Sparks v Van Den Ham
[2003] WASCA 143
•27 JUNE 2003
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION: SPARKS -v- VAN DEN HAM & ANOR [2003] WASCA 143
CORAM: WALLWORK J
MURRAY J
PARKER J
HEARD: 21 OCTOBER 2002
DELIVERED : 27 JUNE 2003
FILE NO/S: FUL 31 of 2002
BETWEEN: RODNEY JOHN SPARKS
Appellant
AND
ALEX VAN DEN HAM
First RespondentVANCOR ENTERPRISES PTY LTD
Second Respondent
FILE NO/S :FUL 32 of 2002
BETWEEN :ALEX VAN DEN HAM
First Appellant
VANCOR ENTERPRISES PTY LTD
Second AppellantAND
RODNEY JAMES SPARKS
First RespondentQUALITY BAKERS AUSTRALIA LTD
Second Respondent
Catchwords:
Tort - Joint tortfeasors - Contribution between defendants - Joint trial of action and cross claims for contribution - Judgment entered after trial discussing plaintiffs' action against D3 and claims for contribution by D1 and D2 - Whether appeal by D1 and D2 against dismissal of action against D3 competent - Whether judgment for plaintiff satisfied by D1 and D2 - Whether satisfaction of judgment precludes judgment also being entered against D3 on appeal
Tort - Occupier's liability - Personal injury to contractor - Immediate cause was negligence of another contractor who removed safety tag and operated machine - Whether safety tag system discharged occupier's duty of care - Keylock safety system installed after accident
Tort - Personal injuries - Assessment of damages - Turns on own facts
Legislation:
Nil
Result:
Appeal FUL 31 of 2002 allowed
Award of damages increased to sum of $600,727
Appeal FUL 32 of 2002 allowed
Judgment entered for first respondent against second respondent
The second respondent do contribute 25 per cent in satisfaction of the judgment for the first respondent
Category: A
Representation:
FUL 31 of 2002
Counsel:
Appellant: Mr R G Walton
First Respondent : Mr P P McCann & Mr S M Denman
Second Respondent : Mr P P McCann & Mr S M Denman
Solicitors:
Appellant: Friedman Lurie Singh
First Respondent : Pynt McKay
Second Respondent : Pynt McKay
FUL 32 of 2002
Counsel:
First Appellant : Mr P P McCann & Mr S M Denman
Second Appellant : Mr P P McCann & Mr S M Denman
First Respondent : Mr R G Walton
Second Respondent : Mr D R Clyne
Solicitors:
First Appellant : Pynt McKay
Second Appellant : Pynt McKay
First Respondent : Friedman Lurie Singh
Second Respondent : Cocks Macnish
Case(s) referred to in judgment(s):
Asphalt and Public Works Ltd v Indemnity Guarantee Trust Ltd [1969] 1 QB 465
Baxter v Obacelo Pty Ltd (2001) 184 ALR 616
Black v Motor Vehicle Insurance Trust (1986) WAR 32
Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR(NSW) 159
George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169
Hadley v Hazian Pty Ltd, unreported; FCt SCt of WA; Library No 950334; 13 July 1995
Hamilton v NuRoof (WA) Pty Ltd (1956) 96 CLR 18
Hanson v Wearmouth Cole Co Ltd & Sunderland Gas Co [1939] 3 All ER 47
Helicopter Sales (Australia) Pty Ltd and Rotor-Work Pty Ltd & Anor (1974) 132 CLR 1
Imperial Chemical Industries of Australia and New Zealand Ltd v Murphy (1973) 47 ALJR 122
James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53
Kelly v Newcastle Protective Coating Pty Ltd [1973] 2 NSWLR 45
March v E & M H Stramare Pty Ltd (1990-91) 171 CLR 506
McLean v Tedman (1984) 155 CLR 306
Morris v Zanki (1997) 18 WAR 260
Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626
Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 492
Raimondo v State of South Australia (1979) 23 ALR 513
Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16
Walter H Wright Pty Ltd v Commonwealth of Australia [1958] VR 318
Wyong Shire Council v Shirt & Ors (1980) 146 CLR 40
Case(s) also cited:
Australian and New Zealand Banking Group Ltd v Hunter BNZ Finance Ltd [1991] 2 VR 407
Australian Smelting Co Ltd v British Broken Hill Proprietary Co Ltd (1896) 22 VLR 190
Boral Resources (SA) Ltd v Byrnecut Mining Pty Ltd [2001] WASCA 408
Bowen v Tutte (1990) A Tort Rep 81-043
Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213
Bus v Sydney Council (1989) 167 CLR 78
Climaze Holdings P/L v Dyson (1995) 13 WAR 487
Coles & Ors v Montague Grant Architects Pty Ltd & Anor, unreported; FCt SCt of WA; Library No 950374; 12 June 1995
Cooper v Southern Portland Cement Ltd (1972) 128 CLR 427
Dal Zotto v Bonnani (1980) 47 FLR 239
Hetherington v Mirvac (1999) A Tort Rep 81-514
Hollis v Vabu (2001) 181 ALR 263 A Tort Rep 81-615
House v The King (1936) 55 CLR 499
Husher v Husher (1999) 197 CLR 138
Jones v Dunkel (1959) 101 CLR 298
Kingshott v Goodyear Tyre and Rubber Co Australia Ltd (No 2) (1987) 8 NSWLR 707
Linke v Howard [1967] SASR 83
Lloyd v Faraone [1989] WAR 154
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
Metwally (No 2) v University of Wollongong (1985) 60 ALR 68
Nelson v John Lysaght (Australia) Ltd (1974-1975) 132 CLR 201
Paff v Speed (1961) 105 CLR 549
Potter v SGIC (1990) A Tort Rep 81-015
Randall v Dul (1994) 13 WAR 205
Schick v Abbott (1976) WAR 54 FC
SRA (NSW) v Earthline Constructions (1999) 73 ALJR 306
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Ta v Lucky Import and Export Co Pty Ltd [2002] WASCA 65
Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150
Thomson v Australian Capital Television Pty Ltd (1996) 186 CLR 574
Unsworth v Commissioner for Railways (1958) 101 CLR 73
Watts v Turpin (1999) 21 WAR 402
Willis v The Commonwealth (1946) 73 CLR 105
Wynn v NSW Ministerial Corporation (1995) 184 CLR 485
WALLWORK J: I agree with the reasons for judgment of Parker J and with his Honour's conclusions. There is nothing I wish to add.
MURRAY J: I also agree with the reasons and conclusions of Parker J.
PARKER J: These two appeals were consolidated. Each appeal is from a decision of the District Court, Muller DCJ, delivered on 1 February 2002 following the trial of an action in which Rodney John Sparks (the appellant in FUL 31 of 2002 and the first respondent in FUL 32 of 2002) claimed damages for personal injuries he suffered while working as a maintenance sub-contractor in the bakery premises in the suburb of Malaga of Quality Bakers Australia Ltd (the second respondent in FUL 32 of 2002). Mr Sparks claim was against Alex Van Den Ham (the first respondent in FUL 31 and the first appellant in FUL 32 of 2002) and his employer Vancor Enterprises Pty Ltd (the second respondent in FUL 31 and the second appellant in FUL 32 of 2002) as well as against Quality. Mr Van Den Ham was both an employee and a director of Vancor which was another maintenance contractor of Quality.
In these reasons it will be more convenient to refer to the parties by name because they appear in more than one capacity.
Mr Sparks succeeded in his claim against Mr Van Den Ham and Vancor and was awarded damages in the sum of $530,006.35, but his claim against Quality was dismissed.
Muller DCJ rejected a claim that Mr Sparks had been contributorily negligent and that his award of damages should be reduced on that basis.
Mr Van Den Ham and Vancor also claimed an indemnity or a contribution from Quality by third party notice. Quality had made a similar claim against them. Those too were dismissed by Muller DCJ.
In FUL 31 of 2002 Mr Sparks appeals essentially on the basis that the damages assessed were affected by error in a number of respects and were thereby inadequate.
In FUL 32 of 2002 Mr Van Den Ham and Vancor originally appealed from the decision of Muller DCJ primarily on the basis that neither of them should have been found to be negligent and, therefore, that the action against each of them should have been dismissed (grounds 1 and 2), but abandoned these grounds at the hearing. A reduction in the amount of the judgment against each of them is sought, both on the basis
that Mr Sparks ought to have been found to be contributorily negligent (grounds 8-10) and by virtue of errors affecting the assessment of damages (grounds 12-14). Ground 11 was also abandoned. Further, Mr Van Den Ham and Vancor appeal against the dismissal of Mr Sparks' claim against Quality and of their claim for contribution against Quality (grounds 3-7). Not only is contribution resisted on the factual merits but Quality also contends that there is no standing to appeal against the dismissal of Mr Sparks' claim against Quality and that contribution cannot be raised because the judgment of the District Court in favour of Mr Sparks against Mr Van Den Ham and Vancor has been satisfied. Quality also contends that findings of contributory negligence should have been made against Mr Sparks.
