Department of Labour v Southroads Limited

[2013] NZHC 1620

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CRI 2012-412-000052 [2013] NZHC 1620

DEPARTMENT OF LABOUR Appellant

v

SOUTHROADS LIMITED Respondent

Hearing:                   10 April 2013

Counsel:                  R P Bates for Appellant

S M Grieve and J M Miles for Respondent

Judgment:                1 July 2013

JUDGMENT OF WHATA J

[1]      KiwiRail   Limited   tasked   Southroads   Limited   (Southroads)   with   the responsibility of replacing two rail bridges.  Southroads engaged Dennis Industries Limited (DIL) to, among other things, design and build temporary platforms alongside each existing bridge on which a crane could operate.   One of those platforms collapsed causing the crane to slide off it.

[2]      Both Southroads and DIL were prosecuted under s 18(1)(a) and s 50(1)(a)  of the Health and Safety in Employment Act 1992.   Section 18(1) states that every principal shall take all practicable steps to ensure that no employee of a contractor or subcontractor is harmed while doing any work (other than residential work) that the

contractor was engaged to do.

DEPARTMENT OF LABOUR  v SOUTHROADS LIMITED [2013] NZHC 1620 [1 July 2013]

[3]      DIL pleaded guilty.  DIL accepted that it had failed to properly test the piles or  take  into  account  the  site  geology.    By  contrast,  Southroads  succeeded  in defending the charge, Judge Crosbie observing that all practicable steps had been taken by Southroads in the circumstances.  He said that the steps said to be required by the Department went “beyond the understanding of the parties” and “would be a

counsel of perfection”.1

[4]      The  Department  of  Labour  now  appeals  against  the  decision  of  Judge

Crosbie. The “question of law” arising by way of case stated as follows:

Whether it was open to me to find, on the evidence available and on the proper construction of s 18(1)(a) Health and Safety in Employment Act

1992, that Southroads Limited was not required, and nor was it reasonably practicable for Southroads Limited to take the steps which the Appellant

alleges  it  should  have  taken  (as  referred  to  at  paragraph  135  of  the
Judgment).

[5]      In this regard, the Department said Southroads should have taken steps:

(a)       To  have  ensured  that  DIL  tested  the  stability  of  the  temporary platform before moving the crane on it.   This included testing the stability of the piles before placement of the platform or crane on top of the platform.

(b)      To have obtained prepared detailed drawings and a PS1 (Producer

Statement) for the temporary platform at bridge 218.

(c)       To have ensured, and obtained pre-loading, written certification from a design engineer that the temporary platform was erected as designed.

(d)       To have ensured that geotechnical analysis of the foundation strata where the temporary platform piles were to be located was undertaken.

[6]      In this appeal, the Department submits that the Judge:

(a)       Erred in concluding that a party with an obligation under the Act can contract out of that obligation by assigning it to a third party whether it be an engineer or specialist subcontractor;

(b)      Erred in concluding that the obligations, expectations or failures of

KiwiRail   in   respect  of  the   contractor   were   of  assistance  in

1      Department of Labour v SouthRoads Limited DC Dunedin CRI 2011-012-001320, 13 August

2012 at [133].

determining  the  practicable  steps  the  respondent  company  was required to take in the circumstances;

(c)       Erred in incorrectly drawing a distinction between obligations to monitor matters of a technical nature as opposed to general matters of basic and obvious health and safety;

(d)       Misdirected itself when it concluded that s 18 of the Act was not intended to be a provision which in effect requires a principal to be an insurer in respect of compliance with statutory obligations by subcontractors; and in considering it was a  question  of fact and degree as to whether the delegation of responsibility to address a particular issue relating to safety was appropriate;

(e)       Was incorrect in its view that in order to conclude that the appellant company had failed in its obligations pursuant to s 18, evidence of industry standards in practice would be necessary.

[7]      Mr Bates submitted further that the Judge erroneously relied on the subjective expectations of the parties in setting the frame for the assessment of practicability.

[8]      Southroads contends that the case stated does not raise a question of law and that the Judge did not err as claimed by the Department.  It also contends that the Judge turned his mind to the correct legal threshold and applied it.

Issues

[9]      Given the above, this appeal raises the following issues: (a)    Does the case stated raise a question of law?

(b)      Did the Judge err in any of the ways claimed by the Department?

(c)       Did the Judge erroneously adopt a subjective (expectations of the parties) test of practicability?

Jurisdiction

[10]     Section 107  of the Summary Proceedings Act 1957 states:

107     Appeal on question of law only by way of case stated

(1)       Where  any  information  or  complaint  has  been  determined  by  a District Court, either party may, if dissatisfied with the determination as being erroneous in point of law, appeal to the High Court by way of case stated for the opinion of that Court on a question of law only.

[11]     The question raised on this appeal is:

Whether it was open to me to find, on the evidence available and on the proper construction of s 18(1)(a) Health and Safety in Employment Act

1992, that Southroads Limited was not required, and nor was it reasonably practicable for Southroads Limited to take the steps which the Appellant

alleges  it  should  have  taken  (as  referred  to  at  paragraph  135  of  the

Judgment).

