Ross Gazis v Gual Pty Limited - Formerly known as Sermacs Australia Pty Ltd (under external administration and/or controller appointed)
[2014] NSWSC 1617
•17 November 2014
Supreme Court
New South Wales
Medium Neutral Citation: Ross Gazis v Gual Pty Limited - Formerly known as Sermacs Australia Pty Ltd (under external administration and/or controller appointed) [2014] NSWSC 1617 Hearing dates: 7 April 2014 - 11 April 2014 Decision date: 17 November 2014 Before: Rothman J Decision: 1.The plaintiff to provide a Short Minutes of Order to reflect judgment for the plaintiff in accordance with these reasons.
Catchwords: TORTS - NEGLIGENCE - workplace injury - liability of principal as occupier to take reasonable steps to prevent employee of subcontractor being subject to risk of foreseeable harm from occupier's work practices - proportionate liability with employer Legislation Cited: Civil Liability Act 2002
Law Reform (Miscellaneous Provisions) Act 1946
Security Industry Act 1997
Workers Compensation Act 1987Cases Cited: Fox v Wood [1981] HCA 41; (1981) 148 CLR 438
Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672
Leighton Contractors Pty Ltd v Fox; Calliden Insurance Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1
McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579
Podrebersek Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492
Stevens Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16
Thompson v Woolworths (Qld) Pty Ltd [2005] HCA 19; (2005) 221 CLR 234
Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 422
Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522
Woods v Multi-Sport Holdings Pty Ltd [2002] HCA 9; (2002) 208 CLR 460Category: Principal judgment Parties: Ross Gazis (Plaintiff)
Gual Pty Limited - Formerly known as Sermacs Australia Pty Ltd (under external administration and/or controller appointed) (First Defendant/First Cross-Defendant to the Third Cross-Claim/Fourth Cross-Defendant/Fifth Cross-Claimant)
South Sydney Junior Rugby Leagues Club Ltd (Second Defendant/First Cross-Claimant/Second Cross-Defendant/Third Cross-Claimant/First Cross-Defendant to the Fifth Cross-Claim)
The Worker's Compensation Nominal Insurer by its agent, Employers Mutual Ltd (Third Defendant/First Cross-Defendant/Second Cross-Claimant/Fourth Cross-Claimant/Second Cross-Defendant to the Fifth Cross-Claim)
HCC Underwriting Agency Ltd (formerly Ilium Underwriting Agency) as agent for Syndicate 4040 (Second Cross-Defendant to Third Cross-Claim)Representation: Counsel:
D.E Baran/with J.C Lee (Plaintiff)
N.E Chen (First Defendant/First Cross-Defendant to the Third Cross-Claim/Fourth Cross-Defendant/Fifth Cross-Claimant)
R.Cavanagh SC (Second Defendant/First Cross-Claimant/Second Cross-Defendant/Third Cross-Claimant/First Cross-Defendant to the Fifth Cross-Claim) P. Perry (Third Defendant/First Cross-Defendant/Second Cross-Claimant/Fourth Cross-Claimant/Second Cross-Defendant to the Fifth Cross-Claim)
Solicitors:
Monaco Solicitors (Plaintiff)
Kennedys Law Firm (First Defendant/First Cross-Defendant to the Third Cross-Claim/Fourth Cross-Defendant/Fifth Cross-Claimant); Second Cross-Defendant to Third Cross-Claim
Hall & Wilcox Lawyers (Second Defendant/First Cross-Claimant/Second Cross-Defendant/Third Cross-Claimant/First Cross-Defendant to the Fifth Cross-Claim) McCabes Lawyers (Third Defendant/First Cross-Defendant/Second Cross-Claimant/Fourth Cross-Claimant/Second Cross-Defendant to the Fifth Cross-Claim)
File Number(s): 2009/00335151 Publication restriction: None
Judgment
HIS HONOUR: The plaintiff, Ross Gazis, was injured at work and claims damages for personal injury. The incident occurred on 19 May 2006. At the time he was employed by Metro Protective Services (MPS). It contracted with the first defendant, Gual Pty Ltd, to supply the plaintiff as a security guard at the premises of the second defendant, South Sydney Junior Rugby Leagues Club Ltd (the Club).
Gual Pty Ltd is now in liquidation and, pursuant to the Further Amended Statement of Claim, has been deleted as the first defendant. A third defendant has been added, being the Workers Compensation Nominal Insurer (the Nominal Insurer) which, for all purposes in these reasons for judgment, stands in the shoes of the MPS in respect of any liability or right to recover contribution for any liability.
The circumstances of the injury are not the subject of extensive disputation, but the consequences in liability of the primary facts are the major issues on liability in these proceedings. Likewise, while there is some dispute as to the level of damage suffered as a consequence of the incident, that dispute is largely confined to ancillary effects of the admittedly serious injury, e.g. levels of care.
Over and above the claim by the plaintiff against the Club and the Nominal Insurer, the Club sues the Nominal Insurer for indemnity from, or contribution to, any damages that may arise from any liability of the Club. Similarly, the Nominal Insurer sues the Club for contribution and/or indemnity for any liability arising in the Nominal Insurer (the second cross-claimant), as a result of the conduct of MPS.
The third cross-claim relates to a claim for indemnity and/or contribution against the first defendant (to the extent that the first defendant is capable of being sued) and, by leave of the Court, the second cross-defendant to the third cross-claim is the first defendant's insurer, raising insurance policy construction issues.
Again, on the same basis, the Nominal Insurer sues the first defendant for contribution and/or indemnity in the fourth cross-claim.
Lastly, under the fifth cross-claim, the first defendant (now no longer a party to the proceedings commenced by the Statement of Claim) sues the Club and the Nominal Insurer for contribution and indemnity for any damages or liability imposed on the first defendant.
Facts
While the incident at the Club premises that is said to have given rise to the injury occurred on 19 May 2006, it is necessary to have some history of the plaintiff and an issue relating to an earlier injury, in order to understand the dispute between the parties.
The plaintiff was born in Greece in 1950, left school at the age of 12 and worked as a merchant seaman until 1969. In that year, he emigrated, came to Australia and married. The plaintiff and his wife have two children, a daughter aged 41 and a son aged 38.
On arrival in Australia, the plaintiff worked in various jobs as a labourer, car washer and the manager of a snooker hall.
In or around 1979, the plaintiff was injured in a serious motor vehicle accident as a consequence of which he underwent a laminectomy. The laminectomy was performed by Dr Segelov, a neurosurgeon, in 1981.
The plaintiff received compensation for the injury and damages arising therefrom. That compensation was received in 1984. The plaintiff had continued to work. Amongst other things, the plaintiff worked in the construction industry, owned and operated a business as a jeweller, which latter business (and the factory from which it operated) was repossessed by the bank in 1995.
An issue between the parties in these proceedings is the extent of any recovery from the injuries sustained in the motor vehicle accident. The plaintiff, as one would expect, maintains that he had fully recovered from the injuries. The defendants (or those of them that were participating) maintained that the 1979 accident was a major and significant aspect of the circumstances under which the plaintiff now suffers. The 1979 accident (and the effect of the laminectomy in 1981 as consequence of that accident) were, admittedly, a source of ongoing pain that the plaintiff suffered. The effect, if any, of the plaintiff's motor vehicle accident on his continuing disability will be dealt with later in these reasons.
In June 1995, the plaintiff commenced employment as a security officer with MPS at Marrickville. MPS employed the plaintiff at all relevant times.
In or about July 2001, the Club suffered a robbery. As a consequence of that robbery, the Club implemented different security arrangements, which involved the presence of a gun guard on the first floor area. The first floor area, on which the gun guard was situated, was that section of the first floor where money from poker machine takings was delivered to what is called the "soft room" or the "soft count room". The soft room is the area in which the monies are counted and the count documented.
