Strang v Johnston, McGee and Gandy Pty Ltd
[2014] TASSC 56
•24 October 2014
[2014] TASSC 56
COURT: SUPREME COURT OF TASMANIA
CITATION: Strang v Johnston, McGee and Gandy Pty Ltd [2014] TASSC 56
PARTIES: STRANG, Ricki Ivan
v
JOHNSTON, McGEE AND GANDY PTY LTD
HYDRO-ELECTRIC CORPORATION
FILE NO: 577/2012
DELIVERED ON: 24 October 2014
DELIVERED AT: Hobart
HEARING DATES: 21 May and 13 October 2014
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Workers Compensation – Liability to pay compensation – Liability of principal for employee of contractor – Particular cases – For purposes of principal's trade or business – Electricity supplier engaged contractor to reconstruct heritage pipeline – Whether construction was a component part of principal's operations.
Moir v Schrader (1936) 56 CLR 310, applied.
Workers Rehabilitation and Compensation Act 1988 (Tas), s 29.
Aust Dig Workers Compensation [225]
Procedure – Supreme Court procedure – Tasmania – Practice under Rules of Court – Summary judgment – Whether plaintiff's case is so obviously untenable that it cannot possibly succeed.
Spencer v Commonwealth of Australia (2010) 241 CLR 118, applied.
Supreme Court Rules 2000 (Tas), r 367.
Aust Dig Procedure [270]
Procedure – Supreme Court procedure – Tasmania – Practice under Rules of Court – Other matters arising before trial – Power to order that in any proceeding any question to be tried before any other.
Idoport Pty Ltd v National Australia Bank [2000] NSWSC 1215, applied.
Supreme Court Rules 2000 (Tas), r 559(1)(b).
Aust Dig Procedure [277]
REPRESENTATION:
Counsel:
Plaintiff: C McKenzie
First Defendant: E Page
Second Defendant: B McTaggart SC
Solicitors:
Plaintiff: McLean McKenzie and Topfer
First Defendant: Hunt and Hunt
Second Defendant: Wallace Wilkinson and Webster
Judgment Number: [2014] TASSC 56
Number of paragraphs: 34
Serial No 56/2014
File No 577/2012
RICKI IVAN STRANG v JOHNSTON, McGEE AND GANDY PTY LTD and HYDRO-ELECTRIC CORPORATION
REASONS FOR JUDGMENT HOLT AsJ
24 October 2014
In his action, commenced in June 2012, the plaintiff alleges that he was injured in the course of his employment in two incidents, each occurring in July 2009. According to the statement of claim the plaintiff was employed by Topgold Enterprises Pty Ltd (Topgold) which provided the plaintiff's labour to Hazell Bros Group Pty Ltd (Hazell Bros) for the construction of a wood stave pipeline which Hazell Bros had contracted with Hydro-Electric Corporation (the HEC) to build. The plaintiff alleges that his injuries were suffered as a result of the defective design of a trolley which the plaintiff was required to use. The trolley had been designed by Johnston McGee and Gandy Pty Ltd (JMG) for the HEC for use at the worksite by the contractor, Hazell Bros. The plaintiff has not sued Topgold or Hazell Bros, presumably because he is unable to satisfy the statutory pre-condition to the commencement of a damages action against an employer contained in the Workers Rehabilitation and Compensation Act 1988 (the Act) which, at the relevant time, required that the injured worker must first secure an agreement or determination that his injuries resulted in a degree of permanent impairment of not less than 30% (the impairment requirement). The plaintiff has sued only JMG and the HEC and admits that at the time of the commencement of the action he did not satisfy the impairment requirement.
The HEC says that absent satisfaction of the impairment requirement, the plaintiff's claim against it is certain to fail. The plaintiff says that he did not need to satisfy the impairment requirement in order to commence the action.
By interlocutory applications filed 2 July and 5 September 2013, the HEC has applied for summary judgment, or in the alternative, an order that the question of whether the proceedings could have been commenced without satisfaction of the impairment requirement, be tried separately and before any other question. Although the applications for summary judgment were filed out of time, the plaintiff makes no point about this. Counsel for JMG advised the Court that the orders sought were not opposed and, although remaining present at the hearing, did not make any submissions.