[12]     The Court of Appeal in Harrison v Ministry of Transport declared:2

The Summary Proceedings Act provides for summary trial before a District Court Judge.  While a person convicted is given a right of appeal on fact as well as law, an informant may only appeal on a question of law.  That is a matter of policy laid down by statute. The Court must guard against the assiduity of informants in endeavouring to challenge a factual decision by attempts to convert such issues into questions of law.  In the present case it may well be that the High Court and this Court would take little persuasion to conclude that the trial Court’s doubt as to the Traffic Officer’s evidence was  wrong  but  that  is  insufficient  to  convert  a  question  of  fact  into  a question of law.

[13]     The Court of Appeal was dealing with an appeal concerning decision on a case stated to the High Court under s 107. The question stated was:

On  the evidence, was the only reasonable conclusion  available to me  a conclusion that the Officer had properly conducted the breath screening test in accordance with the Transport (Breath Tests) Notice (No. 2) 1989?

[14]     The Court quashed an order remitting the matter back to the District Court and dismissed the informant’s appeal to the High Court because “no question of law arose for determination”.3      It  did so  even  though the Crown  argument  that the

District Court Judge erred was compelling.4

2      Harrison v Ministry of Transport CA 424/92, 29 March 1993.

3      At 7.

4      At 3.

[15]     The appellant in this case nevertheless says that the case stated is analogous to the questions posed in Central Cranes Ltd v Department of Labour.5       In      the High Court question (b) was posed as:6

On the evidence available, was it open to the Judge to find that the defendant satisfied its obligations under s 18(1)(a) of the Health and Safety in Employment Act  1992  in the  context  of  its  relationship as  principal  by retaining a sub-contractor who was competent?

...

[16]     In the Court of Appeal the first question posed was:7

(a)       On the evidence available to me was it open to me to find that the defendant was removed from activities on the site?

...

[17]     The second question posed was:8

(b)       On the evidence available to me was it open to me to find that the defendant  satisfied  its  obligation  under  Section  18  (1)(a)  of  the Health and Safety in Employment Act 1992 in the context of his relationship as principal by retaining the subcontractor who was competent?

[18]     But there is a major distinction between the questions posed in the Central Cranes litigation and the present case.   Each of the questions posed in  Central Cranes focussed on a specific error.  So, in relation to the first question posed in the High Court, the critical focal point was whether or not it was available to the Judge to say that the defendant satisfied its obligations “by retaining a subcontractor who was competent”.  That was a matter amenable to consideration on appeal because it relates directly to the scope and content of the obligation under s 18(1)(a).  The first of the two questions posed in the Court of Appeal is similarly focussed on a single error, namely whether it was open to the Judge to find on the evidence that the defendant was removed from activities on the site.   That singular focal point was directly relevant to the reasoning of the Court about compliance with the statutory

requirements.

5      Central Cranes Ltd v Department of Labour [1997] ERNZ 520 (CA).

6      Department of Labour v Central Cranes Ltd [1996] 2 ERNZ 198 (HC).

7      Central Cranes Ltd v Department of Labour [1997] ERNZ 520 (CA) at 530.

8      At 530.

[19]     The second question posed in the Court of Appeal concerned whether or not retaining  the  subcontractor  who  was  competent  satisfied  the  obligations  under s 18(1)(a)  (echoing  the  question  posed  in  the  High  Court).   Again,  that  was  a focussed question bearing directly on the discharge of the duties under s 18.

[20]     The  question  before  me,  by  contrast,  posits  the  ultimate  issue.     The Department is really seeking a fresh decision from me.   That is plainly not an appropriate use of an appellate jurisdiction on questions of law. A Court of appellate jurisdiction on points of law might entertain a focused inquiry on a discrete issue of fact on the basis that the finding was not one that a Judge could reasonably come to on the evidence.  But there is nothing discrete about the case stated.

[21]     With  respect  to  the  diligent  and  comprehensive  approach  taken  by  the appellant, Mr Bates has lost sight of the policy underlying appeals on points of law only.  Parliament has reposed in the trial Judge the task to assess practicability.  It is not the function of this Court to provide a substantive review of that task.  The risk with an open ended appeal like this is that the appellate court unconsciously slides into the merits and undermines this policy.  Indeed the suggestion by Mr Bates that I must review all of the evidence is an invitation to breach this express limitation and the policy that drives it.

[22]     I do not think that the case stated is saved by the reference to “on the proper construction of section 18.”  If the Judge has erred on the construction, then how that is so should be clearly specified as the question of law.

[23]     I am conscious that in the parallel judicial review jurisdiction, the Court must still be sure that the requisite legislative conditions underpinning an exercise of discretionary power were substantively fulfilled.9     But unlike judicial review proceedings, in an appeal on a point of law to this Court, the substantive judicial task is vested by Parliament in the District Court.  It is not sufficient therefore to simply assert that the Judge got it wrong on the evidence and invite substantive review.

There must be a clear and discrete point of law or error of reasoning upon which this

Court can properly fasten its appellate jurisdiction.

9      McGrath v Accident Compensation Corporation [2011] NZSC 77 at [31]

[24]     I therefore dismiss the case stated on the ground that it does not give rise to a question of law.

[25]     I am prepared, nevertheless, to consider the appeal by reference to: (a)         The five specific errors identified by the appellant; and

(b)Mr Bates’ basic contention that the Judge failed to apply the requisite objective test.

