Pahi v Unilever Australia Limited t/as Streets Ice Cream & Anor; Pahi v Swire Cold Storage Pty Limited & Anor

[2011] HCATrans 157

[2011] HCATrans 157

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S167 of 2010

B e t w e e n -

TRICIA PAHI

Applicant

and

UNILEVER AUSTRALIA LIMITED T/AS STREETS ICE CREAM

First Respondent

SWIRE COLD STORAGE PTY LIMITED

Second Respondent

Office of the Registry
  Sydney  No S308 of 2010

B e t w e e n -

TRICIA PAHI

Applicant

and

SWIRE COLD STORAGE PTY LIMITED

First Respondent

UNILEVER AUSTRALIA LTD T/AS STREETS ICE CREAM ABN 66 00 40 50 828

Second Respondent

Applications for special leave to appeal

HAYNE J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 JUNE 2011, AT 12.35 PM

Copyright in the High Court of Australia

____________________

MS S. NORTON, SC:   If the Court pleases, I appear with my learned friend, MS M. FRASER, for the applicant in both applications.  (instructed by Brydens Law Office)

MR P.M. MORRIS, SC:   For the respondent, Unilever, may it please the Court.  (instructed by Astridge & Murray)

MR J.E. SEXTON, SC:   May it please the Court, I appear for the second respondent in the first matter, and the first respondent in the second matter.  (instructed by Lee & Lyons Lawyers)

HAYNE J:   Yes.  There is no reason not to hear the matters together and treat them as a single application, is there?

MR SEXTON:   No, your Honour.

HAYNE J:   Yes.  Yes, Ms Norton.

MS NORTON:   Your Honours, this is an application for special leave to appeal from a unanimous decision of the New South Wales Court of Appeal.  There are two applications simply because there were two defendants in the original proceedings and they both lodged appeals so there were two appeals and hence there had to be two applications, which was something we did not realise initially. 

The claim was for personal injury suffered by an applicant when she worked repacking ice creams into boxes of four and six to allow them to be sold at supermarkets.  The ice creams were kept frozen obviously.  For the repacking they were bought from the freezers out to a cool area where the temperature was between four and six degrees where they were they were taken out of the big boxes, put into little boxes and then repacked and sent away.  Different ice creams had different times they were allowed to be out of the freezer into the cold room.  They never went into a normal atmosphere room. 

The ice creams were manufactured by the first respondent, which I will just call Streets because that is how they were referred to in both judgments below, and the repacking took place in the cold storage facility occupied and operated by the second respondent, which I will call Swire’s.  The premises were adjacent to Streets manufacturing premises and they were joined by a tunnel.  There had been a long‑term relationship, it appears, between Streets and Swire’s where Swire’s had done packaging, repackaging and distribution work of Streets Ice Creams.  ESP - there is a longer name than that, but I will just refer to the applicant’s employer as ESP - had been involved in some repacking at a different site, but this was a new site - their first time onto the Swire’s premises. 

So what happened was the applicant aggravated a pre‑existing carpal tunnel syndrome while performing the work.  There had been an appeal with respect to quantum to the Court of Appeal, but the judgment dismissed that and that is at the application book page 75.  There had never been an appeal concerning the causation findings made by the trial judge, so the fact that this aggravation was caused by the work was not the subject of any appeal and so the trial judge’s findings would stand.

The system of work is set out in the judgment of the trial judge which commences at page 3 of the application book and it runs through to page 11 of that book, and there is a summary of it in our written submissions which are at page 89 of the application book, and I will not take your Honours through that in any detail.  Suffice it to say that the three entities – Swire’s, ESP and Streets - were all involved in, originally a day‑to‑day basis with respect to this system.  The Streets people dictated how much ice cream they wanted repacked each day and they sent a notice down to ESP and Swire’s and then those amounts of ice creams were repacked. 

The trial judge commenced his analysis of whether there was a duty in these circumstances, neither Streets nor Swire being the employer of the applicant, and he commences that in the application book at page 13.  He does this after having made a finding, which I do not think is challenged, that the work being done by the applicant involved a foreseeable risk of significant injury.  He made that finding at page 12 of the application book and that is at about the paragraph numbered 44.  He refers to Dr Adams’ report which said it was foreseeable.  He then sets out an extract from the National Occupational Health and Safety Commission which dealt with these types of problems and at the bottom of the page he set out what was there said that in:

Answering yes to any of the following questions indicates an increased risk –

So those two questions relevantly were:

Are the insufficient numbers of employees to carry out the work including where peak work loads occur?

