense in which it operates here is to refer to either the contract of employment under which Mr Paul would be employed or the contract of labour hire services under which Mr Paul was employed. “Execution”, when used in this clause, should be understood as meaning “performance”.

29. As to the notice of contention, the appellant submitted that the contract between Skillset and the first respondent made it plain that Skillset took responsibility for discharging its relevant statutory obligations for apprentices and for arranging relevant supervision. It was accepted that a Skillset supervisor regularly attended the Ashcroft IGA store “to see what was being done and whether the person was progressing to further its agreement with the worker to ensure that he was getting appropriate on the job training”. It was submitted, however, that Mr Paul’s “on the job training was the provision of manual labour only services to IGA”.

30. As to contributory negligence, the appellant submitted that the apportionment of 10% was manifestly unreasonable and thereby bespoke judicial error in the exercise of discretion. It was submitted that the overwhelming likelihood was that at some point after 4:00am and before 10:30am when this accident occurred, sausage meat mince came to be on the meat room floor. It may also have been a remnant from the night before. However sausage mince came to be there, it was not removed. For that, Ashcroft IGA as the host employer must bear primary responsibility. The appellant submitted that an apportionment of 30% was appropriate to reflect the fact that Mr Paul was an active participant in the meat room with his own ability to inspect his own workplace when he knew that there is always a risk of there being material on the floor. Mr Paul, it was submitted, by omission failed to move the trolley in order to detect the mince.

31. As to s 151Z the appellant submitted that the apportionment determined by the primary judge did not reflect the responsibility and culpability of Skillset. It was submitted that if Mr Paul failed properly to do his job because he was not properly trained to do so that would suggest that Skillset must bear a greater apportionment than 10%. It was submitted that an apportionment of 20% was appropriate.

32. In relation to the cross-appeal, the appellant accepted that the primary judge erred as his Honour was not taken to what this Court said in J Blackwood and Son v Skilled Engineering [2008] NSWCA 142. The calculation of the correct award of damages made by the appellant, on the contingent hypothesis that the appeal was dismissed, was $612,514.21.

First respondent’s submissions

33. The first respondent made no submission in support of the appellant’s contentions about contributory negligence or s 151Z.

34. In relation to the construction of the policy, the first respondent sought to support the conclusion of the primary judge. That is, it was submitted that each of the contracts referred to in the clause identify contracts between the insured and the person who suffered the injury. The second type of contract referred to in cl 16.5 is one between the insured and the person who suffered the injury. Mr Paul was not a party to a contract of the second type identified in cl 16.5.

35. In context, the first respondent submitted, the second part of cl 16.5 was not devoted to labour hire arrangements or contracts. There was nothing in the text or surrounding circumstances to suggest that these parties were concerned about that kind of risk at all. It was submitted that:

1. if the intention of the parties was to refer to labour hire arrangements or contracts, settled language of a kind apt to refer to those types of contracts would have been used;

2. there was no apparent commercial purpose revealed by the surrounding circumstances to warrant the inclusion of an exclusion of that kind;

3. the text itself reveals no apparent purpose of referring to labour hire arrangements or contracts and instead is directed towards contracts and risks of a different kind. This was because, for example, in cl 21.1 there is express reference to contracts between the insured security guards or cleaners or mall managers. There is no reference in cl 16.5 to labour hire arrangements;

4. if, as the insurer submits, the purpose of the second type of contract referred to by cl 16.5 is that the insurer has excluded liability to a labour hire employee who is being supervised by an employee of the insured, that would not exclude an independent contractor type relationship of the kind identified by the primary judge (i.e. a bicycle courier attending at the store to deliver goods). This was said to give rise to incoherence in the operation of the exclusion.

