Papadopoulos v MC Labour Hire Services Pty Ltd (No 4)
[2009] VSC 193
•21 May 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 4244 of 2007
| CHRISTOPHER PAPADOPOULOS | Plaintiff |
| v | |
| MC LABOUR HIRE SERVICES PTY LTD and CONCEPT HIRE LIMITED | Defendants |
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JUDGE: | BEACH J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20-24, 27-30 April, 1, 4-8 and 12-14 May 2009 | |
DATE OF JUDGMENT: | 21 May 2009 | |
CASE MAY BE CITED AS: | Papadopoulos v MC Labour & Anor (No. 4) | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 193 | First Revision |
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ACCIDENT COMPENSATION – Industrial accident – Contribution between defendants – Negligence – Breach of statutory duty – Contract between defendants – Breach of contract – Damages – Hadley v Baxendale – Remoteness of damage – Pure economic loss – Vulnerability – Perre v Apand - Causes of action statute barred – Limitation of Actions Act 1958.
CONTRACT – Implied terms – Warranties implied by s 74 of the Trade Practices Act 1974.
TRADE PRACTICES – Misleading and deceptive conduct – Warranties implied by s 74 of the Trade Practices Act 1974 – Sections 51A, 52, 53(aa), 55A, 74 and 82 of the Trade Practices Act 1974.
LIMITATION OF ACTIONS – Causes of action statute barred – Date upon which contractual causes of action accrued – Date upon which Trade Practice Act causes of action accrued – Date upon which negligence causes of action accrued - Section 5(1) Limitation of Actions Act 1958 – Section 82(2) Trade Practices Act 1974.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J.B Richards SC with Mr A.D.B. Ingram | Clark Toop & Taylor |
| For the First Defendant | Mr D.E. Curtain QC with Mr S.A. O’Meara | Lander & Rogers |
| For the Second Defendant | Mr R.J. Stanley QC with Mr D. Masel | Wotton & Kearney |
HIS HONOUR:
Introduction
On 10 May 2001, Mr Christopher Papadopoulos, the plaintiff, sustained an injury to his low back in the course of his employment. The injury involved a disc prolapse at the L5-S1 level. At the time he was injured, the plaintiff was employed by MC Labour Hire Service Pty Ltd, the first defendant. The first defendant is a labour hire company. At the time of the accident, the plaintiff was performing work for Concept Hire Limited, the second defendant, pursuant to an agreement between the first and second defendants.
The plaintiff commenced proceedings against the defendants claiming damages for the injuries he sustained as a result of the accident. He claimed that his injuries were caused by the negligence and breaches of statutory duty of the defendants. On 8 May 2009, after a jury trial lasting 13 days, the jury returned a verdict against both defendants. The jury assessed the plaintiff’s pain and suffering damages[1] in the sum of $250,000. They assessed the plaintiff’s pecuniary loss damages[2] in the sum of $776,000. The jury then reduced the plaintiff’s damages for his own contributory negligence by 11.5%.
[1] See s 134AB(37) of the Accident Compensation Act 1985.
[2] Again, see s 134AB(37) of the Accident Compensation Act 1985.
Prior to empanelling the jury, the plaintiff made an application under r 47.02(3) for the matter to proceed as a cause. The application was made on the basis of the complexity of the issues between the defendants: specifically, the complexity of the second defendant’s claims under the Trade Practices Act 1974 against the first defendant. The defendants opposed this application. Ultimately, the parties agreed that the issues between the plaintiff and the defendants were not so complicated a jury could not determine them. However, the question of what (if any) relief either defendant was entitled to from the other was separated out for me to determine after any jury verdict obtained by the plaintiff.
The second defendant’s claims against the first defendant may be summarised as follows:
(a) A claim for breaches of a contract made in or about April 2001 (described by the second defendant in its pleadings as “the specific agreement”[3]). This agreement is alleged to contain implied terms which were breached by the first defendant. Further, the agreement is alleged to contain warranties implied by s 74 of the Trade Practices Act (again, which it is said were breached by the first defendant).
[3]This agreement was defined as “the specific agreement” because the second defendant pleaded in its statement of claim against the first defendant the existence of an agreement made in or about 2000 between the defendants (and described by the second defendant in its pleadings as “the general agreement”). However, during argument, specific reliance upon the general agreement was abandoned by the second defendant (T1431.16) and the second defendant conceded that its case related to the specific agreement, but made in the context of previous dealings (T1431.22 - .24).
(b) Claims under ss 52, 53(aa) and 55A of the Trade Practices Act (calling in aid s 51A so far as any representations found to have been made by the first defendant “concern future matters”) in respect of conduct said to have been engaged in by the first defendant in making various representations (defined by the second defendant as “the specialist representations” and “the representations concerning the plaintiff”).
(c) A claim for contribution pursuant to Part IV of the Wrongs Act 1958.
(d) A claim in negligence. This claim involves an allegation that the first defendant breached a duty it owed the second defendant “to take reasonable care in and about the selection and placement with the second defendant of the plaintiff”.[4]
[4]See paragraphs 10A and 10B of the second further amended statement of claim by the second defendant against the first defendant as amended by leave granted 21 April 2009 and further amended by leave granted 14 May 2009.
The damages sought by the second defendant in respect of the causes of action referred to in (a), (b) and (d) above may be summarised as:
(a) the second defendant’s costs of and incidental to the defence of the plaintiff’s proceeding;
(b) the amount of the second defendant’s liability to the plaintiff; and
(c) $335,000, being the amount paid by the second defendant to the Victorian WorkCover Authority to settle a claim brought against the second defendant pursuant to s 138 of the Accident Compensation Act 1985.
The relief sought by the first defendant against the second defendant is confined to a claim for contribution under Part IV of the WrongsAct. For the reasons given below, the second defendant’s claim for damages for breach of contract, the causes of action pleaded under the Trade Practices Act and the second defendant’s claim in negligence will be dismissed. However, each defendant is entitled to contribution from the other in respect of the judgment in favour of the plaintiff to the extent of 50%.
Background facts
The plaintiff left school at the age of 15 and commenced an apprenticeship as a carpenter and joiner. He completed his apprenticeship at the age of 19 and then spent 10 years working as a carpenter and joiner. On 25 June 2000, he commenced employment with the first defendant. Essentially, he worked as a labourer. On 19 September 2000, he injured his right knee in the course of his employment with the first defendant whilst climbing down a ladder. He was carrying a vacuum cleaner down the ladder when he nearly dropped it. He twisted and hurt his knee, trying to make sure the vacuum cleaner did not fall.
When he got home that night, his knee was swollen and next day he went to the first aider at work and then to a general practitioner, Dr Healy. The plaintiff filled out a worker’s claim for compensation and was off work until 29 September 2000. The claim for compensation was never lodged. The first defendant decided to pay the claim itself without calling upon its WorkCover insurer.[5] The plaintiff said that this was done because Mr Kingsley Berry (the general manager of the first defendant) said that instead of putting the claim through WorkCover, the first defendant would pay for it as “it looks bad on our books”. The witnesses called for the first defendant (Mr Berry and Mr Mark Lunedei, a director of the first defendant) agreed that no claim was made on WorkCover and that the first defendant met the claim itself. However, the substance of the evidence of the first defendant’s witnesses was that this was because the plaintiff did not want a WorkCover claim made on his behalf. It was said on behalf of the first defendant that the plaintiff did not want a WorkCover claim made on his behalf because subsequent employers might be reluctant to employ the plaintiff if they found out he had a previous WorkCover claim.
[5]At all relevant times, the first defendant’s “WorkCover insurer” was the Victorian WorkCover Authority: see ss 7 and 9 of the Accident Compensation (WorkCover Insurance) Act 1993 and Exhibit ADN8 of Exhibit TP1.
I accept the plaintiff’s evidence when he says it was the first defendant’s idea and decision not to make a WorkCover claim. If the plaintiff had not wanted to make a WorkCover claim (for fear of what a future employer might think), then it is difficult to see why he would have taken the step of filling out the claim form, signing it and having Mr Berry witness it.[6] It seems more likely to me that the plaintiff filled out and signed the claim form and had Mr Berry witness the claim form before the suggestion was made (probably by Mr Berry[7]) that no claim form should actually be lodged. Whilst this matter assumed some significance in front of the jury, it is only of limited relevance for the purposes of determining the competing claims between the defendants. Mr Berry fairly conceded[8] that the first defendant “did the wrong thing” in not putting this claim through its WorkCover insurer. Whether or not the plaintiff asked for the claim not to be lodged (or acquiesced in it not being lodged), an employer (and specifically one the size of the first defendant with 60 to 70 employees) should not have been a party to an arrangement which effectively sidelined the operation of the provisions of the Accident Compensation Act which might have facilitated rehabilitation and recovery and minimised the risk of secondary injuries or recurrences.
[6] See Exhibit A.
[7]Notwithstanding his evidence to the contrary and his evidence of a lack of authority to take this course.
[8] At T963.12.
