World Workers Training Centre Pty Ltd v Thomas Foods International Murray Bridge Pty Ltd - [2021] SADC 21

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
WORLD WORKERS TRAINING CENTRE PTY LTD v THOMAS FOODS INTERNATIONAL MURRAY BRIDGE PTY LTD
[2021] SADC 21
Judgment of her Honour Judge Bochner
12 March 2021
WORKERS' COMPENSATION - LIABILITY TO PAY COMPENSATION - LIABILITY OF PRINCIPAL FOR EMPLOYEE OF CONTRACTOR - ENTITLEMENT TO INDEMNITY FROM CONTRACTOR
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - JOINDER OF CAUSES OF ACTION AND OF PARTIES
Application by a third party to be disjoined from the action - application dismissed by a Master of the District Court.
Held: Appeal dismissed.
Return to Work Act 2014 (SA); Wrongs Act 1936 (SA), referred to.
Andrews v Ziersch (1994) 61 SASR 521; Workers Rehabilitation & Compensation Corporation v JR Engineering Services Pty Ltd (1995) 180 LSJS 276; Jennings Constructions Pty Ltd v Workers’ Rehabilitation & Compensation Corporation (1998) 71 SASR 465; TA Taylor (SA) Pty Ltd v Hansen & Yuncken Pty Ltd [2003] SASC 212, considered.

WORLD WORKERS TRAINING CENTRE PTY LTD v THOMAS FOODS INTERNATIONAL MURRAY BRIDGE PTY LTD
[2021] SADC 21

Civil (Return to Work Act – contractual indemnity)

Pursuant to his employment with the third party, World Workers Training Centre Pty Ltd (“the third party”), a labour hire organisation, the applicant was placed to work at the premises of the respondent, Thomas Foods International Murray Bridge Pty Ltd (“the respondent”). On 26 October 2015, the applicant suffered a serious injury to his right hand, when it became caught in a piece of machinery at the respondent’s plant. The applicant issued this action against the respondent on 22 October 2018.
On 19 March 2020, the respondent issued a third party action against the third party. In the introduction to the Second Statement of Third Party Claim (“the third party claim”), the respondent says that the cause of action relied on is breach of contract, on the basis that it has a right to indemnity from the third party in respect of the applicant’s claim. At [5] of the third party claim, the respondent sets out the various terms of the Labour Supply Agreement between it and the third party, including clause 7, which provides:
(a)The Agency is solely liable for, and indemnifies and holds harmless each of the Host Employer and its directors, officers, employees, contractors, representatives and agents to the extent of any loss (including legal costs on a solicitor and own Host Employer basis) suffered by any of them arising out of, caused by, or (to the extent of the contribution) contributed to by:
(i)    a claim by or on behalf of a person who is or was an Agency Employee in respect of a right, entitlement or liability arising from work performed under this Agreement due to a breach by the Agency, its directors, officers, employees, contractors, representatives or agents of any law or right applicable to them including a term of this Agreement;
(ii)     the wrongful or negligent act or omission of the Agency or any breach by the Agency of this Agreement;
(iii)    …; or
(iv)    …
(b)Where the Agency indemnifies each of the Host Employer, the directors, officers, employees, contractors, representatives or agents of the Host Employer, the Host Employer receives the benefit, and is the agent of the beneficiaries for the purpose of receiving the benefit of that indemnity on their behalf.
In paragraph 17 of the third party claim the respondent pleads:
17 The Defendant claims the following relief against the Third Party:
17.1 an indemnity:
(a)in respect of the claim by the Plaintiff against the Defendant, including indemnity for any judgment and/or costs order made in favour of the Plaintiff: and
(b)for the Defendant’s costs of defending the Plaintiff’s claim against it.
17.2 interest.
17.3 the costs of the Third Party proceedings.
17.4 such other relief as this Honourable Court deems fit.
On 12 June 2020, the third party applied to be disjoined from the action, on the basis that the respondent is unable to join it as a third party to the claim in circumstances where the applicant brought an action under the Return to Work Act 2014 (SA) (“the Act”) against the respondent, rather than against the third party, his employer. The application was dismissed by a Master of the District Court. The third party has appealed against that decision.
The decision of the Master
After summarising the nature of the claim and the pleadings, the Master provided a summary of the parties’ submissions. He set out the crux of the third party’s position as follows:
[21] The third party argues that although the applicant could make a claim under the Return to Work Act and claim and receive compensation and then pursued a Common Law claim in this court. The third party submits, that by reason of s 66(4) of the Return to Work Act, it precludes the joinder of the third party to this action at the suit of the respondent.