36. In the alternative, the first respondent advanced a construction of cl 16.5 as informed by cl 14.3 (the text of which is set out below at [46]). Clause 14.3, it was submitted, could extend to liabilities of third party contract suppliers to their own employees. It was submitted that the logical way that cl 14.3 worked, together with the second part of the exclusion in cl 16.5, was that the second part of the exclusion dealt with circumstances in which the indemnity under cl 14.3 might otherwise require the insurer to indemnify a security company, for example, for a liability to its own employee pursuant to cl 14.3. A public liability insurer would never wish to provide such cover. It was submitted that this construction was consistent with the commercial purpose revealed by the text and the surrounding circumstances in the sense that it was known that insurer and insured were concerned with contracts with security companies, cleaners, and the like. It was also known to the parties that the insurer would not agree to pick up liabilities to the employees of contractors in claims against their employers. Therefore, so the argument went, the suggested construction accorded with the text and the commercial purpose of the policy.

37. In support of the notice of contention, the first respondent submitted that the contract between Skillset and the first respondent was not a labour only services arrangement in that Mr Paul was completing an apprenticeship for a period of time, attending TAFE training and being regularly examined and supervised by a Skillset supervisor in the first respondent’s workplace.

38. It was submitted that the relevant contract was not one for the supply of “labour only services” as it involved, at least, Skillset completing paperwork relevant to the apprentice, carrying out regular performance management of Mr Paul, resolving workplace issues, monitoring Mr Paul’s TAFE training and providing the first respondent with occupational health and safety assistance.

Second respondent’s submissions

39. In relation to contributory negligence, Mr Paul submitted that on the findings of the primary judge the mince was on the floor by reason of a casual act of negligence on the part of an employee of the first respondent. On his Honour’s unchallenged findings, Mr Paul had been directed to do something else that morning and was occupied butchering a lamb which saw him facing a wall away from where the sausage machine was. He had been given that job by Mr McLennen who was his supervisor at Ashcroft IGA. It was submitted that there is no doubt that by the time he came to perform his own task on the sausage machine that the sausage mince was already on the floor. It was submitted that the finding of 10% for contributory negligence was generous to the appellant.

40. In relation to s 151Z, it was submitted that there was no failure on the part of Skillset to devise a system of work. The system had been devised. A feature of the system was that when people saw contaminants on the floor, they were required to clean them up. The evidence was that Mr Paul’s supervisor from Skillset attended the Ashcroft IGA premises regularly and that on those occasions she discussed various matters with Mr McLennen who was Mr Paul’s supervisor at Ashcroft IGA. The failure in this case that led to Mr Paul’s injury was an omission by an employee of Ashcroft IGA who was tasked with cleaning up the contaminants from the floor and who failed to clean up all of the contaminants under the trolley. It was submitted the finding of 10% for s 151Z ought not be disturbed.

41. In relation to the cross-appeal, the calculation made by the second respondent, on the contingent hypothesis that the appeal was dismissed, was $613,864.24, just over $1,000 more than the appellant’s calculation.

Consideration

42. There was no challenge to the primary judge’s findings about the liability of the first respondent to the second respondent. The three issues on appeal were:

1. the proper construction of the policy and, specifically, cl 16.5 (grounds 1 and 2 and the notice of contention);

2. the primary judge’s assessment of contributory negligence (ground 3); and

3. the primary judge’s assessment of the notional contribution of Skillset under s 151Z of the Workers Compensation Act (ground 4).

43. The issue on the cross-appeal was a narrow one. Both parties agreed that the methodology used by the primary judge in assessing damages was flawed. On the hypothesis the appeal was dismissed, the parties agreed that the primary judge’s calculation of damages was incorrect. The recalculation they each offered on that hypothesis differed by about $1,000 in total.

Issue 1 - the proper construction of the policy and, specifically, clause 16.5 (grounds 1 and 2 and the notice of contention)

44. It is first necessary to set out the relevant terms of the policy of insurance. The coverage provided by the policy was in the following terms:

“8.   COVERAGE SECTION A – INDEMNITY

The Insured is indemnified by this Coverage Section in accordance with the Operative Clause against the Insured’s liability to pay damages, including claimants’ costs, fees and expenses, in accordance with the law of any country for and/or arising out of injury and/or Damage but not against liability arising directly or indirectly out of

8.1.   Pollution or

8.2.   in connection with any Product.

