Australia: Principal’s Standard Of Care Reaffirmed

Unilever Australia Limited v Pahi & Anor; Swire Cold Storage Pty Limited v Pahi
Last Updated: 13 August 2010
Article by David Ro

The NSW Court of Appeal has reaffirmed the principles in Leighton v Fox in relation to the standard of care required of principals with respect to injuries suffered by employees of their contractors.


The plaintiff sustained strain injuries during the course of her employment as a process server with ESP, a labour hire company. ESP had been engaged by Swire to repackage ice-cream products for Streets. ESP designed their re-packaging system, which was undertaken at Swire's premises. Whilst Streets did not have any contractual relationship with ESP, instructions on the quantity and type of product to be repackaged were given directly by Streets to ESP.

The plaintiff commenced proceedings against Swire and Streets alleging that her injury was caused by their failure to take due care in overseeing and directing her work for ESP. She did not commence proceedings against ESP as her medical condition failed to overcome the statutory threshold.

The trial judge held that the plaintiff's injuries were caused by the negligence of Swire and Streets and awarded her damages, after deducting one-third of the award to represent the negligence of her employer, ESP.

Appeal decision

Swire and Streets appealed against the trial judge's decision which was delivered prior to the decision of Leighton v Fox. Beazley JA who delivered the leading judgment on appeal found that the trial judge effectively required both Swire and Streets to do everything in their respective power to ensure that ESP employees were provided with a safe system of work, which was contrary to the principles stated in Leighton v Fox.

Specifically, Beazley JA rejected the trial judge's finding that the ambit of the duties of care owed by Streets and Swire required them to obviate the dangers posed to ESP's employees. Rather, the applicable standard of care was one of reasonable care. Her Honour also rejected the trial judge's decision that the principles that governed the question of duty were the same both in Streets and Swire's cases and stated the law of negligence distinguished the duty of care that is owed in particular relationships.

In this regard, Her Honour added the relationship between Swire and ESP, which is of a principal to its contractor, did not import a duty to retain control of working systems if it was reasonable to engage the services of independent contractors who were competent to control their system of work without supervision by the principal. Her Honour also recognised that Streets did not have any contractual relationship with ESP and that there was no duty on Streets to control the system of work implemented by ESP following the principles enunciated in Leighton v Fox.


It is notable that Beazley JA carefully considered the factual circumstances around the plaintiff's injuries and specifically analysed the degree of control exercised by Streets, Swire and ESP over the plaintiff respectively. In this regard, Allsop P added that the common law does not operate in a fashion that ignores substance in preference for legal form.

An important consideration for the Court of Appeal in overturning the trial judge's decision was therefore that ESP was responsible for and carried out direct supervision of the plaintiff.

That is to say, whilst a principal's duty of care is not coextensive with that of the employer, the degree of control it exercised over the injured subject will still be relevant in determining its liability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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