[22] I set out s 66(4):
(4) If—
(a)a worker suffers a work injury (not being an injury that arises out of the use of a motor vehicle and gives rise to a liability of a kind referred to in subsection (1)); and
(b)action is taken against a person other than the employer for damages in respect of the injury,
the other person has no right to recover a contribution from the employer.
[23] It is submitted that the respondent cannot join the third party because the section ends “the other person has no right to recover a contribution from the employer” [my emphasis]. The respondent’s reject this submission.
[24] This issue was discussed in The Workers Rehabilitation and Compensation Corporation (Appellant) v Jr Engineering Services Pty Ltd, Western Mining Corporation (Olympic Dam Operations) and Jeffrey John Ball (Respondent 3) [1995] SASC 5450. It is a case similar to the one at bar and with a similarly worded sub-section to s 66(4) of the Return to Work Act.
[25] There was a Labour Hire Agreement between Western Mining Corporation and JR Engineering. Western Mining and JR Engineering were responsible for the plaintiff’s injuries. Western Mining argued that, by reason of the indemnity clause, it could be indemnified by JR Engineering. The employer, JR Engineering, argued that by reason of s 54(4b) of the Workers Rehabilitation Compensation Act no claim could be made. Olsson J concluded that the entitlement to “contribution” in s 54(4b) did not deny a party the opportunity that it was entitled to under the contractual arrangement (see paragraph 39).
[26] Mr Agresta sought to argue that, although s 54(4b) and s 66(4) of the Return to Work Act are similar, the Return to Work Act includes the word “a” in the last line that differentiates it from the former s 54(4b). In my view, the addition of “a” does not relevantly change the meaning of the sub-section, particularly as one would expect the statutory removal of contractual rights via the section would make clear or obvious that the common law rights have been lost.
He summarised the position of the respondent as follows:
[30] Ms D’Arcy of counsel took the matter further and she referred to Jennings Constructions Pty Ltd v Workers Rehabilitation and Compensation Corporation (1998) 71 SASR 465 and [1998] SASC 7216. The Jenning’s case concerned an injury prior to the introduction of s 54(4b).
[31] Ms D’Arcy, in her written submissions at paragraphs 28 and 29, argues, and in my view correctly, that the Jenning’s case did not relevantly overrule the JR Engineering case as it was dealing with an unrelated section. However, the matter was further discussed in T A Taylor (SA) Pty Ltd v Hansen & Yuncken Pty Ltd [2003] SASC 212 where Gray J concluded that, at the very least and relying upon the two cases discussed above, the third party claim was at least arguable (see paragraph 20).
The Master expressed his conclusion in the following way:
[32] I do not accept Mr Agresta’s argument that the third party’s claim, relying on a contractual right of indemnity, is not engaged on the basis that the applicant makes no allegation against the third party. In my view that is irrelevant as the applicant cannot join the third party as a respondent to the claim.
[33] In my view, it is not to the point that the applicant does not make any allegation against the third party. In the relevant sense of s 66(4), there is a prohibition against it.
[34] The contractual indemnity will only arise between the contracting parties and is activated when the applicant, who is the employee of the third party, claims compensation from the host employer thereby triggering the arguable contractual rights under the Labour Hire Agreement.
…
[37] In my view, the contractual entitlements in Clause 7 raise rights that are not impacted by s 66(4) and therefore is, at the very least arguably broad enough to cover a contribution claim arising on the applicant’s claim for damages.
He refused to disjoin the third party.
The grounds of appeal
The grounds of appeal are:
1.The learned Master erred in finding at paragraph 32 of his reasons, that the applicant could not join the third party as a respondent to the claim.
2.The Learned Master erred, in paragraph 33 of his reasons, in finding that there was a relevant prohibition in section 66(4) of the Return to Work Act 2014 (SA).
3.The Learned Master erred in his constructions of the Return to Work Act 2014 (SA) insofar as his Honour appears not to have considered all of the relevant provisions of the said Act which apply to regulate the common law rights of a worker who has made a claim under the Act and has had that claim accepted.
The third party’s submissions
The third party submits that, contrary to the Master’s finding that the applicant did not have a right to join the third party as a respondent to his claim, it was open to the applicant to bring a common law claim against the third party if he chose to do so. Mr Agresta, on behalf of the third party, submits that, on its proper construction, the Act permits the applicant both to make a claim for compensation under the Act, and to seek damages at common law. If he chooses to do this, the damages that he will receive at common law will be limited by the Act. However, if the applicant (being the employee) elects not to join the employer in the first instance, it is not open to the defendant to join the employer. Where the employee has elected not to join the employer, the defendant cannot “get round” the provisions of the Act by bringing a third party claim against the employer. Mr Agresta relied on the case of Andrews v Ziersch,[1] where the Legoe J, considering similar legislation said:
In my judgment the prohibition against contribution claims by a person “other than the employer” is clear and unqualified. The third party cannot recover contribution “from the employer”.[2]
[1] (1994) 61 SASR 521.
