Australia: Employer’s Liability For Hired Equipment

A recent Victorian Supreme Court decision regarding s138 recovery proceedings commenced by the Victorian WorkCover Authority (VWA) has highlighted the paramount importance of the employers' duty of care for its workers irrespective of incidents caused by the use of defective hire equipment owned by third parties.

The worker, John Wilson, sustained an injury to his right knee on 3 April 2001 during the course of his employment with Sleepmaster Pty Ltd (indemnified by the VWA) (Sleepmaster). He was dismounting backwards from a forklift, when his right foot slipped on the surface of the floor pan. The worker fell from the forklift and landed on the ground on his right foot, which he stated caused his right knee to 'pop.'

The worker's injury had a complicated recovery and due to ongoing symptoms (which were accepted as caused by the incident) he underwent an above knee amputation of his right leg in May 2003.

The defendant to the VWA recovery proceedings, Prolift Fleet Management Pty Ltd (Prolift) was the owner of the forklift that had been hired by Sleepmaster. The VWA claimed recovery from Prolift alleging that the forklift had two defects which contributed to the incident and the worker's injury. It was alleged that there was no grab handle attached to the left side of the forklift. The VWA produced evidence that both defects could have been fixed inexpensively by Prolift prior to hiring out its forklift to Sleepmaster.

Prolift's experts alleged that surface tests on the slipperiness of the forklift's floor pan demonstrated it was "relatively safe" and the experts contended there was no evidence that the absence of a grab handle played a causative role in the incident.

Kaye J was satisfied on the evidence that, on the balance of probabilities, a relevant causal nexus in negligence and breach of statutory regulation existed between Prolift and the worker's accident. His Honour found the floor pan to be defective as a non slip mat had only covered part of the floor pan and that Prolift should have had a substantial part of the surface covered with a proper abrasive material to render it safe. Further, Kaye J held that the absence of the grab handle further exacerbated the dangerous state of the forklift, as a proper grip handle would have provided the worker with a better grip on dismount.

Regardless of these findings against Prolift, Kaye J apportioned the bulk of the responsibility for the worker's injury on the VWA. His Honour asserted that the employer was 70% responsible in proportion of liability, having regard to Section 24(2) of the Wrongs Act 1958. Kaye J reasoned that the employer owed a non-delegable duty of care and that duty included the requirement to provide safe plant and equipment for the worker. His Honour noted the employer controlled the worker's environment, the work performed, the type of plant used and the condition of that plant. The employer was under no obligation to accept the forklift in a defective state from Prolift and had not required Prolift to fix the defects under its hiring agreement.

The quantum of the worker's claim was assessed at $2,952,352.10. Prolift was held to be 30% liable and was ordered to pay $885,705.63 to the VWA for past and future indemnity.

The findings in this case highlight that an employer cannot completely rely on an indemnity clause in its hire agreement to protect it from liability if the use of such hire equipment causes injury to an employee. The employer's duty of care to ensure the safety of the worker in the workplace remains paramount. Use of external equipment owned by third parties does not lessen the duty of care obligations owed by the employer.

To reduce an employer's risk to a worker when using hire equipment, the employer must ensure it undertakes a thorough inspection of equipment and that it requests defects be rectified by the hire company prior to undertaking an agreement to hire the equipment. It must also act immediately if a defect is identified after hire. The forklift here had obvious defects, but the employer still allowed its worker to use it without requiring the hire company to rectify the defects, which is why the VWA was deemed 70% responsible for the worker's injury. However, it is unlikely that an employer would be deemed to have such a high level of responsibility in a matter where a defect in hire equipment is not obvious to an employer until after an incident causing a worker injury occurs. Time will tell.

Victorian Workcover Authority v Prolift Fleet Management Pty [2009] VSC 96

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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