McGowan v Hills Limited (Ruling No 1)
[2015] VSC 674
•27 November 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2014 05411
| STEPHEN McGOWAN | Plaintiff |
| v | |
| HILLS LIMITED | First Defendant |
| and | |
| ACCESS TELEVISION SERVICES PTY LTD | Second Defendant |
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JUDGE: | T FORREST J |
WHERE HELD: | Wodonga |
DATES OF HEARING: | 23, 24 November 2015 |
DATE OF RULING: | 27 November 2015 |
CASE MAY BE CITED AS: | McGowan v Hills Limited & anor (Ruling No 1) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 674 |
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NEGLIGENCE – Conflict of laws – Place of tort – Negligence alleged in manufacture and design of ladder – Distribution of products - Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 450 – Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 – Amaca Pty Ltd v Frost (2006) 67 NSWLR 635 – Amaca distinguished.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. Morrow | Slater and Gordon |
| For the First Defendant | Mr I. McDonald | Norton Rose Fullbright |
| For the Second Defendant | Mr M. Hooper | Lander & Rogers |
HIS HONOUR:
The plaintiff alleges that on 17 January 2008, during the course of his employment with Access Television Services Pty Ltd (‘ATS’) (the second defendant) he fell from a ladder in Deniliquin, New South Wales. He further alleges the ladder was defective. The ladder was manufactured by Hills Limited (‘Hills’) (the first defendant) in Queensland, and was purchased by the Plaintiff in Tongala, Victoria.
A question has arisen as to the substantive law that governs the plaintiff’s claim for damages against Hills. This is a significant issue because if, as Hills contend, the substantive law governing the claim is the common law of Australia referable to Queensland (including limitation statutes) then the plaintiff’s claim against Hills is prima facie statute barred. If, on the other hand, the common law of Australia referable to Victoria is to be the substantive law governing the claim against Hills (as contended by the plaintiff and the second defendant), then it is agreed by the parties that the plaintiff has issued within time and no limitations claim arises.
At the outset of oral submissions I requested counsel draw up a set of assumed facts for the purpose of my determination of this legal argument. I am grateful to counsel for the conscientious manner in which they have undertaken this task. I reproduce those agreed facts.
(1)The second defendant is a wholly-owned subsidiary of the first defendant ; it is however a separate legal entity.
(2)ATS carried on business as a supplier and installer of pay TV and satellite dishes for use in domestic and other premises.
(3)On or about 21 February 2007 the plaintiff completed an application form for engagement by ATS as a sub-contractor (Exhibit DF-1).
(4)On 22 October 2007, the plaintiff and ATS entered into a written sub-contractor agreement (Exhibit DF-2).
(5)The plaintiff was never employed by Hills, either directly, as a sub-contractor or engaged in any other capacity.
(6)In early 2007 the plaintiff was advised by Mr Trevor Lund, an employee of ATS, that he would be required to purchase certain equipment. The plaintiff was given a ‘New Subcontractor Equipment & Tools Checklist’ (‘the Checklist’) by ATS (DF-4).
(7)In February 2007 the plaintiff purchased a ladder, described as ‘Tradesman Dual Purpose step ladder, bearing code FS10566 TDP7 with closed HT2.1 and extended HT3.6m’ (‘the ladder’) from GTS Trading (Thrifty Link) in Tongala, Victoria.
(8)All of the plaintiff’s training took place in Victoria. The Plaintiff’s training was directed and managed by ATS.
(9)After purchasing the ladder, but prior to commencing installing work, an employee of ATS inspected the ladder at the plaintiff’s home in Tongala.
(10)The plaintiff’s home in Tongala was his work depot, and the ladder and other work equipment was stored there when not in use.
(11)While working for ATS, the majority of the plaintiff’s installing jobs were conducted in Victoria.
(12)On 17 January 2008, whilst installing a satellite dish at 344 Hay Road, Deniliquin, in New South Wales, the plaintiff sustained an injury when he fell from the ladder during the course of installing a satellite dish on said property.
(13)The manufacture and assembly of the ladder took place at the Hills’ manufacturing plant at 70 Fulcrum Street, Richlands, in Queensland.
(14)Exhibit DF-5 is a true copy of a Certificate of Registration in respect of the Quality Management System at 70 Fulcrum Street, Richlands, in Queensland.