Thus, the issues to be dealt with in this consolidated appeal are whether Mr Van Den Ham and Vancor may appeal against the dismissal of Mr Sparks' claim against Quality and their claim against Quality for contribution and, if they can, whether those appeals should succeed, whether Mr Sparks was contributorily negligent, and whether the assessment of damages is affected by error.
Factual background
Mr Sparks is a refrigeration fitter. In partnership with his wife he conducted a business which serviced and maintained industrial and commercial plants. This business had actually been purchased in 1993 from another company, Control and Thermal Engineering Pty Ltd. At the time of purchasing the business Mr Sparks had agreed with Control and Thermal Engineering to do certain work at the premises of Quality in furtherance of an ongoing arrangement between Control and Thermal Engineering and Quality. A claim for contribution had also been made against Control and Thermal Engineering but this was withdrawn during the trial of the action before Muller DCJ.
Mr Sparks was injured at the premises of Quality on Monday 15 August 1994. Before that date he had worked regularly at the premises pursuant to the arrangement he had made with Control and Thermal Engineering. He had taken his directions from Quality's supervisor, a Mr Stanley. On the occasion when he was injured he had gone to the premises by arrangement with Mr Stanley to replace a swivel joint in a machine called an 8000 Mixer. This machine mixes dough with a rotor. The machine is capable of being rotated outwards and downwards to unload the mixture into a receptacle. It is also capable of being rotated the other way if extra ingredients need to be added. The entire unit is refrigerated by chilled water which circulates through the unit in pipes. When ingredients have been mixed to the required standard another machine known as a Hi-Lift lifts the receptacle or bowl containing the mixture and places the dough in another machine known as a divider. Two 8000 Mixers (mixer 1 and mixer 2) were located parallel to each other and in close proximity. A Hi-Lift was situated to the rear of, and between, them. Access to the confined space or compartment between the two mixers could be gained through an electrically operated gate. The flexible joint which Mr Sparks was required to replace was located in the top right hand corner of mixer 1. The joint was at face level and it was necessary to stand in the confined space between the Hi-Lift and mixer 1 to undertake the work that was required.
The replacement was undertaken on Monday 15 August 1994 because for part of that day the machinery in the bakery had been shut down for maintenance purposes. Other persons were also working on machinery in the bakery at the time. These comprised both contractors and maintenance staff of Quality. All work had to be completed in time for baking operations to be resumed at a predetermined hour later in the day.
On arrival at Quality's bakery at about 8 am on Monday 15 August 1994 Mr Sparks spoke to Mr Stanley and then commenced his work. When he examined mixer 1, Mr Sparks found that the unit was tilted at an angle with the bottom edge almost to the extremity of its outward position and very close to the support beam of the Hi-Lift unit. In this position it was impossible for him to gain access to the flexible joint which was to be replaced. Mr Sparks asked Mr Corlett, an employee of Vancor which had also been contracted to work on the machinery, to activate the mixer and raise it into an upright position. Mr Corlett tried unsuccessfully to do this. Mr Van Den Ham, also of Vancor and a director of Vancor, who was apparently familiar with the machine, was then contacted. Mr Van Den Ham arrived at about 9.00 am and after some twenty minutes he managed to get mixer 1 into an upright position. It appears the difficulty in getting the mixer to move to an upright position was due to an electrical fault. Mr Van Den Ham told Mr Sparks that he would have to test or work on the mixer later to correct the fault.
Muller DCJ was faced with a good deal of conflicting evidence as to material events that followed. Witnesses included Mr Sparks, Mr Van Den Ham, Mr Corlett and a Mr Southerwood who was an electrician then employed by Control and Thermal Engineering and who was also working on the premises at the time. After a careful analysis of the evidence of the various material witnesses and of factors relevant to their credibility, his Honour found that Mr Sparks had asked Mr Van Den Ham shortly after the latter's arrival at the bakery how Mr Sparks could "tag" mixer 1 so that he could work on it and Mr Van Den Ham gave him the necessary directions. Mr Van Den Ham directed Mr Sparks to the isolation switch for mixer 1 which was on the main switchboard and told him to tie a "danger" tag to that switch. Mr Sparks was unable to find a danger tag but found an "out of service" tag. This, he attached to the isolation switch by depressing the push button switch, which isolated the mixer, and threading a string with the tag attached through holes in the switch button surround itself, and tying off the string. The string threaded through the holes impeded the operation of the switch and it was necessary to remove the tag and string before the switch could be operated and the machine started. While there was provision on the "out of service tag" for details to be completed, Mr Sparks did not do this as he did not have a pen.
Having attached the tag to the switch Mr Sparks commenced working on the mixer 1. Where he was working was a distance of some 12 feet from the control panel but he could not be seen from the vicinity of the control panel because he was in the space or compartment between the two mixers and the Hi‑Lift. During the morning Mr Sparks moved to the maintenance workshop on three or four occasions in the course of his work and he spoke to Mr Van Den Ham on a number of occasions, both in the workshop and where he was working on the mixer.
Shortly before Mr Sparks was injured he saw Mr Van Den Ham and Mr Southerwood in the maintenance workshop. He saw them leave the workshop and Mr Sparks understood they were returning to mixer 1 to examine it for possible electrical faults. Mr Sparks himself then returned to the mixer but did not see either Mr Van Den Ham or Mr Southerwood. He had been working again on the mixer, for what was approximately 1 – 3 minutes, when the machine suddenly began to tilt or rotate upwards and outwards towards the Hi‑Lift unit. The bottom edge of the rotating mixer crushed Mr Sparks' left leg against the beam of the Hi-Lift machine and, as the mixer continued to rotate, it lifted him off the ground. Eventually the mixer had rotated to a point where it had travelled upwards and away from the Hi-Lift support beam at which point the plaintiff fell down and managed to get out of the compartment between the mixer and the Hi-Lift unit. An ambulance was called and he was taken to hospital.
Before Mr Sparks was injured in this way Mr Van Den Ham had enlisted the help of Mr Southerwood in dealing with the electrical fault in mixer 1. This fault affected the tilting or rotating function of the mixer. A fault in a switch was suspected. When he and Mr Southerwood left the plant workshop shortly before Mr Sparks was injured, to go back to the mixer, Mr Van Den Ham saw Mr Sparks in the workshop. On reaching the vicinity of the mixer they noticed that Mr Corlett was working on the adjacent bin lifter. After a discussion with Mr Corlett and Mr Southerwood it was agreed that Mr Southerwood would operate the switch with a screwdriver while Mr Van Den Ham went to the control panel to activate the tilting mechanism switch. When he got to the control panel he saw the out of service tag attached by string to the isolation switch. He removed the tagged string. As a consequence the mixer was no longer isolated from the main power supply. Mr Van Den Ham then operated the tilt mechanism and the mixer began to tilt or rotate.
As the machine tilted he heard a scream and stopped the machine. Evidence of Mr Van Den Ham that he had warned Mr Sparks that he was about to recommence work on the mixer and that Mr Sparks should remain clear of the machine, that he had looked to ensure that Mr Sparks was not in the vicinity of the machine before moving to the control panel, and that he had called out a warning before operating the tilt mechanism, was not accepted by his Honour. Also rejected was evidence of Mr Van Den Ham's colleague, Mr Corlett, that he too had looked to ensure that Mr Sparks was not at the mixer before it was tilted.
It was his Honour's finding and reasoning that Mr Van Den Ham knew that it was Mr Sparks who had attached the "out of service" tag to the isolation switch on the control panel and that he had done so to protect himself while he worked on the mixer. When Mr Van Den Ham saw the "out of service" tag on the switch he ought reasonably to have foreseen the likelihood of Mr Sparks being in the vicinity of the mixer. By removing the tag and activating the tilting mechanism without checking that Mr Sparks was clear it was his Honour's finding that Mr Van Den Ham had breached his duty of care to the plaintiff and by this negligent act had caused the plaintiff's injuries.
Contributory negligence
It is contended that Mr Sparks was guilty of contributory negligence because he used an "out of service" tag rather than a "danger" tag on the isolation switch of mixer 1. Mr Van Den Ham had told him to use a danger tag and it is accepted that this was the appropriate tag. There were danger tags available in the workshop office but Mr Sparks could not locate them and, instead, he used the "out of service" tag. The tagging system was one which was not peculiar to Quality's premises but was in general use in the industry. The purpose of tagging the isolation switch was to ensure that a person seeking to reconnect power to the mixer was alerted to the existence of a danger so that power would not be reconnected to the machine.