Whether the plaintiff had to satisfy the impairment requirement prior to commencing the action depends upon whether the HEC, although not the plaintiff's employer, is to be treated as if it were the employer. Section 132 of the Act has the effect that the impairment requirement, which exists as a pre-condition to the commencement of an action against an employer, also applies to prospective actions by injured workers against principals. Whether or not a person is regarded as a principal and so treated as an employer depends upon the application of s 29(1) of the Act, which is as follows:
"Where a person (in this section referred to as 'the principal') in the course of, or for the purposes of, his trade or business contracts with any other person (in this section referred to as 'the contractor') for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal is liable to pay to a worker employed in the execution of the work any compensation under this Act that he would have been liable to pay if that worker had been immediately employed by him."
The applications were supported by evidence adduced on behalf of the HEC. The evidence included the following. The core business of the HEC was and is the generation of electricity for sale. The Lake Margaret Power Station, near Queenstown on the west-coast of Tasmania, which was owned by the HEC, was closed in 2006 due to safety concerns arising from the condition of a wood stave pipeline approximately two kilometres in length and used to carry water from Lake Margaret to the power station. The pipeline had heritage significance and so it was decided to design and construct a new wood stave pipeline to replicate the original. Hazell Bros contracted with the HEC to design and construct certain works associated with the recommissioning of the power station, including the building of the new wood stave pipeline. Hazell Bros contracted with Topgold for the provision of workers, one of whom was the plaintiff. The pipeline was eventually built and the power station recommissioned so that it now operates as a viable commercial enterprise. At around the same time as the Lake Margaret Power Station was being recommissioned, the HEC was involved in other infrastructure creation projects. In the past the HEC had constructed, or contracted for the construction of, electricity generating infrastructure.
The question arising by reason of s 29 of the Act and which determines whether the impairment requirement applies to the plaintiff in his action against the HEC is whether the construction of the wood stave pipeline was the whole or any part of any work undertaken by the HEC in the course of or for the purposes of its trade or business.
The leading case is Moir v Schrader (1936) 56 CLR 310. The seminal statement as to the application of legislative provisions, being the equivalent of s 29 of the Act, is to be found in the judgment of Dixon J (as then was) at 323-324, which is as follows:
"Unfortunately the principle which that interpretation of the words 'any work undertaken' ascribes to the legislation is not susceptible of exact definition and of completely certain application. It is based upon the view that from the course of the principal's trade or business and the manner in which he conducts it, he will be found to have assumed responsibility for the performance of a class of work, the fulfillment of given functions or the pursuit of a system of activities. What he has thus adopted as his proper operations, he may accomplish by means of direct employees, or by means of contracts which remove him from the relation of employer with the workmen who do the work. Whichever be his method, he is to be responsible for the workers' compensation payable to those injured in the course of the work for the performance of which he has assumed responsibility, the work which he has 'undertaken.' But when, although the work performed by the injured workman is necessary to enable the principal to carry out the operations the execution of which he has adopted as his trade or business, yet that work does not form a component part of the operations and only contributes or conduces to their performance or is preliminary or ancillary or incidental to them, then the workman must look to his direct employer for compensation." [Emphasis added.]