(15)Exhibit DF-6 is a true copy of drawing ‘FS10566’ depicting the TDP7 ladder.
(16)Exhibit DF-7 is a true copy of a document entitled ‘Performance Tests – Metal DP ladders’.
(17) Between 2007 and 2009 Hills products were sold in Victoria.
(18)Between 2007 and 2009 Hills made satellite dishes that may have been sent to the plaintiff.
There are further relevant factual issues that have not been agreed between the parties. I shall resolve these for the purposes of this ruling.
(a) Was the plaintiff required to purchase a Hills ladder? If so, by whom?
The plaintiff, who was not cross-examined on his affidavit, states that ATS field manager Trevor Lund advised him that he would be required to ‘purchase approved equipment from Hills’.[1] ATS is wholly owned by Hills. The plaintiff was given a ‘New Subcontractor Equipment and Tools Checklist’.[2] The ladder specified therein is described by reference to dimensions and not by manufacturer.[3] The plaintiff purchased a Hills manufactured ladder at Thrifty Link in Tongala in February 2007. I accept that Mr Lund told the plaintiff that he must buy Hills equipment. I think it is likely (given the corporate relationship) that Lund was acting upon instructions from the parent company. For the purpose only of deciding the choice of law question, I am prepared to infer this on the balance of probabilities. I emphasize that this conclusion is confined to this question.
[1]Affidavit of Stephen McGowan, 9 November 2015, [5].
[2]Affidavit of David Fox, 12 November 2015.
[3]Affidavit of David Fox, 12 November 2015.
(b) In his affidavit the plaintiff states:
(i) that 95 per cent of his work jobs for ATS were conducted in Victoria; and
(ii) that he received deliveries of materials direct to his house from ‘Hills or ATS from locations all around Australia…’;
These facts are not admitted by the first defendant. The plaintiff was not cross-examined upon his affidavit and there is no evidence adduced by any party that tends to contradict them. For the purposes of this ruling I accept these facts.
Other factual issues were identified in a document prepared by counsel entitled ‘Facts which may be in dispute…’. I do not regard these issues as material to the location of the tort.
Legal principles
The choice of law rules for determining the substantive law (including limitation periods) that governs the plaintiff’s claim for damages against the first defendant, are:
(a) In tort, the place of the tort determines the governing law.[4] The substantive law governing a claim in tort is therefore the common law of Australia referable to the place of the tort.
(b) The place of the tort will be the place where the act that gives rise to the cause of action occurs.[5] This has been described as the place where the alleged perpetrator did the act that ultimately caused the harm complained of.[6]
(c) The court will examine where, in substance, the cause of action arose. It is the location of the negligent conduct that must be examined, not the consequences.[7] When the tort is complete a court should look back over the series of events constituting it and then consider ‘where, in substance, did this cause of action arise?’[8]
[4]Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 567; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503.
[5]Jackson v Spittal [1870] LR 5 CP 542; Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 450; Sydbank Soenderjylad A/S v Banneron Holdings Pty Ltd (1996) 68 FCR 539.
[6]George Munro Ltd v American Cynamide & Chemicals Corp [1944] 1 KB 432; Lewis Construction Pty Ltd v Tischaeur [1966] VR 341.
[7]Voth v Manildra Flour Mills at 567.
[8]Distillers Co (Biochemicals) Ltd [1971] AC 458 at 468.
The parties’ arguments
The plaintiff and the second defendant contend that I ought conclude that the place of the tort is Victoria as it was to that state that the first defendant’s the relevant activities were directed, and that this direction constitutes the substance of the plaintiff’s claim. They argued that, notwithstanding the fact that the ladder was manufactured in Queensland by Hills, it was supplied (either directly or indirectly) into Victoria by Hills, where the plaintiff was required by Hills to purchase it. Further, the plaintiff used the ladder primarily in Victoria in the course of his employment with a company wholly owned by Hills. His training took place in Victoria, and he worked from his home in Victoria. Some equipment manufactured by Hills may have been supplied directly to him at his Victorian address. In short, the plaintiff and second defendant argued that the relevant tortious act was not the manufacture of the ladder but its controlled distribution to Victoria, into the plaintiff’s hands. Both Mr Morrow, for the plaintiff, and Mr Hooper, for the second defendant, relied on the reasoning path taken by the New South Wales Court of Appeal in Amaca Pty Ltd v Frost.[9]
[9]67 NSWLR 635.