[2] Ibid 532.
Perry J went on to say:
… it is clear that in the case where a person other than the employer issued by a worker for damages at common law, that person’s right of contribution under the Wrongs Act against an employer who otherwise might properly be regarded as “liable in respect of the same damages” within the meaning of s 25(1) of the Wrongs Act, is extinguished by reason of the operation of the words “the other person has no right to recover contribution from the employer” in s 54(4b) of the Act. Any common law right of contribution (and I know of none) would likewise be extinguished.[3]
[3] Ibid 539-540.
Mr Agresta argues that if the defendant, not being the employer, was entitled to join the employer as a third party to the action, the benefit of the insurance conferred by the Act would be undermined. It would create a round robin effect whereby the Corporation as the insurer of the employer, paid compensation to the employee, the Corporation recovered the amount paid from the liable party (the defendant), who was then entitled to claim the amount back from the employer. As a result, the employer would gain no benefit from its policy of insurance with the Corporation. Further, in the event that, having received compensation under the Act from the employer, an employee then brings a common law claim against a third party, the purpose of the Act would be defeated if the third party was in a position to join the employer. This would result in the employer seeking to rely on s 64(11) of the Act, to seek recovery for any amount it was required to pay to the employee, from either the third party or the Corporation.
Mr Agresta further submitted that common law claims by an employee are regulated by different parts of the Act, depending on whether the claim is brought against the employer, or some other alleged wrong doer. As the claim has not been brought against the employer, it is governed by s 66(4) of the Act. He contended that the Master erred in finding that the applicant could not join the third party, and that the contractual indemnity relied on by the respondent is not affected by s 66(4). He argued that the only way that an employee may bring a claim against the employer at common law is pursuant to Part 5 of the Act; as this did not occur, s 66(4) prevents the defendant from bringing a contribution claim against the employer.
The respondent’s submissions
Ms D’Arcy, on behalf of the respondent argued that the provisions of the Act which regulate common law claims by workers are irrelevant to the enforcement of a contractual right held by the respondent. Thus, the Act did not preclude the respondent from seeking indemnity from the third party pursuant to clause 7 of the Labour Supply Agreement and the Master was correct to find that the fact that the applicant made no allegations against the third party was irrelevant. Ms D’Arcy submitted that the paragraphs of the judgement referred to in the grounds of appeal are clearly obiter, and even if the Master erred in respect of those comments, that error did not affect the question of disjoiner. She submitted that the complexities of the Act are not relevant to the substance of this appeal.
Ms D’Arcy submitted that the criteria for disjoinder set out in r 22.3 of the Uniform Civil Rules 2020 (“the UCR”) have not been satisfied so as to justify the disjoinder of the third party. To succeed in its application, the third party needed to demonstrate that it was never, or no longer is, a necessary or proper party to the proceeding. It has not done so.
The respondent submits, to the contrary, that the third party is in fact a proper party to the proceeding because it has a legitimate claim against the third party pursuant to clause 7 of the Labour Supply Agreement. In the event that the third party was disjoined, the respondent would be required to institute a separate action against it, resulting in a multiplicity of proceedings arising out of the same incident. This in itself is a reason why the appeal should be dismissed.
In respect of the operation of s 66(4) of the Act, Ms D’Arcy submitted that, while there appeared to be no authorities dealing with it, there were a number of cases which considered its predecessor, and which should be regarded as authoritative. She relied, for example, on the case of Workers Rehabilitation & Compensation Corporation v JR Engineering Services Pty Ltd[4] (“JR Engineering”), where Olsson J distinguished between a “contribution” under the Act, and an “indemnity”. He found that the section in the previous legislation, by use of the word “contribution”, did not prevent a party from relying on an entitlement to an indemnity which had been conferred by contract.
[4] [1995] SASC 5450, (1995) 180 LSJS 276.