The plaintiff continued to work for the first defendant between October 2000 and March 2001. He had arthroscopic surgery performed on his knee on 22 March 2001. Over the next three days, he had what he described as a “niggle” in his back. In fact, he had had “niggles” in his back from the time of a motorcycle accident in December 1996. However, no specific treatment had been required. On 25 March 2001, while pulling his pants up, he experienced a severe pain in his buttock and down his left leg into the sole of his foot. He went and saw a general practitioner, Dr Michael Turner, who recommended physiotherapy and traction. The plaintiff claims he spoke to Mr Lunedei about the cost of physiotherapy and was told “No worries, not a problem, we’ll go halves”. He claims he also spoke to Mr Berry, who said “Just bring in your receipts and we’ll go halves”. Neither Mr Berry nor Mr Lunedei could remember these conversations. However, a physiotherapy receipt[9] and a payroll advice of the first defendant[10] bear out the plaintiff’s case that 50% of the cost of the physiotherapy attendances on 28, 29 and 30 April 2001 were paid by the first defendant. Having regard to the fact that the first defendant paid for the cost of the arthroscopy in full, it seems likely that the only reason it paid 50% of the post-surgery physiotherapy accounts was that there was some doubt as to whether the plaintiff’s back and left leg problems that arose on 25 March were work-related. While Mr Lunedei and Mr Berry denied any recollection of being told about the back and left leg problems in late March/early April 2001, this evidence suggests that the plaintiff probably did mention these matters to Mr Berry and/or Mr Lunedei and that his (the plaintiff’s) evidence should be accepted in this regard.
[9] Exhibit 2D7.
[10] Exhibit 2D8.
Upon experiencing the severe pain on 25 March 2001, the plaintiff consulted a general practitioner, Dr Turner. The plaintiff saw Dr Turner on 25 and 28 March and 7 April 2001. Dr Turner diagnosed the plaintiff as suffering from a “lumbar disc prolapse of the nuclear type”. He prescribed a back care programme and traction and referred the plaintiff to physiotherapy. The plaintiff underwent physiotherapy on 28, 29 and 30 March and 2 and 10 April 2001. The evidence of the physiotherapist (Mr Guest), Dr Turner and the plaintiff discloses that the plaintiff’s condition improved throughout late March and early April 2001. Dr Turner described the position as a bulging disc which he thought had returned easily into position once traction was applied.[11] As at 7 April 2001, Dr Turner believed the plaintiff’s prognosis for future employment was good, although recurrence of the problem was always a possibility. After the physiotherapy, the plaintiff’s perception was that his back and left leg symptoms “seemed to have gone away”. He described them as “OK” and “fine”. As a result, when the plaintiff last saw Dr Turner, Dr Turner told him that he should be right to go back to work, saying words to the effect “Just do a little bit of light duties at the start and you should make a full recovery”.
[11] T506.16 - .17.
The plaintiff started work again for the first defendant on 24 April 2001. He was hired out by the first defendant to the second defendant to perform work at 320 St Kilda Road. He was told by Mr Berry that there had been water damage at the premises and he would be using an Aquavac to suck up the water and get it off the floors. He did this work for three to four days. Following this, he did some work using black jack (a tar-like substance used in waterproofing) and doing general cleaning up. There was debate between the parties as to the heaviness of the work the plaintiff initially performed at 320 St Kilda Road. I accept the plaintiff’s evidence that the work he performed for the first week to week and a half was light work and that, thereafter, he was performing general labouring duties that were no harder and no lighter than those expected to be performed by the other labourers at the site. This included some lifting of heavy plaster, chipping and chiselling some concrete and assisting in the lifting and moving of a heavy bench top.
On 10 May 2001, the plaintiff was working on an upper level of the site with another employee of the first defendant (Mr Peter Anderson) when he was asked to go downstairs and bring up rolls of membrane that had been delivered to the basement[12] of the site. He was asked to do this by a foreman of the second defendant. The rolls had to be moved 20 to 30 metres from their position in the basement, up an incline to a lift and then from the lift a further 20 or 25 metres. The rolls were cylindrical, being approximately 1.2 metres long and approximately 300 millimetres wide.[13]
[12]The plaintiff described the lowest level of the site as the basement. However, in other evidence this level was described as the ground floor. For the sake of consistency, I will continue to refer to this area as “the basement”.
[13]Different dimensions were given by the plaintiff, his fellow employee Mr Anderson and a general foreman of the second defendant, Mr Trainor. The dimensions ranged from 900 millimetres to 1.2 millimetres in height and 200 millimetres to 300 millimetres in diameter. Mr Anderson and Mr Trainor estimated a length of 1.2 metres and Mr Anderson and the plaintiff appeared to agree on a diameter of 250 millimetres or 300 millimetres. In the end, nothing turns on the differences in these estimates.
Various estimates were given of the weight of each roll. The estimates ranged from 25 or 30 kilograms up to 50 kilograms. There seems little doubt the rolls were heavy. The plaintiff described the weight as being not far off the limit of his strength. The plaintiff had enjoyed some success in competitive weightlifting as a teenager. He was clearly a physically strong man in early May 2001. If, as I accept, the weight of the roll was not far off the limit of his strength, then it follows the roll was very heavy. On this issue, Mr Anderson’s evidence is corroborative of the plaintiff’s evidence. To the extent that the evidence of the second defendant’s former general foreman, Mr Trainor, was inconsistent with this proposition,[14] I reject his evidence. The tenor of Mr Trainor’s evidence appeared to be that not very much a builder’s labourer was asked to lift in the course of employment should be regarded as too heavy.[15]
[14] See for example T1385.31.
[15]See for example his evidence concerning the fact that it was not inappropriate to ask a labourer to lift a concrete block of dimensions 500 x 250 x 400 (T1399.22 – T1400.1 and the register of injury in respect of Mr Corcoran which is part of Exhibit 1D8).
In asking the plaintiff to bring up the membrane, the foreman of the second defendant said words to the effect “Go down and grab the membrane, please, because the bloke’s here to start putting it out and we want it up here ASAP”. There was no trolley provided. The plaintiff carried the rolls by bending down, picking them up and putting them on his shoulder, where each roll remained until he put it down on the third or fourth level. After the plaintiff had moved two or three rolls, he went to lift the next roll. As he was picking it up, he said he “got this massive pain in [his] back and buttocks and down [his] [left] leg”. He dropped the roll. He was a bit dazed. He was in excruciating pain. He went over to the toilets and put water on his face. He was in a lot of agony. Whilst there was a dispute by the defendants as to whether the plaintiff did any further work that day, I accept the plaintiff’s evidence that he did no more work that day. Indeed, save for doing some work as a traffic controller on the next day, the plaintiff has effectively not worked since this accident.
Before proceeding further, it is necessary to say something about the plaintiff’s case against each defendant and the competing cases of the defendants. It is convenient to start with the plaintiff’s case against the second defendant.
The plaintiff’s case against the second defendant
The plaintiff’s case against the second defendant was a straightforward claim in negligence. It was asserted that the second defendant was negligent in requiring the plaintiff to lift the roll and in failing to provide a trolley. Additionally, it was asserted that a cause of the plaintiff’s injury was a breach (or breaches) of the Occupational Health and Safety (Manual Handling) Regulations 1999 (“the Manual Handling Regulations”).[16] Specifically, the plaintiff relied upon regulations 13, 14 and 15.
[16]The Manual Handling Regulations were held to have application to the second defendant in Papadopoulos v MC Labour & Anor (Ruling No. 1) [2009] VSC 175.
The second defendant denied that it was negligent or in breach of the Manual Handling Regulations. Its case was essentially that there was nothing wrong with requiring a healthy labourer to lift the roll and that, had the plaintiff not had a pre-existing back condition or a previous knee problem (which the plaintiff conceded affected his ability to squat and thus required him to put more load on his back when he lifted the roll), there would have been no problem in requiring the plaintiff to lift the roll and/or in him lifting the roll. In essence, the second defendant contended that the accident was caused by the negligence of the first defendant in allowing the plaintiff to do normal labouring duties when he was not fit for the same. The second defendant’s criticism of the first defendant extended to the failure by the first defendant to lodge the WorkCover claim form in respect of the September 2000 knee accident. It endorsed the plaintiff’s case against the first defendant that this failure led to failures to have a return to work plan in respect of the plaintiff and a return to work coordinator who could assist the plaintiff. It was said that these failures and the first defendant’s failure to have an occupational rehabilitation programme and a risk management programme (all of which were said to be required by s 156 of the Accident Compensation Act in the circumstances of this case) led to the plaintiff suffering the serious injury he sustained on 10 May.
The jury did not accept the second defendant’s case and found that either the second defendant’s negligence or its breach of the Manual Handling Regulations (or both) was a cause of the plaintiff’s injury.[17]
[17] By agreement between the parties, the liability question against each defendant was framed in terms:
“Was there negligence of beach of statutory duty by the […..] defendant which was a cause of the plaintiff’s injury, loss and damage?”.
The plaintiff’s case against the first defendant
The plaintiff’s case against the first defendant was more extensive than his case against the second defendant. First, the plaintiff contended (and the first defendant accepted) that the first defendant had a non-delegable duty. The case was conducted (correctly in my view) on the basis that if the jury found there was negligence on the part of the second defendant, then it also had to conclude there was a breach of the duty to ensure that reasonable care was taken on the part of the first defendant. Indeed, the first defendant addressed the jury on the basis that it should find the second defendant negligent and, accordingly, should also answer the liability question in respect of the first defendant against the first defendant. The first defendant joined with the plaintiff in saying that the roll was too heavy and a trolley should have been provided, and that this constituted negligence.