The first defendant argued that the allegations made in the Amended Statement of Claim make this, in substance, a defective product case. The ladder was designed and manufactured in Queensland, and the defects are said to have arisen either by faulty design or poor execution. The place of tort, it submits, is therefore Queensland.
Analysis
Any analysis of the location of the tort must commence with an examination of the alleged tortious conduct. This is defined by the allegations contained in the plaintiff’s Amended Statement of Claim. I reproduce paragraphs [5] to [10] of that document as drafted:
5) At all material times the Plaintiff was employed by the secondnamed Defendant which, as a term of the employment agreement (‘the term’) required him to purchase and work from the ladder in the conduct of his employment duties.
6) Pursuant to the term, and in accord with his instructions from the secondnamed Defendant, in or about April 2007 the Plaintiff purchased the ladder manufactured and/or constructed and/or supplied by the secondnamed Defendant.
7) At all material times the firstnamed Defendant had a duty to ensure the ladder was –
(a) Fit for purpose;
(b) Safe;
(c) Free from defect.
8) At all material times the firstnamed Defendant, as manufacturer and/or supplier of the ladder, owed to the Plaintiff, as purchaser of the ladder, a duty to ensure the ladder was:
(a) Fit for purpose;
(b) Safe;
(c) Free from defect.
9) On or about 17 January 2008, whilst installing a satellite dish at 344 Hay Road, Deniliquin in the State of New South Wales, in accord with the terms of his employment and his instructions, the Plaintiff was upon the said ladder when it collapsed causing him to fall and land upon a concrete surface and thereby suffer serious injury.
10) The said injuries were occasioned to the Plaintiff by reason of the negligence of the firstnamed Defendant, its servants and agents.
PARTICULARS OF NEGLIGENCE OF THE FIRSTNAMED DEFENDANT
(a) Designing and/or constructing and/or manufacturing a defective ladder.
(b) Designing and/or constructing and/or manufacturing a ladder whereby holding clips could not become unattached.
(c) Failing to ensure that the said ladder was manufactured in such a way that the holding clips could not become unattached and the ladder thereby collapse.
(d) Failing to provide any or any secure locking mechanism upon the said ladder.
(e) Failing to warn the Plaintiff of the danger o (sic) the locking mechanism/clips becoming detached with consequent risk of the said ladder collapsing.
(f) Failing to manufacture the said ladder with the provision of a failsafe subsidiary locking mechanism in the event of the primary clips giving way and/or detaching.
(g) Failing to ensure any or any satisfactory quality control checking of the said ladder.
(h) Failing to ensure that the clips upon the said ladder had properties and dimensions providing adequate traction when under pressure.
(i) Failing to provide any or any adequate testing of the said ladder.
(j) Failing to carry out any or any adequate inspection of the said ladder.
In my view the preponderance of the allegations made against the first defendant are to do with the manufacture of the ladder. Paragraph [7] alleges that Hills had a duty to ensure the ladder was safe, free from defect and/or ‘fit for purpose’. In breach of this duty the plaintiff alleges defective design in paragraph 10 (a), (b), (c), (d) (f) and, arguably, (h). Further, the plaintiff alleges deficiencies in the manufacturing process in paragraph 10 (g), (i) and (j).
I have not reproduced the plaintiff’s particulars of negligence made against ATS, however it is worth noting that the plaintiff alleges that ATS were negligent by (inter alia) requiring or permitting the plaintiff to use a defective ladder and supplying a defective ladder.[10]
[10]Statement of Claim, paragraph 11(f) and (h).
I consider it to be reasonably clear that the substance of the plaintiff’s allegations against Hills concern the manufacture of the ladder either in its design or in the manufacturing process itself. There is one particular of negligence (paragraph 10(c)) which alleges a failure by Hills to warn the plaintiff of the danger of the locking mechanism/clips becoming detached with the associated risk of collapse. In my view, this allegation amounts to an assertion that a warning label to this effect should have been attached by Hills in Queensland at the time of manufacture. Even if I am wrong about this, in my view this case could never sensibly be characterised as a ‘failure to warn’ case. The primary allegations concern the manufacture of the ladder and the danger about which the warning is said to be necessary relates to the design and execution of the manufacturing process.