…”

45. There was no dispute that, subject to the operation of cl 16.5, the policy responded to the claim by the first respondent arising from Mr Paul’s injury.

46. It will be recalled that the first respondent called in aid cl 14 of the policy as illuminating the construction of cl 16.5. Clause 14 provided:

“14.   INDEMNITY TO OTHERS – APPLICABLE TO COVERAGE SECTIONS A, B AND C

The indemnity granted extends to:

14.1.   at the request of the Insured, any party who enters into an agreement with the Insured for any purpose of the Business, but only to the extent required by such agreement to grant indemnity and subject always to Clauses 16.3 and 6.4;

14.2.   officials of the Insured in their business capacity for their liability arising out of the performance of the Business and/or in their private capacity arising out of their temporary engagement of the Insured’s employees;

14.3.   at the request of the Insured, any person or firm for their liability arising out of the performance of a contract to provide labour only services to the Insured;

14.4.   the officers, committee and members of the Insured’s canteen, social, sports, medical, fire fighting and welfare organisation in their respective capacity as such;

14.5.   the personal representatives of the estate of any person indemnified by reason of this Clause 14. in respect of liability incurred by such person;

provided always that all such persons or parties shall observe, fulfil and be subject to the terms, conditions and exclusions of this Policy as though they were the Insured.”

47. The critical question of construction at the heart of this appeal was whether the exclusion in cl 16.5 of the policy applied. It will be recalled that the clause was in the following terms:

“This Policy does not cover …

16.5.   Employers’ Liability

Liability for injury to any person under a contract of employment, service or apprenticeship with or for the provision of labour only services to the Insured where such injury arises out of the execution of such contract.”

48. The appellant bears the onus of proving that the exclusion clause applies: Wallaby Grip Ltd v QBE Insurance (Australia) Ltd; Stewart v QBE Insurance (Australia) Ltd (2010) 240 CLR 444; [2010] HCA 9 at [25].

49. The relevant principles of construction were agreed to be found in the decision of this Court in Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang (2016) 93 NSWLR 561; [2016] NSWCA 370 per Leeming JA:

“[53] Where as here the issue is the construction of a complex contractual provision, the starting point is to determine the literal or grammatical meaning or meanings of the clause. Secondly, one then determines the legal meaning of the clause. Thirdly, one applies that legal meaning to the facts as found by the court.

[54] The first phase, determining literal or grammatical meaning, is a matter of English, not a matter of law. It does not turn on evidence. In many cases, there will be no great difficulty determining the literal or grammatical meaning, and in some accounts of the process of construction, this stage is omitted. But sometimes determining the literal or grammatical meaning will be difficult. One reason for that may be that the clause disregards ordinary rules of grammar: the trusts established by Mr Calouste Gulbenkian considered in Whishaw v Stephens [1970] AC 508 and the licence agreement drafted by Mr Arthur Coulls considered in Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460 are examples. Another reason may be that the clause is long and complex and the grammar difficult and indeed ambiguous. That is the case here. Indeed, the difficulties in construing NTI’s policy bring to mind Callinan J’s statement in Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [51] to the effect that even a high level of literacy and commercial and legal sophistication would in any event provide no armour against the obscurities of this policy. Happily, it will not be necessary to resolve all aspects of the construction of the policy, or even of cl 2(b)(8).”

50. I respectfully disagree with the primary judge’s construction of cl 16.5. The literal or grammatical meaning of the clause is tolerably clear. The use of the word “or” in the second line of cl 16.5 divides the two separate limbs addressed by the clause. Those limbs are, on the one hand, liability for injury to a person under a contract of employment, service or apprenticeship with the insured and, on the other, liability for injury to a person under a contract for the provision of labour only services to the insured. Each species of liability to the insured is excluded by cl 16.5.