Secondly, the plaintiff relied upon breaches of the Manual Handling Regulations which he said were committed by the first defendant. The same regulations were relied upon against the first defendant as were relied upon against the second defendant.
Thirdly, the plaintiff relied upon s 156 of the Accident Compensation Act. Put briefly, the plaintiff contended that the first defendant was required to have an occupational rehabilitation programme and a risk management programme in place in accordance with s 156(1) because the first defendant was an employer with rateable remuneration of more than $1 million at the time of the accident. Additionally, the first defendant was required to prepare a return to work plan in respect of the plaintiff following his arthroscopy, and to have nominated a return to work coordinator who could assist the plaintiff in his return to work. These latter two requirements were imposed by s 156(2). A return to work plan and the nomination of a return to work coordinator was required to be done no later than ten days after the 20th day of the plaintiff having no current work capacity.[18] The trial before the jury proceeded on the basis that s 156(1) (which required the provision of an occupational rehabilitation programme and a risk management programme) did not give rise to an independent claim for breach of statutory duty which might sound in damages.[19] However, the plaintiff and the first defendant were content for me to charge the jury on the basis that the requirements of s 156(2) were capable of giving rise to an independent cause of action for breach of statutory duty.[20]
[18]“No current work capacity” was defined in the Accident Compensation Act (at the time of the accident) to mean in relation to a worker, “A present inability arising from an injury such that the worker is not able to return to work, either in the worker’s pre-injury employment or in suitable employment”.
[19] Notwithstanding the plaintiff’s pleadings to the contrary.
[20]In my view, whilst s 156(2) is capable of giving rise to an independent action for breach of statutory duty, s 156(1) is not. This is because the requirement in s 156(1) is only imposed upon a limited class of employer and it does not seem likely that the Act intended to give a right of action in tort in respect of a breach of s 156(1) dependent upon the size of the employer. Further, the requirements of s 156(1) (being the establishment of an occupational rehabilitation programme and a risk management programme) overlap with the requirement of s 156(2)(b) which requires all employers to establish and maintain an occupational rehabilitation programme and a risk management programme within three months after the 20th day of no current work capacity in respect of a worker.
The first defendant did not address the jury in relation to the claims for breach of statutory duty made by the plaintiff against it. It contented itself with telling the jury that they should answer question two “Yes” and, accordingly, question one “Yes”.[21]
[21] Questions one and two were in the following terms (by agreement between the parties):
Resolution of the plaintiff’s claims against the defendants
Because the parties were content to have rolled up questions put to the jury on the question of liability, it is not possible to say with certainty whether the jury accepted any particular individual cause of action against either defendant. However, having observed the jury throughout the trial, it seems likely to me that the jury found against the second defendant in respect of the negligence cause of action and the cause of action based upon regulation 15 of the Manual Handling Regulations. Logically, it is difficult to see how the jury could have come to different conclusions in respect of each of these causes of action. Regulations 13 and 14 of the Manual Handling Regulations are in a slightly different position. It would have been logically possible for the jury to conclude that negligence and a breach of regulation 15 was a cause of the plaintiff’s injury, but remain unsatisfied that any breach of regulations 13 and 14 was a cause of injury.
Similarly, it is likely that the jury, having found the second defendant in breach of the duty of care it owed, concluded that the first defendant failed in its duty to ensure that reasonable care was taken. Again, it seems likely the jury came to the same conclusion in respect of the Manual Handling Regulations that it came to in respect of the second defendant. While I think it is likely the jury also found against the first defendant in respect of the causes of action relating to s 156 of the Accident Compensation Act (a breach of s 156(1) being capable of amounting to evidence of negligence and a breach of s 156(2) additionally giving rise to a claim for breach of statutory duty), again one cannot be certain. In the circumstances, absent any relevant concession by the defendants, it would have been necessary for me to consider each of these matters for myself.
However, during the course of his final submissions, counsel for the second defendant conceded that I could determine this matter on the basis that the jury had found the negligence of the second defendant and a breach by the second defendant of regulation 15, each to be a cause of the plaintiff’s injury.[22] Similarly, counsel for the first defendant made a like concession in respect of his client’s breach of the non-delegable duty it owed the plaintiff and his client’s breach of regulation 15.[23] In the circumstances, it is not necessary for me to give detailed reasons about these matters. However, I should say for the sake of completeness that, having considered all of the evidence and counsel’s submissions, I had already independently come to the view that both defendants breached the duties of care they owed the plaintiff when he was required to lift the roll without a trolley and both defendants were in breach of regulation 15. Additionally, I had already come to the view that these breaches of duty and breaches of regulation 15 were a cause of the plaintiff’s injury. What remains is a consideration of the additional case against the first defendant in respect of its failure to lodge the WorkCover claim form completed by the plaintiff on 22 September 2000[24] and any flow-on effects from the failure to have an occupational rehabilitation programme, a risk management programme, a return to work plan and a return to work coordinator in respect of the plaintiff as required by s 156 of the Act.
[22] See T1577.15 - .27 and T1578.24 - .29.
[23] See T1578.30 - T1579.5.
[24] Exhibit A.
It is now necessary to consider in more detail the claim against the first defendant in relation to its failure to process the plaintiff’s claim in respect of his knee accident in September 2000 through WorkCover and the first defendant’s consequential failure to comply with the requirements of s 156(1). The second defendant alleges that these failures led to the plaintiff being sent to perform work for the second defendant, for which the plaintiff was not reasonably fit. The heart of the second defendant’s complaint is that while the first defendant knew (or, at the very least, ought to have known) of the plaintiff’s unfitness and unsuitability for performing labouring work, the second defendant did not have any such knowledge. Further, the second defendant contends that, had it been advised of the “true position”, it would never have allowed the plaintiff to perform work for it and thus the real or sole cause of the plaintiff’s injury was the more egregious negligence and breach of duty by the first defendant, rather than any negligence or breach of duty on the part of the second defendant.
The separate claim against the first defendant
Neither before the jury, nor in submissions before me, did the first defendant put in issue the fact that it failed to comply with s 156 of the Accident Compensation Act. There was no issue that the first defendant did not have an occupational rehabilitation programme, nor a risk management programme as required by s 156(1).[25] Further, there was no issue that the first defendant did not prepare a return to work plan in respect of the plaintiff or nominate a return to work coordinator as required by s 156(2) at any time prior to 24 April 2001. There can be no doubt that the first defendant breached the duties it owed the plaintiff when it failed to lodge the WorkCover claim form[26] and failed to comply with s 156 of the Accident Compensation Act.[27] These breaches of duty occurred over the period from September 2000 to May 2001 – albeit that the more important period was from 22 March 2001 to 10 May 2001. The real issue so far as these breaches of duty is concerned is whether they were a cause of the plaintiff’s injury and, if so, their causal potency.
[25]Following the evidence of Mr Berry, the case was conducted on the basis that s 156(1) applied to the first defendant. Further, whilst Mr Berry gave some evidence that might have been capable of being viewed as showing the first defendant to have an occupational rehabilitation programme, there was no occupational rehabilitation programme of the kind defined by s 158.
[26] Exhibit A.
[27] See also Exhibit N and the evidence of Ms Frost.
Dr Turner agreed that when he last saw the plaintiff, the advice he would have given him would have been to the effect that the plaintiff could go back to work trying light duties and then full duties if he was “OK”.[28] When asked whether six to eight days of light duties would have fitted in with a return to work programme for the plaintiff he would have provided, he said “I would have gone on longer than eight days”. Dr Turner would have put the plaintiff on light duties for a month.[29] However, Dr Turner also agreed that he did not tell the plaintiff to come back to see him before going on heavy duties: he left it up to the plaintiff. He gave evidence that he would have given the same advice to the employer if he had been asked for his opinion.[30]
[28] T519.
[29] T521.10.
[30] T526 – T527.
Associate Professor Stark (a neurologist) gave evidence as to the cause of the plaintiff’s injury as follows:[31]
[31] T557.15 - .27.
“I believe that the injury was very likely caused in multiple stages as is often the case. It is possible that some initial disc injury occurred gradually at around the time or soon after the initial injury to the knee in September 2000. It seems clear that there was a significant aggravation of the injury in March 2001 and you will note that Dr Turner has recorded quite clearly that there was restricted straight leg raising on the left side at that time. This is very suggestive of there being some left sided disc prolapse at that time. I note, however, that the symptoms improved to some extent and there was objective evidence of improvement and the range of straight leg raising improved also.”
Dr Stark went on to say:[32]
“I believe there had been a pre-existing weakness or susceptibility to disc injury occurring either spontaneously or possibly as a consequence of the knee injury in September 2000. It seems clear that there was a significant exacerbation which occurred as this man was getting dressed in March 2001 soon after his arthroscopic surgery to the knee. However, it seems clear there was a substantial exacerbation in the incident of 10 May 2001. The condition may have been aggravated somewhat by further traffic management work on 11 May 2001.”
[32] At T558.8 - .17.