[26]     It  will  be  seen  that  the  appeal  is  still  wide  ranging  and  calls  for  some assessment of the merits, but it is properly benchmarked against alleged errors that, if correct, might mean that the legal conditions necessary to establish breach of s 18 were in fact present.

Background facts

[27]     The background facts are not disputed and are usefully summarised by Judge

Crosbie in the following terms:10

[11]      The defendant was contracted by KiwiRail Limited (“KiwiRail”) to replace two rail bridges on the main south line located between Dunedin and Port Chalmers.   The first bridge is known as “Bridge 217 MSL” (“bridge

217”) and the second bridge is known as “Bridge 218 MSL” (“bridge 218”).

[12]      The  contractual  arrangements  are  embodied  in  two  documents.

Bridge 217 in contract no. 2018A/129 dated September 2010 (“Contract

217”) and bridge 218 in contract no. 2009/0149 dated 15 January 2010 (“Contract 218”). The contracts are separate but almost identical.

[13]      The defendant contracted DIL to supply and install precast concrete elements for the construction and replacement of both bridges.  The contract included driving piles for both replacement bridges and the installation of a temporary platform alongside each existing bridge on which a crane could operate to construct each replacement bridge.

[14]     Works  on  bridge  217  were  commenced  on  5  May  2010  and completed on 19 August 2010.

[15]      Works on bridge 218 commenced approximately two weeks prior to the incident on 30 September 2010.  Work on erecting a temporary staging at

10     Department of Labour v South Roads Limited DC Dunedin CRI 2011-012-001320, 13 August

2012.

bridge 218 commenced two days prior to the incident.   On the day of the incident three piles for the temporary platform had been installed.

[16]      Mr Nick Dennis, the director of DIL, along with another employee of DIL,  Leslie Whittle, were working on the temporary platform on 30

September  2010.    A 50  tonne  crane  was  moved  on  to  the  platform  in preparation to install the fourth and final pile and construct the second span of the temporary platform.  The second span of the temporary platform could

not be completed without loading the crane onto the first span.  Mr Whittle

then got into the crane’s cab in preparation for its operation.

[17]     It was then noticed that a small gap between the timber deck of the platform, and the rail causeway had opened up.   Further inspection found that the deck was no longer level, and that the piles holding up the deck were sinking.  An initial attempt was made to move the crane towards the centre pier.  However, the platform was sinking too quickly and the workers on the temporary platform were ordered to get off.

[18]      Happily, all workers got off the temporary platform before the piles sunk to the point where the platform was at such an angle that the crane slid off and into the sea.  No-one was injured as a result of the platform collapse.

[19]     It is not in dispute that the incident was caused by an error in the piling design and methodology, being the failure to factor in the difference in soil at the bridge 218 site and the failure to test to ensure pile capacity had been achieved.

The judgment

The frame

[28]     The Judge addresses the argument of the parties and the leading authority of

Central Cranes. As to the duties of employers, the Judge says:

[37]      Those duties have been described in other cases as “uncompromising and onerous”.   However, it is also clear that the Act does not require an employee or principal to guarantee an environment where injuries cannot ever occur.   Nor should they be charged with hindsight not available to a reasonable person making the assessment at the time.  What is required is a balancing exercise and an assessment involving the risk of an accident, of injury occurring, and comparing that with the cost and practicality of either eliminating or reducing that risk.  That assessment for the Court is a matter of fact and degree and will depend on a number of factors including the type of organisation involved.

[29]     The Judge then goes on to say that the facts are incontrovertible. The work of DIL and by connection OCEL (the design engineer employed) was found wanting. He then says that:

[40]      In the absence of a Code of Practice and in the absence of  the appointment of an engineer to the contract (as would have occurred under an NZS: 3910 contract) the Court’s assessment relies on the evidence of the experts and, to an extent, the expectations of KiwiRail.

The evidence

[30]     The Judge then thoroughly canvases the evidence given by Mr Young for KiwiRail, Mr Lake for the Department and Mr Charters for Southroads.   The summary of the evidence by the Judge is not challenged.

[31]     The Judge found that KiwiRail agreed that the design process used for the construction of the temporary structure for Bridge 217 could be used for the construction of the equivalent structure for Bridge 218.11    He said this was flawed because the PS1 and temporary work designs for Bridge 217 did not state the depth at  which  the  piles  would  go.12      However  the  evidence  was  that  the  important criterion was the loading capacity which was required by the PS1 due to the use of driven piles.  The PS1 that was used for both bridges was subject to site verification of design assumptions including pile capacity 85T and load bearing capacity 300 kpa.  The Judge also found that Mr Young “assumed” that the requisite verification assessment would be undertaken by Mr Frank Dennis of OCEL and Mr Nick Dennis of DIL.13

[32]     The Judge observed:

[54]     Mr Young gave further evidence on contractual obligations and reconfirmed  that  the  obligation  on  South  Roads  to  engage  and  pay  an engineer to design and draw plans for the temporary structure and submit those three copies was not complied with for bridge 218 because no PS1 specific to bridge 218 were ever submitted.  However, there really appears to be no issue with this from KiwiRail’s perspective as Mr Young was at all times satisfied with the construction of the temporary structure to proceed on the same basis as the earlier bridge.