In or before May 2005, the Club issued a tender for security at the Club premises. The tender closed on 8 July 2005 and the first defendant was the successful tenderer.
At the time that the security contract was let to the first defendant, the Club attended at the first defendant's premises and provided an induction. The Club also provided the first defendant with documentation that the first defendant could utilise for any future employees' induction.
In or about October 2005, MPS directed the plaintiff to work as a security guard at the Club premises. In that respect, MPS entered into a contract with the first defendant to provide armed security services to the Club.
From October 2005, the plaintiff worked at the Club premises as an employee of MPS, subcontracted to the first defendant, which, in turn, was contracted to undertake certain security work at the Club. As earlier stated, the Nominal Insurer is liable for any damage for which MPS is responsible in law.
On 19 May 2006, the plaintiff was continuing under the arrangements referred to in the immediately preceding paragraph. On that date, 19 May 2006, the plaintiff commenced work at the Club premises at approximately 5am by reporting to the front desk where he signed on for duty.
At approximately 8am on 19 May 2006, other members of staff of the Club were transferring four wheeled trolleys containing boxes of money for poker machines or from poker machines. Each such wheeled trolley contained between 96 and 100 boxes, each box containing coins. The trolleys were being transferred to or from the "soft room".
At or about that time, namely 8am on 19 May 2006, an empty trolley was situated on the first floor in the area patrolled by the plaintiff as a security guard. The plaintiff took hold of the trolley handle and began to pull it in order to move it.
Apparently, the wheels of the trolley were locked, or became locked, and the trolley did not move. As a consequence, the plaintiff's grip on the trolley gave way and the plaintiff fell backwards, landing on his buttocks and striking the lower and centre part of his back, or the centre of his lower back, on the metal part of a scales trolley behind him.
Sometime between 8am and 9.15am on 19 May 2006, according to the plaintiff, he reported the accident to Chris, at the front desk of the Club premises. Chris was a reference to the doorman on duty that day, Chris Frintzillis.
At 9.15am on 19 May 2006, the plaintiff concluded work at the Club premises and drove a motor vehicle back to base at MPS premises. According to the plaintiff, he was in pain. The plaintiff reported the accident to Xeni, the sister of his supervisor Con Kalls, and an administrative employee/officer at MPS.
The next day the plaintiff awoke in immense pain in his lower back. He attempted to continue his work, but did so suffering from immense pain. On 21 May 2006, the plaintiff attended Bankstown Medical Centre and saw Dr Alkuradi. X-rays were arranged and the plaintiff was provided with pain killers. The x-ray was of the plaintiff's lumbosacral spine. The medical issues will be dealt with in more detail later in these reasons for judgment.
The plaintiff continued to work, supervising a trainee guard (Clinton Smith) during which time the plaintiff described himself as "wobbly" and unable to work properly by reason of suffering immense pain. Neither Mr Frintzillis nor Mr Smith has been called by the defendants to refute that which is described by the plaintiff.
After visiting a number of doctors, the last presently relevant one being on 21 May 2006, the plaintiff attended his GP on 30 May 2006, and was referred for a CT scan of his lumbar spine. The GP prescribed pain killers and instructed the plaintiff to take one month off work. The plaintiff has never returned to work.
The effect of any pre-existing injury or condition
As earlier stated, one of the issues between the parties arising for determination in these proceedings is the effect of any pre-existing medical condition on the current circumstances of the plaintiff. The second defendant (with whom other participating defendants agreed) submits that a significant component of the disability that the plaintiff now suffers is as a result of pre-existing injury or condition or both. It is necessary to deal with the plaintiff's effective disability prior to the incident on 19 May 2006.
The plaintiff's history, as earlier stated, includes an injury received in 1979 and an operation conducted in 1981 for which the plaintiff received compensation. The only evidence before the Court, which evidence I accept, is that the plaintiff suffered nagging back pain intermittently, about which he complained from time to time, but rarely, and which pain had no effect on his capacity to work.
Following the laminectomy in 1981, the plaintiff recovered fully. He worked full-time, as earlier stated, including working 11 years as a security guard. During all of that time he did not suffer regular back pain (Transcript, 28).
The foregoing is the evidence of the plaintiff. The plaintiff is assessed as a reliable, truthful witness. He readily admitted that he had continuing pain from his back but it never affected his capacity to work. The evidence before the Court is that the plaintiff did not ever complain (other than for the purpose of this incident) to his general practitioner about back pain (see Transcript, 92, line 35-38; 93, line 4).
Further, the plaintiff's wife, who was called, gave evidence as to his condition prior to the accident in May 2006. Her evidence was that prior to May 2006 he did not usually have back pain and he very rarely complained about back pain.
Mrs Gazis also made clear that, notwithstanding that he worked as a security guard for 11 years, carrying a belt and gun around his waist, he did not complain about back problems, at all, or more frequently, prior to May 2006. This corroborates the evidence of Mr Gazis that in the 11 years during which he worked for MPS he only had two sick days leave.
I find that the plaintiff was, prior to May 2006, a keen, hardworking employee, who continued to work despite some niggling pain and would have continued so to do.
It is necessary, as a consequence of the foregoing, to deal with the medical opinions adduced. It is unnecessary to deal with all of the expert evidence before the Court in that regard. Most of the contentious issues were resolved by the two neurosurgeons in conclave.
The joint report of Associate Professor Michael Fearnside, neurosurgeon, and Dr Ian Sutton, consultant neurologist, expressed a consensus as to Mr Gazis' condition. Associate Professor Fearnside was qualified by the plaintiff and Dr Sutton was qualified by the second defendant. No other defendant qualified medical experts of which the Court is aware.
It should be noted that following the accident in May 2006, the plaintiff underwent surgery. This surgery was performed by Dr Rosenberg. It involved a circumferential L4/5 fusion (posterior lumbar interbody fusion and pedicle screw fusion) on 14 February 2007. This fusion was unsuccessful.
Dr Rosenberg was the treating orthopaedic surgeon and was satisfied that the injury had caused an aggravation of the L4/5 level, which remained symptomatic. There was an L3 fracture, which had healed. The neurosurgeon and neurologist agree that the treatments were necessary as a consequence of the injury on 19 May 2006.
Each of the neurologist and neurosurgeon prepared a report and, as stated, there is a joint report. It is sufficient for present purposes to deal with the joint report and it is appropriate to deal with it at some length. The joint report reflects a common opinion in almost every area upon which the experts were questioned.
The joint report agrees that Mr Gazis sustained a compression fracture of L3. The experts in the report also agree that, on the balance of probabilities, Mr Gazis sustained an aggravation and exacerbation of the pre-existing injury at L4/5 for which he had undergone an L4/5 discectomy in 1981, to which reference is made above. The experts agreed that the surgery at L4/5 has not resulted in any improvement in his symptoms. Rather, the experts suggest, the symptoms have deteriorated following surgery.
The experts cannot be certain as to the mechanism of the reported chronic pain or the spinal level from which the pain is being generated and while they consider some axial pain may continue from the healed L3 vertebrae and their opinion that, on the balance of probabilities, there was an aggravation and exacerbation of the pre-existing injury at L4/5, to which reference is made above, must be accepted. That aggravation is the operative debilitating injury.
The experts are also agreed that it is not likely that Mr Gazis would have experienced a significant increase in his back pain and right sciatica were it not for the incident on 19 May 2006. The experts noted the persisting history of intermittent back pain but accepted that this was fairly minimal over the years. In my view, that acceptance was appropriate and accords with the evidence given both by Mr Gazis and his wife. It is also consistent with the ability of Mr Gazis to maintain full-time work in physically demanding operations.