In relation to the plaintiff’s fitness for heavy lifting work in May 2001, Dr Stark said:[33]
“In general, assuming that the incident back in March involved a degree of either annular tear or a small amount of disc prolapse [which the preponderance of evidence supports], I think it would really be unwise for someone who had an incident like that, even if they have recovered well symptomatically, I think it would be unwise for them to be doing heavy lifting for at least three months.”
[33] At T623.26 – T624.1.
Dr Clayton Thomas gave evidence that the fact there was no return to work programme for the plaintiff was “potentially extremely significant”.[34] He went on:[35]
“Someone who has an initial back problem … will have quite a long period of time where the muscles won’t be functioning properly. The ability to sense position in the back won’t be functioning properly. That’s why we do rehabilitation for these people because it is prevention of secondary injuries in a weakened state, if you like. So, first of all he should have been on a return to work programme. He should have taken consideration of his back problem and he should have … graduated back over a long period of time, avoiding the type of activity which he was subsequently doing. I think it is also reasonable to say that the subsequent event [10 May 2001] … was a significant event in itself. Even if all the I’s had been dotted and all the T’s crossed, it may not have prevented what subsequently happened, but it may have.”
[34] T575.15.
[35] At T575.16 and following.
In further elaboration of his opinion, Dr Thomas agreed with the following propositions:[36]
[36] T597 – T604.
(a) The plaintiff was someone who, in the ordinary course of events, if he had suffered the September 2000 accident, would have had a return to work plan.
(b) There should have been a structured return to work plan.
(c) It was common in his experience for reports to be obtained from treating doctors during the course of a structured return to work plan as treating doctors were the ones “best able to judge precisely what physical tolerance [a] patient could have as a result of [an] injury”.
(d) Liaising with treating doctors is vital to a successful return to work.
(e) With the plaintiff’s then fairly recent episode of significant back complaint involving “the discs”, he was undoubtedly someone who needed a structured return to work with restrictions on the amount he was allowed to lift, bending and repeated twisting.
(f) Any decent return to work plan for the plaintiff as a builder’s labourer would have required ongoing monitoring so that he was assessed before graduating to more onerous duties than those on his initial return to work.
In Betts v Whittingslowe,[37] Dixon J said:[38]
“… [B]reach of duty coupled with an accident of the kind that might thereby be caused is enough to justify an inference, in the absence of any sufficient reason to the contrary, that in fact the accident did occur owing to the act or omission amounting to the breach of statutory duty.”[39]
[37] (1945) 71 CLR 637.
[38] At p.649.
[39] See also Commissioner of Main Roads v Jones (2005) 79 ALJR 1104 per McHugh J at 1109 [26].
In Bennett v Minister of Community Welfare,[40] Gaudron J said (omitting footnotes):[41]
“Leaving aside cases involving some positive act and those in which an omission can be treated as a positive act, a case based on omission or a failure to act will, in certain respects, fall for analysis in a way that differs from that appropriate for a case based on a positive act. Thus, in the case of a positive act, questions of causation are answered by reference to what, in fact, happened. In the case of an omission, they are answered by reference to what would or would not have happened had the act occurred. In that exercise, the larger philosophical questions are brushed aside and the issue is approached on the basis that ‘when there is a duty to take a precaution against damage occurring to others through the default of third parties or through accident, breach of the duty may be regarded as materially causing or materially contributing to that damage, should it occur, subject of course to the question whether performance of the duty would have averted the harm’.
In practice, it is not always necessary to enquire what would have happened in the circumstances under consideration had a positive duty been performed. Thus, in the case of a statutory duty, a: ‘breach of duty coupled with an accident of the kind that might thereby be caused is enough to justify an inference, in the absence of any sufficient reason to the contrary, that in fact the accident did occur owing to the act or omission amounting to the breach of statutory duty’.
And although it is sometimes necessary for a plaintiff to lead evidence as to what would or would not have happened if a particular common law duty had been performed, generally speaking, if an injury occurs within an area of foreseeable risk, then, in the absence of evidence that the breach had no effect, or that the injury would have occurred even if the duty had been performed, it will be taken that the breach of the common law duty caused or materially contributed to the injury.”
[40] (1992) 176 CLR 408.
[41] At pp.420-421.
A useful summary of the relevant principles concerning discharging a burden of proof in a civil case and the common law test of causation is contained in the judgment of McDougall J (with whom McColl and Bell JJA agreed) in Nguyen v Cosmopolitan Homes.[42] Bearing in mind this authority and the authorities to which I have referred, I am satisfied the causal link in respect of this aspect of the claim is established. If there had been a WorkCover claim made in respect of the September 2000 accident, it is likely that reports and certificates would have been obtained from the plaintiff’s treating doctors and specific consideration given to a managed and appropriate return to work plan. It is probable that in devising and managing such a plan there would have been consultation with the plaintiff’s general practitioners, if not other appropriately qualified rehabilitation specialists (be they surgeons, physicians or other specialists). Further, I find it likely that the plaintiff would have been placed on a programme which required no heavy lifting for at least one month following his return to work. In the circumstances, even if the plaintiff was employed at the site of the second defendant and even if it could be said that the second defendant was just as likely to require him to lift an inappropriate weight (it having required him to do so on 10 May 2001), it is likely the plaintiff would have not complied or sought appropriate assistance. Whilst the causal link in respect of this aspect of negligence and breach of duty on the part of the first defendant is not as direct as the causal link between the second defendant’s negligence and the plaintiff’s injury, nevertheless it is established.
[42] [2008] NSWCA 246 at paragraphs [44] – [55] and [58] – [64].
Before turning to the second defendant’s contractual and Trade Practices Act claims against the first defendant, it is necessary to describe in greater detail the circumstances in which the second defendant came to hire the plaintiff from the first defendant.
The circumstances of the hiring of the plaintiff
The first defendant was a labour hire company. It only provided services to the building industry. It was in that sense in the business of providing specialist assistance in the field of building and construction.[43] Mr Berry described the process that occurred when someone wanted to use a person the first defendant had on its books. He said:[44]
“The client calls into our company and they make a statement of what type of worker they want, whether it is a labourer or a carpenter or whatever we have. They will tell us a start time. They will tell us an address to go to. They will tell us the supervisor that our worker is to see. We then confirm that we are able to do that by the quick description that they have given. We then ask them specific details as to what our worker would specifically be doing. Then after that we enter it into our diary that was in existence back then. Then, at the end of the day, presuming that they called during the day for this job order, we would then go through and select the appropriate person for the job.”
[43] Cf T973.17 - .19.
[44] At T906.21 and following.
The first defendant’s diary for 23 April 2001[45] records a call from the second defendant seeking two labourers to work at 320 St Kilda Road. The entry contains the word “dewatering”. Nobody has any recollection of the conversation which led to this entry. Indeed, one would reject any evidence that purported to be given on the basis of a specific recollection of what was said leading to this entry, having regard to the elapse of time.[46] However, much reliance has been placed by the first defendant on the existence of the word “dewatering”. The first defendant’s case is effectively that it was retained to provide a labourer who was suitable for doing dewatering – a job which the plaintiff and Mr Berry described as “light”. Thus it is said there could be no possible warranty or implied term as to the ability of a labourer sent in response to this request being able to do unrestricted labouring duties.
[45] Exhibit 1D6.
[46]It could not even realistically be said that the happening of the accident on 10 May 2001 may have caused a witness to recollect what he said on 23 April 2001 about this matter.
However, the second defendant contends that even if the word “dewatering” was used by its representative (probably Mr Trainor), this did not signify that this was the only work to be performed. Further, the second defendant relies on the plaintiff’s evidence that one can be sent to a site to do a particular job and then retained (in some cases for weeks) to do other jobs. Even if the plaintiff was retained merely for dewatering, by 10 May there could be no doubt the plaintiff would have been (and was) doing other work (almost certainly general labouring). Further, the second defendant contends that dewatering (which involves the use of an Aquavac) is not light work; alternatively, was not work suitable for the plaintiff because it would have required him to work with his back in a flexed position, dragging and moving a piece of equipment of at least moderate weight.
Mr Trainor gave evidence that on occasions he used to ring the first defendant “to request labour hire”.[47] He described what he would say in the following terms:
“I’d ring and say, ‘Pat Trainor from CDK [the second defendant]. I need two labourers tomorrow 7.30, 7 o’clock, for probably three days’ … [depending upon who answered the telephone] they’d say, ‘What are they going to do’, or something. I might say ‘General labour or a bit of dewatering, bit of sweeping, whatever, builder’s labourer’. That’s why I’m ringing … for a builder’s labourer.”[48]
[47] T1375.9.
[48] T1375.12 - .24.
I accept that Mr Trainor was probably asked on 23 April 2001 what the work would be and that he said “dewatering”. However, I do not accept that this conversation purported to limit the work that would be done by those workers sent by the first defendant to dewatering only. Consistently with the evidence of the plaintiff and Mr Anderson, it is improbable that a worker sent by the first defendant to the site of the second defendant would only be required to do the one task identified (if only one task was identified) by the party making the request. The way in which the system worked (with employees sometimes staying days, if not weeks, beyond the originally contemplated period) suggests that while the first defendant might want to have some idea what its employees were doing, there was no actual limitation upon the work the first defendant’s employees might actually be requested to do.
