Victorian YMCA Community Programming Pty Ltd (ACN 092 818 445) v Nillumbik Shire Council , Victorian WorkCover Authority , , Victorian YMCA Community Programming Pty Ltd (ACN 092 818 445) and Nillumbik Shire Council
[2014] VSCA 197
•1 September 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2014 0097
| VICTORIAN YMCA COMMUNITY PROGRAMMING PTY LTD (ACN 092 818 445) | Appellant |
| v | |
| NILLUMBIK SHIRE COUNCIL | First Respondent |
| and | |
| VICTORIAN WORKCOVER AUTHORITY | Second Respondent |
| S APCI 2013 0182 | |
| VICTORIAN YMCA COMMUNITY PROGRAMMING PTY LTD (ACN 092 818 445) | Appellant |
| v | |
| NILLUMBIK SHIRE COUNCIL | Respondent |
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| JUDGES: | NETTLE, ASHLEY and HANSEN JJA | |
| WHERE HELD: | MELBOURNE | |
| DATE OF HEARING: | 20 August 2014 | |
| DATE OF JUDGMENT: | 1 September 2014 | |
| MEDIUM NEUTRAL CITATION: | [2014] VSCA 197 | 1st Revision 24 October 2014 (Cover Page) |
| JUDGMENT APPEALED FROM: | Balassone v Victorian YMCA Community Programming Pty Ltd and Anor and VWA v Nillumbik Shire Council and Anor (Unreported, County Court of Victoria, Judge Murphy, 30 October 2013) | |
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TORTS – Workplace injury – Premises – Two occupiers – Owner – Operator of premises pursuant to contract with owner – Claim for damages by employee of operator against owner and operator – Judgment for employee against both defendants – Operator’s contractual duty to have public liability insurance in name of itself and owner – Breach of contractual duty – Owner’s claim to be indemnified by operator in respect of judgment amount against it – Whether operator’s breach of contract causative of loss to owner – Policy in approved form not in evidence – Whether inference favourable to owner could be drawn as to terms of approved form of policy – Inference not available on balance of probabilities.
TORTS – Tortfeasors – Contribution between tortfeasors – Occupier’s liability – Whether owner’s duty of care to injured employee relevantly delegable – Whether judge’s ruling that duty non-delegable affected decision with respect to contribution – Decision successfully impugned – Wrongs Act 1958, Part IIA.
ACCIDENT COMPENSATION – Recovery proceeding against third party – Effect of successful appeal in respect of contribution proceeding between defendants.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr R P Gorton QC with Mr R Kumar | Hall & Wilcox |
| For the First Respondent | Mr C J Blanden QC with Ms J Frederico | Minter Ellison |
| For the Second Respondent | Mr J P Gordon QC with Ms M Norton | Russell Kennedy |
NETTLE JA:
I have had the advantage of reading in draft the reasons for judgment of Ashley JA. I agree with his Honour that the appeal and cross-appeal should be allowed and also with the other orders which his Honour proposes.
ASHLEY JA:
Overview
On 23 April 2005, Michelle Balassone (‘the plaintiff’) sustained injury when she fell from the edge of a pool deck at premises known as the Eltham Leisure Centre (‘the Centre’). At the time when she sustained injury, she was engaged in her employment by Victorian YMCA Programming Pty Ltd (‘YMCA’) as a swimming teacher. By contract dated 14 September 2001, YMCA was the manager and operator of the Centre. Its owner was Nillumbik Council (‘the Council’).
The plaintiff brought a claim for damages against YMCA and the Council. By her amended statement of claim, she pleaded that YMCA owed her duties both as employer and occupier of the premises, which duties it had breached. She further pleaded that the Council owed her duties both at common law and as occupier, which duties it breached.
At trial, the plaintiff confined her claim against YMCA to alleged breach of duty of care as her employer; and she confined her claim against the Council to breach of its duty as occupier.[1]
[1]That is, under Part IIA of the Wrongs Act 1958. It was thus unnecessary to address the question whether an occupier owes duties both under Part IIA and the common law.
Each defendant denied liability. Notices of contribution were delivered between them (’the contribution proceeding’). The Council also alleged that, if it was found liable to the plaintiff, it was entitled to full indemnity from YMCA because the latter had breached a term of the contract made between them.
The plaintiff’s proceeding came to trial in October 2013. A second proceeding
was also on foot arising out of the plaintiff’s accident. She had been paid accident compensation. Victorian WorkCover Authority (‘VWA’) made a claim (‘the recovery
proceeding’) on the Council pursuant to s 138 of the Accident Compensation Act 1985. The Council joined YMCA as a third party. It claimed indemnification from YMCA in the event that it was held liable to VWA, again relying upon the alleged contractual breach.
The plaintiff’s proceeding against YMCA and the Council (‘the defendants’) was tried by a jury. The recovery proceeding was deferred for determination until the resolution of the plaintiff’s proceeding.
The trial of the plaintiff’s action proceeded on the footing that the contribution proceeding should be dealt with after the jury had rendered its verdict. The evidence which was adduced in the course of the plaintiff’s action against the defendants was to be the evidence upon which the contribution proceeding was thereafter to be determined by the judge.
The plaintiff obtained a verdict against both defendants in an amount of $250,000. Judgment was thereafter entered in her favour.
The judge then heard submissions upon the Council’s claim that it should be indemnified by YMCA because of the latter’s alleged contractual breach, upon the issue of contribution between tortfeasors which would arise in the event that the claim for indemnification failed, and upon the outcome of the recovery proceeding. His Honour held that the claim for indemnification succeeded. This was to the Council’s advantage, both with respect to the judgment in favour of the plaintiff and the recovery proceeding.
In case the matter went further, the judge determined that, if it was not for indemnification, each defendant should contribute equally to the judgment entered in favour of the plaintiff.
Orders were made as between defendants, and as between the parties to the recovery proceeding, which gave effect to the judge’s conclusion with respect to indemnification.