51. The clause should be understood as addressing only one injury arising under one contract. The type of contract involved may be one of two kinds, that is, a contract answering the first limb, employment, service or apprenticeship with the insured, or a contract answering the second limb, provision of labour only services to the insured. “Such contract” at the conclusion of the clause refers to both limbs of the exclusion.

52. The insurer’s liability excluded by cl 16.5 is for injury to a person who is under either of the two relevant types of contract with the insured. When used here, “under a contract” means “pursuant to” a contract. The relevant exclusion is for liability to a person, here Mr Paul, who was providing services to the insured pursuant to a contract, here the contract between Skillset and the first respondent. The injury rose out of the “execution of such contract” in the sense of the carrying out of the terms of the contract.

50. I am unable to agree that cl 16.5 has the consequence that the “person” referred to in the first line of the clause must himself or herself be party to a contract “with” the insured for the purposes of the second limb of the exclusion. A contract for the provision of labour only services “to” the insured, which is the second type of contract referred to in cl 16.5, is not one that requires the injured “person” referred to in the first line of the clause to be a party to the contract.

51. The correct construction of cl 16.5 is that the policy does not cover:

1. liability for injury to any person under a contract of employment, service or apprenticeship with the insured; or

2. liability for injury to any person under a contract for the provision of labour only services to the insured

where the injury arises in the course of giving effect to the relevant contract.

55. The context and purpose of the clause, read in the light of the remainder of the policy of insurance, leads to the same conclusion. Clause 16.5, in context, is seeking to exclude liability for injury to a person who is an employee of the insured or one who is providing services of a similar kind to the insured. Thus liability for injury to any person under a contract of service with the insured, a contract of apprenticeship with the insured or a contract to provide labour only services to the insured are excluded.

56. The relevant context and purpose of the clause also makes clear that the construction preferred by the primary judge is not correct. In relation to liability for injury to any person under a contract for the provision of labour only services to the insured, there is no requirement of the kind found in the first limb that the relevant contract be one “with” the insured. The commercial unlikelihood of the construction preferred by the primary judge is demonstrated in the following exchange:

“WARD CJ in Eq: How would it ever apply then?  How many labour hire companies – how many parties that enter into a labour hire contract are entering into a contract for the performance of only that particular person’s labour?

LLOYD: Almost never, which on a separate point in this appeal –

WARD CJ in Eq: I would have thought none.”

57. The first respondent’s fall-back argument, based on cl 14.3, does not give rise to any different conclusion. Clause 14.3 assumes that liability “arising out of the performance of a contract to provide labour only services to the Insured” is not within the coverage of the policy of insurance. That is because such liability is excluded by cl 16.5. Clause 16.5 is not one of the identified clauses to which an extension granted under cl 14.3 applies. Read in this way the contract of insurance is coherent and advances a consistent commercial aim, being the exclusion of liability to a person under a contract to provide labour only services to the insured (see cl 16.5) unless an extension of cover is sought, and no doubt an additional premium paid (see cl 14.3).

58. The first respondent’s submission, that the potential breadth of coverage effected by an extension granted under cl 14.3 means that cl 16.5 is addressing a different subject matter, should be rejected. If, for the sake of argument, an insured sought under cl 14.3 to obtain cover for “any person or firm for their liability arising out of the performance of a contract to provide labour only services” there is no incoherence in any extension granted providing cover for the liabilities of third party contractors to their own employees. No doubt any such coverage provided would be reflected in an additional premium charged for the cover.

59. For these reasons, I have concluded that the construction of cl 16.5 adopted by the primary judge cannot be supported by the language of the clause, the legal meaning of the clause or the commercial context of the policy. To that extent, I accept the appellant’s criticisms of the construction favoured by the primary judge.