Further, whether the plaintiff actually performed dewatering for the period he described (three or four days) or the period arguably suggested by his time sheet[49] (one day) is largely beside the point in the resolution of the current dispute. If the plaintiff performed light duties on one day or three to four days or approximately one and a half weeks, he was in any event, by the time of 10 May 2001, performing ordinary (unrestricted) duties.
[49] Part of Exhibit 2D9.
I turn now to consider the second defendant’s contractual claims.
The contract between the parties
While there was some inadmissible evidence led in this case concerning the intentions and expectations of Mr Trainor and Mr Lunedei, the rights and liabilities of the parties to the contract made on 23 April 2001 fall to be determined objectively. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd,[50] Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:[51]
“This Court, in Pacific Carriers Ltd v BNP Paribas., has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”
[50] (2004) 219 CLR 165.
[51] At p.179 [40].
The agreement made on 23 April 2001 was made in the context of previous dealings between the parties where the second defendant (probably Mr Trainor) had telephoned the first defendant (either Mr Lunedei or Mr Berry) and hired workers from the first defendant. For the reasons given above, the contract was not a contract limiting the work the workers hired on 23 April could perform or limiting the work the plaintiff (who was not assigned to the job until 24 April) could perform. A reasonable person in the position of the first defendant (or, perhaps more correctly, Mr Lunedei) would not have been led to believe by Mr Trainor that any worker sent pursuant to the contract made on 23 April would only be performing dewatering for as long as such person remained on the second defendant’s site. If, as the first defendant submits, the contract was a contract to supply labourers to do only dewatering, it is curious that the first defendant did not make any complaint that the contract it alleges was breached when it must have known by 26 April (or shortly thereafter) that work other than dewatering was being performed by (at least) Mr Anderson.[52]
[52] See generally Exhibit 2D9.
Terms implied by s 74 of the Trade Practices Act
The plaintiff relies upon the warranties implied under s 74 of the Trade Practices Act. Section 74 relevantly provides:
“(1) In every contract for the supply by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and that any materials supplied in connexion with those services will be reasonably fit for the purpose for which they are supplied.
(2) Where a corporation supplies services (other than services of a professional nature provided by a qualified architect or engineer) to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the corporation any particular purpose for which the services are required or the result that he or she desires the services to achieve, there is an implied warranty that the services supplied under the contract for the supply of the services and any materials supplied in connexion with those services will be reasonably fit for that purpose or are of such a nature and quality that they might reasonably be expected to achieve that result, except where the circumstances show that the consumer does not rely, or that it is unreasonable for him or her to rely, on the corporation's skill or judgment.
(2A) …
(3) …”
So far as s 74(1) is concerned, there are parallels between this case and the decision of Ashley J in Deutz Australia Pty Ltd v Skilled Engineering Limited.[53] In that case, the defendant (Skilled Engineering) hired out a forklift driver to the plaintiff (Deutz). His Honour said:[54]
“I turn to consider the application of s. 74(1) in the circumstances of this case. According to the plaintiff’s argument the agreement should properly be characterised as a contract for the supply of forklift driving services. So characterised, there would be a breach of the warranty implied by the subsection if the driving itself was not rendered with due care and skill. But according to the argument for Skilled the services to be supplied under the agreement consisted simply of the provision of a forklift driver. Due care and skill must be exercised in selecting and providing a suitable man.
I later conclude, for purposes of imposition of vicarious liability in tort, that Mr Sutton was at material times the employee of Skilled for all purposes; or, perhaps more accurately having regard to the way in which the case was argued, that he was not at material times the servant pro hac vice of Deutz. That conclusion does not resolve, however, the question whether the services to be provided by Skilled by the agreement between it and Deutz were for the provision of a (competent) man or the provision of forklift driving services.
Neither, in my opinion, is the question answered by the pleadings. Counsel for the plaintiff relied upon an admission made by Skilled in its amended defence. Skilled, for its part, was able to point to inconsistency in the statement of claim. Neither argument was persuasive.
I should next say that I do not regard documentation compiled by Skilled – in particular the standard order form and the invoice dated 28 January 1997 - as contributing anything much to resolution of the question now under discussion. The order form contained the heading “what type of man” as well as the heading “job description”. The invoice referred to “supply of personnel services” but also identified Mr Sutton and his job description.
In the end, the question should be resolved by identification of the substance of the agreement. So considered, I conclude that what Skilled agreed to provide was a qualified and competent man to undertake work which required a man with particular qualifications.
The consequence of that conclusion is that there was implied into the agreement a warranty by Skilled that in substance it would exercise due care and skill in selecting and assigning to Deutz a qualified and reasonably competent forklift driver. There was not implied a warranty that the performance of the forklift driving would be performed with due care and skill.”
[53] [2001] VSC 194.
[54] At paragraphs [20] – [25].
Similarly, in this case the first defendant agreed to provide a suitable labourer: that is, a person prepared to do labouring work and suited by experience to it.[55] While expectations may be irrelevant, Mr Trainor summarised the objective position in the following question and answer:
“When you hire an employee from someone like MC Labour, what do you expect from them?---I expect them to do their eight hours work and be a builder’s labourer. If they are not done that night or whatever, I would ring up and probably say, ‘This bloke is probably not suited [for] what he’s doing’ and ask for another one.”[56]
[55]Part of the difficulty with the implied terms alleged by the second defendant is giving content to them. Obviously, an implied term using the words “suited” or “suitable” would encompass the exclusion of the possibility of the first defendant sending a grossly disabled (for example quadriplegic) person to perform the work of a builder’s labourer.
[56] T1381.13 - .18.
It follows that s 74(1) implied into the agreement a warranty by the first defendant that in substance it would exercise due care and skill in selecting and assigning to the second defendant a builder’s labourer – being a person willing to and capable of performing labouring work to the standard expected of a reasonable builder’s labourer: that is, a qualified and reasonably competent builder’s labourer.
Section 74(2) (if its pre-conditions are met) implies a warranty “that the services supplied under the contract for the supply of the services and any materials supplied in connection with those services will be reasonably fit for that purpose or are of such a nature and quality that they might reasonably be expected to achieve that result”. Again, it is the services of the first defendant which is the object of s 74(2). The services the first defendant provides are in the selecting and sending of a suitable person to perform labouring in the sense to which I have referred above. Further, and in any event, even if it was apposite to discuss the services to be provided by the worker in terms of whether they were “reasonably fit for the purpose”, the purpose cannot have included a requirement for the plaintiff to perform work in breach of a duty of care owed by the purchaser of the services to the plaintiff. I will say more about this when I come to the issue of any possible breach.
Other implied terms alleged by the second defendant
In addition to the warranties implied by s 74 of the Trade Practices Act, the second defendant alleges the following were implied terms of the agreement:
(a) “The first defendant warranted that services rendered under the agreement will be rendered with due care and skill”.[57]
[57]This term is said to be implied by both s 74(1) and law (see the particulars under paragraph 5 of the first defendant’s statement of claim). What I have said above disposes of this term so far as s 74(1) is concerned. However, in the event that the second defendant seeks to rely upon this term by reference to services performed by the plaintiff (rather than the first defendant), then I will deal with the issue of whether the term is implied by law.
(b) “The services of the first defendant in the selection and supply of workers be undertaken with reasonable skill and care”.
(c) “The first defendant take reasonable care to ensure that workers provided to the second defendant were reasonably fit to undertake labouring duties”.
(d) “The first defendant comply with its statutory obligations as employer”.
(e) “Workers provided by the first defendant to the second defendant be reasonably fit to engage in labouring work in the building and construction industry”.
(f) “The first defendant not send workers to the second defendant who it knew to have recently suffered injury requiring surgery unless and until it received appropriate medical clearance for the worker to engage in the further employment for which it was supplying the worker”.
Because there was no formal written contract between the defendants, the defendant does not have to establish all of the five conditions required for the implication of the term referred to in BP Refinery (Westernport) Pty Ltd v Shire of Hastings.[58] However, in respect of each term it alleges, it must establish that the suggested term is “necessary for the reasonable or effective operation of a contract of … [the nature entered into between the parties] in the circumstances of the case”.[59]
[58] (1977) 180 CLR 266 at 283.
[59]See generally Hawkins v Clayton (1988) 164 CLR 539 at 573 per Deane J and Breen v Williams (1996) 186 CLR 71 at 91.
While there is some lack of precision in the terms alleged by the second defendant, it seems likely that the reference to “services” in the first of the second defendant’s asserted terms is a reference to the services of the first defendant, rather than the services of the plaintiff. If this is the case, then the issue is covered by s 74(1) of the Trade Practices Act and it is not necessary to imply either the same term or a term with a slightly different shade of meaning. However, if the reference to “services” is meant to be a reference to the plaintiff’s services, then it is difficult to see the relevance of the term. There is no suggestion that such services as were provided by the plaintiff were not provided with due care and skill.[60]
[60] Cf paragraph 9(a)(i) of the second defendant’s statement of claim.