Some emphasis was placed during examination and cross-examination as to the reference by the experts to the nature of the L4/5 injury being "degenerative". In that regard, the following oral evidence is relevant:
"CAVANAGH: Isn't the situation that that what I will go back to the theme I have raising, a deteriorating condition, that is the pushing on the nerves, there are changes in the spine, degenerative disc disease with an increase of pressure on the nerve which led to an increase in the pain, whether or not he has an incident such as falling over on his back?
WITNESS SUTTON: Not necessarily. What is interesting about sciatic pain, and you are talking about degenerative pain, you are making the assumption that degeneration continues. Both Professor Fearnside and I would say that you can have degenerative discs causing pain. The discs themselves actually shrink so the pressure can come away from the nerve. So the presence or absence of leg pain does not necessarily imply that things are not degenerating. I think the critical thing in this case is that there is no objective evidence, either radiologically or clinically, that there has ever been any pressure on the nerve. In this case we would call this a nonverifiable radicular or sciatic pain. So there is nothing that I or Professor Fearnside have been able to establish objectively which would account for the pain in the leg. I think that would be fair.
WITNESS FEARNSIDE: Yes, I agree with what Dr Sutton says. Additionally, a cause for sciatic pain in this situation, after a discectomy, is scar tissue around the nerve root. The nerve root runs out of the vertical canal in a sheath of dura. It is a fibrous sheath. It has ordinary nerve innovations. So it is a painful structure and where someone has a disc protrusion, scar tissue can form. Some people have more than others; some not at all; some form a lot. But it is not an uncommon situation and I would have thought in this man's story, he probably had some scar tissue from his nerve discectomy which is very common.
HIS HONOUR: That sort of scar tissue shows up in an MRI, doesn't it?
WITNESS FEARNSIDE: It can, but not always. It depends if they are given enhancement with gadolinium. But, yes it can.
HIS HONOUR: Can I ask you this question, which is probably underpinning questions that Mr Cavanagh has been asking you and I may be wrong, but, as I understood it, the medical profession uses the expression "degenerating", or "degeneration", not in the sense of a continuing process?
WITNESS SUTTON: I would agree with your Honour. I think you can have a stepwise degenerative process that can stabilise for long periods, or you can have a slowly degenerative process. I do not think that lumbar disc disease is a necessarily a slowly degenerative process. I think you can have stepwise, degenerative disease that can stabilise for a long period.
HIS HONOUR: And even in one that has stabilised, the degeneration, in a person, for example, who lives to the age of 120, it might get worse again?
WITNESS SUTTON: It might get worse again."
Then, when asked about the chances of a person with a very degenerative disc aggravating that condition through an ordinary incident of life, whether by bending over, picking something up, or the like, the experts agreed:
"WITNESS FEARNSIDE: It might or might not occur.
WITNESS SUTTON: I could not say whether it is necessary or probable to bring it into the terms that are not objective.
CAVANAGH: There is a risk of that occurring, is that right?
WITNESS FEARNSIDE: There is a risk of it occurring, but many, many, many people have a lumbar discectomy, recover from it, have a bit of back pain with a bit of sciatic pain and go through their lives perfectly normally without any aggravations and have a radiological appearance such as this."
While it is not shown in the transcript, Dr Sutton nodded agreement to the comment of Associate Professor Fearnside.
Ultimately, each of Mr Gazis and his wife were reliable witnesses. The prior injury had not degenerated in the 11 years that Mr Gazis worked as a security guard and it is, as the joint experts make clear, more probable than not that Mr Gazis would have continued to work unimpeded by the previous injury or any "degenerative" spinal injury. Of course, there were additional risks associated with the existence of a prior injury. Those risks are accommodated within a very slightly raised level of vicissitudes, if, following the discussion on liability, damages are awarded.
Procedures at Work
The evidence before the Court on the procedures adopted by Mr Gazis when working at the Club are relatively uncontroversial. There were variations on the general procedures, but those variations did not affect any relevant issue in the proceedings.
The allocation of Mr Gazis to the Club occurred in the following manner. He had been employed by MPS from approximately 1995 and was allocated by the then CEO of MPS, Constantine Kalls, to various locations to perform security work. From 2005, Mr Gazis was allocated to the Club to perform security work on the first floor of the Club premises. On 19 May 2006, Mr Gazis performed work at the Club premises in accordance with that arrangement.
The arrangement occurred in the following way. An employee of Sermacs Australia Pty Ltd (later known as Gual Pty Ltd) (the first defendant) rang Mr Kalls and requested a gun guard for static guard work on the first floor of the Club premises. The request for an armed static guard was for the morning hours. Mr Gazis was available and Mr Gazis was supplied from the inception of the arrangement between Sermacs and MPS.
The arrangement for the provision of work did not include payment for any supervisory services and was an agreed price for the provision of one armed guard. Mr Kalls had no further conversation with anyone from Sermacs in relation to the arrangements for work, save that Mr Kalls received a standard operating procedure document from Sermacs, which was one page. The page was photocopied and given to Mr Gazis. Mr Kalls understood that the plaintiff took the operating procedures with him to the Club and apparently had to go through it on the first day of work at the Club.
Sermacs provided MPS with a uniform for Mr Gazis to wear and MPS provided it to him. Mr Gazis' wages continued to be paid by MPS, which received an amount from Sermacs, being the amount agreed as to the arrangements already made. The plaintiff's shift hours were determined by Sermacs, at the request of the Club.
Mr Gazis worked at the Club without incident until 19 May 2006.
On the day of the incident, there were no other persons from MPS working at the Club. A supervisor from Sermacs attended, on one earlier occasion, to view the work that was being performed by Sermacs (including the work sub-contracted to MPS) and for which it had contracted to the Club.
The procedure in relation to the first floor static guarding work was that the armed guard patrolled the first floor area outside the soft room, as indicated earlier. The trolleys were transported by employees of the Club from the poker machine areas to the soft room at the time they were loaded. They were unloaded in the soft room and the empty trolley or trolleys placed in the area adjacent to the soft room, being the area patrolled by Mr Gazis.
Mr Gazis understood that his task included assisting the employees of the Club at the time he was patrolling the area. I accept the evidence of Mr Gazis that he was never told that he should not move the trolleys, whether empty or otherwise. I also accept his evidence that he moved the trolleys from time to time. It was a regular event and happened daily.
One of the senior managers of the Club testified to the fact that he had never seen Mr Gazis move a trolley. This is not particularly unexpected and is not inconsistent with the practice that Mr Gazis moved the trolleys. The senior manager called was not a person who was stationed regularly, or at all, on the first floor adjacent to the soft room.
The standard procedures document that Mr Kalls testified he received and photocopied to give to Mr Gazis has not been produced. A draft standard operating procedure document, being a document significantly longer than one page, has been produced and is in evidence (Exhibit A5, tab 39). Relevantly, it provides a range of starting and finishing times for the first floor static guard and a range of duties.
The static guard on the first floor is Security Position 1. Its location is described as "first floor immediate vicinity of soft count room" and the duties are, generally, described as remaining in this position for the whole of the clearance period and the remainder of the shift.
Most relevantly, the Security Position 1 is described (page 2) as the Sermacs security personnel and the duties of that position are described "as per daily security clearance period Standard Operating Procedures and CHM directions". CHM is the Club House Manager.
As a consequence, the duties provided in the standard operating procedures document (and inferentially provided to Mr Gazis either orally or in writing) was that he was to work under the direction of the Club House Manager. At no stage did the Club House Manager direct Mr Gazis not to move trolleys.