There was no appeal from judgment in favour of the plaintiff. But YMCA has appealed against the judge’s order that, in consequence of the breach of contract which his Honour found was established, it must indemnify the Council against the latter’s liability to the plaintiff; and it seeks also to challenge the order that it indemnify the Council against judgment in the recovery proceeding.
The Council has cross-appealed in respect of a ruling by the judge, made at the conclusion of the evidence but before counsels’ addresses, that ‘as a matter of law and as a matter of fact in this case the jury could not find that [the Council] had delegated its duty’. His Honour was there addressing a submission for the Council that, as a matter of law, it could delegate discharge of the duty of care which it owed to the plaintiff to YMCA; and a further submission that it was for the jury to determine whether it had relevantly done so.
The Council has further contended by its cross-appeal that the judge’s finding of equal contribution between defendants cannot be sustained. That is because, the argument runs – (1) the judge’s erroneous rejection of the delegation of duty submission meant that his Honour did not fully address relevant circumstances, and (2), the judge’s disposition of the contribution claim focused upon an attempt by his Honour to interpret the jury’s verdict as to the circumstances of the accident, rather than being his Honour’s independent consideration of the evidence, and then his reaching conclusions which were consistent with the jury’s verdict in favour of the plaintiff.
Conclusions summarised
In my opinion, for the reasons which follow –
(1)the judge’s conclusion that YMCA breached its contract with the Council, such breach being causative of loss and damage to the Council, was erroneous. In those circumstances, the Council could not maintain a claim to be indemnified against its liability to the plaintiff and to VWA;
(2)the judge erred in ruling, as a matter of law, that the Council was precluded from discharging the duty owed by it as occupier to the plaintiff;
(3)if the judge found that there was no evidence which could support a finding of delegation in fact, that conclusion was not available.[2] Counsel for YMCA frankly and correctly conceded that this was so;
(4)it could not be concluded, contrary to a submission in writing for YMCA, that the judge should be taken to have determined the issue of factual delegation by the exercise of the power conferred by r 47.04 of the County Court Civil Procedure Rules2008. His Honour was not invited to exercise that power. No order was made as that rule contemplates. Nor again did the judge make any reference to the rule in his ruling;
(5)in consequence of his Honour’s conclusion that delegation by the Council of performance of its duty of care to the plaintiff was not open in law or in fact, his consideration of the contribution issue between defendants was incomplete;
(6)for that reason, and also because, as was submitted for the Council, the judge appears to have been concerned to interpret the jury’s verdict, rather than find relevant facts consistent with that verdict for himself, his Honour’s determination of the contribution proceeding could not stand;
(7)both because the judge erred in concluding that YMCA was in breach of its contract with the Council, such breach being causative of loss and damage to the Council, and because, for several reasons, his Honour’s resolution of the contribution proceeding was flawed, consequences ensue for the order made in the recovery proceeding. The application by YMCA for leave to appeal against that order out of time, not opposed by the Council or by VWA, should be granted;
(8)in the circumstances described, YMCA’s appeal against the orders flowing from the judge’s ‘indemnification’ conclusion must be allowed. So also, the cross-appeal, attacking the order respecting contribution, must be allowed. Further still, YMCA’s appeal against the order for indemnification of the Council in the recovery claim must be allowed;
(9)it is inappropriate that this Court should consider and itself determine the interrelated questions of delegation and contribution between defendants, and the implications of the eventual resolution of the contribution proceeding for the recovery proceeding. The material which would require examination is voluminous. Acknowledging that the questions will be answered by analysis of the evidence already adduced, and that credibility issues will be at least unlikely to arise, there comes a point at which this Court should decline to act as a trial court. The outstanding questions should be remitted for consideration, upon the evidence already adduced, by a different judge in the County Court.
[2]See Naxakis v Western General Hospital (1999) 197 CLR 269.
Circumstances
In order to understand how the issues to which I have referred arose, it is first necessary to say something about the circumstances in which the plaintiff came to be injured, and the way in which she put her case.
There were a series of steps which led from the pool deck down into the pool. The steps intruded into the pool deck. Indeed, the bottom step was at or about in line with the edge of the pool deck had it continued uninterruptedly. On either side of the steps there was a handrail. The handrails ran parallel with the steps. They ran the full length of the steps from top to bottom. Each handrail was set a short distance in from the point at which the pool deck ended and the steps began.
Whilst walking along the edge of a pool deck, apparently intent upon watching the efforts of a young swimmer, the plaintiff fell into the water. In the process of falling, according to her evidence, ‘somehow [her] right foot became entrapped’ in the gap between the handrail and the edge of the steps.
The plaintiff put her case, essentially, in two ways. The first was that she fell because the surface of the pool deck had been inadequately cleaned and was slippery. She slipped, fell, became caught, and suffered injury. Her alternative case was that, without slipping, she stepped into the gap which I have described and then fell. She was able to do so because there was no guardrail as would have prevented it. This structural defect led to her fall and to injury.
The plaintiff’s primary case was put in the first of the two ways just mentioned. She gave evidence that, before this incident, she had given oral warnings to her employer that the pool deck was allowed to become slippery. She called a consultant engineer to explain why the pool deck had become slippery, and as to what could have been done to alleviate the supposed problem.
What I perceive to have been the plaintiff’s primary case, however, was controverted by certain written and viva voce evidence.
What I have described as the second way in which the plaintiff put her case was in one respect more difficult to advance, in another respect less difficult. It was more difficult in that the plaintiff’s evidence was that the accident was attributable to a slip on a slippery pool deck. It was somewhat less difficult in that, whilst it could always be said that the plaintiff was the architect of her own accident because she had failed to keep a proper lookout, it was the fact that there was a gap between the edge of the steps and the existing handrail which enabled a person to inadvertently step into that gap. It is next the fact that, within a short time, guardrails were installed by the Council, at its cost, such as would have precluded a person stepping into the gap. It could readily be inferred from photographs put into evidence that no great cost had been involved in the installation of those guardrails. Their installation could have assisted the jury to conclude that the plaintiff had suffered injury by reason of breach of duty – whether viewed from the standpoint of an employer or an occupier.[3]
[3]Theilemann v The Commonwealth [1982] VR 713, 715-716 (Murray J), 719-722 (Marks J).