60. There remains to be determined, however, the issue raised by the notice of contention, namely, whether on its correct construction the contract between Skillset and the first respondent was a contract “for the provision of labour only services to the Insured” within the meaning of cl 16.5.

61. The written contract between Skillset and the first respondent comprised a signed covering letter and signed terms and conditions, including the following:

“You, the host company, provide the apprentice or trainee with work and the relevant on-the-job experience so they can complete their trade or vocational qualification. [Skillset] will conduct a recruitment process for you, provide you with OHS advice, support and implement a supervision plan for the apprentice/trainee, provide a payroll service and organise the workers compensation arrangements.

For this we charge you a flat service fee of $50 per week. …”

62. A specific promise by Skillset was made in the terms and conditions which stated that Skillset would abide by the Skillset “Service Standards and Policies”. The services Skillset promised to provide included:

“Skillset Services

Even after your Apprentice/Trainee Starts work with you, Skillset will continue to provide you with ongoing services including:

Handling the array of paperwork associated with commencing an employee. This includes wage records, sick leave, annual leave, loadings, PAYG tax, superannuation, TAFE/RTO fees and government paperwork including training contracts, etc.

Arranging the off the job training as well as on the job accredited assessments; maintaining regular contact with you and the Apprentice or Trainee as well as monitoring attendance and training outcomes.

Providing industrial relations advice on changes to industrial relations legislation including Award conditions etc.

WHS advice and training. We are committed to the prevention of injury and illness of all our employees by ensuring a healthy and safe workplace.

Handling all Workers’ Compensation and rehabilitation matters if required.”

63. The “Service Standards” Skillset promised to provide included:

“Service Standards for Host Companies

…

4. Our support of Host Companies will involve an account plan that seeks to develop the skills, attributes and performance of Apprentices and Trainees. We will also take care of the paperwork and relevant compliance requirements of the Apprenticeship or Traineeship.

5. We will provide an Occupational Health and Safety training program for all Apprentices and Trainees as required, as well as an induction training program and information kit on how to succeed as an Apprentice or Trainee.

…

8. We arrange the Training Contract and will organise enrolment with the relevant Registered Training Organisation for the Apprentice or Trainee. We will also coordinate payment of their enrolment fees.

…

11. We will actively liaise with the Registered Training Organisation to resolve any issues you, the Apprentice or Trainee have about the training arrangements.

12. We will work with you to develop an annual leave plan for each Apprentice and Trainee with the aim of providing them with annual leave in the year their entitlement for it accrues.

…”

64. I respectfully disagree with the conclusion of the primary judge that the contract between Skillset and the first respondent was a contract “for the provision of labour only services to the Insured” within the meaning of cl 16.5.

65. It is true, as the appellant submitted, that the contract between Skillset and the first respondent made it plain that Skillset took responsibility for discharging the relevant statutory obligations for apprentices and for arranging relevant supervision of the apprenticeship. It is also correct that a Skillset supervisor regularly attended the first respondent’s IGA store “to see what was being done and whether the person was progressing to further its agreement with the worker to ensure that he was getting appropriate on the job training”.

66. It does not follow, however, that the contract between Skillset and the first respondent supplied “manual labour only services to IGA”.

67. The policy does not define “labour only services”. The only other use of the term in the policy is in cl 14.3 which provides for an extension of cover “at the request of the Insured, [for] any person or firm for their liability arising out of the performance of a contract to provide labour only services to the Insured”.

68. I am prepared to assume that, in context, the language of a contract “for the provision of labour only services to the Insured” should be understood as intended to capture many of what the appellant described in submissions as “labour hire” arrangements.

69. That assumption, however, does not answer the critical question in this case. The phrase the parties have chosen to use is “labour only services”. The language used captures a narrower class of contractual arrangements than all “labour hire” arrangements. Whatever the limits of the expression labour only services, the contract between Skillset and the first respondent was not a contract for the supply of “labour only” services because a number of other important services were supplied under the contract.