Dixon J considered a number of English cases to support his analysis. Two of the cases taken into account were Hockley v West London Timber and Joinery Co (1914) 3 KB 1013 and Bobbey v W M Crosbie & Co Ltd (1915) 112 LT 900. Dixon J said at 322-323:
"In two further cases the Court of Appeal has applied the same interpretation of the word 'undertaken.' In Hockley v West London Timber and Joinery Co a manufacturer of mouldings used timber purchased from abroad. The manufacturer, acting in accordance with the general practice of the trade, did not employ his own servants to take delivery of the timber from the ships by which it was imported. Contracts were made with several contractors for the successive operations of receiving the timber into barges, carting it from the wharves upon which it was discharged from the barges and unloading the timber from the carts and stacking it in the yards where it would season. It was held that the operation of stacking was not part of the work 'undertaken' by the manufacturers of mouldings. Pickford LJ said:—'In order to do their business of moulding manufacturers they must have timber, and they must have seasoned timber. Therefore the timber is stacked, and it is stacked for the purpose of being seasoned, but the stacking and seasoning are not parts of the actual operation of moulding manufacture, and it is a thing that has been always done by this firm, and by other firms in the same business, by means of contractors, and not by means of their own men or by themselves at all. The authorities make it quite clear that it is not enough that the work that is being done should be incidental to, or even necessary for, the preparation for the work which is actually done by the principal'. In Bobbey v W M Crosbie & Co Ltd - FTN.26the Court of Appeal applied this decision to a case in which the manufacturers, whose raw material was imported, employed outside labour to unload a cargo consigned to them and to place the goods in their store. But they did so by paying a lump sum to a wharf labourer who collected a gang to do the work and divided the payment amongst the members of the gang; and the House of Lords reversed the decision of the Court of Appeal on the ground that under this arrangement the members of the gang were directly employed by the manufacturers and there was no contractor intervening. In the Court of Appeal Lord Cozens-Hardy MR said that the work of unloading a bulk cargo was not work undertaken by the principals. 'They deliberately abandoned such work, one experiment having satisfied them that their own men were not suitable for such work, and they employed gangers or similar men to do the work'. … It is unnecessary to say that as the legislation has been almost literally transcribed we should apply the interpretation adopted by the English Court of Appeal."
These examples show that it is not enough that work is necessary to the principal's operations if such necessary work is characterised as incidental to or in preparation for the work actually undertaken by the principal.
It is a question of fact in each case whether the work which the principal has contracted out is a component part of the principal's operations or merely work which contributes or conduces to the performance of such operations or is preliminary or ancillary or incidental to them.
Counsel for the plaintiff submits that a detailed analysis of the operations of the HEC at the relevant time, including what was routinely contracted out and what work was performed by the HEC's own workforce, is needed. This analysis must be undertaken before a determination can be made as to whether infrastructure construction and this particular construction was, at the relevant time, a component part of the operations of the HEC as opposed to work, although perhaps necessary for the conduct of the operations of the HEC was simply work which contributes to or conduces to those operations, or work which was preliminary, ancillary or incidental.
Counsel for the defendant submitted that the replacement of the wood stave pipeline was for the purpose of generating electricity, and that as such it was work undertaken in the course of, or for the purposes of, the HEC's trade or business and a component part of its operations.
The question on the summary judgment applications is whether the plaintiff's case is so obviously untenable that it cannot possibly succeed. Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; Webster v Lampard (1993) 177 CLR 598 at 602; Agar v Hyde (2000) 201 CLR 552 at 575-576; Lindon v Commonwealth of Australia (No 2) (1996) 70 ALJR 541 at 544-545 and Spencer v Commonwealth of Australia (2010) 241 CLR 118 at 131.
The question, whether or not the construction of the wood stave pipeline was a component part of the operations of the HEC, which is a public authority, at least arguably, is not answered by s 3(3) of the Act, which is as follows:
"For the purposes of this Act, the exercise and performance of the powers and duties of a local or other public authority shall be deemed to be the carrying on by such authority of a trade or business."
Counsel for the plaintiff submitted that the provision operates to bring public authorities within the potential ambit of s 29 of the Act, but that it does not go so far as to deem all operations of a public authority to be component part operations as opposed to incidental, ancillary or preparatory operations. Counsel for the HEC did not submit otherwise.
In my view, a detailed analysis of the evidence is required before it can be determined as a matter of fact whether or not the HEC was a principal in the construction of the wood stave pipeline. The evidence before me did not purport to be exhaustive. I cannot exclude the possibility that detailed evidence presented at trial might ultimately result in a finding that the HEC, at the time of the plaintiff's injuries, was not in the business of constructing electricity generating infrastructure, or in particular in the business of undertaking heritage work such as the construction of the wood stave pipeline. Despite the fact that the HEC needed infrastructure, such as the pipeline, to conduct its core business of generating electricity for sale, it does not necessarily follow that the construction of the pipeline was a component part of the business of the HEC.