[33]     The Judge then observed:

[63]      In terms of the testing to ensure pile capacity had been achieved at the temporary works, Mr Young confirmed that it needed to be proved as

part of the design that the 85 tonne capacity had been achieved.  The way that needed to be proved was something the piling contractor would carry out or determine, and that the defendant, as the head contractor, would have little influence in the piling methodology.  This is key, not just in relation to Kiwi Rail’s expectation but also in respect of the Court’s view in assessing what is “reasonable compliance” in a subcontracting situation where specific expertise is contracted out.

[34]      The Judge thought it was significant that the parties elected to use Contract

3915 which does not require the appointment of a engineer and envisages the potential for assignment of the engineering to a third party.

[35]     The Judge concluded:14

As a result of the evidence of Mr Young I take from him the clear inference that, even with the benefit of hindsight, based on the manner in which the parties proceeded to adopt the 217 contract for the purposes of bridge 218 and the manner in which the parties proceeded, that no different step would have been taken prior to the loading of the crane on the temporary platform. That is because all parties appear to have been reliant on the design work and construction of DIL and OCEL.

[36]     In short he found that KiwiRail did not actually require compliance with the written contractual obligations.15

[37]     The Judge is critical of Mr Lake’s evidence on behalf of the Department: 16

Mr Lake was also reluctant to accept under cross-examination that the defendant did not have experience in bridge pile driving.   This reluctance was symptomatic of several aspects of Mr Lake’s evidence and inconsistent with the objectivity required from an expert witness.  In the end he appeared to accept, as I accept, that the defendant did not have bridge pile driving or design experience.

[38]     The Judge then examines each of the four allegedly practicable steps (see [5]) promoted by Mr Lake, namely in short: pre loading stability testing, detailed design drawings, pre loading certification and geotechnical analysis.   Mr Lake’s logic for each of these steps is recorded in detail.  The essential theme identifiable from the judgment is that Mr Lake considered that the process adopted by Southroads did not include any hold or check points where key assumptions could be tested.

[39]     The Judge records, however, that Mr Lake accepted that if the 85 tonne capacity had  been  achieved  for the  temporary platform  on  Bridge 218  that  the platform would not have sunk.  Mr Lake apparently accepted that even looking at the geotechnical information the pile capacity would have been the same ie 85 tonnes. The Judge further recorded that Mr Lake, however, believed that new drawings could have made a difference in terms of the length that needed to be known at which the pile is to be foundered.   The Judge regarded this aspect of the evidence as important  in  terms  of  the  informant’s  own  attribution  to  the  defendant  for

oversight.17

[40]     The Judge observed at [86] that Mr Lake appeared to infer more into the contractual construction process than was actually the case.  The Judge said he was effectively saying  that  DIL was  not  approved  to  do  the  work  on  the  platform. However, the Judge noted the evidence of Mr Young is in fact to the contrary.

[41]     He recorded also that Mr Lake said it was an implied term of the contract that a geotechnical engineer would be required for piling design.  Mr Lake did accept, the Judge said, that Mr Frank Dennis was qualified to be a temporary works designer and that Mr Nick Dennis implemented a pile methodology to achieve, among others,

the 85 tonne capacity in relation to the earlier bridge 217.18

[42]     The Judge noted that Mr Lake said that a competent piling contractor would know when certification was required at the stages of construction.  The Judge also referred  to  Mr  Lake’s  disagreement  with  the  proposition  that  certification  was required on completion of the temporary platform and there should have been a review carried out between bridge 217 and bridge 218.19   He regarded this as an odd

position for Mr Lake to take on the facts in this case.20   The Judge noted that on the

evidence before him there was nothing to be carried forward to the 218 contract that would have given any party cause to consider that there should have been an intermediate holding point or that the temporary platform be constructed differently.

He also notes Mr Lake’s concession that Mr Nick Dennis made a judgment call that

17 At [83].

the pile capacity had been met based on his view that he had driven them to refusal. He recorded however that Mr Lake would have expected not only a different process to  be  used  but  a  more  formal  process  including  consultation  with  OCEL or  a geotechnical engineer.

[43]     The  Judge  clearly  preferred  the  evidence  of  Mr  Charters,  who  did  not consider that Southroads had overall responsibility for technical design aspects21  or that it was required to ensure that testing of the piles had been carried out as it had contracted DIL to design a temporary constructed platform.22     Mr Charters also opined that the failure to draw new design drawings was immaterial.   He said the methodology used was incorrect because it did not take into account that ground conditions and did not allow for testing of pile capacity.23    The geotechnical data should have been a red flag to DIL that in order to achieve an 85 tonne capacity piles would need to be driven much deeper than the 11 metres for bridge 217.24

[44]     The Judge also records a number of factors that Mr Charters considered militated against a finding of breach.  Significantly the Judge accepted that even had Southroads been on site it would not have been expected to closely monitor the piling design methodology and oversee the technical design work that they had

engaged DIL to carry out.25

[45]     The Judge records Mr Charters’ general broad disagreement with Mr Lake’s opinion  about  contract  management  and  the  suggested  hold  points,  and  that  in Mr Charters’ opinion a formal hold point was not required at the intermediate stage prior to loading of the crane as this is naturally a point in the job where DIL could be expected to make a professional assessment.26