In his evidence, Mr Van Den Ham advanced the view that, relevantly, there was a difference in the significance of a danger tag and an out of order tag. The latter, he suggested, was used only to warn that damage might result to the machine if power was connected. It was his evidence that he knew the nature of the repair work being undertaken by Mr Sparks, and knew that operating the tilting or rotating mechanism would not affect that part of the machine, so that there was no reason for him not to proceed to operate the tilting mechanism. This evidence, however, was not accepted by his Honour. It was contrary to earlier statements made by Mr Van Den Ham and was contrary to all other evidence on the issue. Instead, his Honour accepted that it was standard industry practice that neither an "out of service" tag nor a "danger" tag should have been removed without the authority of the person fitting it, or the supervisor of the workshop. More particularly, however, it was the evidence, in the finding of his Honour, that Mr Van Den Ham well knew who had fitted the tag to the isolation switch, ie Mr Sparks, and that it had been done to ensure that he could work on the machine with safety. Indeed, it had been Mr Van Den Ham who had given him directions about tagging the machine.
In these circumstances, I am not persuaded that there is fault in the reasoning of his Honour that it was immaterial to the occurrence of this injury to Mr Sparks that the tag he used was an "out of service" tag rather than a "danger" tag.
More generally, reliance is placed on the evidence that Mr Sparks was in the workshop shortly before he was injured and saw both Mr Van Den Ham and Mr Southerwood leave the workshop to work on the same mixer that Mr Sparks was working on. It was in the knowledge of Mr Sparks that Mr Van Den Ham had been called to Quality's premises to rectify the problem that was experienced in the morning with tilting or rotating that mixer. While there was some difference in the evidence whether Mr Van Den Ham had used words that he was going to be testing the mixer, or working on the mixer, that difference is not critical. In either case, it is submitted that Mr Sparks should have foreseen that Mr Van Den Ham's work could result in the mixer being tilted or rotated. Accordingly, it is submitted that Mr Sparks should not himself have returned to mixer 1 and recommenced work on it without taking care to check on the whereabouts of Mr Van Den Ham, inform him that he had returned to work on the mixer, and to check with Mr Van Den Ham precisely what work he intended to do on the mixer. Instead, he simply resumed his own work. In this respect it is stressed that Mr Sparks was in the capacity of an independent contractor and not an employee, so that his obligation to take care for his own safety must be examined without according to Mr Sparks the benefit that an employee might have from the non-delegable nature of the duty of care of an employer.
I am not persuaded by the submissions of Mr Van Den Ham, Vancor and Quality in this respect. In the course of the work of Mr Sparks he had reason to go to the workshop on a number of occasions and then return to the mixer to continue his work. Just before he was injured he returned to the mixer, saw no sign of Mr Van Den Ham or Mr Southerwood, and continued with his work. He did so in the knowledge that Mr Van Den Ham knew that he was working on the machine, that he had tagged the machine to ensure that it could not be operated while he was working on it, that he had not removed the tag, and that Mr Van Den Ham had no reason to think that he had completed his work. Further, there was no reason for Mr Sparks to foresee that Mr Van Den Ham's testing or work on the machine would involve actually operating it. It is true that the defect had inhibited the tilting or rotating function of the machine but it does not follow from that, in the circumstances, that Mr Sparks should have foreseen that Mr Van Den Ham would in fact operate the machine, especially when it was tagged to prevent operation.
At trial a number of other closely related factual issues were in contention. In particular, it was the case of Mr Van Den Ham that he had expressly told Mr Sparks he was going to operate the machine and had warned him to stay away from it, and it was the evidence of both Mr Van Den Ham and his co-employee of Vancor, Mr Corlett, that each of them had expressly looked to ensure that Mr Sparks was not at the mixer before the tilting mechanism was operated. It was also the evidence of Mr Sparks that he had called out a warning. For reasons that are well explained in his decision, and which appear sound, his Honour rejected these aspects of the case of Mr Van Den Ham and Vancor, and the evidence of Mr Van Den Ham and Mr Corlett, preferring the contrary evidence of Mr Sparks and in relevant respects that of Mr Southerwood. These findings are not challenged on appeal.
I am not persuaded, therefore, that there is reason to conclude that Mr Sparks should have been found to have been guilty of contributory negligence in respect of the injuries he suffered.
Competence of appeal against Quality
In FUL 32 of 2002 Mr Van Den Ham and Vancor seek to agitate not only issues affecting Mr Sparks but also to have set aside the decision and orders of the trial Judge whereby Mr Sparks' action against Quality was dismissed and the claim of Mr Van Den Ham and Vancor for a contribution from Quality was dismissed. Quality contends that Mr Van Den Ham and Vancor cannot appeal against the dismissal of the claim of Mr Sparks against Quality, as that is not a claim in which they have a direct interest. That being so, it is Quality's submission that the dismissal of Mr Sparks' claim against Quality is fatal to any claim that Mr Van Den Ham and Vancor might seek to pursue for a contribution from Quality, as it has been finally determined, by the order dismissing Mr Sparks' action against Quality, that Quality was not liable in negligence or otherwise for Mr Sparks' injuries. In support of this Quality relies on decisions such as George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169, Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 and, in particular, James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53. It is further submitted that this Court should not order a retrial of the issue of Quality's liability to Mr Sparks when Mr Sparks has not appealed against the dismissal of his action against Quality and does not seek a retrial. In this respect, reliance is placed on views expressed by Asprey JA in Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR(NSW) 159 at 178.
The relevant effect of the decisions in George Wimpey & Co Ltd and Oceanic Crest Shipping Co were considered by the High Court in James Hardie & Co Pty Ltd v Seltsam Pty Ltd so that it is convenient to turn to that decision. This turned on s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). It is not submitted that there is any material distinction between that provision and s7 of the Law Reform (Contributory Negligence and Tort Feasors' Contribution) Act 1947 (WA). The effect of the decision of the majority, Gaudron, Gummow and Callinan JJ, McHugh and Kirby JJ dissenting, is that the third defendant in those proceedings was not a joint tort feasor who was liable with the first defendant in respect of the damage suffered by the plaintiff because there had been an entry of judgment by consent in favour of the third defendant in the trial court. That judgment established that the third defendant was not liable to the plaintiff. The third defendant was therefore absolved from liability. In that case, the entry of judgment in the trial court in favour of the third defendant had been by consent and occurred with the knowledge of the first defendant who had claimed a contribution from the third defendant. While counsel for the defendant claiming the contribution was present in Court no objection was taken to the entry of judgment by consent dismissing the claim against the third defendant. In the joint judgment of Gaudron and Gummow JJ, at 62, their Honours noted:
"The judgment of the Court of Appeal was delivered by Mason P. The reasoning which led the President to hold that the cross-claim by the appellant (D1) for contribution by the respondent (D3) had properly been struck out appears in the following passage:
'The plaintiff and the respondent were the parties to the judgment which, albeit by consent, determined conclusively as between those parties that the respondent was not liable. This event alone put an end to the appellant's right of contribution simply because it had the effect of taking the respondent out of the class of persons against whom an order for contribution under the statute could be made.'
His Honour added:
'Unless and until the appellant can show that the respondent should have been found liable to the plaintiff then a vital step in its claim for contribution is missing. Since no attempt was made either below or here to challenge the judgment in the plaintiff's favour against the respondent, whether by appeal or otherwise, the fact that that judgment stands precludes the right of contribution.'
In Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd, Brennan J said with reference to the facts of that case:
'… So long as the judgment holding Pilbara not liable stands on the record, the shipping company is unable to assert that Pilbara is a tort feasor who 'is or would if sued have been liable' to Hamersley'.
The outcome supported by the Court of Appeal in the present litigation had not been inevitable. Not all steps open to the appellant to protect and advance its position had been taken. The appellant had been 'directly interested in the question whether [the respondent was] a tort feasor who [was] liable to the plaintiff' upon the claim in respect of which judgment by consent was entered in favour of the respondent on 9 November 1995."
Their Honours went on to outline steps which might have been taken by the appellant (first defendant) to protect and advance its position, none of which were in fact taken. Their Honours then continued at 63:
"Against any decision by the Tribunal to enter consent judgment as sought by the respondent and the plaintiff but against the wishes of the appellant, the appellant would have had standing to appeal. By that means, the appellant would have kept in play the question whether it was entitled to recover contribution from the respondent. This would have been achieved without falling foul of the procedural difficulties which divided the New South Wales Full Court in Castellan v Electric Power Transmission Pty Ltd …"
The decision of the Court of Appeal was upheld by the majority.
The present case is, however, materially different. There has been no judgment by consent with Mr Van Den Ham and Vancor simply standing by. The claims by Mr Sparks against both Mr Van Den Ham and Vancor, and against Quality, were defended. Mr Van Den Ham and Vancor sought by third party notice an indemnity or alternatively a contribution from Quality in respect of their liability, if any, to Mr Sparks. Quality acted similarly against Mr Van Den Ham and Vancor. The third party issues were tried at the same time as the action. While it is not apparent from the papers before this Court whether common form third party directions were ordered in the District Court, the trial below has clearly proceeded as if common form third party directions had been given. It is clear that, in their capacity as defendants to the third party notices, both Mr Van Den Ham and Vancor on the one hand, and Quality on the other, participated in the trial of the action itself (as well as in their capacity as defendants), and each were to be bound by the result of the trial of the action by Mr Sparks against Mr Van Den Ham and Vancor on the one hand, and Quality on the other. It was a clear aspect of the defence of Mr Van Den Ham and Vancor in the action, that any liability that might exist for the payment of damages to Mr Sparks was the liability of Quality, and not theirs, or alternatively, that there was a shared liability to which Quality should contribute. Quality's position was the reciprocal of this.