70. The terms of the contract between Skillset and the first respondent set out at [61]-[63] above make plain that a range of services in addition to the provision of “labour” were provided by Skillset. Skillset was paid a service fee for providing recruitment, vocational training management, payroll and administration services and support to the first respondent. Skillset was required to provide access to the first respondent to training programs conducted by Skillset. Skillset was obliged to arrange occupational health and safety site inspections of the first respondent’s premises.

71. These services were in addition to the provision of labour. On the correct construction of cl 16.5, the contract between Skillset and the first respondent was not “a contract ... for the provision of labour only services”.

72. Although for different reasons than those given by the primary judge, the appeal against the finding that the policy of insurance responded to the claim by the first respondent should be dismissed.

73. While the appellant’s complaints about the way in which the primary judge approached the construction of cl 16.5 were justified, the ultimate conclusion reached by the primary judge was also justified, on the basis of the matters raised by the first respondent in the notice of contention.

74. Whilst on the proper construction of the policy and, specifically, clause 16.5 the appellant was correct in the propositions advanced in grounds 1 and 2, the respondent is entitled to succeed in defending the order made by the primary judge on the basis of the notice of contention.

Issue 2 - contributory negligence (ground 3)

75. Having concluded that the appeal fails on the principal point, construction of the policy of insurance, it is necessary therefore to address the two remaining grounds advanced by the appellant.

76. The first was that the primary judge erred in making a 10% allowance for contributory negligence. It was submitted that an award of 30% for contributory negligence was more appropriate.

77. The appellant proceeded on the basis that in order to succeed on this ground it was necessary to demonstrate that this Court should only interfere if there was error of principle or of fact or where the apportionment is plainly wrong. As Meagher JA explained in Smith v Zhang [2012] NSWCA 142; (2012) 60 MVR 525:

“[21] Because the task of apportioning responsibility involves the weighing of a number of considerations and the making of judgments about which minds might reasonably differ, it is well established that appellate courts should not interfere in the absence of some error of principle or of fact or where the apportionment is plainly wrong: British Fame (Owners) v Macgregor (Owners) [1943] AC 197 at 201; Pennington v Norris [(1956) 96 CLR 10] at 15-16; Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492 at 494; Joslyn v Berryman [2003] HCA 34; (2003) 214 CLR 552 at [84], [157]; Anikin v Sierra [[2004] HCA 64; (2004) 79 ALJR 452] at [50]; Nominal Defendant v Rooskov [2012] NSWCA 43 at [122]-[123], [163].”

78. The appellant made no challenge to any of the primary judge’s findings of fact. In particular, the findings of fact set out at [12] above were not challenged.

79. As to a possible error of principle, the appellant asserted in the notice of appeal that the primary judge “failed to properly apply s 5R of the Civil Liability Act2002”, however no submission was addressed to that matter orally or in writing. There was no error of principle here. The primary judge referred to and applied s 5R of the Civil Liability Act. By s 5R(2)(a) of the Civil Liability Act, the standard of care required of Mr Paul was “that of a reasonable person in the position of that person”. His Honour’s unchallenged factual findings were then applied by reference to that test.

80. In truth, this was a case where the only issue was whether this Court considered the apportionment to be plainly wrong. My conclusion is that on the unchallenged findings of fact set out at [12] above, the 10% allowance for contributory negligence was well open to the primary judge and may even have been generous to the first respondent and the appellant. Perhaps for this reason the first respondent did not join in the complaint made by appellant about this aspect of his Honour’s reasons.

81. In the face of the unchallenged findings of fact, the appellant’s submission that it was “equally [the] responsibility [of Mr Paul] to pick up [the sausage mince] during the time that he was working [in the meat room]” must be rejected. Mr Paul had been allocated a different task in the two hours leading to his commencement of work at the relevant meat trolley. During those two hours, another employee of Ashcroft IGA had been tasked with cleaning meat (and anything else) from the floor. The primary judge found that Mr Paul’s assumption that the floor had recently been cleaned by a qualified butcher and was thus free of contaminants was reasonable in the circumstances.

