Australia: Employees, subcontractors and contractors – a detailed examination of liability and apportionment principles

CASE SUMMARY: COOTE V TERRY'S CRANE HIRE & CGU INSURANCE & DEBRI PTY LTD

This decision of Bowden DCJ, although at first instance, is instructive as to the application of legal principles typically arising in multi-party workplace injury disputes and the apportionment between contracting parties.

The plaintiff, Benjamin Coote, was very seriously injured when on 20 September 2010, whilst working as a dogman and standing on a roof, he tripped or stepped through a skylight and fell about 3m to the concrete floor below.

Mr Coote had been engaged by Terry's Crane Hire (TCH) to work as a dogman assisting roofing contractor.

TCH had been engaged by the roofing contractor, Mallon Co Pty Ltd, t/asFrontline, which company also engaged Debri Pty Ltd as a roofing subcontractor on the site.

Mr Coote had been warned about the presence of the skylight and told to avoid walking near it as it clearly constituted a danger. It appears that in the circumstances of the accident, Mr Coote actually tripped on or near the load that was about to be removed by crane and fell headfirst through the skylight.

TCH, by which Mr Coote had been engaged to work as a dogman, admitted liability for negligence, compromised by a deduction of 15% for Coote's contributory negligence. The action, however, continued as between the defendants for the purpose of ascertaining apportionment.

TCH sought contribution from CGU Insurance, as the insurer of Frontline, which had been deregistered pursuant to Section 509 of the Corporations Act 2001. The action against CGU was brought pursuant to Section 601KG of the Corporations Act.

In order to dispose of the case, Bowden DCJ had to consider a range of legal issues, as well as to make the necessary findings of fact to apply to the determination of those issues. The legal issues included:

  • Did Frontline owe a duty of care to Mr Coote?
  • Did Frontline breach a common law or statutory duty of care?
  • Was Frontline aware of the danger?
  • Did Frontline know or ought they to have known of the danger to Mr Coote?

His Honour found that as principal contractor, Frontline was aware of the circumstances surrounding the injury to Mr Coote and of the danger to which he was exposed. His Honour found that there was a failure to take reasonable care by Frontline in not retaining a supervisory power which would have resulted in steps being taken to better assure the safety of workers such as Mr Coote, who might be working on the roof. Amongst other things, that duty would have extended to ensuring that the skylights were made safe.

The danger was found to be an obvious one but also the risk was very clearly of serious harm being caused. His Honour had no difficulty in also reaching the conclusion that Frontline's breach of duty was a contributing cause to Mr Coote's injuries.

His Honour found that Frontline had also breached the duties it owed pursuant to the provisions of the Civil Liability Act, as well as the Occupier's Liability Act. He also considered the significance of Frontline's conviction for an offence under the Occupational Safety and Health Act. This, he regarded as relevant and of some weight in determining the issue of liability, but not determinative. In the circumstances, he concluded that it was the evidence at trial and not the conviction that satisfied him in regard to the elements of Frontline's liability.

He further considered the question of whether a breach of statutory duty (regulation) gave rise to a further course of action in relation to which a finding should be made against Frontline. It was his opinion that such a breach may create a private right of action and found an action for damages, but that on the basis of his conclusions with respect to the liability of Frontline under the Civil Liability Act and the Occupier's Liability Act, it was unnecessary for him to determine the issue. He noted that if he was wrong in his conclusions with respect to liability under the former legislation, it would mean that Frontline could not have had "control at the site" or "control of the workplace" and could not therefore be in breach of statutory duty. He did not, however, believe it necessary to consider the issue further.

The question of whether Mr Coote was an employee or a subcontractor was also raised for determination. On the face of it, a finding that Mr Coote was an employee was likely to impose a higher duty of care on TCH than if he was found to be an independent contractor.

His Honour reviewed the various indicia of an employment relationship by reference to the facts in this case and found several that applied equally to employment as to an independent contract, several were more consistent with an independent contracting arrangement but several were also more consistent with an employment relationship.

His Honour found that although in having an ABN and submitting invoices for his work, Mr Coote appeared to view himself as an independent contractor, in substance, his role was more that of an employee and he so found.

In considering the issue of apportionment as between TCH and CGU (on behalf of Frontline), His Honour noted that the primary obligation for the safety of the employee rested with the employer, TCH. Nevertheless, the contribution of Frontline was a substantial one for all of the reasons previously canvassed and, in the circumstances, his apportionment of liability was 40% to Frontline and 60% to TCH. His Honour also observed that if he was wrong in his conclusion that Mr Coote should be regarded as an employee, and "notwithstanding that an employer's duty to an employee in law is greater than a contract's duty to another contractor, factually in the circumstances of this case, it makes no real difference as TCH's breach of duty is, in my view, greater than Frontlines". Accordingly, he maintained the apportionment of 40% to Frontline and 60% to TCH.

On one view the substantial apportionment against a contracting party that had sub-contracted the physical work and was not directly involved in the work on site, as compared to an employer actively engaged on site may seem high. The reasoning, however is well explained and the conclusions certainly open on the evidence. The conclusion does place emphasis on the duty of care, both statutory and at common law, of a higher tier party for which the safety issue in question should be within its nature field of concern and responsibility – regardless of the interposition of other responsible contracting parties including an employer.

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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