Similarly, the implied term alleged in (b) above is not necessary for the reasonable or effective operation of the contract, having regard to the existence of the warranties implied by s 74 of the Trade Practices Act. The terms alleged in (c) to (f) above fall into a slightly different category (although perhaps arguably (c) is also part of the field covered by s 74). These terms are simply not necessary for the reasonable or effective operation of the contract between the defendants. As Mr Trainor put it, if a labourer sent to him could not do the eight hours of work he expected, he would simply ring up and say that the person was not suited and ask for another. It is not necessary for the reasonable or effective operation of the contract to imply terms imposing obligations on the first defendant over and above those contained in the warranties implied by s 74. Objectively, all the second defendant was reasonably interested in was whether the labourer sent was someone prepared to do the work and capable of doing the work that would reasonably (and in compliance with law) be required of him. The issues of compliance with statutory obligations owed to others (in this case the plaintiff) or medical clearances do not form any proper basis for the implication of a term (or terms) into the agreement between the defendants.
Was there a breach of any implied term or warranty?
In my view, there was no breach of either of the warranties implied by s 74 of the Trade Practices Act. At the time of the accident, the plaintiff had more than 15 years’ experience in the building industry. All of the evidence was to the effect that he was a good (if not very good) worker. He knew what labouring work involved. He was prepared to do it. His general practitioner had cleared him to go back to work trying light duties first. If the second defendant had not committed an act of negligence and breached duties it owed the plaintiff, there is no basis for saying that “non-negligent” work the plaintiff might have been required to perform would have caused injury. Indeed, the evidence is to the contrary. No injury was sustained by the plaintiff while performing work, that was not negligently too heavy, during the period 24 April to the early afternoon of 10 May 2001. The medical evidence as to the possibility of workers with vulnerable backs suffering injuries in particular circumstances is not to the point. I do not accept that it can form a basis for the contention that the first defendant failed to exercise reasonable care and skill when it selected and assigned the plaintiff to perform work he wanted to perform, and which did not cause injury until the occurrence of the negligence of the second defendant. The second defendant contracted for a qualified and reasonably competent builder’s labourer. It received what it contracted for.
Putting to one side the facts that occurred after the contract was formed on 23 April 2001, the first defendant agreed to provide a suitable labourer – being a person prepared to do labouring work and suited by experience to perform labouring work. That is exactly what the first defendant provided to the second defendant. The plaintiff was in every way suited and fit (in the sense of appropriate) for the performance of general labouring duties. It is not to the point that at the same time the first defendant was in breach of its duty to the plaintiff and that medical witnesses would have advised a more cautious approach. The plaintiff was entitled to hold himself out as a person capable and willing to perform labouring duties. He was entitled to pursue his occupation. While events after 24 April 2001 may not be relevant in terms of whether there was a breach of contract as at 24 April 2001,[61] as events transpired, the second defendant received exactly what it contracted to receive until it breached the duties it owed the plaintiff on 10 May 2001.
[61]Save for the possible exception of such an event disclosing the existence of a circumstance present on 24 April 2001 which might have constituted a breach of contract.
It follows from what I have said above that there was no breach of contract committed by the first defendant. There are two further impediments to the second defendant’s breach of contract claim. They are the issues of remoteness of damage and s 5(1) of the Limitation of Actions Act 1958. Having regard to the conclusions I have already reached, it is strictly speaking not necessary for me to consider these issues. However, in the event that I am wrong, I turn now to consider Hadley v Baxendale[62] and the limitation defence.
[62](1854) 9 Exch 341.
Hadley v Baxendale
The issue here is whether a reasonable person would have realised that the second defendant’s loss was likely to occur as a usual consequence of the breach of the agreement between the defendants alleged by the second defendant; alternatively, whether the first defendant should have realised that the second defendant’s loss was likely to occur on the basis of the first defendant’s actual knowledge of the circumstances. The second defendant’s claim is a claim for the economic loss it has sustained as a result of being found negligent and liable to the plaintiff in damages. If the second defendant had not been negligent, it would not have incurred the liability it incurred to the plaintiff (in respect of which it now seeks damages) nor any liability under s 138 of the Accident Compensation Act to the VWA (in respect of which it also seeks damages).
The first defendant’s case is that the second defendant’s alleged losses do not arise naturally (according to the usual course of things) from the breaches of contract alleged against it. Further, it contends that the losses alleged by the second defendant could not reasonably be supposed to have been in the contemplation of the defendants as the probable result of a breach of the contract by the first defendant at the time the contract was made. The second defendant submits that the answer to these submissions is contained in the line of authority commencing with Mowbray v Merryweather.[63] In Mowbray there was a contract between the defendant and a firm of stevedores whereby the defendant agreed to supply chains fit for use in unloading cargo. One of the chains supplied was defective. It broke and one of the stevedores’ workers was injured. The stevedores might have discovered the defect in the chain by examining it. The stevedores sued the defendant in respect of amounts they were required to pay their employee. The action by the stevedores succeeded. Lord Esher MR said:[64]
“I think that the plaintiffs’ contention is correct, and that, if the defendant, having contracted to supply a sufficient chain, supplies a rotten chain for the purposes of the work which he knows will be done by the plaintiffs’ workmen, it may reasonably be supposed to have been in his contemplation that injury might result to a workman in respect of which the plaintiffs would be liable to pay damages.”
[63] [1895] 2 QB 640.
[64] At p.643.
The issue is a factual one. In Mowbray, there could be little doubt that supplying a “rotten chain” could lead to injury if an examination of it (which no doubt would be part of an examination of all of the material supplied by the defendant) was not made (or not made with reasonable care). The difference between Mowbray and the present case is that whilst it might be in the contemplation of the parties to a contract that one party might not examine the work of the other party to ensure that there was no breach of contract, it is somewhat different to contemplate an independent act of negligence (constituting a breach of duty to the plaintiff) giving rise to a liability for damages in the second defendant for which it could seek recovery from the first defendant.
In further elaboration of its argument under this heading, the second defendant relied upon Florida Hotels Pty Ltd v Mayo,[65] Redken Laboratories (Aust) Pty Limited v Docker,[66] TNT Australian v Christie[67] and Oxley County Council v MacDonald.[68] While each of these cases stand for the proposition that the rule in Hadley v Baxendale does not automatically or universally preclude a party in breach of contract recovering by way of damages amounts it has been held liable (because of its negligence or breach of contract) to pay to another party, they do not provide that in every such case damages are recoverable no matter what breach of contract is established. Each case depends upon its facts. In the present case, it is sufficient to conclude that I am not satisfied the loss suffered by the second defendant which was caused by its negligence and breach of duty and which gave rise to its liability to the plaintiff (and under s 138) was one that a reasonable person would have realised was likely to occur as the usual consequence of any breach of contract the second defendant alleges against the first defendant. Further, I am not satisfied it was one the first defendant should have realised was likely to occur. To borrow from the words of Barwick CJ in Florida Hotels,[69] the possibility of liability of the second defendant to the plaintiff (and the VWA), caused by the second defendant’s negligence, flowing from the breaches alleged against the first defendant was not such that it must have been fairly within the contemplation of the parties. I turn now to consider the limitation defence raised by the first defendant.
[65] (1965) 113 CLR 588.
[66] [2000] NSW CA 100.
[67] (2003) 65 NSWLR 1.
[68] [1999] NSWCA 126.
[69] At 113 CLR 598.
Are the second defendant’s contractual claims statute barred?
Section 5(1) of the Limitation of Actions Act 1958 provides a six year time limit for causes of action founded in contract. It is trite that proof of damage is unnecessary in a claim for breach of contract. Thus, the cause of action in breach of contract accrues on the date of breach. In this case, the breach alleged by the first defendant related to the selection of the plaintiff and occurred on or about 24 April 2001.[70]
[70] Cf Kone Elevators Pty Ltd v Popa [2006] VSCA 26 at paragraph [21].
In this proceeding, the second defendant filed and served a notice claiming contribution under the Wrongs Act on 15 May 2007. This was more than six years after the last possible date upon which the breach occurred. The second defendant issued another notice in identical terms (again only claiming contribution under the Wrongs Act) on 25 January 2008. It was not until 12 September 2008 when a statement of claim alleging breach of contract was delivered. Even if the claim for breach of contract made on 12 September 2008 could somehow be related back to 15 May 2007 (about which I say nothing), the claim is statute barred.[71] I turn now to consider the claims under ss 52, 53(aa) and 55A of the Trade Practices Act. These claims are based upon representations alleged by the second defendant to have been made by the first defendant, and described by the second defendant as “the specialist representations” and “the representations concerning the plaintiff”.
[71]Indeed, in his reply submissions, junior counsel for the second defendant, when asked what he said about the claim that the contractual cause of action was statute barred, said: “Your Honour, we raise no affirmative answer to contradict that”: T1563.24.
The Trade Practices Act claims
The second defendant alleges that between February 2000 and May 2001 the first defendant represented to the public and/or the second defendant:
(a) “The services it [the first defendant] supplied and would supply were specialist services suited to the needs of the building and construction industry”.
(b) “Workers it [the first defendant] supplied and would supply were and would be reasonably fit to engage in labouring work in the building and construction industry”.
(“The specialist representations”).
Building (to some extent) upon the specialist representations, the second defendant alleges that by assigning the plaintiff to work for it and by not advising the second defendant of the plaintiff’s knee and back problems (or any matter concerning the plaintiff’s unfitness to engage in duties as a labourer), the first defendant, by its conduct, represented to the second defendant:
(a) “The plaintiff was and would be reasonably fit to engage in labouring work”.