82. For essentially the same reasons, the appellant’s submission that Mr Paul was “uniquely placed” to observe and assess any potential dangers in the area where he was working must also be rejected. Mr Paul had been working on another allocated task prior to the accident and task and believed, on reasonable grounds, that the floor had recently been cleaned by a qualified butcher who had been specifically tasked with ensuring the floor was clear of contaminants.

83. It was only because of the primary judge’s separate finding that Mr Paul bore a general responsibility for cleaning the floor that any apportionment for contributory negligence was appropriate here:

“[77] … his position included his acquired knowledge that sausage mince was slippery, that such mince was often deposited on the meat room floor during the operation of making sausages, and that it was his and everyone else’s job to clean up any mince on the floor.”

84. That finding, however, was made in the context of a separate finding that another person had been specifically tasked on the morning of 10 October 2012 with cleaning the floor and it was reasonable for Mr Paul to conclude that he or she had done so and that the floor was clean. The appellant has failed to demonstrate that the apportionment of 10% in respect of contributory negligence was “plainly wrong”. That finding should not be disturbed by this Court.

Issue 3 - section 151Z apportionment (ground 4)

85. Section 151Z(2) of the Workers Compensation Act provides:

151Z Recovery against both employer and stranger

…

(2)  If, in respect of an injury to a worker for which compensation is payable under this Act—

(a)  the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker’s employer, and

(b)  the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer,

the following provisions have effect—

(c)  the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable,

(d)  the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages,

(e)  if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that—

(i)  if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise—the indemnity referred to in subsection (1) (d) is for the amount of the excess only, and

(ii)  if the compensation paid by that employer does not exceed the amount of that contribution—subsection (1) (d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution.

86. The conditions for the operation of s 151Z(2) apportionment were present here as Mr Paul had taken proceedings independently of the Workers Compensation Act to recover damages from a person other than the worker’s employer, namely the first respondent. Mr Paul was also entitled to take proceedings independently of the Workers Compensation Act to recover damages from his employer, Skillset. The damages recoverable from the first respondent were to be “reduced by the amount by which the contribution which [Mr Paul] would (but for this Part) be entitled to recover from the employer as a joint tortfeasor”. It will be recalled that his Honour concluded that the relevant contribution from Skillset that Mr Paul would have been entitled to was 10%. The appellant submitted that a contribution of 20% was “appropriate in the circumstances”.

87. The primary judge explained his approach to determining the contribution from Skillset that Mr Paul would have been entitled to, had he taken proceedings against Skillset, in a way not criticised by either party:

“[85] In submissions I was referred to the decision of Justice McColl in Pollard v Baulderstone Hornibrook Engineering Pty Ltd [2008] NSWCA 99. From paragraph 33 onwards, her Honour set out the following principles. I will summarise the principles, without citation of the authorities, which can be found in her Honour’s judgment. The principles are:

(1)   An employer owes an employee a non-delegable duty of care;

(2)   The non-delegable duty rests on the employer whether or not the employer takes any share in the conduct of the operations;

(3)   A person subject to a non-delegable duty cannot escape liability if the duty has been delegated and then not properly performed;

(4)   An employer’s non-delegable duty is one of a special and more stringent kind;

(5)   In deciding whether an employer has discharged its obligation to establish, maintain and enforce a safe system of work, the court must take into account the power of the employer to prescribe, warn, command and enforce obedience to its commands;

(6)   The employer’s duty of care is not modified because its employees are sent to work for a client – in such circumstances the employer may be required to adopt additional measures by way of warning or training in order to discharge its continuing duty of care to its employees;

(7)   Whether the employer’s non-delegable duty is discharged where an employee is working at a third party’s premises depends upon such matters as “the employer’s opportunity to inspect the premises, the length of time the employer has put his employees to work on the premises, the awareness in the employer of the danger, his capacity to shield his employees from the danger and various other factors” – Bourke v Victorian WorkCover Authority [1998] VSCA 24; [1999] 1 VR 189;

(8)   The fact that the plaintiff was injured at premises not controlled by the employer is an important factor in favour of the employer.”