In the action, as it was fought, whether pursuant to formal order or otherwise, Mr Van Den Ham and Vancor pursued a very clear interest in the outcome of Mr Sparks' claim against Quality. In the event that Mr Sparks was entitled to recover damages, their case was against the dismissal of Mr Sparks' claim against Quality and this was fought on the merits. In these circumstances, in my view, it is clear that Mr Van Den Ham and Vancor have standing to appeal from that aspect of the decision which involved the dismissal of Mr Sparks' claim against Quality. It cannot be said that they consented to judgment. Judgment was entered according to the outcome of a strenuously fought trial. In my view, it cannot be said the conduct of the trial below by Mr Van Den Ham and Vancor that they failed to take all steps open to protect and advance their position. Further, unlike the position as identified by the Court of Appeal in James Hardie & Co, having suffered adverse decisions on material issues they have sought by appeal to have those aspects of the judgment set aside, including and especially that aspect of the decision by which Mr Sparks' claim against Quality was dismissed. By appealing they have "kept in play" the issue whether Quality is liable to Mr Sparks.
It is contended by Quality that some obiter observations of Barwick CJ in Imperial Chemical Industries of Australia and New Zealand Ltd v Murphy (1973) 47 ALJR 122 should be accepted. At p 123 the learned Chief Justice observed:
"I have some difficulty, as at present advised, in discerning the footing on which a co-defendant can appeal against a verdict given in favour of another defendant. It may have been thought that the claim for contribution by the carrier in the third party proceedings may in some way form a basis for reconsidering the verdict obtained in the action by the party for whom compensation is sought. But of such a basis I am not convinced. However, … I do not intend to pursue the procedural question or to express any concluded view thereon."
In the following year, however, in Helicopter Sales (Australia) Pty Ltd and Rotor-Work Pty Ltd & Anor (1974) 132 CLR 1 at 1, the learned Chief Justice gave further consideration to the standing of a third party to appeal against the judgment given in the primary action. In favour of the competence of the appeal by the third party in that case Barwick CJ said at 4 – 5:
"It seems to me that a third party who is given leave to defend a plaintiff's action, and who does so, is bound by the result of the issues which that third party contests. … In my opinion, the result of the third party contesting issues in the action does not depend on the making of an order determining the extent to which the third party should be bound but upon the making of an order giving the third party leave to defend the plaintiff's action. Further, where a third party does contest that action without leave to defend having been given, it may well be proper to deal with the case as if an order giving leave had been made."
Stephen J, Menzies J concurring at 5 – 7, accepted the competence of the third party's appeal, having considered the conduct of the action and the parties on appeal to the Full Court, saying at 14 – 15:
"In these circumstances, and despite the absence of any order such as might have been made under O.17, r.4(4) [which provided for third party directions] the appropriate course appears to be to treat the matter as the parties have chosen to, to deal with both of the third party's appeals as if an order had been made binding it by the result of the trial of the issues between plaintiff and defendant – Asphalt and Public Works Ltd v Indemnity Guarantee Trust Ltd [1969] 1 QB 465 at 471."
At p 15 Mason J observed:
"I do not feel that there is any difficulty in dealing with both of the third party's appeals. The third party defended the plaintiff's action pursuant to an order giving it leave so to do. Although no order was made binding the third party to the result of the trial of the issues between the plaintiff and the defendant, it was in my view in these circumstances entitled to appeal against the judgment against the defendant. I should have taken the same view had the third party defended the plaintiff's action without the benefit of an order giving it leave so to do."
See also Hanson v Wearmouth Cole Co Ltd & Sunderland Gas Co [1939] 3 All ER 47; Walter H Wright Pty Ltd v Commonwealth of Australia [1958] VR 318; Kelly v Newcastle Protective Coating Pty Ltd [1973] 2 NSWLR 45 at 52.
The views expressed in Helicopter Sales are in keeping with the decision of this Court in Hadley v Hazian Pty Ltd, unreported; FCt SCt of WA; Library No 950334; 13 July 1995, that a third party can appeal as of right against the judgment between the plaintiff and the defendant if the third party directions provided that the third party be at liberty to appear at the trial and take such part as the Judge should direct and be bound by the result of the proceedings between the plaintiff and the defendant, ie the common form third party directions. As indicated in Helicopter Sales that position appears to be the same if the third party has in fact been allowed to follow those courses, as was the position in this case if no formal order was made.
In Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd only Brennan and Deane JJ considered issues relevant to this discussion as the other members of the Court had no need to do so; they took a different view of the primary point in that case. At 671 of the report Brennan J, Deane J agreeing in this respect at 680, made these observations:
"In Castellan v Electric Power Transmission, a majority of the Court of Appeal held that no new trial could be ordered on the application of one tort feasor to decide the liability of another alleged tort feasor to the plaintiff when the first tort feasor had satisfied the plaintiff's judgment against him and the plaintiff's claim against the other alleged tort feasor had been dismissed by consent of those parties. The judgment for the alleged tort feasor standing as a final judgment, he was immune from an order for contribution to the tort feasor who had satisfied the plaintiff's judgment. Walsh JA dissented. In a passage with which I respectfully agree, his Honour said [(1967 69 SR(NSW) 159 at 173]:
'In order that the rights of all parties should be properly determined in accordance with law, I am of opinion that this Court has the power and the duty to set aside any part of the result of the trial, if it was reached through error of law, and if it is such that, whilst it stands, it impedes the proper resolution of the rights of all parties. It was the automatic consequence of the entry of verdicts for BHP in the plaintiff's action that, in the claims of EPT for its contribution against BHP, there must be verdicts for BHP. If this was erroneous and if, so long as it stands, the said claims of EPT can never be duly determined according to law, it is proper for this Court to review the correctness of the entry of the verdicts for BHP in the plaintiff's action.'"
Brennan J had reasoned immediately before this passage at 670 – 671 as follows:
"It follows that Hamersley's action against Pilbara ought to have succeeded, that judgment should have been entered for Hamersley against Pilbara and the shipping company and that orders for contribution ought to have been made between Pilbara and the shipping company under s 7(1)(c) of the Tort Feasors' Contribution Act. But when Pilbara's exoneration from liability to Hamersley was affirmed by the Full Court, the shipping company did not appeal against that part of the Full Court's judgment. So long as the judgment holding Pilbara not liable stands on the record, the shipping company is unable to assert that Pilbara is a tort feasor who 'is or would have sued have been liable' to Hamersley: … the shipping company has now sought an order similar to that in Unsworth v Commissioner for Railways (1958) 101 CLR 73 under O.70, r.29 of the High Court Rules. Such an order would provide for the joining of Hamersley as a respondent with a view to amending the record by having judgment entered in solidum against Pilbara and the shipping company. A similar order should be made here to permit the making of a contribution order unless, the judgment having been satisfied by the shipping company, it is too late to amend the record."
These views appear also to support the view, to which I have come, that in the present case Mr Van Den Ham and Vancor should be able to raise on appeal the correctness of the decision dismissing Mr Sparks' claim against Quality because of the effect of that decision on their rights. There is no need to join Quality for this purpose as Quality is already a party to the appeal.
Alternatively, if it be the case that a third party may only appeal against the judgment between the plaintiff and a defendant by leave of the court, such leave will be given if it is just and convenient to do so as indicated in Asphalt and Public Works Ltd v Indemnity Guarantee Trust Ltd [1969] 1 QB 465 at 471. The present case would appear to be one in which justice and convenience require a grant of leave and I would so order.
Has the plaintiff's claim been satisfied?
The concluding observations of Brennan J in the passage just quoted raised the issue whether the judgment below had been satisfied and the effect if that had occurred. In the present appeal Quality submits that the judgment obtained by Mr Sparks against Mr Van Den Ham and Vancor has been satisfied and as a consequence there is no further remedy or right which can be pursued between Mr Sparks and Quality. There are at least two immediate difficulties with that proposition. First, the amount of the judgment that has been ordered against Mr Van Den Ham and Vancor is subject to appeal, both by Mr Sparks and those parties, and secondly, it is not the case that Mr Sparks is seeking to recover more than his full damage, rather it is one of the tortfeasors who is seeking to adjust, as between itself and another alleged tortfeasor, their liability to meet Mr Sparks' damage. The principles relating to satisfaction in this context were reviewed by Gleeson CJ and Callanan J in Baxter v Obacelo Pty Ltd (2001) 184 ALR 616 at 626 – 629. In the present case, of course, subject only to the question of any adjustment warranted on appeal, the judgment ordered by Muller DCJ represented the court's assessment of the full measure of the loss suffered by Mr Sparks by virtue of his injury. It is clear that he may not, therefore, recover more than that amount from those whom he sued, although each may be liable to pay him that amount subject to any contribution that may be ordered between them.