Ms D’Arcy sought to distinguish the case of Jennings Constructions Pty Ltd v Workers’ Rehabilitation & Compensation Corporation[5] (“Jennings Construction”) on the basis that it dealt with previous legislation which did not have a provision similar to s 66(4). She pointed to the case of TA Taylor (SA) Pty Ltd v Hansen & Yuncken Pty Ltd[6] (“TA Taylor”), in which Gray J discussed both JR Engineering and TA Taylor. He found that the difference in approach between the two cases suggested that a third party claim was at least arguable. Ms D’Arcy submitted that this approach should be followed here.
[5] [1998] SASC 7216, (1998) 71 SASR 465.
[6] [2003] SASC 212.
In respect of the limited rights that the Act gave to an employee to sue an employer for common law damages, Ms D’Arcy submitted that the Act did not affect a party’s rights under a contractual indemnity. In the alternative, she submitted that this question is one that should be left to the trial judge.
While Ms D’Arcy submitted that the Master had not erred in finding the applicant was unable to join the employer as a respondent, even if he was wrong on this point, there was no error in his decision not to order disjoinder of the third party.
Consideration
Three errors on the part of the Master were contended for by the third party: the finding that the applicant cannot join the third party as a respondent; the finding that s 66(4) prohibits the applicant from making any allegations against the third party; and the Master’s failure to consider all of the relevant provisions of the Act which regulate the common law rights of the worker. I note that the third party did not contend that the Master had erred in his finding at [37] that the contractual entitlement to indemnity was not affected by s 66(4) of the Act.
The third party’s submissions did not address each of these grounds in any direct way. Rather, Mr Agresta dealt with the appropriate construction of s 66(4) of the Act, which provides:
(4)    If—
(a)     a worker suffers a work injury (not being an injury that arises out of the use of a motor vehicle and gives rise to a liability of a kind referred to in subsection (1)); and
(b)     action is taken against a person other than the employer for damages in respect of the injury,
the other person has no right to recover a contribution from the employer.
In my view the grounds of appeal are misconceived.
The first ground of appeal relates to paragraph 32 of the Master’s reasons. This paragraph reads:
I do not accept Mr Agresta’s argument that the third party’s claim, relying on a contractual right of indemnity, is not engaged on the basis that the applicant makes no allegation against the third party. In my view that is irrelevant as the applicant cannot join the third party as a respondent to the claim.
The relevant question arising from this paragraph is whether the respondent is entitled to rely on the contractual indemnity which arises through clause 7 of the Labour Supply Agreement. Whether or not the applicant has made an allegation against the third party, or whether the applicant was entitled to join the third party as a respondent at the commencement of the proceeding is neither here nor there in reaching this conclusion. The true meaning of paragraph 32 is that the question of whether the applicant has made any allegations against the third party is irrelevant to whether the third party can rely on the contractual indemnity.
The second ground of appeal relates to paragraph 33 of the Master’s reasons. Paragraph 33 reads:
In my view, it is not to the point that the applicant does not make any allegation against the third party. In the relevant sense of s 64 (4), there is a prohibition against it.
Again, in my view, the third party has misunderstood this paragraph. In this paragraph, the Master simply reiterates his view that on the question of joinder of the third party, it is irrelevant that the applicant has not made any allegation against it.

In my view, the third ground of appeal is also misconceived. This is because the claim that the respondent seeks to bring against the third party is not on the basis of any common law right of the worker. It is on the basis of a contractual right of the respondent.
In any event, I am of the view that the authorities referred to by the parties support the proposition that a contracting party in the position of the respondent is entitled to join a party in the position of the third party in order to enforce a contractual right of indemnity.
Andrews v Ziersch[7] must be distinguished. This case did not deal with a contractual right of indemnity; rather, it dealt with the question of whether a third party could exercise a right of contribution pursuant to the Wrongs Act 1936, where an injured worker brought proceedings against a party other than the employer. Clearly, the respondent does not seek to invoke the Wrongs Act 1936 in this case.
[7] (1994) 61 SASR 521.
JR Engineering is clear authority for the proposition that a party in the position of the respondent may join an employer in an action such as this one, for the purpose of enforcing a contractual indemnity. Olsson J said:
Moreover, insofar as subs(4b) of s54 of the Compensation Act operates to restrict rights of recovery by third parties, it specifically directs its attention to a restriction on the right of such parties "to recover contribution from the employer". What is manifestly there in contemplation is the concept of contribution (in the technical, legal sense) as reflected upon by s25(1) of the Wrongs Act. As the learned trial judge held, the legal concept of "contribution" is quite distinct and separate from the legal concept of an indemnity - particularly a contractual indemnity. This is readily illustrated by Birmingham and District Land Company v London and North Western Railway Company (1886) 34 Ch D 261, Westpac Banking Corporation v P and O Containers Ltd (1991) 102 ALR 239 and Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 596. Indeed the Wrongs Act itself makes such a distinction, in subs(1)(c) of s25.