88. No basis has been shown to interfere with the finding made by the primary judge that the relevant contribution from Skillset that Mr Paul would have been entitled to was 10%. Mr Paul was injured at the premises of the first respondent. Mr Paul’s accident principally resulted from a casual act of negligence on the part of an employee of the first respondent, the person tasked with cleaning the floor of the meat room that morning.

89. This was not a case where it was proven that a proper system for the cleaning of contaminants from the floor was not in place. Further, the primary judge found that there was no evidence that, on the visits by Skillset’s field officer to the first respondent’s meat room, there was ever a dangerous floor of the type upon which Mr Paul slipped on the morning of his accident.

90. The evidence did not establish, and it was not found, that Mr Paul failed properly to do his job because of any training failure, on the part of Skillset or anybody else. Nor did the evidence establish that Skillset failed to provide occupational health and safety training or to conduct appropriate inspections of the first respondent’s premises from time to time. On the contrary, the primary judge found that those inspections were carried out.

91. The primary judge, however, determined that the relevant contribution from Skillset that Mr Paul would have been entitled to was 10% having regard to the non-delegable character of the employer’s duty to Mr Paul. This was because his Honour was persuaded that an employer’s non-delegable duty is one of a special and more stringent kind. That finding, on the evidence in this case, was favourable to the appellant and the first respondent.

92. Ground 4 of the notice of appeal should be dismissed.

Issue 4 – the cross appeal

93. In written submissions filed prior to the hearing, the appellant agreed that, on the hypothesis that the appeal was dismissed, the calculation of damages by the primary judge was incorrect based on a decision of this Court in J Blackwood & Son v Skilled Engineering [2008] NSWCA 142 at [10].

94. The difference between the parties about the correct calculations was about $1,000. On the hypothesis that the appeal was dismissed, Mr McCulloch SC for the appellant very sensibly accepted:

“Your Honour, I’m not here to quibble about pounds, shillings and pence. I would accept Mr Toomey’s calculation.”

95. Accordingly, as the appeal has failed, it is appropriate that the cross-appeal be allowed and the damages awarded be set aside and replaced by an award in favour of Mr Paul of $613,864.24.

Conclusion and Orders

96. For the foregoing reasons the appeal should be dismissed and the cross-appeal allowed. Whilst it is true that the appellant enjoyed limited success in identifying errors in the reasoning of the primary judge, the appeal failed as the conclusion that cl 16.5 of the policy did not defeat the first respondent’s claim for indemnity was ultimately correct. There is no sufficient reason in this case that the costs of the appeal should not follow the event. Costs of the cross-appeal should also follow the event. The only active party resisting the cross-appeal was the appellant/second cross-respondent. The appellant/second cross-respondent should pay the cross-appellant’s costs of the cross-appeal.

97. The orders I propose are:

1. Appeal dismissed.

2. Appellant to pay the costs of the appeal.

3. Cross-appeal allowed.

4. Order 1 made on 5 April 2019 by the primary judge on the plaintiff’s claim set aside and in lieu thereof order that:

1. Ashcroft Supa IGA Orange Pty Ltd pay Mr Paul $613,864.24.

5. Order 1 on made on 5 April 2019 by the primary judge on the cross-claim set aside and in lieu thereof order that:

1. Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account pay Ashcroft Supa IGA Orange Pty Ltd $613,864.24.

6. Appellant/second cross-respondent to pay the costs of the cross-appeal.

**********

Decision last updated: 10 March 2020