[46]     In relation to the steps promoted by the informant, Mr Charters was of the view that the defendant was entitled to rely on DIL in terms of testing.  As to DIL’s

drawings, in view of KiwiRail’s agreement to allow the defendant to use the 217

21     At [100]

22     At [101]

23 At [103].

PS1, and that its capacity was 85 tonnes, there was no need for additional drawings. As to written certification, it was noted that it was not required until completion of the temporary platform and the reference to loading in cl 2.2.3 was not envisaged at intermediate loading to complete the platform.27

[47]     Finally, in relation to geotechnical analysis, Mr Charters’ view was that the defendant was entitled to rely on DIL to carry out the geotechnical analysis as a fundamental requirement.28

The reasons

[48]     The Judge then sets out the reasons for his decision.   He observes that the essential facts are not in dispute and the defendant otherwise had in place appropriate procedures for steps in relation to the health and safety of its employees.  He says that there was uncertainty and ambiguity under contract 218 as to responsibility, if any, for certification of the work carried out by DIL prior to the temporary platform being used, or loaded by DIL or any other party.  There was equal uncertainty and ambiguity as to timing of any certification.

[49]     Significantly, the Judge concludes that, in any event, the manner in which the parties proceeded under both contracts 217 and 218 meant that there would be no actual difference in terms of the events that occurred – the methodology used in respect of bridge 218 was precisely the same as that used for 217 and there was no hold point or substantial review of DIL’s methodology or calculations prior to either of the temporary platforms being used and loaded.  Relevant to this, the Judge found that DIL was engaged to design and build a temporary platform and only minimal design requirements were specified in cl 2.3.3; that neither KiwiRail nor Southroads took the term “loading” in cl 2.3.2. to include the intermediate loading undertaken by DIL, and that MWH approved the temporary platform for Bridge 217.

[50]     The Judge treated this case as distinguishable from Central Cranes.  In that case the principal failed to monitor basic and obvious health and safety on the site.

In contrast, the Judge noted that the present purported failure in this case was to

27     At [114]-[116].

monitor the technical piling and piling design work.  Thus he says that this case is more analogous to Department of Labour v Bell Block Quarries Limited29 where the collapse of a trench occurred as a result of an error in technical aspects of the subcontractor’s work.  There the Court held in that case that the deficiencies were within the purview of the subcontractor.

[51]     The Judge also resolved that:

[132]    It is clear that section 18 cannot be intended to be a provision which in effect requires a principal to be an insurer in respect of compliance with statutory obligations by subcontractors.   The issue must always be one of fact and degree as to whether the delegation of the responsibility to address a particular issue relating to safety was appropriate or whether the principal should have retained a degree of authority and responsibility in respect of the issue in question.

[52]     He found that DIL assumed responsibility in respect of the site construction and health and safety of the temporary platform, the Judge noting:

[133]  For the defendant to have independently required engineering certification prior to the intermediate loading of the platform with DIL’s crane would not only have been beyond the understanding of the parties, as noted above, but it would be a counsel of perfection.

[53]     The Judge also observed that in order for the informant’s case to succeed the Court would have required proof of industry standards and practice consistent with the obligations that the defendant had. There was no such evidence.

Argument for the Department

[54] The Department basically contends that it was not available on the evidence for the Judge to resolve that all practicable steps had been taken by the respondent. Five specific errors were also alleged, as noted above at [6]. The Department then provided a detailed summary of the evidence, for me to digest, to support its underlying claim that the Judge got it wrong.

[55]     Perhaps sensing my concern about the breadth of the case stated, Mr Bates focused his challenge on the following core propositions:

29     Department of Labour v Bell Block Quarries Ltd DC New Plymouth CRN 4043004077-78,

18 September 1996.

(a)      The  Judge  did  not  ask  the  correct  question,  namely  whether, objectively assessed, the respondent took all reasonably practicable steps in the circumstances?

(b)       Instead, the Judge adopted a subjective (expectations of the parties)

test.

(c)      Objectively assessed, the respondent was obliged to take active steps (ie those identified by the Department) to secure safety of employees, and not simply delegate that task to DIL.

(d)The approval or otherwise of KiwiRail to depart from the explicit contractual obligation to obtain drawings (Step 2) and to certify (Step

3) did not expunge the statutory and commonsense duty to obtain those drawings and to certify the work.

(e)      The duty to monitor was not discharged – Mr Rennie was absent from the site at the crucial time – in breach of a contract obligation and standard industry practice.

Argument for respondent

[56]     The respondent reminded me that this is an appeal on a question of law by way of case stated and not an opportunity for the appellant to revisit the full merits of the case.  It submits that, on the facts of the case, the Court determined that there was no breach of s 18 of the Health and Safety in Employment Act by Southroads because the Department failed to prove that Southroads did not take all practicable steps in the circumstances.  Rather the Court properly found that the responsibility for the technical aspects of the piling work remained with DIL.

[57]     In terms of the specific errors alleged by the appellant, Southroads contends:

(a)       That the Judge did not suggest that there can be any “contracting out”

of the principal’s obligation under the Act;

(b)Paragraph [132] upon which the appellant relies is said to reflect the correct approach which is that both the principal and contractor will owe duties under the Act and the nature and extent of the duty of each in relation to a particular safety matter will depend on the facts;

(c)      The   reliance   or   otherwise   of   the   Court   on   the   obligations, expectations or failures of KiwiRail were legitimate matters for the Court to consider;

(d)The obligations of Southroads were relevant considerations in determining whether or not all relevant practicable steps had been taken in the circumstances;

(e)      It was open to the Court to make a determination that in this case there was a distinction between the obligation to monitor matters of a technical nature and general matters of basic and obvious health and safety.