In the present case, there is no question of Mr Sparks' claim for damages having been compromised by agreement, whether or not that agreement then was given effect by a consent judgment. The questions both of liability and quantum have been determined at trial and the full measure of Mr Sparks' entitlement is, subject to the appeal, presently reflected in the judgment which he has secured. While a party may compromise a claimed right to recover a sum of money, by accepting in full satisfaction a lesser amount than that claimed, there is difficulty in the proposition that a judgment to pay a fixed sum can be satisfied, in the relevant sense, other than by the payment of the sum ordered to be paid. In the present case, it appears from affidavit material placed before the Court that in August 2002 agreement was reached between the insurers for Mr Van Den Ham and Vancor and Mr Sparks and his wife, who was not a party to the action but is a joint owner with her husband of their home, that pending resolution of these appeals a sum of $350,000 would be paid by the insurer to Mr Sparks, which sum was to be applied to discharge requirements of the Health Insurance Commission, his liability for costs to his solicitors, and the mortgages over his residential property. The balance of the judgment sum, some $180,006.35, was to be paid by the insurer into an interest bearing trust account in which solicitors acting for the respective parties were to be joint signatories. Mr Sparks and his wife agreed they would not sell or encumber their residence and this was to be charged with repayment of any sum required after the resolution of the present appeals. These terms were to be reflected in a deed to be executed by Mr Sparks and his wife, and the insurer, and that deed was to make provision for any further payments or adjustments that might be necessary to give effect to the decision reached by this Court on the hearing of the appeals.
A deed has been prepared and this was executed by Mr Sparks and his wife in August 2002 but the copy before the Court has not been executed by the insurer. It contains provisions reflecting what is described as a "part payment" to the judgment creditor of $350,000, with the balance to be paid to an interesting bearing trust account and it has provisions for the payment of the balance to the judgment creditor if the judgment sum is not varied by the decision of this Court on the appeals, and there are further provisions for adjustment if the judgment sum is either increased or reduced by this decision. There is further provision that if the judgment sum is set aside on appeal the moneys in the trust account will be repaid to the insurer and Mr Sparks will repay to the insurer the part payment of $350,000. There is a provision which provides that Mr Sparks "… covenants and agrees that payment to him in accordance with the provisions of this Deed shall discharge the Judgment Debtors' obligations under the judgment". While any attempt to enforce payment of the judgment sum by Mr Sparks may well be successfully resisted by Mr Van Den Ham and Vancor if there has been compliance with the requirements of this agreement, it does not appear to me that it can presently be said that the judgment debt has been satisfied in the relevant sense. There are, if one accepts that the deed has either now been executed by all parties or reflects an otherwise concluded agreement between the insurer of Mr Van Den Ham and Vancor and the plaintiff, arrangements agreed which precisely avoid the payment of the judgment sum to Mr Sparks and make interim and contingent arrangements for part payment and for later adjustment of any future payment that may be required. These arrangements take into account the possibility that the amount of the judgment sum may be varied and that the judgment itself may be set aside. Despite the term of the deed that payment in accordance with its provisions should discharge the judgment obligations, in my view, there has not been a satisfaction of the judgment of the court. I am not persuaded, therefore, that the arrangements with regard to payment, if indeed they have been concluded and agreed between the parties, in any way preclude the consideration and determination, in the present appeal proceedings, of the issue whether there should be a contribution, as between Quality on the one hand and Mr Van Den Ham and Vancor on the other, in respect of the damage suffered by Mr Sparks, and for that purpose the consideration of the question whether or not the dismissal of Mr Sparks' claim against Quality should be set aside.
The liability of Quality
In his reasons for decision Muller DCJ said:
"While [Quality] undoubtedly owed a duty of care to contractors on the premises I am not satisfied that [Mr Sparks] has proved [Quality] was in breach of that duty. I am unable to find the system of work in place at the time was unsafe. While there was obviously a risk of injury to a contractor arising from machinery being operated while it was being worked on I do not believe there was any need for [Quality] to give directions as to when or where the work was to be done or to coordinate the activities of the contractors involved. …
[Quality] had a tagging system in place when machinery was worked on. Danger and out of service tags were readily available. The evidence revealed that the contractors, including [Mr Van Den Ham] were all familiar with the essential requirements of this tagging procedure. [Mr Van Den Ham] knew who had put the tag there and why it had been put there. Had an employee of [Quality] been aware of [Mr Van Den Ham's] intended removal of the out of service tag and the operation of the tilting mechanism of the mixer he or she could undoubtedly have been expected to put a stop to it. But such supervision was not necessary. It was not necessary because [Mr Van Den Ham] was familiar with the essential features of the procedure and, knowing [Mr Sparks] was going to work on the mixer, expressly told him to tag it. He ought reasonably have known he should not have removed that tag and operated the machine as he did."
Earlier his Honour had dealt specifically with a factual issue central to this aspect of the appeal as follows:
"32.… The absence of a key lock on the operating panel simply meant that the switch on the panel could be used to activate the machine without the operator having to insert a key and unlock the mechanism before activating the machine.
33.When the inspector returned to the premises on 5 September 1995 he noticed … that a key lock system had been installed in the control panel. …
34.I am unable to attach any significance to the fact that … the operating switch on the control panel did not have a key lock. There is no evidence that [the absence of a key lock] contributed to the plaintiff's accident. … While a key lock might be considered the most effective way of rendering machinery inoperative during maintenance it is significant that the Department of Occupational Health, Safety and Welfare circulated a pamphlet (exhibit 24) expressly recognising that, where locking out may not always be practical, a system of tagging machines during maintenance, using either a danger tag or an out of service tag, should be followed as an alternative procedure.
…
36.… [Quality] was entitled to assume that the contractors were experts in their own field and acquainted with the basic rules of safety. It had provided a tagging system which was available for use if special precautions needed to be taken. The tagging procedure was one approved by the relevant agency. There was no need to instruct skilled tradesman in the operation of the tagging procedures."
I would observe in respect of par 32 quoted above that the reference in the last sentence to the operator having to insert a key and unlock the mechanism is erroneous. The evidence as to the key lock system is that each worker is issued with a key lock, the keys not being interchangeable, so that if a worker locks off a machine on the control panel that machine cannot be operated until that worker removes the key lock using the key which only the worker has. That is the system which was dealt with in the pamphlet of the Department of Occupational Health, Safety and Welfare referred to by his Honour. It was a pamphlet issued in January 1991, some years before the injury. That pamphlet describes locking out of equipment using the key lock system as the most effective way of preventing machinery becoming operational during maintenance. Its effectiveness lies in the "one key per lock, one lock per person" procedure. Under that system where more than one person is working on the machine multi locks are used so that each worker is ensured that the machine cannot be operated until the safety lock fitted by that worker has been removed as well as any other locks fitted by other workers. That pamphlet went on to recommend, as an effective safety measure, "locking out and tagging". It added that it "may not be practical is some organisations" to use locking out and tagging. It continued "if this is the case, a system of tagging machines during maintenance should, at very least, be followed as an alternative procedure".
The body of evidence at the trial did indicate that the use of tags was a procedure normally used and that following the injury to Mr Sparks a locking out system was installed as well as other devices, including mirrors so that persons at the control panel could see into the spaces between the machinery.
In the course of his reasons, Muller DCJ directed himself in accordance with the principles enunciated in Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 in particular by Mason J at 31 and Brennan J at 47. These passages are particularly relevant to the duty of care owed when organising an activity in which a number of independent contractors and others are variously engaged. As Brennan J observed in Brodribb at 47:
"The duty to use reasonable care in organising 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 minimise 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 … If there is no failure to take reasonable care in the employment of independent contractors competent to control their own systems of work, or in not retaining a supervisory power or in leaving undefined the contractors' respective areas of responsibility, the entrepreneur is not liable for damage caused merely by a negligent failure of an independent contractor to adopt or follow a safe system of work either within his area of responsibility or in an area of shared responsibility."
A defendant "will not be liable unless it appears that he has failed to take measures, or adopt means, which were reasonably open to him and which would have eliminated or significantly reduced the element of danger": Raimondo v State of South Australia (1979) 23 ALR 513 per Mason J at 518. In this respect it is necessary to consider "the magnitude of the risk and the degree and probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action" and other conflicting responsibilities: Wyong Shire Council v Shirt & Ors (1980) 146 CLR 40 per Mason J at 47; Hamilton v NuRoof (WA) Pty Ltd (1956) 96 CLR 18 at 26. The duty of care which Quality owed required it also to take into account the possibility of inadvertent or a negligent conduct on the part of others: McLean v Tedman (1984) 155 CLR 306 at 311; March v E & M H Stramare Pty Ltd (1990-91) 171 CLR 506.