As a matter of reasonable expectation, one would expect that if a person were patrolling and guarding an area, that person would, from time to time, move non-fixed moveable items in that area. At no stage was Mr Gazis, as earlier stated, directed not to perform that work. Nor was Mr Gazis informed as to the correct manner of moving the trolley. The accident was a direct result of the attempt by Mr Gazis to move the trolley in a manner that did not take account of the necessity to ensure that the wheels of the trolley were not in a locked position.
Moreover, even if one could not reasonably anticipate that a guard working in that area would, from time to time, move a trolley positioned there, such a guard would, in the case of a security emergency, need to move such a trolley and/or need to know how such trolleys could be moved (or prevented from moving).
Principles on Liability
Mr Gazis was, on 19 May 2006, an employee of MPS. As a consequence, MPS owed a duty of care to Mr Gazis of a kind owed by an employer to its employees.
Further, as an employee, Mr Gazis was under the direction of MPS. MPS directed Mr Gazis to work for Sermacs, the first defendant in these proceedings.
In turn, and by direction of MPS, Mr Gazis was directed to work at the Club and fulfil the duties assigned to him. Those duties included, as earlier recited, to work in accordance with a daily security clearance standard operating procedures and the directions of the Club House Manager.
In other words, the direction of his employer, together with the directions of the sub-contractor to the Club on behalf of whom Mr Gazis was providing services to the Club, was to obey the directions (presumably lawful and reasonable) and be subject to the directions of the Club House Manager and the Club.
As an employee, Mr Gazis had no capacity not to follow the reasonable and lawful directions of his employer and, by virtue of the directions given by his employer, of the reasonable and lawful directions of the Club.
Nevertheless, Mr Gazis was not an employee of either the first defendant or the second defendant.
I have accepted the evidence of Mr Gazis. That evidence includes the proposition that Mr Gazis moved the trolleys from time to time. Such an occurrence would have been known (and I infer was known) to employees of the Club. It was not known to Mr Muir, the manager called to give evidence. Yet it would have been known (and I infer was known) to employees who worked in the soft room. No such employee was called. The Club has the knowledge of its employees.
I do not draw an inference under the rubric of Jones v Dunkel (1959) 101 CLR 298. Such an inference is unnecessary. I accept the evidence of Mr Gazis that he moved the trolleys on a regular basis.
Moreover, I accept that, for all intents and purposes, Mr Gazis formed part of the workforce at the Club and was bound to obey the lawful and reasonable directions of the Club's management hierarchy. He was so bound by the terms of the contract between the Club and the first defendant, the terms of the contract (such as it was) between the first defendant and MPS, and the directions given to Mr Gazis by his employer and those authorised by his employer to give him directions.
On Mr Gazis' evidence, and as must be expected given the nature of his work, Mr Gazis was required to use his own initiative regarding the scope of his duties. If Mr Gazis were to have been directed not to move any trolley, I accept, as has been submitted, that he would have obeyed that direction. Such is the necessary conclusion given the evidence of Mr Kalls as to Mr Gazis' disposition to comply with directions.
Mr Gazis understood that his duties were to guard the first floor and assist the employees of the second defendant in moving the trolleys.
The Club, for its part, had a specific safe work procedure to be adopted when moving trolleys. That document, on the evidence before the Court, was never provided to Mr Gazis. Nor was it provided to MPS or Sermacs. The evidence was, from Mr Gazis, that he moved trolleys on a daily basis.
Given the evidence that Mr Gazis moved trolleys on a daily basis and that this was seen by employees of the Club, the issues necessarily arise relating to what, if any, risk factors are associated with the movement of a trolley.
Most of those risk factors are self-evident. Nevertheless, they are identified by Mr Dubos in his report and include the size of the trolley; the potential for its wheels to lock; the fact that it was used on carpet and debris could build up in the wheels; and it required more than one person to move it in order to prevent the risk of injury.
The duty owed by MPS is that of an employer. This is a well-recognised relationship importing a duty of care to employees. That duty is non-delegable and is a duty to take reasonable care to ensure the safety of the employee.
An employer is liable for damages arising from an injury occurring in the course of the employee's employment. The proceedings currently before the Court involve an allegation of negligence and, as a consequence, involve an assessment of the duty of care and causation as those terms are determined under the common law.
This occurs as part of the "hodge-podge" that is the statutory regime that governs the determination of damages to workers for industrial accidents, as described by the Court of Appeal in State of New South Wales v Ball [2007] NSWCA 71; (2007) 69 NSWLR 463 (per Ipp JA, with whom McColl JA and Young CJ in Eq agreed), citing, with approval, the comments of Ipp JA (with whom Hodgson and Santow JJA agreed) in Landon v Ferguson [2005] NSWCA 395; (2005) 64 NSWLR 131.
The application of common law principles arises because of the exclusion from the application of the Civil Liability Act 2002 of liability relating to an award to which Division 3 of Part 5 of the Workers Compensation Act 1987 applies: see s 3B(1)(f) of the Civil Liability Act. The liability of the employer, MPS, is uncontroversial in these proceedings.
The more controversial aspect of liability in these proceedings is the determination of the liability of the Club in negligence. The liability of an employer, at common law, requires no more than that the employer take reasonable care for the safety of the employee.
It is unnecessary to restate established principle, but that which amounts to reasonable care for the safety of the employee involves the consideration of a matrix involving the magnitude of the risk, the degree of the probability of the occurrence of that risk and the expense, difficulty and inconvenience of ameliorating the risk against other inconsistent responsibilities or conflicting responsibilities which the employer may be obliged to accept: Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-48, per Mason J. The Court is required to determine whether, in the circumstances of this particular situation, the employer failed to take precautions which an employer, acting reasonably, ought be expected to take.
More controversial, in the context of these proceedings, is the duty of care, if any, relevant to the Club. As earlier stated, the Club was the owner and occupier of the premises in which the accident occurred. It was the Club which placed the trolley in the area patrolled by Mr Gazis. Further, it was the Club's system of work that involved the placement of these trolleys in the area on a regular (i.e. more than once a day) basis. The Club's employees, I infer, were aware that Mr Gazis assisted them in moving the trolley on a daily basis. That is the evidence of Mr Gazis.
The liability of the Club is governed by the provisions of the Civil Liability Act. It is, therefore, necessary to assess liability on the basis of the general principles prescribed by ss 5B, 5C and 5D of the Civil Liability Act.
Before determining those issues, it is necessary to determine whether the relationship between the plaintiff and the second defendant is one in which a duty of care arises. As earlier stated, the plaintiff was on the premises of the second defendant, the Club, for the benefit of the Club and was providing services on its behalf or for its benefit. The duty of care owed by the Club was part of the well-known and accepted duties of care, being a duty of care arising from the relationship of occupier, in circumstances where Mr Gazis was lawfully present on the premises and carrying out duties which, at least in part if not wholly, were under the control, organisation and direction of the Club.
The submissions of Mr Gazis have referred the Court to Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16, amongst others and in particular to the statement by Brennan J in Stevens v Brodribb at 47, in which his Honour said:
"The duty to use reasonable care in organizing an activity does not import a duty to avoid any risk of injury; it imports a duty to use reasonable care to avoid unnecessary risks of injury and to minimize other risks of injury."
While the circumstances at the Club were different in detail to that described by Mason J (as his Honour then was) in Stevens v Brodribb, the principle expressed by Brennan J remains the same.
However, there is a difficulty in the application of the principles in Stevens v Brodribb in the manner suggested by the plaintiff. The High Court in Stevens v Brodribb was dealing with a submission that the principal owed a duty of care to an independent contractor of the kind ordinarily associated with the duty of care owed by an employer.
Leaving aside for present proposes that part of the judgment of the High Court that dealt with the appropriate test for the existence of a contract of employment, the High Court determined that, in certain circumstances, an entrepreneur (here referred to as the principal in the position of the Club) may owe a duty of care, being the duty to use reasonable care to ensure that a system of work for one or more independent contractors is safe. The duty, or the standard of care involved in the duty, is different.