Conclusion 1 – Indemnification
Contractual provisions
The contract, as I have said, was entered into between YMCA and the Council on 24 September 2001. The contract was for a five year period. Its commencement date was 1 July 2001.
There had been a prior contract between the parties, entered into in 1996, which ran for a five year period.
A letter dated 14 September 2001, sent by the Council to YMCA, stated that the contract was to be constituted by –
·Letter of acceptance;
·Your offer and any post tender correspondence before the award of work;
·Specification;
·Tenderer’s Information Sheet;
·Schedule of Prices;
·Conditions of Tendering;
·Information about Tenderer; and
·General Conditions of Contract.
It is not necessary to refer to any of these documents in detail. But I must refer to some parts of some of those documents.
As part of a tender proposal, a tenderer was required to submit –
Details of Public Liability and Professional Indemnity Insurances to the value of $20 million and $5 million respectively and Cash in Transit Insurance to a value of $20,000.
By clause 9.2 of the General Conditions –
9.2.1Obligation to Insure
The Contractor must, at all times during the Contract Term, be the holder of a current public liability policy of insurance (“the Public Liability Policy”) in the joint names of the Contractor, its sub-contractors and the Council providing coverage for an amount per event of at least that stated in the Annexure.
The Public Liability Policy must –
9.2.1.1be effected with an insurer; and
9.2.1.2cover such risks and be subject only to such conditions and exclusions as are –
approved by the Supervisor.
Clause 9.3 provided that the contractor – that is, YMCA - must hold professional indemnity insurance. The language of that clause was exactly the same as the language of clause 9.2.1 to 9.2.1.2.
Clause 9.4 provided as follows –
9.4.1 Provision of Evidence
The Contractor must produce to the Supervisor policies of insurance and receipts showing that the insurances referred to in clauses 9.1, 9.2, and 9.3 have been paid not less than seven (7) days before the Commencement Date.
9.4.2 Certificates of Currency
The Contractor must provide the Council with certificates of currency in respect of the insurances referred to in clauses 9.1, 9.2, and 9.3
9.4.2.1.each six (6) months (beginning six (6) months after the Commencement Date) during the Contract Term; and
9.4.2.2.within two (2) days after a written request being made by the Supervisor.
By clause 9.1, YMCA was required to itself effect and to ensure that each of its subcontractors effected a policy of insurance complying with the provisions of the Accident Compensation Act1985 in respect of all of its employees. Clause 9.1.2 required compliance with any other workers compensation legislation in force from time to time. I should refer also to clause 9.1.3. Thus –
9.1.3.Indemnity
The Contractor must indemnify, keep indemnified and hold harmless the Council and all of the Council’s staff, sub-contractors or agents against any liabilities, costs, penalties or additional premiums they may incur arising, whether directly or indirectly, from any provision of the Accident Compensation Act 1985 (including, without limitation, section 10A of that Act) which:
9.1.3.1.deems any employees or agents of the Contractor, or any employees or agents of any sub-contractor of the Contractor, to be employees or workers of the Council, or the Council’s employees, sub-contractors or agents; or
9.1.3.2.otherwise makes the Council, or any of the Council’s staff, sub-contractors or agents, in any way responsible for, or liable to pay any moneys to or in respect of such persons, except for liabilities arising directly from the negligence of the Council or any of the Council’s staff, sub-contractors or agents.
Facts
Against the background set by the tender proposal requirement and the General Conditions, the material placed before the judge was as follows:
(1)As disclosed by certificates of currency, YMCA held policies of combined public and products liability for the years ending 30 June 1997 to 30 June 2004, and for the years ending 30 June 2007 and following, which described the ‘principal insureds’ as –
The National Council of YMCA of Australia and all Associations, affiliated organisations and clubs including trustees and committees and all parties for whom the insured undertakes to insure, for their respective rights and interests.
A summary of what the policy covered was stated as follows in certificates issued for the years up to 30 June 2003:
Legal liability to third parties for personal injury or property damage as a result of an occurrence in connection with the business of the insured, as specified in the policy.
The limit of liability noted in the certificates satisfied the requirement of the tender document.
The policy was, evidently, generic, in that it extended to YMCA’s business Australia-wide.(2)As disclosed by a certificate of currency, YMCA held a policy of public and product liability for the year ended 30 June 2005. But it did not include as an insured ‘all parties for whom the insured undertakes to insure’.
(3)It was thus common ground that YMCA did not hold any policy of public liability insurance ‘in the joint names of the contractor, its subcontractors and the Council’ within the meaning of clause 9.2.1 of the General Conditions at the time when the plaintiff suffered injury.
(4)The certificates of currency for the years ending 30 June 2003 did not describe YMCA’s business. The certificates for the years ending 30 June 2004 and subsequently did so. The language varied a little over time, but the breadth of the business can be gleaned from this description in the certificate for the year ending 30 June 2005:
Youth and community service programmes including residential and camping facilities; management of recreation, aquatic and leisure facilities; education and training services; childcare services; outdoor recreation; special needs programmes; international programmes; operation of country craft market and any other activities incidental thereto.
(5)YMCA’s tender offer included a certificate of currency dated 21 March 2001. It was in the form referred to in (1) above.
(6)Except for the certificate just mentioned, it was asserted by counsel for YMCA in this Court – without dissent by counsel for the Council – that there was no evidence that any of the certificates of currency, at least for any period up to the time of the plaintiff’s accident, were provided to the Council (cf clause 9.4.2 of the General Conditions). That assertion does not coincide with the judge’s reasons, but nothing ultimately turns upon the point.
(7)There was no direct evidence that a public liability policy and payment receipt had in fact been produced to the Supervisor (whose name was stated in an annexure to the General Conditions) for his approval, or any direct evidence that the Supervisor or the Council had approved its terms not less than seven days before the Commencement Date of the contract, which was 1 July 2001.