Given the evidence in the present, case I am not persuaded that Quality should be held liable for the injuries to Mr Sparks simply on the ground that it had not sufficiently supervised or organised the work being undertaken by the various workmen in its premises, whether they were independent contractors or its employees. The effect of the evidence is that they were competent in their respective fields and each was aware of the tagging system which had been provided. It seems to be a situation in which Quality ought not to be liable merely by virtue of a negligent failure of Mr Van Den Ham to follow the system of tagging which was provided. It is not apparent that the trial Judge was in error in this respect.
It is the case, however, as his Honour expressly observed at [37], that Quality undoubtedly owed a duty of care to the contractors on the premises, as well as its own employees. A number of different workmen, of different trades, were working on various items of machinery in the one area and, at least in the case of mixer 1, two different workers were employed on maintenance affecting the one machine. In those circumstances, especially as the workers were not directly supervised but were left to their own independent devices, the risk is clear in my view that misunderstanding, oversight or inattention by one worker may well cause injury to another. As found by his Honour, there was an obvious risk of injury to a contractor arising from machinery being operated while it was being worked on. The system utilised by Quality to eliminate or significantly reduce that risk was for a stringed tag to be tied to the relevant switch on the electrical control panel from which the machinery was operated. In the present case, string was inserted in the surround of the isolation switch for mixer 1 with the switch depressed so that to operate the machine it was necessary to remove the string which had a tag attached. (It was also necessary to move to another panel to deactivate an alarm, but that is really incidental.)
If conscientiously observed, the tag system should ensure that the machinery was not operated by a worker while another was working on the relevant piece of machinery. It is the case, however, that the string is readily removable notwithstanding the warning tag attached to it, and once removed the machine is readily operated. Thus the tagging system by no means eliminates the danger, although it does reduce it.
The locking out or key lock system described above and which was canvassed adequately in the evidence of the workplace inspector Mr Campbell, as well as Mr Sparks, Mr Van Den Ham and Mr Corlett, appears to be effective to eliminate this risk that the stringed tag might, for whatever reason be it misunderstanding, oversight or inattention, be removed from the isolating switch by another worker while the machine is still being worked on. The evidence supports the conclusion that this was regarded as the most effective method from at least January 1991. However, where it was "not practical in some organisations" a system of tagging such as that followed by Quality was accepted as an alternative. In this case, the installation of a locking out system following the injury to Mr Sparks supports a conclusion that there was no particular difficulty in the way of the provision of this system whether by virtue of technical difficulties, expense or inconvenience. Indeed, the nature of the system does not suggest that this would be so. A different form of switch would need to be provided and installed for each piece of machinery, that is a switch adapted for use with the padlocks, and it would be necessary to provide the locks and individual keys and of course ensure that each worker was familiar with the changed procedure.
Given the nature of these premises, ie, a very substantial commercial bakery, the nature and variety of the machinery which is used, the variety of maintenance work required as indicated by the events of the day on which Mr Sparks was injured, the variety of different trades that may be involved in maintenance at the one time, the use of workers from different employers and contractors, and the absence of supervision or coordination by Quality, it appears to me that the nature and magnitude of the risk and the degree of probability of its occurrence are by no means insignificant and was of such a degree that the use of a key lock safety system, which would eliminate the obvious risk, was warranted.
In my respectful view, it ought to have been found that the failure of Quality to provide a key lock safety system for its items of machinery represented a failure to satisfy the duty of care Quality owed to the various independent contractors who worked independently on its machinery, as well as to those of its own employees who were engaged in maintenance work.
In the circumstances of this present case it remains the case that Mr Van Den Ham's negligence was the immediate cause of the injuries to Mr Sparks. Nevertheless, the failure of Quality to provide a key lock safety system to ensure that mixer 1 could not be operated while Mr Sparks was working on it, appears to have contributed in a real way to the events that caused injury to Mr Sparks. For the reasons indicated Quality's failure to provide a key lock safety system was a concurrent cause, the nature and effect of which was such as to commend the conclusion, as a matter of commonsense and logic, that Mr Van Den Ham's negligence should not properly be seen as the sole cause in law, albeit that it was the immediate and a substantial cause of the harm that befell Mr Sparks.
Causation, in this respect, is of course, essentially a question of fact which must be considered and answered by reference to commonsense and experience.
A comparison of the culpability and also the relative importance of the acts of Mr Van Den Ham and Quality in causing the injury, viewed in the context of the whole conduct of each party, cfPodrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 492 at 494, persuades me that Quality ought to be held to be one‑quarter responsible for the injuries to Mr Sparks, and Mr Van Den Ham and Vancor together three‑quarters responsible.
For these reasons I would allow the appeal of Mr Van Den Ham and Vancor in respect of the dismissal of Mr Sparks' claim against Quality and also the appeal of Mr Van Der Ham and Vancor against the dismissal of their claim for contribution pursuant to their third party notice against Quality, with a view to the substitution of orders that Mr Sparks succeeds in his action against Quality, and that as between Quality on the one hand and Mr Van Den Ham and Vancor on the other, Quality should be liable for one‑quarter of the assessed damages awarded to Mr Sparks and Mr Van Den Ham and Vancor together be liable for the other three‑quarters.
Assessment of damages
It will generally be convenient to deal with related issues affecting the assessment of damages at the one time, whether or not they are raised by Mr Sparks in FUL 31 of 2002 or by Mr Van Den Ham and Vancor in FUL 32 of 2002. I would also note that generally Quality actively supported the submissions of Mr Van Den Ham and Vancor.
It is first contended by Mr Sparks that his Honour erred in not making a positive allowance for favourable contingencies and in not awarding interest on past economic loss. The issues of contingencies in respect of past loss of earning capacity is to be viewed, in this case, in the context that Mr Sparks has continued to conduct the business to trial and to devote his energies to it, albeit that he has only been able to work reduced hours and with reduced efficiency. He has not worked elsewhere. Since September 1995 he has not been able to perform the work that was previously his primary work in the business, ie service and maintenance work, which work was the primary source of income of the business. Instead, contractors have been hired to do the work. This was work which, generally speaking, on his Honour's findings Mr Sparks otherwise would have done had he not been injured. The income from that work has been charged to customers at the same rate as would have been charged had Mr Sparks performed the work.
While the business was essentially one of self-employment, the evidence does not disclose any significant circumstance to the time of the trial that would have affected the capacity of Mr Sparks to perform his work, apart that is from the injuries in 1994. It was, however, a business in a quite competitive field of activity and its prospects were always susceptible to commercial variables. Indeed, the business has been subject to good and bad years, experiencing both too much and too little work. Significant customers have gone elsewhere. The nature of the work has undergone some significant change with Mr Sparks also venturing, in 1996, into the installation of split air conditioning systems, an area of work which appears to have been very competitive and less profitable than maintenance and service work (although his Honour was left without sufficient evidence to adequately assess the difference) and was more labour intensive, requiring two persons at least for the larger units. His Honour was not able to decide if the split air conditioning unit work was profitable.
In general terms the variables and uncertainties relevant to contingencies have already been reflected in the actual profits earned from time to time by the business from September 1995 to trial. Mr Sparks has enjoyed those profits. They have been diminished, however, by the need to pay contractors to do the work which otherwise he would himself have performed. His Honour assessed past economic loss on the basis that he should be compensated for the loss to the business of the cost of hiring those contractors. Subject to matters more specifically considered in what follows, the approach taken by his Honour was designed to restore to Mr Sparks the income from his business which he would have earned had he not been injured. Given the particularly circumstances as found by his Honour that approach appears to be an appropriate one.
Again subject to matters considered in what follows, the approach to the assessment of past economic loss followed by his Honour leaves little scope for adjustment for the contingencies that could have affected the earnings of Mr Sparks to the date of trial, as by and large these have actually been reflected in the actual performance of the business. In these particular circumstances there appears to be little justification for some further adjustment to the figure for past loss of earning capacity to take account of contingencies.
Of course, the matter of contingencies involves a discretionary judgment and will not be interfered with on appeal unless it is clear that the discretion has been erroneously exercised: Morris v Zanki (1997) 18 WAR 260. Nevertheless, in my respectful opinion no adjustment for contingencies, in particular for adverse contingencies, could properly be justified in this case having regard in particular to the method of assessment of the loss of past earning capacity used by his Honour.
It is contended by Mr Sparks that some positive adjustment should have been made because of the strong prospect that the business would have continued to expand had he not been injured. While recognising that the business had grown by the end of 1994 and into 1995, his Honour found, however, that "Whether any such expansion could have been maintained is entirely speculative". His Honour was not able to find that further expansion was likely to occur. The prospect of further expansion could not, therefore, be any more than one of many unpredictable contingencies, rather than a probability. Further, as discussed later, the expansion that did occur to September 1995, while increasing turnover did not produce an increase in profits because of greater labour costs. In the circumstances it was open to his Honour to conclude that no positive adjustment on this basis was warranted.