The passage in the judgment of Mason J in Stevens v Brodribb, upon which the plaintiff relies in its submissions, does not take the standard of care in this case to the level suggested by the plaintiff. The submission ignores the quintessential nature of the proposition that the individual workers, with whom the High Court was concerned in Stevens v Brodribb, were required to work together in teams in an "intricate process of extracting timber" in which "they had little choice but to rely on the care and skill of [the principal] in the arrangements which it made for the disposition of the work and the care and skill of the persons engaged by [the principal] in the execution of the work".
The passage, at 30-31 in the judgment of Mason J, depends on the "interdependence of the activities" and the need for coordination. In Stevens v Brodribb the duty and standard of care to which Mason J referred can best be summarised in the following statement of his Honour, at 31:
"If an entrepreneur engages independent contractors to do work which might as readily be done by employees in circumstances where there is a risk to them of injury arising from the nature of the work and where there is a need for him to give directions as to when and where the work is to be done and to co-ordinate the various activities, he has an obligation to prescribe a safe system of work. The fact that they are not employees, or that he does not retain a right to control them in the manner in which they carry out their work, should not affect the existence of an obligation to prescribe a safe system."
The duty of care to which Mason J was referring was the duty of care associated with the requirement to carry out work in the coordinated and intricate manner described by the High Court.
In the reasons for judgment of Brennan J in Stevens v Brodribb, his Honour said, at 47:
"An entrepreneur who organizes an activity involving a risk of injury to those engaged in it is under a duty to use reasonable care in organizing the activity to avoid or minimize that risk, and that duty is imposed whether or not the entrepreneur is under a further duty of care to servants employed by him to carry out that activity. The entrepreneur's duty arises simply because he is creating the risk (Sutherland Shire Council v Heyman (1985) 59 ALJR 564 at 587) and his duty is more limited than the duty owed by an employer to an employee. The duty to use reasonable care in organizing an activity does not import a duty to avoid any risk of injury; it imports a duty to use reasonable care to avoid unnecessary risks of injury and to minimize other risks of injury. It does not import a duty to retain control of working systems if it is reasonable to engage the services of independent contractors who are competent themselves to control their system of work without supervision by the entrepreneur."
The passage from the reasons for judgment of Brennan J in Stevens v Brodribb was cited with approval by the Full Court in Leighton Contractors v Fox Pty Ltd at [20]. The significant aspect reconciling the passage in the reasons for judgment of Mason J and the passage in the reasons for judgment of Brennan J is that each refers to the distinction between an ordinary contractor (or employee thereof) and a worker engaged intricately in the organisation of work of the principal in a similar way to which an employee would be, where the work "might as readily be done by employees". In the latter class, there may arise a duty and a standard of care in like fashion to that applying to employees. That is not the situation in the proceedings currently before the Court.
The law (Security Industry Act 1997) requires that armed guards performing security work be licensed and be employed by an entity licensed with a master security licence (either itself or through one of its management personnel). Unless the Club were prepared to obtain a master security licence, it could never legally employ an armed security guard. In the current situation, the Club could not engage Mr Gazis "as an employee" nor was Mr Gazis' work that "which might as readily be done by employees".
The duty of care to which Mason J refers, and the standard of care to which he alludes, is not the basis for any liability reposed in the Club. There is nothing unreasonable about sub-contracting the work of a security guard: Leighton Contractors Pty Ltd v Fox at [62].
Rather, the basis of liability and the duty of care is, as earlier stated, dependent upon the relationship of occupier and invitee. This is a well-known and generally accepted relationship imposing a duty of care. Indeed, the relationship of occupier and invitee was one of the relationships to which Mason J referred in Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672, at 686, as a non-delegable duty. However, the issue in these proceedings is not whether there is a duty, but the standard of care and whether it has been breached.
In Thompson v Woolworths (Qld) PtyLtd [2005] HCA 19; (2005) 221 CLR 234, the High Court (Gleeson CJ, McHugh, Kirby, Hayne and Heydon JJ) described a situation not dissimilar to the one currently before the Court in these proceedings. The High Court said:
"[24] The status of the respondent as occupier of the land on which the appellant was injured was one aspect of the relationship that gave rise to a duty of care. It gave the respondent a measure of control that is regarded by the law as important in identifying the existence and nature of a duty of care. There was, however, more to the relationship than that, and, as was agreed on both sides, the problem was not one that concerned only the physical condition of the respondent's premises. There was a time when the common law sought to define with precision the duty of care owed by an occupier of land, and treated the content of the duty as variable according to categories fixed by reference to the status of entrants. The common law has since rejected the approach of seeking to construct a series of special duties by reference to different categories of entrant. The problems involved in the former approach included the rigidity of the classification of entrants, and the artificiality of distinguishing between the static condition of premises and activities conducted on the premises. That is not to say, however, that the law now disregards any aspect of the relationship between the parties other than that of occupier and entrant. On the contrary, other aspects of the relationship may be important, as considerations relevant to a judgment about what reasonableness requires of a defendant, a judgment usually made in the context of deciding breach of duty (negligence).
[25] Even in the days when the content of an occupier's duty of care was defined by reference to fixed categories, within those categories the requirements of reasonableness were affected by a variety of considerations. Mason J, in Papatonakis v Australian Telecommunications Commission, said:
The content of the occupier's duty to exercise reasonable care for the safety of an invitee must, of course, vary with the circumstances including the degree of knowledge or skill which may reasonably be expected of the invitee and the purpose for which the invitee enters upon the premises.
[26] The purpose for which, and the circumstances in which, the appellant was on the respondent's land, constituted a significant aspect of the relationship between them...
[27] Even so, the respondent established and maintained a system, and its obligation to exercise reasonable care for the safety of people who came onto its premises extended to exercising reasonable care that its system did not expose people who made deliveries to unreasonable risk of physical injury. A number of aspects of the facilities and procedures for the delivery of goods into the respondent's store might have involved issues of health and safety. Many, perhaps most, of the people who made the actual deliveries were outside the respondent's organisation, and were not subject to the direct control it exerted over its employees. Even so, they were regular visitors to the premises, for a mutual commercial purpose, and it was reasonable to require the respondent to have them in contemplation as people who might be put at risk by the respondent's choice of facilities and procedures for delivery.
...
[38] There was no sufficient reason for the Court of Appeal to set aside the primary judge's finding of negligence. The question was whether the respondent had a proper delivery system in place. Such a system should have included arrangements for moving the waste bins left in the laneway by the Council workers in order to clear access to the loading dock. The appellant, and the other delivery drivers, had no responsibility to design, and no power to implement, the delivery system operating on the respondent's premises. That power and responsibility belonged to the respondent alone. The respondent, in truth, had no system for that particular purpose. In practice, the respondent's employees either moved the bins themselves or left it to the delivery drivers to move the bins for them, according to the convenience of the respondent's employees and any other demands upon their time and attention. In the circumstances that prevailed, the respondent knew that, frequently, delivery drivers would move the bins. The respondent knew that not all drivers were capable of doing that without risk of injury. The reasoning of McMurdo J set out above is persuasive. The primary judge's finding of negligence should have been upheld."