There is a further point which I should mention in relation to the summary judgment applications. Counsel for the plaintiff submitted that as a matter of law there is a possibility of a finding that there cannot be more than one principal for the purposes of s 29 of the Act, with the result that as Hazell Bros had contracted Topgold which employed the plaintiff, Hazell Bros was the principal and, that being the case, the HEC could not also be treated as a principal. In Marshall v Andrews (1995) 12 NSWCCR 153, the New South Wales Court of Appeal, by majority (Kirby ACJ and Handley JA), held that the New South Wales equivalent of s 29 of the Act permitted of the existence of more than one principal where there was a chain of contractors and the worker was employed, not by the person with whom the first contract had been entered into, but by a contractor down the line. Rolfe AJA, who was in dissent, concluded that the principal was the person who contracted with the employer of the injured worker to the exclusion of others further up the hierarchy.
Counsel did not refer to any case where Marshall v Andrews had been considered. Considerations of judicial comity (CAL No 14 Pty Ltd v Motor Accidents Insurance Board (2009) 239 CLR 390 at 411-413) weigh strongly against a trial court or court of intermediate appeal reaching a conclusion contrary to the majority judgment in Marshall v Andrews. Notwithstanding this, courts should be slow to stultify the development of the law by summarily terminating proceedings on the basis that existing authority is against a proposition put by a party. In Spencer v Commonwealth of Australia (2010) 241 CLR 118, French CJ and Gummow J said at 132 [25]:
"Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application … could justifiably conclude that the proceedings had no reasonable prospect of success."
I am not persuaded that the HEC should have summary judgment against the plaintiff. In particular I am not persuaded, either as a matter of fact or law, that the plaintiff's case is so obviously untenable that it cannot possibly succeed. The summary judgment applications will be dismissed.
I now turn to the application for a separate trial of the question raised in the summary judgment applications. The question has been framed as follows:
"Before commencing this action against the second defendant, was the plaintiff required to agree with the employer or have determined by the Tribunal that he had a whole person impairment of not less than 30% pursuant to the Workers Rehabilitation and Compensation Act 1988, section 138AB?"
The application is made under r 559 of the Supreme Court Rules 2000 which relevantly provides as follows:
"(1) In any proceeding and at any time, the Court or a judge may order that –
(a)…;
(b) any question be tried before any other.
(2) On an application for an order under subrule (1), the Court or judge is to have regard to –
(a) the advantage of hearing evidence without undue delay; and
(b) the costs which may be incurred; and
(c) any other relevant matter.
(3) If any issue which has been ordered to be tried or any question or issue of fact which has been ordered to be determined in any manner has been determined, the Court or a judge may give any judgment as is appropriate …"
As to the matters which may have a bearing on whether or not questions should be tried separately, Einstein J said in Idoport Pty Ltd v National Australia Bank [2000] NSWSC 1215 at [7]:
"7 Without examining specific cases in relation to the power conferred on the Court in Part 31, Rule 2, I proceed on the basis of the following principles.
(1) The power of the Court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 699 at 670 per Young CJ and Jenkinson J.
(2) In exercising the power under Part 31, Rule 2, the Court is now enjoined to give effect to the overriding purpose of the Supreme Court Rules; namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings and cannot be stated in a more confined way: Part 1, Rule 3 (1), (2) Supreme Court Rules.
(3) The Court begins with the proposition that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 per Giles CJ in Comm D, Hadid v Australis Media Ltd (unreported, Supreme Court of NSW, 29 March 1996 per Rolfe J). Accordingly, it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur.