His Honour did not make any specific allowance for contingencies to trial. His reasoning was that an allowance for adverse contingencies was called for; he offset this, however, by not awarding interest on past economic loss to trial rather than by applying a specific deduction for contingencies. For the reasons indicated I am persuaded that in respect of contingencies there was no justification in the circumstances for the view that the prospect of either adverse or favourable contingencies warranted specific adjustment being made.
That being so, in my view, it would have been proper to allow interest to trial on past economic loss at the standard rate of 3 per cent.
It is next contended by Mr Sparks that his Honour erred in failing to award a sum in respect of loss of profits. In particular, it is submitted that significant losses actually encountered in 1999 and 2000 ought to have been the subject of a specific provision in the calculation of the past economic loss of Mr Sparks. In support of this what is submitted to be an inconsistency in his Honour's findings is pointed to. At [85] when considering the accounting evidence called by Quality in respect of the performance of the business, his Honour observed that the accountant's conclusions rested on the validity of assumptions, but that his Honour could not accept all of those assumptions. Hence, his Honour could not accept the accountant's conclusions. In this context his Honour noted in particular that he could not make the assumption that the downturn in net profits in 1999, and more so in 2000, were not connected with Mr Spark's injury. His Honour explained that he accepted that the business fell away in 1999-2000 because of problems experienced with a series of [sub] contractors. At [91], however, his Honour was considering precise calculations of loss of profits in schedules provided by Mr Sparks. With some modification his Honour considered these substantially reflected Mr Sparks' loss. But his Honour was not prepared to accept one aspect of the calculations in those schedules. This dealt with the loss of profits to the business for the financial years ending 1999, 2000 and 2001. They were, he noted, based on "alleged lost sub-contract work". His Honour was not satisfied that the decline in profits so claimed for these three financial years had been established. This aspect of the claim was advanced on three bases – loss of customers through the use of subcontractors, the inefficiency of substitute labour and the poaching of the plaintiff's customer base by subcontractors.
There were further observations at [95] when his Honour was considering future loss of earning capacity. His Honour commented that the business is hardly likely to survive in the longer term using contract labour, a proposition which he thought to be demonstrated by the sharp downturn in the income of the business in 1999 and 2000.
If his Honour's reasoning is followed from [85] – [91] – [95] it seems unlikely that the apparent difference reflects, in truth, a mistake or inconsistency of understanding as to the effects of the evidence. The explanation appears more probably to lie in the precise context and subject matter being addressed on each occasion.
One sentence at [85] is stressed by Mr Sparks. It reads: "In light of my finding that the sharp deterioration in the plaintiff's profits was substantially due to his injury and his inability to do the service and maintenance work himself …". The submissions of Mr Sparks treated this as a finding and sought to contrast it with what was said at [91], the observations at [95] being seen as confirmation of the sentence at [85]. When this sentence is considered, however, it is clearly referring back to a finding made elsewhere. That appears to be a reference back, in particular, to [76] where in the context of the down turn of profits after 1998 his Honour said:
"The more probable explanation, and the one I accept, is that the decline was due to the plaintiff's inability to do the work himself. I am unable to say why the business declined so markedly. It may have been due to customer dissatisfaction with the standard of substitute labour or the plaintiff's own failure to adequately supervise the work done or maintain good customer relations. Whatever the cause of the decline I am satisfied it would not have happened if the plaintiff had been able to do the work himself."
It will be apparent that the sentence at [85] is a shortened, and perhaps thereby misleading, summary of that finding and reasoning at [76]. A consideration of [76] provides an explanation of his Honour's reasoning. In essence he accepted that the use of contractors in the work of the business had led to a series of problems in 1999-2000 which in turn caused the business to fall away [85]. Contractors were used because the injury in 1994 prevented Mr Sparks doing the work of the business himself. In this way the injury was connected to the falling away of the business and the profits in 1999-2000, and the decline would not have happened if Mr Sparks had been able to do the work himself [76].
But this problem with contractors did not manifest itself the moment contractors were first used instead of Mr Sparks in September 1995. It was essentially in the years 1999 and 2000 that it became a significant issue. Although the reasons for this were explored in some detail in the course of the evidence, his Honour in the end found that he was "unable to say why the business declined so markedly" at that stage. His reasons identify the main possibilities canvassed in the evidence, customer dissatisfaction with the standard of the contractors' work, Mr Sparks' failure to adequately supervise the work of the contractors, or Mr Sparks' failure to maintain good customer relations. These were all possibilities open on the evidence but, in the end, Mr Sparks had failed to establish the particular cause or causes for the "marked deterioration" which adversely affected the profitability in the financial years ending 1999, 2000 and 2001. More particularly he failed to establish that causes attributable to his own failure to properly conduct the business, such as his failure to supervise the contractors or to maintain good customer relations, were not the real and immediate or direct cause for the marked fall off of profitability after several years of the use of contractors.
In my view, that is the apparent explanation for the rejection, at [91] of the reasons, of the particular items claimed as lost profits based on alleged lost subcontract work. As his Honour there expressly observed he was "not satisfied the decline in profits in those years has been shown to have been due to a loss of customers through the use of subcontractors, the inefficiency of substitute labour or the poaching of the plaintiff's customer base".
While it may be said in retrospect that his Honour's reasons could have been more clearly expressed, I am not persuaded that there is in truth any error or inconsistency revealed in his treatment of the claim for loss of profits in the financial years ending 1999, 2000 and 2001.
For present purposes, the critical passage is [91]. It has not been shown in argument on this appeal that his Honour should have accepted the claimed loss of profits in the plaintiff's schedules in this respect, or that any allowance was warranted above that made by his Honour in respect of those three financial years.
Next, Mr Van Den Ham and Vancor contend that his Honour erred in failing to take into account extra earnings of Mr Sparks from his retained earning capacity and also the mark up rate on the work performed by contractors and that Mr Sparks had incurred the cost of contract labour before his injuries became disabling.
In considering these contentions it is necessary to have regard to the implications of the method of assessment used by his Honour and the factual findings upon which this approach was based. His Honour accepted that after September 1995 Mr Sparks continued to engage himself in the work of the business to the extent that he was able. He did acknowledge that Mr Sparks could only undertake some types of work, for limited hours, with reduced efficiency, and that contractors were engaged because he could no longer perform some work. His Honour considered what work Mr Sparks would have performed in the business had he not been injured, and found that he would have worked 50 ‑ 60 hours a week in peak periods. This, his Honour saw, might have involved some 40 hours on maintenance and service, and the balance on split systems and administration. This analysis led his Honour to the conclusion that had he not been injured, Mr Sparks "could have done himself what he must now pay a contractor to do". It was on this basis, and after recognising the work actually performed by Mr Sparks in the business to the date of trial, his Honour saw that an appropriate measure of the true loss in the particular circumstances of this case was the extra cost to the business of engaging contract tradesmen. These were engaged to do what Mr Sparks was not able to do because of the injury. They were engaged as necessary and paid at hourly rates. On the basis of his Honour's findings the work they performed was work Mr Sparks himself would have done, being in addition to the work that he actually performed in the business to the date of trial, had he not been injured. All the work done by contractors was charged to clients at the same rate that would have been charged had Mr Sparks himself done the work.
In respect of the contention that there was error in failing to take into account, or adequately into account, that contract labour had been engaged before the injury to Mr Sparks became disabling in September 1995, the reasons reveal that his Honour was well aware of this. Indeed, he expressly did not allow the cost of this pre‑September 1995 labour in assessing past loss of earning capacity.
It is clear that although Mr Sparks did maintain "up to 40 hours a week" work until September 1995, he could not maintain the longer hours that the business was requiring by December 1994. Hence, he engaged a contractor in December 1994 to help him. His Honour accepted this was due to the extra demands of the business at that time. From September 1995 to trial, however, the position was materially changed. Mr Sparks effectively ceased to do service and maintenance work because of the effects of the injury. The arrangement he had for help from a contractor was terminated and a different contractor commenced. Essentially, this contractor did the service and maintenance work. While Mr Sparks continued after then to work in the business, the hours and the type of work he could do were significantly curtailed. He worked with reduced efficiency. It was his Honour's finding that from September 1995 onward essentially contractors did what Mr Sparks would have done (as well as the work he actually did perform, albeit with reduced efficiency) had he not been injured.
This last finding is really the answer to each of the matters raised by Mr Van Den Ham and Vancor. The change in circumstances from September 1995 has the effect that what occurred before then in respect of the engagement of contractors has no continuing relevance. As the same rate was charged for work done by contractors after September 1995 as would have been charged if Mr Sparks had done the work, the mark up on contract labour is not relevant to the assessment made by his Honour of the lost earning capacity to trial, nor is Mr Sparks' retained earning capacity. What was included in the calculation of this aspect of the damages was the extra cost of hiring contractors to do work which, had Mr Sparks not been injured, he would have done himself. The gross return to the business remained the same, but the cost was increased by the cost of engaging contractors.
Future economic loss
It is contended by Mr Sparks that, by adopting the business returns of the financial year ending 1994 as the basis for calculating future economic loss, his Honour failed to take into account that the business could and did expand.