In this instance similar circumstances arise. Mr Gazis was not simply an invitee (to the extent such a category is still relevant) on the land occupied by the Club. He was there for the mutual commercial benefit of the Club and his employer. He was there for the express requirement to work in accordance with the directions of the Club (or its Club House Manager). It was the Club, as earlier stated, that placed this trolley in Mr Gazis' work location. The Club failed to provide a direction to Mr Gazis not to move, or assist with the moving, of the trolleys, despite being aware that the trolleys were moved from the lift across the first floor when being transported to the soft room and that, by virtue of Mr Gazis's location and his duty to assist employees to gain access to the first floor via the lift, he was likely to assist employees transporting the trolleys. The Club knew that Mr Gazis assisted other employees and moved trolleys on a regular (daily) basis. The Club knew the risk to persons moving the trolleys where there was no training in the manner in which they should be moved, because of the weight of the trolley and the capacity of the wheels of the trolley to lock. The Club, in allowing Mr Gazis to move trolleys regularly, was effectively implementing a system of work that imposed a risk on workers in that area.
While the Club does not have a duty to take all necessary steps to ensure the safety of Mr Gazis, it does have a duty to take reasonable steps to prevent a person in Mr Gazis' position not being,, because of the Club's work practices and the person's role while working at the Club, subject to a foreseeable risk of harm.
The work practices of the Club, bearing in mind the Club's knowledge that Mr Gazis moved the trolleys on occasion or could have moved the trolleys on occasion by virtue of his location in the Club premises, presented Mr Gasiz with a foreseeable risk of harm that the Club was required to ameliorate. That is, the risk that a person unfamiliar with the proper manner in which to move a trolley would be injured by attempting to move the trolley was foreseeable. Such a risk was known or ought to have been known and, in relation to employees, was dealt with by the Club. The risk was not insignificant. Consequently, the incident that occurred on 19 May 2006 was reasonably foreseeable, if not expected.
It was therefore necessary for the Club to provide a system by which the trolleys could be moved safely. That system should have included a direction to those persons, whether employees or contractors, or the employees of a contractor, who are involved in working where the trolleys are situated and who, it may be expected or foreseen, would move the trolleys or may need to move the trolleys. That direction to any such contractor, or employee of any such contractor, should have been that only other employees should move a trolley. Such a course of conduct involved no additional expenditure and, at least on one view of the evidence of Mr Muir, accorded with the desires of the Club.
Further, the precautions were inexpensive (or without cost), easy to effect and a reasonable person in the position of the Club would have taken the precautions of either directing Mr Gazis not to move or attempt to move a trolley or informing him of the proper manner in which such trolleys could be moved. It is clear that the Club took steps in relation to the moving of such trolleys in relation to its employees and it considered that, without appropriate training or directions, harm was a probable result of a person attempting to move a trolley. Such harm is likely to be serious.
I therefore find, in accordance with s 5B of the Civil Liability Act, that the Club was negligent in failing to take precautions against the foreseeable risk of harm that was likely to arise from placing the trolley in an area where a person was working, whom it knew, or ought to have known, would move the trolley, without providing such person with the requisite training or safety induction, or failing to provide a direction not to handle the trolleys where the person had not undergone such training or induction.
Having dealt with the provisions of s 5B of the Civil Liability Act, it is necessary to deal with the principles embodied in s 5D of the Civil Liability Act, which concern causation. Causation requires factual causation, namely, that the negligence was a necessary condition of the occurrence of the damage and an assessment that it is appropriate for the Club to have the liability in relation to such damage.
I have already commented that Mr Gazis would have obeyed a direction, if one were given, not to handle the trolleys and would, on the basis of his employment history, handled a trolley in accordance with directions given, were such steps to have been taken.
As to the scope of liability, earlier I noted the liability of an occupier in negligence. This is a further example of such liability. Moreover, it was the Club, and only the Club, that had control over both the conduct of Mr Gazis and the location of the trolley, as well as the method by which the movement of such trolleys could be the subject of training and/or direction.
Even though the first defendant had the capacity to supervise in that it had the ability to provide a supervisor, at least from time to time, to supervise the work being done at the Club, such supervision would have been wholly ineffective to allow the first defendant to foresee or ameliorate the risk in relation to trolleys, unless, coincidentally, the supervision were to occur at a time when the trolley was located in the area supervised by Mr Gazis. As I have already noted, the circumstances with which the Club was required to deal were not dissimilar to the circumstances with which the High Court was dealing in Thompson v Woolworths (Qld) Pty Ltd.
Further, the Club, being the only person capable of implementing reasonable care for the movement of the trolleys safely in the area, owed a duty to Mr Gazis to exercise reasonable care by ensuring that the system of work adopted by it was safe for the security guard and, in particular, either to provide training to the security guard in the proper moving of trolleys or to direct that the security guard not move the trolley and allow only personnel that had been trained by the Club so to do: Stevens v Brodribb; Leighton Contractors Pty Ltd v Fox; Calliden Insurance Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1. Such training and/or directions were given to employees, but not to this employee of a contractor or subcontractor.
Moreover, documents existed directing contractors not to perform work that was not assigned to them, but such documents were never, on the evidence before the Court, given to the first defendant or to MPS or to Mr Gazis.
In this instance, it matters not whether, on the one hand, the location of the trolley, in the expectation that an employee such as Mr Gazis would move it or attempt to move it, was a risk of harm that was foreseeable, not insignificant and against which a reasonable person would have taken those precautions, or, on the other hand, whether the conduct of the Club was a breach of the duty of care in not warning (or directing) Mr Gazis not to move the trolley. The risk of injury, to a person in the category of Mr Gazis, was not so obvious that it would obviate a duty in the Club to warn Mr Gazis of the risk of moving the trolley, either by directing him not to move it or training him as to the proper method of moving it: see s 5H of the Civil Liability Act; Woods v Multi-Sport Holdings Pty Ltd [2002] HCA 9; (2002) 208 CLR 460 at [45]; Vairy v Wyong Shire Council [2005] HCA 62; (2005) 223 CLR 422.
In this instance, Mr Gazis had moved the trolleys daily on previous occasions. Whether by luck or otherwise, on the other occasions, the wheels were not locked. On this occasion the wheels were locked.
Mr Gazis was unaware of the risk involved in moving the trolley as it had been moved by him on previous occasions. The risk associated with the moving of the trolley without first ensuring that the wheels were not locked into position is not a matter of which Mr Gazis would have been aware or ought to have been aware, in those circumstances.
The Cross-Claims
As earlier stated, I accept that the contractual arrangement between Sermacs and MPS was one of contractor and sub-contractor. In accordance with the requirements of the Security Industry Act, it was necessary for Mr Gazis to be employed by a master licence holder or an entity associated with a master licence holder.
The Club submits that the relationship is not one of contractor and subcontractor, but lent labour or deemed employment and that the duty owed by Sermacs and MPS was the same, subject to the differentiation associated with the applicability of the Civil Liability Act to the claim against Sermacs and the Workers Compensation Act to the claim against MPS.
On the question of apportionment, the Club submits that it provided to Sermacs all necessary documentation such as would ensure that security guards knew of the work that they were required to perform. This is not accurate.
Mr Muir, who gave evidence on behalf of the Club, initially went to the premises of Sermacs and provided a PowerPoint presentation for the initial group of guards. That PowerPoint presentation is contained in Exhibit A5, tab 41. The PowerPoint presentation includes the instruction:
"If you are not delegated to handle something, you must call a Supervisor."
There are two aspects to that comment. First, it assumes there will be times when security guards will be seeking to handle something for which they have not been delegated. Secondly, that comment was not provided in the standard operating procedures that were given to Sermacs for it to provide to subsequently employed or engaged security guards. Mr Gazis was a subsequently engaged security guard. It would have been very easy for Mr Muir to provide to Sermacs the PowerPoint presentation material as well.
As a consequence, any security guard, including Mr Gazis, engaged after the initial group would not have been informed to contact a supervisor if the person had not been delegated the responsibility of handling something. Further, the Club relied significantly on the absence of a direction to assist other workers or handle the trolleys. I have already dealt with the regularity with which Mr Gazis handled the trolley and the knowledge necessarily possessed by the Club through its employees stationed in the soft room.