(4) Without being exhaustive, the separate determination of an issue may prove to be an appropriate procedure in at least the following sets of circumstances:
(a) where the resolution of that separate issue will have the effect of resolving the entirety of the litigious controversies or of substantially narrowing the field of litigious controversy: CBS Productions Pty Ltd v O’Neil [1985] 1 NSWLR 601 at 606 per Kirby P, Dunstan v Simmie & Co Pty Ltd (supra, at 671 per Young CJ and Jenkinson J);
(b) where the resolution of that separate issue carries with it a strong prospect that the parties will thereafter be able to resolve their dispute themselves and thus avoid further litigation: Tallglen v Pay TV Holdings (supra, at 141 - 142 per Giles CJ in Comm D);
(c) where there is a clear demarcation between that issue and all other issues in the case, including issues going to the credit of witnesses: CBS Productions Pty Ltd v O’Neil (supra, at 606 per Kirby P), Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Rajski v Carson (1988) 15 NSWLR 84 at 88 per Kirby P and Hope JA.
(5) Conversely, the separate determination of an issue will rarely be an appropriate procedure where:
(a) there are intertwined issues of fact or law between the separated question and the other questions such that the determination of the separate question will not have any substantial effect upon the width of the field of litigious controversy or the prospect of the settlement of the balance of the litigation: Law Society of NSW v Bruce (unreported, Supreme Court of NSW, 23 April 1996, per Rolfe J), Parramatta Stadium Trust v Civil and Civic Pty Ltd (unreported, Supreme Court of NSW, 27 August 1996, per Hunter J).
(b) where there is a commonality of witnesses and issues of credit as between the separate issue and other issues in the case which will or may necessitate a ruling on the credit of one or more of the common witness, thus possibly precluding that same judicial officer from again dealing with the matters going to the credit of the common witness in accordance with the decision of the Court of Appeal in Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 441: Story of Sydney Pty Ltd v Ling (unreported, Supreme Court of NSW 15 November 1994, per Rolfe J), Century Medical v THLD [2000] NSWSC 5; (unreported, Supreme Court of NSW, 3 February 2000, per Rolfe J).
(c) there is a possibility that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings: Story of Sydney Pty Ltd v Ling (supra), Century Medical v THLD (supra).
(6) The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Parramatta Stadium Trust v Civil and Civic Pty Ltd (supra), Century Medical v THLD (supra)."
Counsel for the HEC submitted:
1If the question is resolved in favour of the HEC, the HEC will be entitled to judgment against the plaintiff and against JMG in the contribution proceedings, with the result that costs will be saved and the chances of a negotiated settlement between the plaintiff of JMG increased.
2There is a clear line of demarcation between the question and the other issues in dispute.
3The question will not be resolved on findings as to the credit of the various witnesses and, in any event, there is unlikely to be a commonality of witnesses giving evidence on the question and witnesses giving evidence on the other issues in dispute.
4The question can be tried without delay.
5Resolution of the question is unlikely to result in an appeal to the Full Court.
Counsel for the plaintiff took issue with points 2, 4 and 5.
Resolution of the separate question is likely to involve extensive evidence covering matters such as:
• The extent and manner of performance (contractors or HEC's own workforce?) of the operations of the HEC in building infrastructure as compared to the extent and manner of performance of the other operations of the HEC.
• The extent of the HEC's involvement in the management of the construction of the wood stave pipeline, if any, going beyond the role of an HEC employee acting as contract superintendent under the design and construct contract between the HEC and Hazell Bros.
• The interrelation between heritage work, such as the reconstruction of the wood stave pipeline, and other infrastructure work in the recommissioning of the Lake Margaret Power Station.
• The exercise of control and supervision of the plaintiff in the performance of his work on the reconstruction of the wood stave pipeline.
The starting point is that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time.
The resolution of the separate question will not resolve the dispute between the plaintiff and the HEC if the question is decided against the HEC.
There is a prospect that evidence as to the separate question will be relevant to the question of the responsibility (if any) of either or both of the defendants for the plaintiff's injuries.
There is a prospect that resolution of the separate question will result in an appeal, creating a multiplicity of proceedings.
There is no evidence that the separate question can be tried without delay.
The trial of the separate question might involve more extensive evidence than the trial of all other disputed issues.
It is far from clear that the trial of the separate issue will achieve the overarching case management purpose of resolving the dispute justly and efficiently. As to efficiency, the trial of the separate question might be counter-productive to the overarching purpose.
In the result, I am not persuaded that there should be a separate trial of the question.
The applications for summary judgment and the application for the trial of the separate question are dismissed.
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