His Honour fixed on the 1994 returns because they were the only returns available to show what the business was capable of returning when run by Mr Sparks alone, with some administrative support from his wife. It was a good year. All subsequent years were affected by reduced profitability because of the use of contractors. For example, while 1995 was a busy year and both Mr Sparks and a contractor generated income, the actual profitability was at about the same level as 1994. Further, the actual experience to the time of trial varied considerably. It was his Honour's finding that it was entirely speculative, given the state of the evidence, whether the business would have expanded further had Mr Sparks not been injured and had he continued to perform the work of the business himself after September 1995. His Honour did not make a finding that the business would have maintained the expanded rate of work experienced in 1994 or 1995, nor that the business would have expanded further. Hence, the prospect of future expansion of the business was regarded by his Honour as a matter relevant to general contingencies rather than a likelihood or fact established by the evidence.
Hence, 1994 was seen by his Honour as the most reliable indication of the earnings Mr Sparks could have expected from the business had he not been injured. I am not persuaded there was error in this approach.
Both Mr Sparks and Mr Van Den Ham and Vancor are concerned that the discount of 30 per cent applied by his Honour to take account of the retained earning capacity of Mr Sparks was in error. In the contention of Mr Sparks it was too high a discount, whereas Mr Van Den Ham and Vancor contend it was much too low. Both parties rely on his Honour's factual findings to support their divergent contentions.
It was his Honour's finding that "for all practical purposes [Mr Sparks'] capacity to do refrigeration service and maintenance work" had been lost. That is the type of work for which he was qualified and he had only worked in that capacity throughout his working life. He could, however, perform some other types of work in that field which were less physically demanding, especially split system installations, but only for limited periods, and he had been able to perform the administration in the business. His Honour also found that Mr Sparks was "not trained or equipped to change the nature of his employment". His Honour found that the probabilities persuaded him that Mr Sparks' business would:
" … continue to decline to the point where the plaintiff will simply have to bring this business to an end. He will then have to find something else to do and given the limited opportunities that might be available, the probabilities are that he would earn a lesser income than he did when he was able to work in his business."
These findings appear to be open to his Honour and I am not persuaded that some other view should be taken. His Honour had canvassed the nature of Mr Sparks' residual capacity for work, which at one point he described as "a substantial retained capacity to do work of a sedentary nature and less physically arduous work …". However, it appears his Honour was also well conscious of the difficulties of Mr Sparks adjusting to different forms of work given that he was "not trained or equipped" to change, and also of the difficulty of finding suitable work given the clear limitation on his physical capacity.
It must be observed that, from either viewpoint, the evidence available to his Honour in respect of this issue was less than satisfactory and his Honour was left with precious little to guide him. What he did, therefore, was to take the net income in 1994 of $46,000 per annum as the basis for the calculation of future loss, and reduce this by some 30 per cent to reflect the retained earning capacity. In practical terms this contemplated that Mr Sparks' residual earning capacity should enable him to earn on average some $14,000 per annum over his remaining working life. In the absence of more specific evidence, this assessment depends much on general impression. Accepting that limitation, it has not been shown to be outside the range of a reasonable assessment. I would not disturb that figure.
Mr Van Den Ham and Vancor next contend that his Honour erred in allowing a discount of 10 per cent for other contingencies when assessing the future economic loss. It is submitted that an appropriate allowance would be in the range of 4 – 6 per cent.
His Honour weighed both favourable and adverse contingencies presented by this case. Apart from the usual uncertainties, in particular, his Honour weighed against the possibility that the income from the business may have increased over time, the prospect of injury and incapacity to Mr Sparks because of the physically demanding nature of the work, and the possibility of a downturn in the industry.
As has been indicated earlier his Honour was unable to find that increased profitability from an expanded business was likely. The future prospects he saw as simply speculative. It is also to be born in mind that his Honour accepted as his base the returns from the first year of the business when the volume of work and returns were good and no costs were incurred on contractors. The use of a contractor in the following year because Mr Sparks couldn't keep up with the work, did not improve the profitability of the business. It was not apparent from that that a growth in business would necessarily lead to greater profits, and the experience in later years was inconsistent. Hence, the prospects of increased profitability were not strong.
The base for the calculations was from a year in which Mr Sparks had to work hard to cope with the volume of work. The evidence clearly demonstrated the physically demanding nature of the work, and the risk of injury. The fluctuating nature and competitiveness of the industry were also evident. These considerations had a greater than usual significance for a self-employed person such as Mr Sparks.
It is relevant to the assessment of an appropriate allowance for contingencies in a case such as this to take into account the period over which the loss of income is to be calculated. Anticipating what is to follow, in this case that should be assessed over 20 years by which time Mr Sparks would be aged 60. In particular, the demanding nature of the work and the risk of injury will be of greater significance as Mr Sparks approaches that age.
There are cases where a discount for contingencies much higher than the usual of between 4 per cent and 6 per cent has been justified by the circumstances; eg Black v Motor Vehicle Insurance Trust (1986) WAR 32. Each case must be evaluated on its merits. Earlier in these reasons I adverted to Morris v Zanki in which it was emphasised that the discretionary nature of the assessment of an appropriate allowance for contingencies should not be interfered with on appeal unless it is clear the discretion has been erroneously exercised.
In this particular case, notwithstanding it is higher than in more typical cases, given the circumstances and the considerations that have been mentioned, I am not persuaded that the discount of 10 per cent made by his Honour discloses an erroneous exercise of the discretion.
The remaining issue raised in respect of loss of future earning capacity is in respect of the retiring age on which his Honour's calculations were based. It is contended by Mr Sparks that the retirement age of 55 years used by his Honour was against the evidence and should have been 65 years.
At the time of trial Mr Sparks was some 40 years old. His evidence was that he had hoped to continue in his business and to stop working at about the age of 55 years. In re-examination, however, he said it was his intention to continue until age 65. Faced with this conflicting stance by Mr Sparks as to his intentions, his Honour relied on the initial assertion of Mr Sparks, ie about age 55, as the better indication of the likelihood had Mr Sparks not been injured. It was on this basis that his Honour calculated the future loss of earning capacity over 15 years to age 55.
Given this evidence it cannot be said, as the ground of appeal contends, that the finding of age 55 was against the evidence. Nevertheless, age 55 is relatively young, and even if it had been Mr Sparks' intention or ambition to be able to finish work at age 55, it is clear that if circumstances were not by then as favourable as he had hoped, he would have the capacity to go on working for longer if he needed to do so. It appears to me, therefore, that in this case to treat Mr Sparks' intention at age 40 of retiring at age 55 as entirely determinative of the lost earning capacity of Mr Sparks is inadequate in its result.
There is no question that at age 55, contingencies aside, Mr Sparks would still have the capacity to continue working until even 65 years of age. Having regard to his Honour's finding it can be accepted that at age 40 Mr Sparks had the intention or expectation that by age 55 he might be in a position to give up work. A more realistic appreciation of his loss of earning capacity, however, would appear to be arrived at by recognising that the intention at age 40 might never be realised and by taking therefore some realistic middle ground. This leads me to prefer the calculation based on age 60, given the circumstances as found by his Honour in this case.
Calculation of Damages
It will be apparent from these reasons that in part both appeals have been successful. In respect of the assessment of damages the following calculations result from the reasons.
Interest on past earnings
The figure reached by his Honour in respect of lost past earning capacity of $179,899 should be increased by interest at 3 per cent over the 6.5 year period to trial. The interest allowance is thus $35,080 bringing the total allowance for loss of past earning capacity to $214,979.
Future earning capacity
The figure arrived at by his Honour of a weekly income of $884 should be calculated to age 60, the multiplier being 616. This produces a present capital sum of $544,544 from which should be deducted the allowance made by his Honour of 30 per cent to allow for retained earning capacity. The result is $381,180. From this there should be deducted a further 10 per cent for contingencies producing a figure for damages in respect of loss of past earning capacity of $343,060.
Award
The assessment of damages made by his Honour would need to be recalculated to reflect these reasons in the following way:
Past loss of earning capacity
$ 214,980
Future loss of earning capacity
$ 343,060
Pain and suffering and loss of amenities
$ 40,000
Special damages
$ 2,687
Total
$ 600,727
On this basis it is my view that the assessment made by his Honour was in the result too low and is properly to be seen as outside the range of a sound discretionary judgment. I would therefore substitute an award for damages of $600,727 for that proposed by his Honour.
Decision
For the reasons given, in the action in the District Court Mr Sparks' claim against Quality should have succeeded, as well as his claim again Mr Van Den Ham and Vancor. His damages should have been assessed in the sum of $600,727 rather than $530,006.35. The third party proceedings should have been resolved on the basis that Quality was one-quarter responsible for the injury to Mr Sparks, and Mr Van Den Ham and Vancor jointly and severally responsible for the remaining three-quarters.
I would hear counsel as to the precise form of the orders to be substituted in the action and as to costs, both of these appeals and of the action.
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