As I have indicated in paragraph [8] of these reasons, the plaintiff and first defendant argue that the controlled distribution of the defective ladder into the plaintiff’s hands in Victoria is sufficient to locate the tort in Victoria. They rely on Amaca Pty Ltd v Frost to make good this submission. In that case, Spiegelman CJ (with Santow and McColl JJ agreeing) overturned an earlier decision of the Dust Diseases Tribunal (‘the DDT’). The respondent to the appeal, Mr Frost, had been exposed to asbestos fibres between 1963 and 1966 while working in New Zealand. He subsequently contracted mesothelioma. It was agreed between the parties that the source of the asbestos fibres which caused the disease were products manufactured in New South Wales by the appellant, Amaca, and thereafter distributed in New Zealand. The issue arose as to the location of the tort: was it committed in New South Wales where the fibre had been manufactured or in New Zealand where the fibres had been distributed? The distinction was significant as New Zealand had a statutory compensation scheme which precluded common law claims for damages.
Spiegelman CJ was critical of the DDT for considering only two aspects of the plaintiff’s claim (continuing to use asbestos in Hardie products and failing to substitute the asbestos in Hardie products with a non-asbestos material), and took the view that it was necessary to consider the whole of the cause of action including the elements of duty, breach and causation. His Honour found that the place of the tort was New Zealand, where the exposure had actually occurred. His Honour considered that there was no defect in the manufacturing process itself at the point of manufacture.
The act of manufacture is not, in my opinion, the relevant act of the defendant. The product itself was inherently dangerous, in the sense that it could not safely be used without special precautions. It was not however defective in the sense that something went wrong in the manufacturing process. It was always intended that the product would be distributed in New Zealand. The respondent to whom the duty was owed, was always located in New Zealand.[11]
[11]Amaca Pty Ltd v Frost (1996) 67 NSWLR 635 at [645].
Elsewhere in the judgment Spiegelman CJ observed that determining the place of the tort is not always an easy task, it is unwise to reason by factual analogy and the identification of the relevant act is a matter of judgment upon which reasonable minds may differ.[12] With respect, I agree with these observations.
[12]Ibid at [640].
In my view, there is a significant factual distinction between the elements of duty, breach and causation in Amaca v Frost and the case before me. In Frost, Amaca had properly manufactured an inherently dangerous product and directed its distribution into New Zealand. Unlike the case before me, there was no manufacturing negligence involved. It was the act of distribution that led to the respondent’s exposure, his subsequent illness and his cause of action.
In the present case, it is uncontested that the ladder was supplied to an outlet in Victoria, and that the plaintiff was required to purchase it as a condition of his employment. I have found that Hills required ATS to impose this condition on sub-contractors. It is also a fact that the plaintiff was only exposed to risk from this defective product once it had been supplied into his hands, indirectly, by the first defendant, to be used by the plaintiff in carrying out his primarily Victorian located employment from his home in Victoria. These are all factors that have some relevance to my determination of the place of the tort, however, taken in combination, I am not persuaded that their impact is sufficient to allow me to conclude that Victoria is the proper location of the tort. In paragraphs [10] – [12] of this ruling I set out my reasons for concluding that this is primarily a case concerned with the defective manufacture of the ladder, either in its design or in the manufacturing process itself. In Distillers Co (Biochemicals) Ltd their lordships said:
“…It is not the right approach to say that because there was no complete tort until the damage occurred, therefore the cause of action arose where the damage happened to occur. The right approach is, when the tort is complete, to look back over the series of events constituting it and ask the question where in substance did this cause of action arise?”[13]
Spiegelman CJ cited this passage with apparent approval when reviewing the relevant authorities in Amaca v Frost.
[13]Distillers Co (Biochemicals) Ltd v Thompson [171] AC 450 at 468.
In my view the nub of the plaintiff’s case is that Hills manufactured a defective product, and that the plaintiff was injured as a consequence of those defects. The duty alleged by the plaintiff relates to the safety of the manufactured product and the breaches alleged, with perhaps one exception, relate to various aspects of the ladder’s manufacture. The place of the allegedly defective manufacture was Queensland and that is where the substance of the cause of action arose.
It follows that I consider that the common law of Australia referable to Queensland (including limitation statutes) to be the substantive law that governs the plaintiff’s claim against the first defendant.
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