(8)There was, however, evidence that the Council wrote to YMCA on 26 June 2001, its letter stating in part –
As required under the terms of the tender document, the following items are to be forwarded to Mr Garry King within seven days
(1) a copy of your Public Liability Policy and Certificate of Currency confirming a minimum cover of $20 million;
…
When the above items have been approved, a formal letter of acceptance will be issued together with your copy of the contract documents.
As I have said, the contract was thereafter executed, on 14 September 2001.
(9)No relevant public risk policy current as at 1 July 2001 was produced at trial by either YMCA or the Council. Neither was a policy produced by either party for any period preceding or subsequent to the happening of the plaintiff’s accident, as might have cast light on the likely risks covered, and any exclusions, in the policy current as at 1 July 2001. It was said by both parties that no policy could be located.
(10)With the exception of the certificates of currency, no secondary evidence was adduced as to the risks covered, and any exclusions, in the policy current as at 1 July 2001.
(11)On 23 May 2002, the Council wrote to YMCA indicating an intention of awarding it a contract for the management of the Diamond Valley Sports and Fitness Centre. The letter noted that YMCA had included, with its tender documents, inter alia, a copy of a combined public and products liability insurance policy. It was common ground in this Court that, since the certificates of currency identified an Australia-wide policy of that kind being held by YMCA, the policy to which the Council’s letter of 23 May 2002 referred would have been that which applied in the case of the Centre.
A policy could have been approved by the Supervisor, with respect to the Centre, even at that stage. It was no impediment that the contract was already on foot. But there was no direct evidence that a policy was then approved with respect to the Centre. Further, this was yet another policy which neither YMCA nor the Council was able to produce.[4] So the terms of the policy, and any exclusions, remained unknown.
[4]Although, somewhat strangely on one view, the Council was able to give discovery of the letter but not the important document to which it referred.
(12)The tender proposal, as I understand it, showed that the Council was to be guaranteed a minimum annual amount over the life of the contract. In addition, there was to be a profit sharing arrangement. The amount of the guaranteed return and the profit share must clearly have been affected by the cost of operating and managing the Centre. In the tender proposal, the estimated gross annual expenditure was not broken down, but it evidently included the cost of insurances.
In a letter to the Council dated 31 May 2001, which set out answers to questions arising out of the tender proposal, YMCA referred to the operation of the facility having hitherto been ‘extremely lean’. YMCA was forecasting little, if any, growth in income, but an increase in expenditure. YMCA stated that it had tendered for the operation of the Centre ‘with a preparedness to accept minimal profit share return’.
The relevance of insurance premiums to the viability of YMCA’s business at the Council-owned centres operated and managed by it emerged from a letter dated 28 February 2005 written by the YMCA Group Manager to the Supervisor.[5] The letter, in part, said this:[5]By then, Mr Paul Bennett had replaced Mr Garry King.
2. Insurance Premiums – Diamond Valley Sports and Fitness Centre
Background information:
As you are aware the events of “September 11” resulted in significant increases in insurance premiums. Since this time the YMCA has worked in partnership with council to negotiate a variation on an annual basis.
It has always been the intention of the YMCA to seek this variation purely to minimize organizational losses rather than seeking a full entitlement. It was further agreed that the larger the facility the greater it’s [sic] ability to offset unanticipated increases in expenditure. This was demonstrated in 2003/04 when the net loss was anticipated to be $67,184 however only a combined variation of $45,000 was sought and again in 2004/05 when the net loss was anticipated to be $66,436 and only a $20,000 variation was sought.
In 2003/04 the Diamond Creek contracts were re-tendered and as such any insurance increases were factored into the new contract price. However the Eltham Leisure Centre and the Diamond Valley Sports and Fitness Centre are operating their contracts in accordance with the original tendered price (pre September 11) thereby having to withstand the premium increases.
Proposal:
Whilst the impact is greatest to the Eltham Leisure Centre, the combined net difference (Eltham and Diamond Valley) in insurance premiums for 2005/06 compared to those amounts tendered is anticipated to be $46,631.00. In this instance whilst not seeking a full entitlement the YMCA is seeking a variation of $10,000 that would apply to the Diamond Valley contract only.
The YMCA’s views it’s [sic] presence in Nillumbik with totality and seeks this variation purely to minimise organisational loss. The YMCA further believes that it has acted in good faith by not seeking it’s [sic] full entitlement and accordingly seeks Council’s approval of the variation sought. A summary of the variations is outlined in the table below. Should you wish to discuss any aspect of this variation please do not hesitate to contact me on 9439 2266.
Additional insurance costs against tender
Variation sought
Difference
2003/2004
$67,184
$45,000 (approved)
$22,184
2004/2005
$66,436
$20,000 (approved)
$46,436
2005/2006
$46,631
$10,000
$36,631
(13)At relevant times, the Council held public liability insurance attaching, inter alia, to the Centre. The terms of that insurance, including any exclusions, were not in evidence.
The judge’s reasons
The judge identified in his reasons most of the factual material to which I have referred already. He mentioned clauses 9.1.3, 9.2, 9.3 and 9.4 of the General Conditions. He then posed the question whether the decision in Burch v Shire of Yarra Ranges[6] ‘govern[ed]’ the case.
[6](2004) 42 MVR 1 (‘Burch’).
His Honour noted that YMCA’s argument was that there was no evidence of any policy that would have in fact indemnified the Council for the plaintiff’s claim. Thus, it was said, whilst breach might have occurred, on the evidence, the Council had not suffered any loss.
The judge rejected that submission. At the heart of his reasoning, as I understand it, were these propositions:
(1)It was reasonable to infer that the Council had received a copy of the public and products liability insurance policy from YMCA prior to acceptance of the tender for the Centre. In that event, the Council must be taken to have approved same by proceeding to execution of the contract.[7]
[7]Balassone v Victorian YMCA Community Programming Pty Ltd and Anor and VWA v Nillumbik Shire Council and Anor (Unreported, County Court of Victoria, Judge Murphy, 30 October 2013) (‘Reasons’) [49].
