Australia: Losing control - when a principal will be liable to the employees of its independent contractors

Focus: Vella's Plant Hire Pty Ltd v Mistranch Pty Ltd & Ors [2012] QSC 077
Services: Insurance
Industry Focus: Insurance

The Supreme Court of Queensland recently clarified the legal liability of principal contractors to employees of sub-contractors where the injuries sustained were caused by an unsafe method of work.

Facts

On 23 April 2007, Mr McKenzie was de-grassing a field at the request of Mr Klenowski, a director of Mistranch Pty Ltd (Mistranch) and Dreamtea Pty Ltd (Dreamtea), when he drove over the edge of a steep embankment, overturned his vehicle and suffered severe head injuries. It was common ground that the edge of the embankment was not visible, due to the overgrowth of the grass.

McKenzie was employed by Vella's Plant Hire Pty Ltd (Vella's) as a dozer driver. Vella's was engaged by Mistranch to clear two adjacent parcels of land to enable surveyors to carry out work preparatory to the subdivision of the land. Klenowski acted as an agent of Mistranch. Vella's submitted that he also acted as an agent of Dreamtea, which owned one of the parcels of land. Dreamtea had engaged Mistranch to arrange the de-grassing. The Court did not make any determinations regarding the alleged agency, but noted that the incident did not occur on Dreamtea's land and that Dreamtea had not been joined to the claim as an occupier of the site.

Klenowski's involvement in the work was limited to the placing of pink tape in certain locations around the field to mark infrastructure sites and the boundaries of the land. He maintained that his only role was to ensure that the grass was not pushed into areas where it was not wanted. Klenowski had placed pink tape on a fence near the embankment shortly before the incident. McKenzie testified that Klenowski instructed him to clear the grass up to the pink tape. Vella's alleged that Klenowski placed the pink tape so as to lead McKenzie to believe it was safe for him to push grass on to the areas in which he got into difficulties.

Vella's knew of the steep embankment and had advised McKenzie of its existence, but had not taken any further preventative action in relation to the risk it posed.

The plaintiff commenced proceedings against Vella's pursuant to the Workers' Compensation and Rehabilitation Act 2003 (Qld) (WCRA) and against Mistranch. Vella's sought contribution from the Mistranch, Klenowski and Dreamtea (the latter two added as third parties to the claim) under the joint tortfeasors provisions of the Law Reform Act 1995 (Qld). Vella's settled McKenzie's claim, but persisted to trial with its claim for contribution.

The essence of Vella's case was that Mistranch and Dreamtea, through their agent Klenowski, had assumed responsibility for the work method of McKenzie and therefore owed him a duty of care to ensure that the work method was safe. Klenowski's case was that he engaged competent contractors to do the task and left it to them to proceed as they saw fit.

Decision

The Court dismissed Vella's claim for contribution.

In finding against Vella's, the Court noted that while the common law does not impose a duty of care on principals of the kind which independent contractors engaged by them owe to their employees, a principal with sufficient power to control and direct its independent contractors may come under a duty to use reasonable care to ensure that a system of work is safe. The totality of the circumstances must be considered in determining whether the principal owes a duty of care, in particular, the extent of the power to direct or control the independent contractor, any reliance on the principal and the vulnerability of the independent contractor.

Mistranch had engaged Vella's to undertake the land clearing work because it possessed specialised knowledge and expertise in dozer operations. The Court found that McKenzie, as a competent dozer driver, was the party best placed to assess the hazard of the embankment because of his knowledge of the dozer machine and its operational limitations. Mistranch, Klenowski and Dreamtea could not be expected to have any more knowledge than Vella's and McKenzie about the risk of the embankment. Additionally, while Klenowski requested that work be done in a certain way, he did not seek to direct the performance of the manner of the work. Importantly, McKenzie never asserted that Klenowski had taken on the task of identifying for him the safe edge of the embankment, nor did he assert that Klenowski misled him in relation to the position of the embankment. The Court held that in the circumstances, Mistranch, Klenowski and Dreamtea did not direct or control McKenzie, and McKenzie's own expertise excluded any argument of vulnerability or reliance.

Implications

The decision clarifies the circumstances in which a principal will be found liable to employees of its independent contractors.

Where the principal engages competent independent contractors to undertake work, then unless the principal has specialised knowledge of a particular risk or the power to direct or control the employee, the Court will be reluctant to impose a duty of care.

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.