The next one, over the page on 13:

Are there extremes of heat, cold, wind or humidity?

The trial judge then went on to find that the injury to Mrs Pahi was foreseeable.  We say that is, in determining in a novel situation whether there is a duty or not, an appropriate starting place to decide whether the injury was foreseeable or not.  He then goes on to ask himself the question:

Did Streets or Swire owe the plaintiff a duty of care?

He sets out there the passage from Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16, which is familiar to most people who do this kind of work, and he sets that out from Justice Mason’s decision which is at page 31 of that case, and then refers to Justice Brennan’s decision which is at 47, and it is our submission that this was the correct starting point for determining whether or not there was such a duty. If you look at it, it provides, just as set out in the trial judgment:

If an entrepreneur engages independent contractors ‑ ‑ ‑

HAYNE J:   Yes, I think we are familiar with the golden passage out of Stevens v Brodribb.

MS NORTON:   Yes, your Honour.  What we wanted to point out and which I think I have to confess is not particularly clear in my written submissions because it had not really gelled with me at that time, that what Stevens v Brodribb really sets out is that there can be, in relevant circumstances, two duties on an entrepreneur.  The first duty is the one that Justice Mason is speaking of in that paragraph, which is in short a duty to set up - if you have created an enterprise which has with it a foreseeable risk of injury, then there is a duty on the entrepreneur to set up a safe system of work.  The second duty, which is the one the Court of Appeal focused on - well in fact it did not refer to the first one at all - was the duty to supervise those who are employed in the system once it has been set up.

Now, the main thrust of our argument here is that what happened here is that Streets and Swire’s were both entrepreneurs and they had between them created this risk of injury because of the nature of the work, in particular the requirement it be done quickly and it be done in cold conditions.  They did this and before they had prescribed, if I use the words from Justice Mason, any safe system of work, they simply contracted the actual packaging to ESP.  We say they never gave up their control of the system because of numerous things that they did, but at the more basic level we say they did never prescribe a safe system.

A safe system, if we had the evidence here of Dr Adams, goes to rotation of people, not having them in the cold room for too long, being able to wear protective clothing, those kind of things.  So they never did that first step and we say the trial judge, when he made his findings as to the duty owed, first of all by Streets, he did that at page 20 of the application book, and he said:

The relevant duty of care is analogous to that which would have been owed to ESP employees had Mrs Pahi been directly employed by Streets.

Then he set out what he says is the duty:

It is a duty to take reasonable care to avoid exposing a person employed in the enterprise to foreseeable and unnecessary risks of injury.

That formulation of the duty – well, the formulation of the duty was criticised by the Court of Appeal, but the Court of Appeal focused on what was said in paragraph 58, that is the following paragraph, where he was dealing with the content of the duty:

The content of the duty imposed upon Streets is not coextensive with that of any employer of ESP because of the limits of control.

That is a correct statement of principle.

Nevertheless the ambit of that duty required that Streets takes such measures as were within its power to obviate the dangers posed to ESP workers in an activity which had been commissioned by Streets.

Objection was recorded to that statement in the Court of Appeal judgment at 62, I think, in the paragraph 37 of her Honour’s judgment.  But our submission is that you have to read what the trial judge said in paragraph 58 as following on what he had said in paragraph 57, and therefore there was no error in the principle he was using or in his enunciation of a possible duty.  We say that is the type of duty that can, in certain circumstances, correctly flow from all of the judgments in Stevens v Brodribb except the dissenting judgment.

HAYNE J:   Do you accept at page 68, paragraph 53, the second sentence of that paragraph?

MS NORTON:   Paragraph?

HAYNE J:   Paragraph 53, second sentence:

Although this was a labour hire case, the undisputed evidence was ‑ ‑ ‑

MS NORTON:   Yes, we do.  We say, and there is evidence in the black book to the effect that what happened was Mrs Pennington‑Collins, who was the manager of ESP, gave some evidence about a meeting between representatives of Swire’s, Streets and ESP where the system of work, such as it was, was devised.

HAYNE J:   At page 71, paragraph 62, do you accept at line 44, it, that is to say Streets:

engaged Swire to arrange for that work . . . Swire, in turn, engaged ESP to perform that work.  How ESP managed the workload was entirely a matter for it.