Over and above the material already discussed, part of the duties of the security guard, not otherwise mentioned, to which Mr Muir referred, was that the security guard at the location that Mr Gazis was stationed was required to call the lift up from the ground floor once the trolleys had been loaded into the lift by other employees.
In other words, part of the functions of the security guard related not to the functions of security as a static guard but to assisting employees to gain access to the floor through the lift for the purpose of transporting the trolleys to the soft room. It is not a significant extension of that specific duty for an employee or contractor to assume that assistance should be provided in the delivery of the trolleys.
Apart from any other factor, once the trolleys were, with other employees, in the lift, it is almost essential for an employee or contractor with control of the lift to ensure that the trolleys are removed from the lift as quickly as possible.
Earlier in these reasons for judgment I discussed the practical impossibility of either MPS or Sermacs exercising control over a function such as the attempt to move the trolleys. Any supervision by Sermacs or MPS would require a full-time supervisor to be employed or engaged and to examine the work performed by Mr Gazis constantly in order to ensure that they observed a time when the trolley was located on the first floor level and/or the conduct of Mr Gazis in moving or attempting to move the trolleys in question.
On the other hand, the Club was aware, through its employees in the soft room, that Mr Gazis moved the trolleys. It should have been aware, even if those employees had not observed such a practice, that a person whose duties included bringing up to the first floor the lift with trolleys in it would, ordinarily, seek to move those trolleys, even if it were only out of the lift.
Nevertheless, the duty of an employer is, as earlier noted, more extensive than the duty imposed upon the Club. Otherwise the issues relate to contributory negligence and the apportionment of damages, which will be dealt with later in these reasons.
The major issue of contention, other than those already the subject of comment, relates to the Second Amended Third Cross-Claim under which the Club, pursuant to leave granted by the Court, joins the insurer of Sermacs (Sermacs being under external administration), claiming that it is liable to indemnify Sermacs for any liability to the Club, pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946. As a consequence of that cross-claim, it is necessary for the Court to examine the terms of the insurance contract between Sermacs and the second cross-defendant to the third cross-claim (hereinafter referred to as the Sermacs Insurer).
Before dealing with the terms of the contract of insurance it is necessary to deal with a preliminary issue relating thereto. It is said that the relationship between MPS and Sermacs was not that of contractor and subcontractor. The Club submits that the Sermacs Insurer has not adduced any evidence that would allow the Court to find that the relationship between Sermacs and MPS was one of contractor and subcontractor. This misses the point. The Court determines the relationship between Sermacs and MPS on the basis of the evidence before it, regardless of which party adduced it.
It is accurate to say that MPS provided a guard to Sermacs. The consequence of that is not necessarily the creation of a labour-hire arrangement.
Sermacs contracted to provide security services to the Club. Part of that contract was the provision of an armed guard for certain hours on the first floor of the Club premises.
The Club relies upon a passage from Derrington & Ashton: "The Law of Liability and Insurance" relating to exclusions and the definition of subcontractor. The passage upon which the Club relies is a passage peculiarly relevant to the construction of buildings, which is a major area in which subcontracting occurs on a regular basis.
It is sufficient, for my purposes, to accept the proposition to which the Club refers, namely, that a "subcontract" is "a contract that assigns some of the obligations of the prior contract to another party". Part of the obligation of the contract between the Club and Sermacs was the provision of security services, by the use of an armed guard, at the first floor location.
The obligations under that part of the contract were contracted to another party, namely MPS. It is unnecessary in order for a subcontract to exist for there to be a formal assignment of obligations to a particular party. Rather, there is a requirement that an identifiable aspect of the work undertaken under the contract is delegated to a different entity for that latter entity to perform it.
I do not consider the arrangement between MPS and Sermacs was a "labour hire" arrangement. Indeed, the evidence before the Court is that MPS understood that the armed guard would be provided as part of Sermacs' contract such that the directions be given directly by employees of the Club. It is necessary to deal in more detail with the other exclusions upon which the Sermacs Insurer relies.
The relevant provisions of the contract of insurance are Exhibit 1D1 (formerly Exhibit 1 on the motion). The insurance is with Heath Lambert Ltd on behalf of Lloyd's and was initially in force from 12 August 2005 to 30 September 2006, being the time during which the incident at the Club occurred.
There are irrelevant monetary limits on claims to which I do not refer. The coverage, relevantly, provides that the Sermacs Insurer indemnify Sermacs (and other related companies) for all amounts which Sermacs becomes liable to pay legally for compensation, relevantly, in respect of personal injury or property damage where the liability is caused by an occurrence in connection with Sermacs' business.
It is uncontroversial that the issues before the Court are for amounts for which, assuming liability for present purposes, Sermacs has become legally liable to pay for compensation in respect of personal injury or property damage. The Sermacs Insurer relies upon exclusions. The first exclusion upon which the Sermacs Insurer relies relates to a liability assumed by Sermacs. The exclusions are in the following terms:
"We shall not be liable for claims in respect of:
...
3. Contracts and Agreements
Liability assumed by You under any contract or agreement except to the extent that such liability would have been implied by law...
4. Employees
a)Personal Injury to any of Your employees, deemed employees or the employees of subcontractors arising out of or in the course of his/her employment in Your business;
b)Personal Injury to any person in Your service arising from a liability imposed by an industrial award or agreement or determination;
c)Any liability in respect of which You are entitled to seek compensation under any policy of insurance required to be taken out pursuant to any legislation relating to workers' compensation whether or not You have effected such a policy;"
Reliance is first placed upon the exclusion of liability for liability assumed under any contract. The principles of construction of an insurance contract are well established. I do not repeat them: see McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579; Wilkie v Gordian Runoff Ltd [2005] HCA 17; (2005) 221 CLR 522.
The first proposition is that the words of the insurance contract are to be construed as part of the entire contract to achieve the commercial purpose and effect that the Policy was intended to achieve. Secondly, exclusion clauses will be interpreted narrowly, but not otherwise than in accordance with the ordinary and grammatical meaning of the terms, bearing in mind the principle just enunciated.
The exclusion for the assumption of liability under contract does not apply to a claim for negligence arising under common law and governed by the Civil Liability Act, regardless of the terms of any contract. Entering into an agreement or contract to perform work by the provision of services is not, unless expressly stated to be so, an assumption of liability by contract or agreement. Any liability to Mr Gazis arises under common law. It does not depend upon the assumption of any liability under contract. The reliance by the Sermacs Insurer on the exclusion in Clause 3, recited above, is unarguable.
Of more relevance, is the reliance by the Sermacs Insurer on the exclusion in Clause 4, recited above. Paragraph (c) of Clause 4, in my view, informs the purpose of the exclusion and the context of the exclusion is to ensure that the insurance policy on which reliance is placed complements, but does not overlap with, workers compensation insurance or liability of like kind.
As a consequence, Clause 4(a) excludes liability for injury to employees, deemed employees or employees of subcontractors arising out of or in the course of that employee's employment in the business of Sermacs. Paragraph 4(b) has no relevance.
The submission of the Sermacs Insurer ignores the words "arising out of or in the course of his/her employment in Your Business". The exclusion in Clause 4(a), above, does not exclude liability to all employees of subcontractors. Liability is excluded only if the employee of the subcontractor were an employee, akin to a deemed employee, being an employee of a subcontractor where the injury to the subcontractors employee arises out of in the course of "his/her employment in Your Business".
As earlier determined, in my view, the relationship between Sermacs and MPS was truly one of contractor and subcontractor. Mr Gazis did not work "in the business of" Sermacs. Moreover, the injury arose to the Sermacs subcontractor's employee out of or in the course of his employment with the Club, not Sermacs.