On a reading of s54 of the Compensation Act it at once becomes apparent that the word "contribution" was employed advisedly and does not (and was not intended to) remove any entitlement which relevant parties may have conferred by their express contractual arrangements.
It follows that s54(4b) does not operate so as to avoid other than contributions between tort feasors pursuant to the statutory provisions in that regard. (See the reasoning in Andrews v Ziersch and Ors (Full Court, 17 March 1994, unreported).)
Ms D’Arcy was right to distinguish the case of Jennings Constructions on the basis that it dealt with legislation which was in a materially different form to the legislation being considered in JR Engineering.
Any contest between the applicability of Jennings Constructions and JR Engineering was dealt with by Gray J in TA Taylor. He said:
[16] In The Workers Rehabilitation & Compensation Corporation v JR Engineering Services Pty Ltd & Ors Olsson J drew a clear distinction between contribution and indemnity.
… insofar as subsection (4b) of section 54 of the Compensation Act operates to restrict rights of recovery by third parties, it specifically directs its attention to a restriction on the right of such parties ‘to recover contribution from the employer’. What is manifestly there in contemplation is the concept of contribution (in the technical, legal sense) as reflected upon by section 25(1) of the Wrongs Act. As the learned trial judge held, the legal concept of ‘contribution’ is quite distinct and separate from the legal concept of an indemnity – particularly a contractual indemnity…Indeed the Wrongs Act itself makes such a distinction, in subsection (1)(c) of section 25.
On a reading of section 54 of the Compensation Act it at once becomes apparent that the word ‘contribution’ was employed advisedly and does not (and was not intended to) remove any entitlement which relevant parties may have conferred by their express contractual arrangements.
It follows that section 54(4b) does not operate so as to avoid other than contributions between tortfeasors pursuant to the statutory provisions in that regard. (See the reasoning in Andrew v Ziersch and Ors (1994) 175 LSJS 377).
Debelle J drew the same distinction and said that it was of no consequence that an indemnity may be “equivalent to” a right to contribution.
… it is possible for a court to order contribution which would amount to a complete indemnity…Notwithstanding that the contribution may in the result be equivalent to an indemnity, the law nevertheless distinguishes between a contribution which has the consequence of providing a complete indemnity and a contractual indemnity.
…
The word ‘contribution’ in s54(4b) is being used in the context of recovering contribution from a joint tort-feasor. It is not being used in the context of a contractual indemnity. For these reasons, s54(4b) does not operate so as to prevent recovery under a contractual indemnity. Had it been the intention that s54(4b) should prevent a person other than the employer from relying on a contract of indemnity, the subsection would have been expressed in quite different terms.
[17] On appeal it was accepted by Hansen & Yuncken that section 54(4b) of the Workers Rehabilitation and Compensation Act precluded any claim against T A Taylor for contribution. However as earlier observed it was contended that the statutory restriction imposed by section 54(4b) did not preclude its contractual claim for indemnity against T A Taylor.
[18] The intention of the Workers Rehabilitation and Compensation Act was to ensure that all workers would receive compensation for injuries sustained during the course of their employment. Parliament intended to restrict recovery pursuant to the contribution provisions of the Wrongs Act 1936 (SA). Parliament did not intend to regulate contractual arrangements between private parties. The reasoning in J R Engineering Services appears to resolve the issue of interpretation that arises in this appeal. Hansen & Yuncken entered into a contract with T A Taylor which contains an agreement to indemnify. As Debelle J observed in J R Engineering it does not matter that a contractual indemnity may happen to coincide with rights or former rights to contribution. T A Taylor were aware or must be taken to be aware of the provisions of section 54(4b) when undertaking a contractual obligation to indemnify Hansen & Yuncken. T A Taylor elected to undertake an independent contractual obligation. The Act does not preclude private contractual arrangements. …
(footnotes omitted)
Gray J makes it clear that the Act which he was considering at that time did not preclude a party relying on a contractual indemnity, even in circumstances where they would be precluded from seeking contribution under the Wrongs Act 1936. The legislation which is applicable to this action is not materially different to that considered in TA Taylor. As a result, the provisions of the Act which regulate the common law rights of a worker are not relevant to the question of whether the respondent is entitled to seek to enforce a contractual indemnity against the third party.
In my view, the third party has not demonstrated any error on the part of the Master in finding that this was not an appropriate case to assert that the joinder of the third party was improper or not necessary.
The appeal is dismissed. I will hear the parties on the question of costs.