MS NORTON:   We say that that is not a correct summary of the facts given that we never got a lot of information about the relationships between Swire’s, Streets and ESP - no contracts were tendered - but the system of work that seemed to have developed was that Streets would issue an invoice about how many they wanted packed that day.  It would be sent to both Swire’s and ESP and there was no real information about what happened if that was not reached.  There was evidence that at times ESP could not conduct the work in the area that had been allocated to them because Swire’s needed it for that period so they would have move out and keep their workers outside whilst Swire’s did whatever they did, and then they were allowed to more back. 

So we say the system was not left to ESP because ESP had to work in an around the constraints put on them by both Streets and Swire’s and those constraints could change from day to day.  So it was not as it was in Fox v Leighton, the allocation of a discrete task to them to be performed at the speed they wanted to perform it in the area where they thought it was safe to perform it.  What was happening was that the whole thing was almost a joint venture between the three companies to get this done as quickly as possible, and it was a very flexible arrangement and there was no guarantee that ESP could have access to the cold room for the same number of hours every day.  If Swire’s needed it, then they got pushed back.

So we say there was no such delegation to them entirely of the system of work, and we go back to our first point that there seemed to be no drawing up of a safe work plan by anybody before this work was allocated and some of the decisions in Stevens v Brodribb then bring us to the point of the duty to supervise, and the duty to supervise can be wider than the duty that was referred to by the Court of Appeal.  We say the Court of Appeal fell into error by first of all not posing for itself what was the duty that was owed by these two companies, Streets and Swire’s, but by launching into whether there had been in fact a breach of those duties.

Now, we say that when the Court of Appeal in its judgment referred to Stevens v Brodribb it simply referred to one paragraph in Stevens v Brodribb which was not the one which was referred to by this Court in Leighton v Fox, and not the one which highlighted the fact that there was a duty on an entrepreneur if they had created a risk which we say happened here, and in certain circumstances given that both Streets and Swire’s would every day see the system of work that was being carried out by ESP workers, it is not enough, even if they had prescribed a safe system of work, which they had not, it would not be enough in those circumstances because they saw every day the number of ice creams that were being packed.

They knew how many people were doing it, they knew the space available, they knew the cold temperatures and so they knew all of the things which acted together to make it an unsafe system of work.  So we say they were under a general duty of care in much of the terms that were outlined by the trial judge and what has happened in the Court of Appeal is really that because there was a duty owed by the employer and we never questioned that there was such a duty, that that in effect meant there was no duty owed by the other two parties who were very much involved in this entrepreneurial adventure.  So Streets, where at page 31 of Stevens v Brodribb, Justice Mason said:

Brodribb’s ability to prescribe such a system was not affected by its inability to direct the contractors as to how they should operate their machines ‑

is not relevant here because it was fairly obvious that Streets could direct the workers of ESP how to conduct their activities, because if different ice creams were brought out with different melt times, then they could prescribe different times where they had to be repacked. 

In Stevens v Brodribb it was not found that there was no duty, it was found that there was no breach by the majority of the judges.  Here, the Court of Appeal never grappled with the question of what was the duty that was owed by the entrepreneurs, Streets and Swire’s, and we say that led them into an error.  In the decision of Stevens v Brodribb there is the less referred to judgment of Justices Wilson and Dawson, which starts at page 43 of that judgment - I am sorry, the relevant part starts at 43, where it is in similar terms but slightly different - 43 at about point 5 on the page:

Where an independent contractor is employed to do the very thing which, if done by the employer himself, would constitute a breach of duty on his part, then the employer will nevertheless be liable for any consequent loss or damage.  Moreover, where precautions can be taken against loss or damage and the failure of an employer to ensure that his independent contractor takes those precautions amounts to authorization of the acts or omission causing the harm, then the employer will also be liable.

So we say in these circumstances, given that this was not just as it was in Fox v Percy, the signing off of one particular discrete task which may have only had to be done one time by people who had expertise in that area, here we have a system that has been set up, it has been allowed to continue to

operate in circumstances where there was a foreseeable risk of injury and thus it was in fact authorised by both Streets and Swire’s.

HAYNE J:   Yes, thank you, Ms Norton.  We shall not call on you, Mr Morris or Mr Sexton.

An appeal to this Court would enjoy insufficient prospects of success to warrant a grant of special leave.  Each application for special leave is refused with costs.

AT 12.55 PM THE MATTERS WERE CONCLUDED