[58]     I have rejected a general appeal based on the case stated. I turn therefore to the  alleged  specific  errors,  but  before  doing  so  I  will  set  the  frame  for  my assessment.

The frame

[59]     Section 18 of the Health and Safety in Employment Act states:

18       Duties of principals

(1)      Every principal shall take all practicable steps to ensure that—

(a)      No employee of a contractor or subcontractor; and

(b)      If an individual, no contractor or subcontractor,—

is harmed while doing any work (other than residential work) that the contractor was engaged to do.

(2)      Subsection (1) of this section shall be read subject to section 2(2) of this Act.

[60]     Section 2A states:

2A       All practicable steps

(1)       In this Act, all practicable steps, in relation to achieving any result in  any  circumstances,  means  all  steps  to  achieve  the  result  that  it  is reasonably practicable to take in the circumstances, having regard to-

(a)       the nature and severity of the harm that may be suffered if the result is not achieved; and

(b)       the current state of knowledge about the likelihood that harm of that nature and severity will be suffered if the result is not achieved; and

(c)      the current state of knowledge about harm of that nature; and

(d)       the current state of knowledge about the means available to achieve the result, and about the likely efficacy of each of those means; and

(e)      the availability and cost of each of those means.

...

[61]     The Act adopts a preventive approach to maintaining and promoting health and safety in the workplace.30     The Act however does not adopt  a prescriptive approach to the duties of those made responsible for safety in the workplace.  Rather it provides a comprehensive set of general principles and leaves the detail of acceptable practices to be worked out and implemented by regulation and codes within the various industries.31

[62]     The central  issue  that  a  Court  must  determine  in  any case  involving  an alleged breach of s 18 is whether the principal took all reasonably practicable steps, as that phrase is defined, to ensure that the contractor or his or her employees is not harmed while doing the work which the contractor was engaged to do.  The question of what is practicable is a matter of fact and degree in each particular case.32

[63]     There may be occasions where the only practicable step a principal could take  would  be  to  employ  a  competent  contractor.33    But  each  case  must  be

30     Central Cranes Ltd v Department of Labour [1997] ENRZ 520 (CA) at 527.

31     At 527-528.

32     At 528.

33     At 529.

determined having regard to the circumstances of the case and the steps, if any, which it is practicable for the principal to take in those circumstances.34

[64]     The test of what is practicable is said to be an objective test and that the definition of “all practicable steps” is essentially one of objective fact, viewing the matter through the eye of an employer conducting the relevant activity and with the knowledge that such an employer could reasonably have been expected to possess as to the nature of the prospect of harm from the activity.35

[65]     It has also been said, and I agree:36

[41]     The use in s 2 of the objective standard “.... all steps to achieve the result that it is reasonably practicable to take in the circumstances” refers to “... the current state of knowledge” about relevant factors;   not what the particular employer happened to know, whether or not it took advice even from apparently competent advisers.

[66]     But as Hansen J said in Buchanans Foundry Ltd v Department of Labour:37

The requirement to take all reasonably practicable steps is not a counsel of hindsight perfection.   It involves, as noted earlier, considerations of “due diligence,” “a total absence of fault,” of doing what a “reasonable man” would have done under the circumstances, or acting with “all reasonable care”.

Error 1:  Contracting out?

[67]     The appellant claims that the District Court erred by concluding that a party can contract out of its obligations under the Act by assigning it to a third party whether it be an engineer or a specialist subcontractor.  The appellant refers to [132] of Judge Crosbie’s decision.  Given its significance I repeat it here:

[132]    I adopt the same view as Judge Abbott did in Bell Block.  It is clear that section 18 cannot be intended to be a provision which in effect requires a  principal  to  be  an  insurer  in  respect  of  compliance  with  statutory obligations by sub-contractors.  The issue must always be one of fact and degree  as  to  whether  the  delegation  of  the  responsibility  to  address  a particular issue relating to safety was appropriate or whether the principal

34     At 530.

35     Refer  Department  of  Labour  v  Solid  Timber  Systems  New  Zealand  Limited  HC  Rotorua

AP 464/44/2003, 7 November 2003 at [35].

36     Solid Timber at [41].

37     Buchanans Foundry Ltd v Department of Labour [1996] 1 ERNZ 333 (HC) at 342.

should have retained a degree of authority and responsibility in respect of the issue in question.

[68]     I reject this ground.   The Judge is not saying that, as a matter of law, an employer may contract out his or her responsibilities under s 18.  On the contrary, the Judge states that it will be a question of fact and degree as to whether delegation of responsibility was sufficient to discharge the duty under s 18.   This literally mirrors the approach contemplated by the Court of Appeal in Central Cranes where

it is stated:38

As it is a matter of fact and degree in each case there may be situations, of course, where the only practicable step a principal could take would be to employ a competent contractor.