(2)But if that was not so, YMCA was seeking to profit from its own neglect.
(3)If the Supervisor did not actually approve the relevant policy, it was no barrier to finding that YMCA was in breach of contract.[8]
[8]Reasons [51].
(4)Clause 9.2.1 of the General Conditions was clearly inserted for the benefit of the Council. Whilst there was no evidence that the Council took advantage of the term, by calling for the policies and expressly approving their terms, a construction that the Council could not hold YMCA liable for an admitted failure to insure ‘is something that the Council would have grounds to complain about’.[9]
[9]Reasons [52].
(5)The negotiations about insurance premium increase in 2005 showed that this was effectively a relational contract between the parties. Even if YMCA had never delivered an actual public liability policy to the Council, ‘it was representing that it had cover under a specifically nominated policy for “parties for whom the insured undertakes to insure” and for “legal liability to third parties for personal injury … as a result of an occurrence in connection with the business of the insured”’.[10]
[10]Reasons [53].
(6)The submission for YMCA that it was not clear whether a policy would cover a claim by an employee of YMCA against the Council should be rejected. The provisions of the contract must be considered objectively. There was ‘no commercial reason why the Council would not wish to have itself protected against possible claims by employees of its contractor’. His Honour said that –
An objective bystander would, in my opinion, regard an obligation on the YMCA to obtain a “public liability policy” to be an obligation to have a policy that would meet claims by members of the public against it because as against it, everyone on the premises was a third party. There is no reason why claims by YMCA employees ought be excluded. As the Council argued, “Legal Liability to third parties for personal injury as a result of an occurrence in connection with the business of the insured” is what is in the certificate of currency proffered by to the Council in the tender.[11]
[11]Reasons [55] (emphasis original).
(7)Further –
Even though a policy has not been produced, the inference is available, and it is a reasonable one that can be drawn in the context of this contracting out arrangement, that it would respond to a claim for personal injury by the plaintiff as a third party to the Council.[12]
(8)Burch was distinguishable because, inter alia, the (assumed) failure of the Supervisor to approve the policy was not significant:
(9)… [T]he provision to require the Supervisor to approve the risks, conditions and exclusions was purely for the benefit of the Council. On the evidence, the Council chose not to expressly exercise that right to approve. As the provision was for its benefit, it was entitled to waive that provision. I do not accept the contrary proposition, raised in the pleading but faintly argued that the Council had waived any obligation on the YMCA under the contract.[13]
(10)… The parties had been in a business relationship for years. The parties chose to continue with their contract in good faith, without, on the evidence, the Supervisor from Council actually sitting down and approving any terms of a policy proffered by the YMCA. Little weight can be given to this failure of the Council in circumstances where the parties had been in virtually an identical relationship for some eight or nine years before the YMCA proffered to the Council a certificate of currency materially different from the earlier ones, and on its face not in compliance with the contract.[14]
(11)YMCA carried an evidentiary onus to produce a policy which showed that any public liability policy it might have held in the joint names of the parties would not have covered the risk which arose in this instance.[15]
(12)On the evidence here, including inferences to be drawn from that evidence, and from the failure of the YMCA to produce any relevant public liability policy that would exclude the risk, I accept the submission that a public liability policy that the parties contemplated by cl 9.2 would have responded to the claim by the plaintiff alleging liability by the Council under the Wrongs Act. Her claim vis a vis the Council is encompassed within the term “Legal Liability to third parties for personal injury … as a result of an occurrence in connection with the business of the [YMCA].”[16]
[12]Reason [55].
[13]Reasons, [57].
[14]Reasons [58].
[15]Reasons [59].
[16]Reasons [63] (emphasis original).
Analysis
Counsel for YMCA attacked a number of aspects of the judge’s reasoning. I will refer to some of them in the course of what follows, and to such response as was made for the Council.
In my opinion, the following considerations are in point.
First, it is, with respect, far from clear whether the judge found that a relevant policy was ever produced to the Supervisor for approval, or that he approved the same. His Honour’s reasons as summarised at (3), (4), (5), (8), (9) and (10) in [36] above suggest that he did not find that there had been any such production or approval; but contrast the findings summarised at (1).
It is, however, clear that his Honour considered that any such failure to approve a policy submitted by YMCA was no barrier to finding that YMCA was in breach of contract. In that connection, his Honour concluded that clause 9.2.1 of the General Conditions – this must include clause 9.2.1.2 – was clearly inserted for the benefit of the Council.
There was no direct evidence that a public liability policy was produced to the Supervisor for approval, or approved, before the commencement of the contract. Neither was there any direct evidence that the Supervisor later approved a policy which necessarily applied to the contract with respect to the Centre. It was thus a matter of inference whether or not a policy had been submitted, and had been approved. This Court is as well able to draw an inference as was the trial judge.
In my opinion, on the balance of probabilities, it should be inferred that a public risk policy in which the Council was named as an insured was produced to the Supervisor and was approved. The Council’s letter of 26 June 2001, and the subsequent execution of the contract, supports such an inference.
In those circumstances, it is unnecessary to consider what inference might be drawn from the receipt by the Council, in May 2002, of a policy in a form almost certainly applicable to the contract for the operation and management of the Centre.
Because, in my opinion, it should be inferred that a public risk policy was produced to the Supervisor, and approved before the contract was executed, it is unnecessary to address the judge’s conclusion that, absent approval, Burch was distinguishable.[17] In this Court, neither party sought to support his Honour’s conclusion in that connection so far as it concerned a question of construction of the policy. But as I say, on the view I take, that issue is beside the point.
[17]Cf [2004] 42 MVR 1, 31 [193]. For completeness, clause 9.4.3 of the General Conditions was to the same effect as clause 8.5.3 of the General Conditions of Contract considered in Burch. Clause 9.4.3 empowered the Council, if YMCA failed to comply with its obligation under clause 9.2.1, to itself effect a public liability policy of the kind described, to pay the premium, and then to demand payment from YMCA; or else to immediately terminate the contract. The Council thus had multiple weapons at its disposal in the event that YMCA did not produce a policy for approval. The failure of the Council to use any of those weapons in a case of ‘non-production’ would arguably bear on its prospects of success in a claim for indemnification of the kind which was pursued in this case.