(b) “The first defendant had made all reasonable enquiries as to ensure itself that the plaintiff was reasonably fit to undertake labouring duties”.
(c) “To the first defendant’s knowledge, information and belief, the plaintiff was reasonably fit to undertake labouring duties”.
(“The representations concerning the plaintiff”).
If, by “specialist” in the first of the specialist representations no more is meant than the first defendant only supplied labour to the building and construction industry, then one could not cavil with the proposition that the first defendant made the first of the specialist representations. However, if the second defendant intends to give the word “specialist” some content suggesting that the labourers provided by the first defendant were represented as being superior to average builder’s labourers, then the allegation by the second defendant that the first defendant made the first of the specialist representations is not made out. I do not accept there was any evidence to suggest the first defendant made any general representation as to the quality of its services, other than:
(a) it was a labour hire company engaged in the business of providing labourers in the construction and building industry; and
(b) the labourers it provided were people prepared to do labouring work and suited by experience to performing such work.[72]
It is beside the point that the second defendant might have been paying (on an hourly rate) more to the first defendant’s employees than it was paying to its own employees.[73] No doubt a larger hourly rate was paid to employees of the first defendant because that hourly rate had to take account of sick pay, workers compensation premiums and the first defendant’s administrative costs. This fact does not translate into some representation of superiority.
[72]Perhaps, put another way, the labourers it provided were qualified and reasonably competent builder’s labourers.
[73] T1381.12.
For like reasons to those given in respect of the second defendant’s case on the issues of implied warranties and implied terms, I do not accept there was a representation made by the first defendant that workers supplied by it were reasonably fit to engage in labouring work – particularly, if what is really meant by “reasonably fit” is that the individual worker does not have some underlying medical condition which might predispose him to injury in the event that he is negligently required or asked to perform an excessively heavy or difficult task.
Adopting the same reasoning, I do not accept that the first defendant made the representations concerning the plaintiff. Whilst Mr Berry agreed in cross-examination with a suggestion that the first defendant should have told the second defendant that the plaintiff had recently had surgery to his knee, I do not regard this as determinative. Mr Berry’s real position was that the first defendant could have taken this step. As to whether it should have, his answer was clearly affected by the benefit of hindsight (he having given evidence that he now knows a lot more about occupational health and safety issues than he knew back in 2001). Further, his subjective opinion in 2009 does not determine what the first defendant objectively in all the circumstances should have done in 2001. The same can be said with respect to such concessions as were made to questions in cross-examination containing the word “fit”. While the cross-examiner might have meant to inquire concerning “medical fitness” or fitness in the sense of no possible underlying (and then currently) asymptomatic medical condition, the witness under cross-examination may have been referring to the question of “fitness” in the sense of suitability by experience to perform the work (whatever underlying medical condition there might be).
The only representation concerning the plaintiff made by the first defendant was in substance that the plaintiff was a person with sufficient experience to perform the work of a builder’s labourer, a person who wanted to perform that work and a person who saw himself as able to perform the work that was likely to be required of him.[74] This representation was true.[75] The claims for damages under s 82, based upon breaches of ss 52, 53(aa) and 55A must fail. There are further impediments to the second defendant’s Trade Practices Act claim. However, having regard to the conclusions I have reached, I do not need to deal with those in any detail. Suffice it to say, there was no evidence of any reliance upon any of the representations alleged. Additionally, I do not accept that the second defendant would not have accepted the plaintiff on its site had the first defendant informed the second defendant in respect of the plaintiff’s back and knee problems, together with Dr Turner’s views and the fact that the plaintiff was regarded as a keen and very good worker. I do not accept Mr Trainor’s evidence in this regard. Mr Trainor impressed me as somewhat partisan towards the interests of the second defendant. At times his answers were non-responsive and a little truculent. His answer to the question: “If you found out that someone had had an injury and that he had had some time off and then came back and was asked to work on your site about six weeks after injury, and he was a good worker, and he did the work perfectly for you for a while, say, two weeks, and you then found out that he had had an injury, would you seriously send him off the site?”, was unsatisfactory. Mr Trainor answered: “I know this happened to me, myself, and I couldn’t get back to work unless I had a medical from the doctors sitting in front of me to say that I could go back to work. That is the only way you should be able to go back to work”. This answer was non-responsive and somewhat misleading in the context of this case. When he was later asked how he injured himself, he said that he did not injure himself. He continued: “I was running a job worth $1 billion and running 1,700 men and the depression got me because the unions were cutting me to pieces. So I had to take time off”.[76]
[74]Or, again, perhaps put another way, that the plaintiff was a qualified and reasonably competent builder’s labourer (which was true).
[75]It follows from what I have said above that I reject the second defendant’s case on the issue of representation by silence. On the facts as I have found them, there was no duty on the part of the first defendant to tell the second defendant of the plaintiff’s medical and/or claims history: cf Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31.
[76] See T1408 – 1409.
For the reasons given above, the Trade Practices Act claims must fail. The first defendant also contended that the Trade Practices Act claims were statute barred. Assuming some representation made in April 2001 was breached, the current version of s 82(2) of the Trade Practices Act provides that actions based upon a contravention of a provision of Part V (which contains ss 52, 53(aa) and 55A) must be commenced within six years after the day on which the cause of action that relates to the conduct accrued. While the first defendant originally contended that the time limit was three years (rather than six years), the relevant period is six years.[77]
[77]In April 2001, s 82(2) provided for a three year time limit. However, that section was amended on 26 July 2001 to increase the period from three years to six years in respect of conduct engaged in on or after that date – and also in relation to conduct before that date (but only if the period of three years had not expired as at 26 July 2001): see item [20] in Schedule 1 to the Trade Practices Amendment Act 2001.
A cause of action under s 82 does not accrue merely upon the breach of a relevant provision (in this case, one or some of s 52, s 53(aa) or s 55A). The cause of action accrues upon the breach of the provision and when damage occurs. The issue in this case is, on the assumption (contrary to my findings) there was a breach of a relevant provision, when did damage occur? This issue was discussed extensively by Nettle JA (with whom Ashley and Dodds-Streeton JJA agreed) in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd.[78] In the course of his Honour’s judgment, his Honour reviewed the decisions of HTW Valuers (Central Queensland Pty Ltd v Astonland Pty Ltd,[79] Henville v Walker,[80] Karedis Enterprises Pty Ltd v Antoniou,[81] Hawkins v Clayton,[82] Wardley Australia Limited v Western Australia,[83] Commonwealth v Cornwell[84] and Sellars v Adelaide Petroleum NL & Ors.[85] His Honour then identified the four different types of cases which need to be considered when determining when a limitation period begins to run under s 82(2). His Honour said:[86]
“[T]he first class is the sort considered in HTW Valuers, where misleading and deceptive conduct results in the purchase of an asset at an over value. In such a case, time runs from the date of purchase (subject, perhaps, to the plaintiff being able to ascertain the true or real value). The second class of case is of the sort that was dealt with in Wardley Australia Ltd & Anor v The State of Western Australia, in which misleading and deceptive conduct results in the incurrence of a contingent obligation (in that case, as a guarantor). In that sort of case, it is said that no loss is incurred and therefore time does not begin to run until the liability crystalises (as when payment under the guarantee is first demanded). The third class of case is of the sort considered in Murphy & Anor v Overton Investments Pty Ltd, where a contingency is hidden by the defendant’s conduct and might or might not come to pass (for example, where it is within the power of a landlord to increase tenancy charges but, at the time of entry into agreement, the landlord is yet to decide to increase the charges). Once again, it is said that time does not begin to run until the contingency occurs. The fourth class, of which Henville v Walker was put forward as an example, consists in misleading and deceptive conduct which results in the purchase of an asset for a particular purpose for which it is unsuited. And as to that, although the Court did not state expressly the point at which time begins to run, their Honours appear to have concluded that, since there was no evidence of undervalue at the time of purchase, time did not begin to run until losses on the redevelopment were incurred.”
[78] [2008] VSCA 26 at paragraphs [101] – [117].
[79] (2004) 217 CLR 640.
[80] (2001) 206 CLR 459.
[81] (1995) 59 FCR 35.
[82] (1988) 164 CLR 539.
[83] (1992) 165 CLR 514.
[84] (2007) 229 CLR 519.
[85] (1994) 179 CLR 332.
[86] At paragraph [105].
Nettle JA went on to say:[87]
“In the result, I take the law to be that where a plaintiff is induced by misleading and deceptive conduct to purchase an asset for a particular purpose for which it is unsuitable, and there is no evidence that the asset is worth less than the price agreed to be paid for it, no loss is incurred until and unless the asset is applied to the particular purposes for which it is purchased and is as a result found not to be as the plaintiff was induced to believe that it would be.”
[87] At paragraph [106].
His Honour went on:[88]
“It is also true that, where relief is claimed on the basis of misleading and deceptive conduct which induces entry into a transaction, and a series of losses flow from the transaction, the cause of action for damages for misleading and deceptive conduct may accrue at the time of incurrence of the first loss (even if the plaintiff is unaware that a cause of action exists).”
[88] At paragraph [112].