Bearing in mind the commercial purpose of the contract of insurance and the terms of the exclusions, the injury to Mr Gazis is not one which is exempt under either Clause 4(a) or 4(c) of the exclusions to liability.
Conclusion and Consideration
Underpinning much of the earlier discussion is the now well settled basis upon which apportionment occurs. The High Court in Podrebersek Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492 discussed the basis upon which apportionment should occur.
The statement of the High Court in Podrebersek has been cited with approval and applied on many occasions to the apportionment as between plaintiff and defendant in relation to contributory negligence, and as between different defendants. In Podrebersek, the High Court (Gibbs CJ, Mason, Wilson, Brennan and Deane JJ) said, at 494:
"The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd [1953] AC 663 at 682; Smith v McIntyre [1958] Tas SR 36 at 42-49 and Broadhurst v Millman [1976 VR 208 at 219, and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance."
As is clear from the foregoing comments in these reasons for judgment, I have come to the conclusion that the Club owes a duty of care arising from its position as occupier of the premises and the circumstance that it controlled the system of work that placed the trolleys in a position where the Club could foresee, and expect, Mr Gazis would, from time to time, seek to move the trolleys. The duty of care imposed upon them is that described earlier with particular reference to the passages in Thompson v Woolworths. The Club breached that duty of care and is liable in damage.
For all of the reasons discussed by the High Court in Leighton Contractors v Fox, Sermacs are in a very different position. Sermacs was neither the occupier of the premises in which Mr Gazis was working, nor was it the employer of Mr Gazis. Its liability, if any, is governed by the principles described in Stevens v Brodribb and Leighton Contractors v Fox. In the circumstances of these proceedings and the circumstances affecting Mr Gazis, I do not consider Sermacs has breached its duty of care to Mr Gazis, an employee of a subcontractor. Sermacs had no duty to provide a safe system of work.
MPS, on the other hand, was Mr Gazis' employer. Its duty was to provide a safe system of work. MPS took no steps to ensure that the conditions under which its employee was working were safe. It has breached its duty of care and is liable in negligence.
Nevertheless, as earlier stated, the opportunity for it to assess the system of work under which its employee was operating were extremely limited. It did not provide the system of work or dictate the performance of work, other than in the sense that every employer so dictates.
Further, an inspection of the Club and the conditions under which its employee was working would not have necessarily, or probably, ascertained the particular risk that has caused the damage to Mr Gazis.
I consider that its proportionate liability, bearing in mind the principles recited above deriving from the judgment of the High Court in Podrebersek, should be at the lower, if not lowest, end of the spectrum. I consider that, subject to any contributory negligence, to which I will next come, the proportion of liability for which MPS is responsible is 25% of the damage.
I next deal with contributory negligence. I do not consider that Mr Gazis was negligent in the manner in which he handled the trolley.
I bear in mind the provisions of s 5R of the Civil Liability Act and apply to Mr Gazis the same principles as to the existence of contributory negligence as one applies to the determination of negligence. If there were any carelessness by Mr Gazis in the handling of the trolley, which I am not prepared to accept on the balance of probabilities, that carelessness would amount to mere inadvertence, inattention or misjudgment and not amount to negligence.
I make it clear that in determining that the Club has breached the standard of care expected of it, I have taken into account the obviousness of the risk, the reasonableness of an expectation that Mr Gazis would take precautions for his own safety, the ease with which steps could have been taken to avoid the risk and the probability that harm would occur and may be quite serious (as it has been in this case).
But for the failure of the Club to avoid these risks, this damage would not have occurred. I also take into account that the Club was the entity that had exclusive control and possession of the premises in which the accident occurred and the circumstances that gave rise to it.
Further, it was the only entity with supervisors continuously on site who had the capacity to direct Mr Gazis in the manner in which he performed his work.
Moreover, the risk in moving these trolleys was known to the Club to the extent that it provided training to certain employees in that regard. While it inducted some employees of Sermacs, it did not induct all of them and it did not provide to Sermacs or MPS the material in relation to that induction to allow either Sermacs or MPS to perform that induction or provide that material to an employee or contractor. The documentation that was not provided included the statement that nothing should be handled unless the person had been delegated, presumably expressly, to handle it.
It is therefore necessary to deal with the amount of damage. I decide the issue by way of principle and leave to the plaintiff the calculation of the amount and the settlement of any Minutes of Order. In relation to the question of mitigation of loss, it seems to me that the defendants have not seriously put material that would give rise to any finding of a failure to mitigate.
It is true that the plaintiff declined to go to a Pain Management Program and declined to have further surgery. The joint experts make it clear that further surgery is not warranted and would be of little benefit.
Further, it seems, from their opinion, jointly expressed, that further surgery would be counter-productive. The joint experts are of the view that, on any realistic basis, Mr Gazis cannot be employed again. With that opinion I agree.
It seems to me that the most probable cause of the long term total incapacity of the plaintiff is what Dr Sutton referred to (and Associate Professor Fearnside agreed) was the "maladaptive plasticity of the central nervous system". Whatever be the cause of it, each of the experts agrees Mr Gazis is totally incapacitated and cannot work.
On the basis of that evidence, I also take the view that the so-called degenerative back condition (as that term was used by the experts) would not have been, in any serious sense, the cause of any incapacity to work.
That of course does not exclude the possibility (although not a probability) that some incident of ordinary living or circumstance may have occasioned a deterioration in Mr Gazis' condition. For that possibility, I increase the vicissitudes from the standard 15% to 20% in relation to future economic loss.
The major issue between the parties in relation to damages relates to heads of damage for care, both past care and future care. The provisions of s 15 of the Civil Liability Act condition any award for gratuitous care.
The evidence of the Occupational Therapist, Ms Lausch, which is largely uncontroversial, satisfies me that there was a reasonable need for past services that were provided on the basis of the injury, and solely on that basis, which services would not have been provided but for the need arising from the injury.
Further, I am satisfied that past and future services were for a minimum of 6 hours per week and for significantly longer than 6 consecutive months.
The plaintiff gave evidence as to his past care needs, as did his wife. That evidence was largely uncontested.
The report of the Occupational Therapist, Ms Lausch, particularly at page 29 and following, which estimates were not the subject of cross-examination, are accepted both as to past and future care and the cost thereof.
There is no significant dispute as to the level of past economic loss, future economic loss, Fox v Wood [1981] HCA 41; (1981) 148 CLR 438, or past out of pocket expenses. I accept the claim in the schedule of damages of the plaintiff as to future out of pocket expenses.
The future economic loss must be discounted by the allowance for additional vicissitudes bringing the vicissitudes to a total of 20%, as indicated earlier, and otherwise I accept the schedule of damage provided by the plaintiff.
The last aspect with which it is necessary for the Court to deal is the question of non-economic loss. Little has been put by any of the defendants to question the assessment proposed by the plaintiff. It proposes that the non-economic loss be assessed at 45% of the most extreme case.
Mr Gazis has a total incapacity relating to his back, which significantly restricts his movement and from which he suffers significant pain. I consider the assessment of 45% ($248,000) to be an appropriate assessment and would award that amount for non-economic loss.
I direct the plaintiff to file and serve Short Minutes of Order reflecting the foregoing calculations, including the proportion, calculated in accordance with s 151Z of the Workers Compensation Act, as between the second and third defendant and the additional vicissitudes to which reference has been made. The aforesaid Minute should reflect the effect of the findings in these reasons on the multitude of cross-claims, each of which reflect the liability and proportion expressed therein. Such Minute shall be filed within 14 days hereof. Any defendant or party to any cross-claim disputing the proposed Minute of Order to reflect the foregoing judgment may do so within 7 days of receipt of the proposed Minute.
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Decision last updated: 17 November 2014
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