Second, there was no primary evidence of the terms of the contract which, I have concluded, was produced to and was approved by the Supervisor. The issue which arises is what inference should be drawn as to the terms of the policy, including any exclusions. Again, this Court is as well equipped to draw the appropriate inference as was the trial judge.
Third, so far as secondary evidence is concerned, the Council’s reliance upon the description of the risk covered in the pre-2005 certificates of currency does not take the matter very far. It was no more than a general description of the nature of public liability insurance where it is intended that such insurance attach to the activities of an insured wherever carried out.
Fourth, there is no doubt that the Council was concerned that YMCA held public liability, professional indemnity, and accident compensation insurance. But that says nothing as to the terms and any exclusions of any approved public risk policy.
Fifth, I respectfully disagree with the judge’s conclusion that clause 9.2.1.2 of the General Conditions was clearly for the benefit of the Council (by which I understand his Honour to have concluded that it was for the benefit of the Council, but not YMCA). The cost of insurances was evidently a factor of some significance in YMCA’s expenditure, and thus its likely profit margin in operating and managing the Centre. Containment of cost, by an exclusion or exclusions in its public liability policy which could have the effect of reducing premium, would be to its advantage.
Sixth, the Specification, which constituted part of the contract, provided for the scope of works to be undertaken by YMCA, and matters outside such scope. The latter were the Council’s responsibilities. They included maintenance and repair of structural components of the Centre. As I have already said, the Council held public risk insurance which attached to the Centre. But no evidence was adduced of the terms of such insurance at the relevant time, including any exclusions, as might have cast some light on the content of the YMCA policy which the Supervisor had approved. Consistently with the apportionment of responsibilities under the contract, the Council’s insurer commissioned at least one, probably two, safety audits at the Centre. One of them appears to have been conducted in the second half of 2001 – that is, within the life of the contract. Further, the Council itself conducted occupational health and safety inspections at the Centre from time to time.
Seventh, I agree with the submission for YMCA that an exclusion in its public liability policy in respect of injuries which would be covered by its accident compensation insurance policy had the potential to somewhat reduce the cost of that insurance, this supporting an inference that the approved policy contained such an exclusion. It was submitted for the Council that a reduction in premium was unlikely, bearing in mind the fact that the presumed policy was Australia-wide, and covered a variety of different activities at different sites. That is a possible view. But it is, I consider, certainly no more likely than the contrary, and indeed less likely. The description of YMCA’s business in the certificates of currency referred to at [33](4) above show that it is likely that YMCA had many employees throughout Australia engaged in a variety of activities and the probability that a good number of those activities were conducted on premises occupied by others.
Eighth, there was, arguably, a rational commercial reason why the Council would not have required cover by YMCA’s public liability insurance against possible claims by injured employees of YMCA. That is, the cost of its own public liability insurance covering such a risk may have been less than the additional cost of the YMCA policy extending to such a risk. If that was so, there would have been a net advantage to the Council – because of the profit sharing arrangement between it and YMCA – in it carrying the public risk liability in respect of claims by employees of YMCA under its own policy.
Ninth, clause 9.1.3 of the General Conditions was a ‘hold harmless’ clause. The Council did not contend that the clause operated to prevent liability attaching to it by reason of the jury’s verdict, or that it should be held harmless in that event. The precise area of operation of the clause need not be explored. It is sufficient for present purposes to note that it did not protect the Council against liabilities ‘arising directly from the negligence of the Council or any of the Council’s staff, subcontractors or agents’. It is, I consider, as likely as not that the exclusion marked out an area of liability which the Council was to assume and insure against, rather than an area of liability which the Council was to assume, but which YMCA was to insure against by its public liability insurance to the Council’s advantage.
Tenth, in seeking indemnification, the Council was contending that YMCA had breached its contract, which breach caused it loss and damage. Proof that a policy in the approved form was not in force when the plaintiff was injured established breach. But it did not establish that a policy in the approved form would have responded to that incident. Contrary to the judge’s conclusion, the Council carried the evidentiary, as well as the ultimate, burden of proof that the policy would have responded. The fact that earlier certificates of currency had been issued in the form which I have described did not connote that the policy in force at the time when the contract commenced would have responded. YMCA was not put in the position of being required to show that a conforming policy for the year ending 30 June 2005, by contrast to what had preceded it, would not have responded. Indeed, one should only focus on the form of policy approved from the time of commencement of the contract. Later changes of insurer by YMCA were irrelevant.
Eleventh, in my opinion, there was force to the submission for YMCA that the question whether the approved public liability policy would have responded so as to protect the Council against the plaintiff’s claim was not to be answered by what an ‘objective bystander’ would regard as YMCA’s obligation to hold a policy pursuant to clause 9.2.1. The question was what inference was to be drawn by the finder of fact on consideration of all the circumstances.
Twelfth, the judge decided that the inference was ‘available’ and was ‘a reasonable one’ that an approved policy would have responded to the plaintiff’s claim. But the question, with respect, was whether the Council had established, more probably than not, as a matter of inference, that the policy would have responded. In all the circumstances which I have described, I would not draw that inference on the balance of probabilities. At best for the Council, I would say that the inference was neither more nor less likely than the competing inference advanced for YMCA – that is, having regard to all the circumstances, that the approved policy would have excluded cover in respect of a claim for damages made by an injured employee of YMCA. I add that the possible exclusion to which I have referred was not the only possible exclusion identified by counsel for YMCA. But it is unnecessary to go any further than I have done.
Thirteenth, it is not altogether clear whether the judge decided that the Council had waived compliance with clause 9.2.1.2 of the General Conditions. If he did so, I respectfully disagree. That is because – (1) I have concluded, as a matter of inference, that a policy was produced by YMCA to the Supervisor, and was approved; (2) the clause was not solely for the benefit of the Council, and thus one that it could unilaterally waive; and (3) the circumstances which would justify a conclusion that the Council waived the right which the judge concluded it possessed were not the subject of any evidence.