Applying this analysis, any cause of action the second defendant had under s 82 of the Trade Practices Act accrued on 10 May 2001. It was at the time of the plaintiff suffering injury that the plaintiff was found not to be as the second defendant alleges it was induced to believe that he would be. Further, while the accident occurred close to finishing time on 10 May (2.00pm[89]), the plaintiff’s evidence (which I accept) was that he did no further work on that day. The second defendant paid the first defendant for the full eight hours (7.00am to 3.30pm) on that day.[90] It follows that the second defendant suffered a loss on 10 May 2001. Accordingly, and for the reasons given above, the Trade Practices Act claims are statute barred.
[89] According to Exhibit 2D4 - which was completed on 16 May 2001.
[90] See Exhibit 2D9.
The mutual claims for contribution
Each defendant claims contribution from the other pursuant to Part IV of the Wrongs Act. The amount of contribution each defendant can recover from the other is such as may be found to be just and equitable having regard to the extent of each defendant’s responsibility for the damage. The two principal factors are the degree to which each has departed from the standard of conduct required of them and the relative causal potency of each defendant’s acts. In this case, the causal potency of the second defendant’s acts is much greater than the causal potency of the first defendant’s acts. However, the departure from the standard of care expected of the first defendant (being a departure that occurred over a protracted period of time) is greater than the departure from the standard of care expected of the second defendant. Further, it can be argued the first defendant has some (albeit a very limited) responsibility in respect of the actual events that occurred at the second defendant’s site on 10 May.[91]
[91]Remembering that s 24(2) of the Wrongs Act empowers the trier of fact to exempt any person from liability to make contribution or to direct that the contribution to be recovered “shall amount to a complete indemnity”.
On one view of the facts, one could say that the more significant causal potency of the second defendant’s acts is counterbalanced by the greater departure from the standard of care by the first defendant. On this analysis, contribution would be assessed 50/50 (if one held the second defendant to be entirely responsible for the events of 10 May[92]). On another view, the difference between the causal potency of the acts of the second defendant and the first defendant on the one hand is greater than the difference between their respective departures from the standards of care expected of them. On this scenario, one might then factor in the fact that the first defendant has some responsibility for the actual events of 10 May 2001. In Hoad v Peel Valley Exporters Pty Ltd,[93] Harrison J set out some of the questions that need to be answered when considering what, if any, contribution should be ordered against an employer whose employee is working for an occupier when the negligence of the occupier results in injury to the worker. His Honour identified the questions as follows:[94]
[92] Cf s 24(2) of the Wrongs Act.
[93] [2008] NSWSC 981.
[94] At paragraph [152].
“1. What were the respective degrees of access to the premises as between the employer and the occupier and what was the employer's opportunity to inspect them?
2. What were the employer and occupier's respective states of knowledge of the hazard?
3. Was the employee located on the occupier's premises for a short time or indefinitely or was she moved around?
4. Did the employer have an ability independently of the occupier to avert the hazard by itself or only with the consent or approval of, or in consultation with, the occupier, sometimes called the employers capacity to 'shield' the employee?
5. How long had the relevant hazard been in existence?
6. Had any prior injury been caused by the hazard to anyone else apart from the employee?
7. Did the relevant hazardous conditions at the occupier's premises vary from day to day or were they constant?
8. Was the employee injured in the course of her normal duties or were those duties relevantly different to what was usual for that employee?
9. Was there any dissimilarity in the employee's ability to draw the hazard to the attention of the occupier as compared to the employer?
10. Who was responsible for the employee's training?
11. Was the non-delegable duty of care owed by the employer one that could be discharged in the circumstances by doing nothing at all, such as (arguably) a casual and unforeseeable act of negligence on the part of the occupier?
12. What were the respective roles played by the employer and the occupier in devising, instituting and maintaining the system of work that was found to be unsafe?
13. Who controlled the premises?
14. Who supplied any plant and equipment to the employee required for use in carrying out the work?”
In the present case, the second defendant controlled the premises and it supplied any plant and equipment to the plaintiff which was required to be used in carrying out any work. The second defendant was wholly responsible for devising, instituting and maintaining the system of work under which the plaintiff worked on 10 May. The act of negligence of the second defendant was a casual one. However, both defendants bore a responsibility for the plaintiff’s training/safety induction. The first defendant did not have an ability independently of the second defendant to avert the hazard caused by attempting to lift the roll (other than in the provision of training and safety information). While the second defendant had knowledge (or ought to have had knowledge) of the hazard posed in attempting to lift the roll, the same could not be said of the first defendant. If it was not for the first defendant’s independent breaches of duty to the plaintiff, contribution might have been assessed against it in the range 0% to 15%. That is, while the figure would have been small, there was the possibility of the first defendant being exempted from a liability to make contribution and the second defendant being ordered to provide an indemnity in accordance with s 24(2) of the Wrongs Act.
The issue of contribution is not to be approached mathematically or by the application of some formula. Questions of apportionment involve questions of balance and relative emphasis. They involve the weighing of different considerations. Value judgments upon which reasonable minds might differ are involved. Some of these do not readily admit of articulation.[95] The second defendant submitted that any apportionment should be 90/10 against the first defendant. The first defendant submitted that any apportionment should be 75/25 against the second defendant. Accepting that value judgments upon which reasonable minds might differ are involved, both of these submissions were unrealistic. Having regard to the more significant negligence of the first defendant (over a prolonged period) and the more significant causal potency of the acts of the second defendant, in my view the appropriate apportionment is 50/50. This apportionment takes into account some responsibility of the first defendant for the actual incident on 10 May – but balances this against the fact that the second defendant’s more significant causal potency is greater than the first defendant’s more significant negligence in respect of the pre 10 May issues.
[95] See generally Esso Australia Limited v VWA (2000) 1 VR 246 at 253-4 per Winneke P.
The first defendant’s claim in negligence
By amendments to its statement of claim made on the last day of hearing,[96] the second defendant alleged that at all material times the first defendant owed it “a duty to take reasonable care in and about the selection and placement with the second defendant of the plaintiff”. The second defendant alleges the first defendant breached this duty, relying upon the matters it alleges in respect of the contractual claims.
[96]Paragraphs 10A and 10B of the second further amended statement of claim by second defendant against first defendant.
One might have thought that little turns on this additional cause of action because the first defendant can (in respect of it) rely on the defence of contributory negligence.[97] An apportionment between the defendants performed in accordance with Part IV of the Wrongs Act (that is, the mutual claims for contribution to which I have already referred) would yield the same apportionment on the issue of contributory negligence. However, it is to be remembered that the second defendant seeks damages measured not only by the amounts it is ordered to pay Mr Papadopoulos, but also measured by the amounts it has paid in compromise of the s 138 recovery proceeding.
[97] See generally Part V of the Wrongs Act 1958.
As Gaudron J observed in Perre v Apand,[98] the law as to liability for economic loss is a comparatively new and developing area of the law of negligence which has not yet developed to a stage where there has been enunciated a governing principle applicable in all cases. As her Honour said: “Perhaps it never will”.[99] What can be said is that liability for pure economic loss will likely be imposed upon a party whose negligence causes that loss if that party has knowledge (or the means of knowledge) that the plaintiff (being a member of a determinate class) is unable to protect himself or herself against the loss which results from the negligence – provided that the imposition of such a liability does not unduly fetter that person’s legitimate commercial interests. In the present case, the question that looms largest is the second defendant’s ability to protect itself against a loss of the kind in respect of which it now claims damages. Here, the second defendant could have protected itself by complying with the manual handling regulations and not breaching the common law duty of care it owed the plaintiff. Further, the defendants were in a contractual relationship. It was open to the second defendant to seek to impose a term of the kind in respect of which a duty is now alleged. It did not do so. For these reasons, I am of the view that the second defendant was not relevantly “vulnerable” as that concept is referred to in Perre v Apand and the cases considering that decision. It follows that the first defendant did not owe the second defendant the duty of care alleged.
[98] (1999) 198 CLR 180.
[99] At paragraph [25].
However, even if I am wrong about the issue of the existence of the duty alleged, for the reasons given in respect of the second defendant’s contractual claims, there was no breach. The first defendant selected and assigned a qualified and reasonably competent builder’s labourer. There was no lack of reasonable care and skill in the selecting and assigning of the plaintiff to the second defendant. Additionally, and in any event, any claim for breach of a duty to take reasonable care in and about the selection and placement of the plaintiff with the second defendant is statute barred – having been issued more than six years after the date upon which the cause of action accrued (10 May 2001, for the reasons given in respect of the second defendant’s Trade Practices Act claims[100]).
[100] See further Cartledge v E. Jopling & Sons Limited [1963] AC 758.
Conclusion
For the reasons given above:
(a) The second defendant’s claims for damages against the first defendant will be dismissed.
(b) Each defendant is entitled to contribution to the extent of 50% from the other defendant in respect of the plaintiff’s judgment.
I will hear the parties on the question of costs.
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CERTIFICATE
I certify that this and the 39 preceding pages are a true copy of the reasons for Judgment of Justice Beach of the Supreme Court of Victoria delivered on 21 May 2009.
DATED this twenty-first day of May 2009.
Associate
“1. Was there negligence or breach of statutory duty by the first defendant which was a cause of the plaintiff’s injury, loss and damage?
2. Was there negligence or breach of statutory duty by the second defendant which was a cause of the plaintiff’s injury, loss and damage?”
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