[69]     In the present case, the critical error was the failure to take into account the geology of the affected site and the method used to test the piles.  The responsibility for assessing the geology and the suitability of the piles for the purpose of the temporary platforms was delegated to DIL.  The Judge found that any further check would not have achieved much and that the steps proposed by the Department went

beyond the understandings of the parties and “would be a counsel of perfection”.39

[70]     For completeness, I have examined the evidence on this issue.   Mr Lake’s essential complaint is that there were no formal checks and/or hold points which might provide surety to the defendant that DIL was exercising appropriate care and diligence when designing the temporary platforms.  The practicability of those hold points, in the circumstances, was a factual matter for the Judge to assess.  Plainly the Judge did not agree with Mr Lake and preferred the evidence of Mr Charters. That is

a fact specific conclusion that was available to the Judge on the evidence. 40

Error 2: Were KiwiRail’s expectations or failures irrelevant?

[71]     The Department contends that the Judge erred at [134] of the decision by having found that the obligations, expectations or failures of KiwiRail in respect of the contractor were of assistance in determining the practicable steps required to be

taken.

38     Central Cranes at 529.

39     Department of Labour v South Roads Limited at [133]

40     At [81], [90], [100], [103].

[72]     I disagree.   First, it is necessary to repeat what the Judge said about the

relevance of KiwiRail’s expectations:

[40]      In the absence of a Code of Practice and in the absence of  the appointment of an engineer to the contract (as would have occurred under an NZS: 3910 contract) the Court’s assessment relies on the evidence of the experts and, to an extent, the expectations of KiwiRail.

[73]     This is not a statement of absolute reliance.  The primary reference used by the Judge was the evidence of the experts.

[74]     Second, the obligations and expectations of KiwiRail provided the frame for Southroads’ activities and formed part of the factual matrix.   They are inherently relevant to the assessment of practicability “in the circumstances” as required by the Act.41   Indeed, Mr Lake relied on the contracts to demonstrate what was required of the respondent (namely to provide certification that the works were erected in accordance with detailed drawings).42   In similar vein, the Judge was entitled to have regard to the contractual frame and expectations of the parties as a reference point for what they considered to be their operational duties.  The Judge simply found that the obligations sought to be imposed by the informant went beyond the expectations of KiwiRail which had expertise in rail bridge design and construction.  Significantly also, the Judge did not say that KiwiRail’s expectations were determinative of the issue of what was practicable.  Instead, as I have noted, he said that the Department’s

proposals were counsel of perfection.

Error 3:  No distinction between obligations to monitor technical matters and general health and safety matters?

[75]     The Department contends that the Judge erred at [131] of the judgment by seeking to draw a distinction between oversight of the technical aspects of a subcontractor’s work and general oversight of safety matters on site.

[76]     At [131] the Judge said:

[131]    Ms Grieve also submitted that Bell Block is also sound having regard to policy implications and that s.18 must be intended to impose a general

41     Section 2A.

42 Brief of evidence of Mr Lake at [70].

duty on the principal to have control and oversight of safety matters onsite, but it would be too onerous to impose an obligation on a principal to have an intimate understanding of the technical aspects of a sub-contractor’s work to ensure that it is carried out correctly.   This, Ms Grieve submitted, would defeat the purpose of engaging a sub-contractor at all and she drew the Court’s attention to the informant’s 2010 publication Health and Safety in Contracting Situations at p.2:

Sometimes duties might be shared by the principal and contractor. So, if you are a builder or developer who engages an electrician to do electrical wiring on a building project, you will usually have limited duties in relation to the safety of the wiring itself.  However, the principal’s duty is much greater when it comes to providing scaffolding for the electrician to gain access to the work.

[77]     In addressing this appeal point, it is necessary to observe that the Judge referred to “an intimate understanding of the technical aspects” of a sub-contractor’s work.  That comment must also be set within the context of the judgment as a whole and dealing with the particular circumstances confronted by the respondent in this case.   It is quite clear that the Judge was simply stating that in light of all of the evidence, s 18 should not demand an intimate understanding by Southroads of the sub-contractor’s work.  Given that the Act is concerned to ensure that all “practical steps are taken”, I see no obvious problem with this assessment and it was a conclusion available to the Judge on all of the evidence.

[78]     Nevertheless, I have assessed the merits of the Judge’s reasoning at [131] in light of the key evidence for the informant.  Before doing so, it must be recalled that the primary error causing the hazard related  to  the technical  work  of  DIL,  not Southroads.  Mr Lake stated that there was no testing prior to the construction of the platform for bridge 217.  He also contends that no proper testing was carried out and should have been prior to loading the temporary platform for bridge 218.   He says that there are common methods for such testing, well known to the industry.  In his view, Southroads should have ensured that the testing was carried out.  He says this could and should have been provided for in the works programme.  He also said that no temporary works designer was appointed, in breach of the contract, and therefore no  design  drawings  were obtained  and  no  certification  obtained.    Had  a works designer been employed as required, he or she would have observed that no testing had been done and refused to certify the works.   Finally he says the respondent should have ensured that the geological data was provided to DIL and in which case

the piles would have been much deeper.   The failure then by the respondent to undertake geological assessments meant that a fundamental step was missed.