Conclusions 2, 3 and 4 – Delegation of duty of care?
As a matter of law, was the Council’s duty of care to the plaintiff delegable?
As I have earlier noted, the judge ruled that discharge of the duty of care which the Council owed to the plaintiff under Part IIA of the Wrongs Act1958 was non-delegable. His Honour so concluded contrary to the submissions of all counsel at trial. That is a matter of record. It does not imply that his Honour’s conclusion was erroneous. Whether or not it was erroneous involves a question of principle. It may be said, however, that his Honour’s ruling was ambiguous in stating that ‘(t)here was argument … as to whether any duty owed by [the Council] to the plaintiff was delegable’.
In this Court, counsel for the Council and for YMCA briefly repeated the submissions which they had made below. Again, that is a matter of record, no more.
Before going further, it is desirable to say just what delegation the Council contended for. As I understand it, the Council sought to argue that, by operation of the contract, YMCA had been placed into a position akin to that of an independent contractor which had been assigned the performance of certain tasks by an occupier. In respect of those tasks, the Council had delegated the discharge of its duty to the plaintiff to YMCA. But the Council did not seek to contend that it had delegated to YMCA its duty of care as occupier to the plaintiff in all respects.
The distinction was made by senior counsel for the Council in this passage of his submissions prior to the judge’s ruling:
It’s not a situation of having to say, ‘It’s all your responsibility’, it’s the situation of contracting with another party to take particular steps in relation to safety of the premises, relevantly here cleaning the floor on which the plaintiff says she slipped thereby causing her to come into contact with the rail.
That’s specifically what the contract provides for. Now if the jury independent of the slipping on the floor business and the cleaning of the floor say that the rail of itself somehow is negligence in this case then they’ll say we haven’t delegated it because clearly the rail is our responsibility in the sense that it’s got to be replaced or modified we’ve got to do it, we accept that.
What counsel said recognised that, as a matter of fact, he could not argue that the Council had delegated discharge of the duty of care which it owed to the plaintiff in respect of an area which, by the contract between the Council and YMCA, was entirely a matter of the Council’s responsibility. To the contrary, what had been delegated – so the Council wished to argue – was the performance of so much of its duty of care to the plaintiff as was confided, by the contract, to YMCA.
The distinction which counsel drew was of some potential significance. If the jury found that the plaintiff sustained injury in the first of the two ways which I have earlier described,[18] on the Council’s argument the matter fell within the delegated area of discharge of its duty to the plaintiff. But, as I perceive it, the Council conceded it would be otherwise if, as counsel inelegantly put it, ‘the rail of itself somehow is negligence’.
[18]See [21] above.
Against that background, I turn to the judge’s reasoning. It was essentially as follows:
(1)At common law, an occupier could delegate discharge of its duty of care to an entrant to another person, at least in some circumstances.
(2)The question whether an occupier could delegate discharge of the duty of care specified by Part IIA of the Wrongs Act had not been the subject of direct decision.
(3)In determining whether the Council was able, as a matter of law, to delegate discharge of the duty of care which it owed to the plaintiff, the first port of call was the statute.
(4)Nothing in s 14B(3) or (4), on their face, answered that question. But s 14B(4)(g) could be rendered otiose if delegation was possible.
(5)The ‘whole purpose’ of the statute being to rationalise the obligations of employers to all categories of entrants into a general duty, to allow delegation of the duty –
would allow the duty to be avoided by delegation to others who may have been in a less favourable position to discharge any liability to a person who suffers injury on the property.
This would discourage coherence in the law, in that –
Two persons suffering the same loss and damage as a result of conduct on the land could be in a different position as to their ultimate recovery against the occupier depending on whether the occupier had by a business arrangement delegated its duty to another such that the delegate was not in a position under sub-s (g) to engage in remedial conduct to avoid a risk.
(6)It followed that, as a matter of principle, there was –
no reason to read the provision of s 14B as preserving any previous right of an occupier to delegate any duty of care to persons injured on the premises. Had Parliament wished to preserve the ability of an occupier to delegate its duty express provision could easily have been made in the amending provision, particularly under s 14B(4).
(7)The principle which provides that an employer’s duty to its employee is non-delegable supported a conclusion that, if not as a general provision, but certainly in this case the duty ought not be delegable.
(8)The Council had contracted out to YMCA the provision of services at the Centre. The Council nonetheless retained extensive supervisory control over the conduct of YMCA. It was inappropriate to equate YMCA’s position with that of an independent contractor. Reliance by the Council on cases that supported the capacity of an occupier to discharge its duty by engagement of an independent contractor were inappropriate.
A duty of care is said to be non-delegable when its discharge is not permitted to be confided to some other person – most often, by the engagement of a competent independent contractor. A non-delegable duty is a more stringent duty than the duty to take reasonable care. It is a duty to ensure that reasonable care is taken by the other person for the persons to whom the duty is owed.[19] It is thus a duty which tends to equate the principal’s liability for the conduct of an independent contractor with an employer’s liability for the conduct of its servant.
[19]Kondis v State Transport Authority (1984) 154 CLR 672, 685-686 (Mason J).
As a departure from the basic principle of negligence – which imposes a duty to take reasonable care –this special duty has been discerned to arise only in confined areas. Particular instances are the relationships of master and servant, school authority to student,[20] and hospital to patient. In Burnie Port Authority v General Jones Pty Limited,[21] such a duty was also held to arise in what had hitherto been the province of Rylands v Fletcher[22] liability.
[20]Though not in an exceptional case: New South Wales v Lepore (2003) 212 CLR 511.
[21](1994) 179 CLR 520.
[22](1868) LR 3 HL 330.
It has been questioned whether there is a unifying feature in cases in which a non-delegable duty has been discerned to arise. But one thing is clear: there is no evidence of marked enthusiasm by courts of high authority to recognise new categories of case in which it will do so.[23] I think that it would be wrong to recognise, or create, such a new category in the absence of very clear indications leading to that conclusion.
[23]See, for instance, New South Wales v Lepore (2003) 212 CLR 511, 595-596 [245]-[247] (Gummow and Hayne JJ), 608 [289] (Kirby J).
I see no reason in principle why an occupier’s duty of care should be accounted non-delegable. I do not see any indication in Part IIA of the Wrongs Act which should lead to the recognition of a new category of non-delegable duty.
Part IIA, introduced by the Occupiers Liability Act 1983, had as its essential purpose the imposition of a new ‘standard of care’ which was to be required of occupiers in the case of all entrants upon land, in place of the different duties hitherto owed at common law to invitees, licensees and trespassers, overlaid as they were by the ‘active operations’ conception.[24] In fact, the common law soon caught up with Part IIA in that connection.[25] This emphasises the fact that Part IIA in fact brought about little change to the evolving common law.
[24]See Wrongs Act1958 sub-s 14B(1), (2) and (3).
[25]Hackshaw v Shaw (1984) 155 CLR 614; Australian Safeway Stores v Zaluzna (1987) 162 CLR 479.
It is true that s 14B(4) lists a non-exhaustive list of matters which must be considered in determining whether an occupier has breached its duty of care. But almost entirely, they are matters which would be brought to account in any common law analysis of breach. In Central Goldfields Shire v Haley,[26] both Redlich and Neave JJA said that some of the matters set out in sub-s (4) may be relevant to determining the scope of the duty owed.[27] Regardless, it does not affect a conclusion that Part IIA and the common law essentially march in step. It is of no present relevance, I add, that Part X of the Wrongs Act, at least very probably, applies to some cases to which Part IIA applies.
[26](2009) 24 VR 378.
[27]Ibid [6] (Neave JA), [118] (Redlich JA).
In the circumstances, there is no reason why Part IIA should be regarded as having established some entirely new regime, distinct from the common law, in which what had hitherto been accepted as a duty which was delegable (save in very particular circumstances)[28] became non-delegable. I respectfully consider that it was putting the matter back to front for his Honour to say, as he did, that there was ‘no reason to read the provision of s 14B as preserving any previous right of an occupier to delegate’ its duty of care. Neither, in my opinion, was it necessary for Parliament to preserve the ability of an occupier to delegate its duty by making express provision in Part IIA of the Wrongs Act.
[28]In Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313, the infant plaintiff’s injuries were attributable to two concurrent causes. One was the consequence of breach of a duty by the landlord defendant (it related to the state of the premises at the time of commencement of the tenancy) which, for different reasons, a majority in the High Court treated as being non-delegable. The other was the result of a breach of delegable duty which the landlord had delegated to an independent contractor. There is also Pickard v Smith (1861) 10 CB (NS) 470, where an occupier of railway refreshment rooms was held liable for injuries sustained by an invitee train traveller when the latter fell down a trap door which had been negligently left open by a coal merchant. That case was decided under the old law relating to occupier’s liability, long before the development of the modern law of negligence which in substance finds expression in Part IIA of the Wrongs Act.
His Honour was evidently concerned that if it was determined that the Council’s duty as occupier was delegable, then it might be held to have discharged its duty to the plaintiff by delegating to YMCA, in discharge of its duty, the performance of tasks which, by operation of the contract between them, were not tasks to be performed by YMCA. But that was not the way in which the Council sought to put its case.
His Honour also distinguished between the situation in which an occupier engages an independent contractor to perform a particular task, and the situation where, as here, both the Council and YMCA were occupiers, each, by contract, entrusted with certain obligations. The circumstances to which his Honour referred might be reason why it should be concluded, as a matter of fact, that the Council did not delegate the discharge even of so much of its duty of care to the plaintiff as it contended for. But that does not touch the conceptual question whether an occupier’s duty under Part IIA of the Wrongs Act is or is not non-delegable.
Delegation in fact?
If his Honour concluded that there was no evidence which could support a finding that the Council delegated the discharge of its duty in some respects to YMCA, that conclusion was, as counsel for YMCA conceded, unavailable. The test whether there is some evidence to go to a jury is not an exacting one.
What I have already said at [16](4) above about the submission advanced in writing for YMCA that the judge should be taken to have determined the issue of factual delegation by the exercise of the power conferred by r 47.04 of the County Court Civil Procedure Rules 2008 needs no elaboration.
Conclusions 5 and 6 – The contribution proceeding
I have earlier noted there is no challenge to the judgment entered in favour of the plaintiff. That is so although the Council was prevented from putting to the jury its contention that the Council had delegated to YMCA the discharge of particular aspects of the duty of care which it owed to the plaintiff.
The judge’s conclusion that the Council could not delegate to YMCA its duty of care under Part IIA of the Wrongs Act was acknowledged by his Honour to be ‘relevant to the issue of comparative culpability of the parties here.’[29] For that reason, as I said at [16](5) above, his Honour’s consideration of the question of contribution was incomplete, and his conclusion has been successfully impugned.
[29]Reasons [88].
Respecting the matters noted at [16](6) above, it is enough to say that, upon reconsideration of the contribution proceeding, it will be necessary for the judge to reach his or her own conclusion, consistent with the jury’s verdict, as to the circumstances in which the plaintiff came to be injured. But the judge will need to remember, although not permitted make findings inconsistent with the verdict, that it was arrived at without the jury being able to consider the issue of factual delegation.
Conclusion 7 – The recovery proceeding
It is unnecessary to add to what I said at [16](7) above.
Orders
As earlier indicated, I would allow the appeal by YMCA, allow the cross-appeal by the Council, grant leave for YMCA to appeal out of time against the order made in the recovery proceeding, and allow that appeal. I would remit the contribution proceeding and the recovery proceeding for hearing and determination by a different judge of the County Court upon the evidence adduced at the trial held in October 2013.
HANSEN JA:
I also agree with Ashley JA.
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