[79]     For my part I accept that the failure to test the piling for  bridge 217 is problematic,  and  that  the  production  of  design  drawings  and certification  by an expert engineer appear to be available steps to take, together with the inclusions of milestones for testing and certification included within the works programme. But there is an element of hindsight prudence in all of this. The critical issue was whether all practicable steps were taken “in the circumstances”.  The circumstances were that the process for construction achieved a safe outcome for bridge 217.   An expert, DIL, was engaged to design and construct temporary platforms because Southroads is not an expert in such matters. This was approved by KiwiRail, an expert on bridge construction.  Mr Lake accepted that Mr Frank Dennis of DIL was qualified to be a temporary works designer and that Mr Nick Dennis of OCEL implemented a pile methodology to achieve, among others, the 85 tonne capacity in relation to the

earlier bridge 217.43    Southroads also had no reason to assume that these experts

would make a fundamental error, namely design and construct platforms without carefully examining the geology or design and test the piling in light of that information.  DIL’s basic error was also not something that would have been obvious to Southroads.  It is then unclear (and was not proven) that the steps promoted by Mr Lake would have produced a different result.  Indeed the best that can be said is that DIL may have had cause to note the error, (as Mr Frank Dennis now asserts).  It was not unreasonable therefore for the Judge to conclude that the Department’s steps were not practicable in the circumstances, and amounted to counsel of perfection.

Error 4: Are principals insurers?

[80]     The appellant  contends  that  the  District  Court  misdirected itself  when  it concluded that s 18 was not intended to be a provision in effect requiring a principal to be an insurer in respect of compliance with statutory obligations.  The appellant also repeats the contention that the appropriateness of delegation is not a question of

fact and degree.

43 At [87].

[81] Paragraph [132] is quoted above. Plainly the Judge’s observation that a principal is not an insurer must be right. Section 18 specifically says that the relevant standard or threshold test is “all practicable steps”. But in any event, as I have said above, the Judge proceeded on the basis that the central issue must be always one of fact and degree as to whether delegation of responsibilities to address a particular issue relating to safety was appropriate. There was no misdirection. I dealt with the appropriateness of delegation at [68].

Error 5:  Evidence of industry standards not necessary?

[82]     The Judge was of the view that in order for the informant’s case to succeed the Court would have heard of industry standards and practice consistent with the obligations.   I do not think this raises a question of law.   The Judge was simply saying that in this particular context in order to properly assess the informant’s case and whether or not what the informant is saying is practicable, he would have to hear about industry standards and practice relating to those obligations.  While industry standards and practice do not set the benchmark for compliance with statutory requirements, it must be right that the Judge in assessing the practicability of such steps can have regard, and depending on the circumstances, must have regard to such practices.   How else is the Judge to properly contextualise the conduct and the asserted obligations?  I agree that if the Judge was saying that in all cases industry standards must be produced, then he might be on difficult ground.  But I think it is available for me to say that what he meant was that in this case, and given the circumstances of this case, in order to resolve the question of fact and whether or not the duty in this case required compliance with asserted obligations, he would have been assisted by industry practice.   In any event he went on to hold that on the information available to him, the said obligations were not practicable in the circumstances. Again, that was a question of fact for the Judge.

Subjective assessment?

[83]     Mr Bates emphasised to me that there must be an objective assessment of practicability and it is not sufficient simply to prefer the evidence of one expert and/or to gloss the assessment by reference to the expectations of the parties.  The point of principle is clearly correct; there needs to be an objective assessment of

whether or not all practicable steps were taken.  But Mr Bates cannot reframe what is a substantive appeal into a question of law by asserting that the Judge’s assessment lacked the requisite objectivity.  In reality, the Judge assembled all of the evidence available to him for the purposes of assessing whether all practicable steps were taken in the circumstances.   First, the Judge analysed the respective contractual obligations, as varied by approval.  He then examined the nature of the hazard and the cause of it, resolving that it was in fact caused by error by DIL.  He considered the evidence given by Mr Lake as lacking the requisite objectivity and preferred the evidence given by Mr Charters as to the practicability of the suggestions made by the Department.   He then examined whether the steps suggested by the Department would make a material difference and he resolved that they would not.  Moreover, he was satisfied that the technical exercise undertaken by DIL (and OCEL) was not something that Southroads could be reasonably expected to review, bearing in mind that Southroads are not experts on such matters.  It is quite clear, therefore, that the Judge synthesised both the subjective expectations of the parties and the objective evidence  of  reasonableness  to  form  a  view  that  the  steps  promoted  by  the Department were counsel of perfection.

[84]     As a final comment, it  is apt to note that Mr  Lake made the following observation in his brief of evidence:44

While Southroads did not have to actively supervise Dennis Industries Limited, because it was an experienced piling company, it did have to take some simple steps to ensure that the work was done safely.

[85]     Plainly therefore the premise of the judgment was sound – delegation of the key task of ensuring the safety of the platforms to DIL was objectively appropriate. The key point of difference was that the Judge did not accept that the so-called simple steps were practicable in the circumstances. That is a finding of fact, and one

that was objectively available to him on the evidence.

44 At [51].

Result

[86]     For the reasons set out above:

(a)       The case stated did not raise a valid question of law.

(b)       The Judge did not err in any of the ways asserted by the Department. (c)      The Judge did not apply a subjective test of practicability.

[85]     Costs should be awarded on a 2B basis in favour of the respondent. The parties have leave to file submissions if they cannot agree as to quantum.

Solicitors:

Wilkinson Adams, Dunedin

Duncan Cotterill, Christchurch