Australia: Legal Directions: Labour hire agency fully indemnified by host employer

Hodge v CSR Limited [2010] NSWSC 27
Last Updated: 16 March 2010
Article by Seyi Onitiri

Justice Hislop of the NSW Supreme Court has awarded a plaintiff, who sustained injury whilst operating a jack hammer above his head for prolonged periods, $533,220 in damages, and in doing so held that the labour hire agency with whom he was directly employed should be fully indemnified by the host employer.


The plaintiff was employed by the second defendant, Adecco Pty Limited, a labour hire agency. At the time of the accident his services had been hired to the first defendant, CSR Limited, a building materials manufacturer.

The first defendant directed the plaintiff to remove, by a process known as 'de-dagging', solidified concrete from the barrel attached to one of its concrete agitator trucks. To perform the task, the plaintiff was required to stand inside the barrel and operate a jack hammer, weighing approximately 25kg, above his head for around five to six hours. As he did so, he developed pain in his neck and left shoulder, and was eventually diagnosed as having suffered a disc prolapse with associated nerve root impingement.

Both defendants denied liability to the plaintiff and alleged contributory negligence in the alternative. The defendants also cross claimed against each other seeking indemnity and contribution.

The decision

Hislop J accepted the plaintiff's evidence that the jack hammer weighed approximately 25kgs and found that in all the circumstances, requiring the plaintiff to use such a piece of equipment above his head for five to six hours, amounted to a breach of the first defendant's duty of care.

In discussing the liability of the second defendant, Hislop J referred to the High Court's decision in Czatyrko v Edith Cowen University, and in particular the Court's statement that:

'An employer owes a non-delegable duty of care to its employees to take reasonable care to avoid exposing them to unnecessary risks of injury. If there is a real risk of an injury to an employee in the performance of a task in a workplace, the employer must take reasonable care to avoid the risk by devising a method of operation for the performance of the task that eliminates the risk, or by the provision of adequate safeguards..'

His Honour then remarked that the relevant authorities made it clear that a person subject to a non-delegable duty could not escape liability of the duty if the delegated duty was not properly performed, and on this basis found the second defendant liable to the plaintiff for a breach of its non-delegable duty of care.

However, it is His Honour's findings in respect of apportionment between the defendants which is of particular interest. The first defendant had submitted that the second defendant should bear 35% of any liability to the plaintiff. By contrast, the second defendant and plaintiff contended that there should be no apportionment or, if apportionment was to be made, it should not exceed 10% to 15%.

In reaching his decision, Hislop J confirmed that the second defendant had breached its non-delegable duty of care, but found that, as there was no direct breach of duty by the second defendant which materially contributed to the plaintiff's injury, there should be no apportionment and the second defendant was entitled to a full indemnity from the host employer, including an indemnity in respect of any payments made pursuant to the Workers Compensation Act 1987 (NSW). His Honour's reasons for this were as follows:

  • The second defendant had no direct involvement at the site or in the plaintiff's day-to-day activities, and was not aware that a full-sized jack hammer was being used to de-dag trucks
  • Although the second defendant had been supplying the plaintiffs labour for three to four years, de-dagging was only performed intermittently and on dates which were unpredictable, meaning that the second defendant would have been unlikely to have observed the de-dagging being performed during site inspections
  • Even if the second defendant had observed de-dagging being performed prior to the theft of the first defendant's smaller jack hammer, it would have observed the work being carried out using appropriate equipment
  • The first defendant generally hired smaller jack hammers, meaning that even reasonable inspection or inquiry by the second defendant at any time prior to the day of the plaintiffs injury may not have revealed an unsafe system of work
  • The plaintiff was experienced
  • The second defendant had provided the plaintiff with a safety handbook which directed the plaintiff to notify the second defendant of any hazardous or potentially hazardous situations identified and not to undertake tasks that were unsafe.


Since the NSW Court of Appeal's decision in TNT v Christie in 2003, the rule of thumb in claims such as this has been that the labour hire firm will be liable for 25% of the plaintiff's damages (paid by the labour hire firm's workers compensation insurer), with the host employer responsible for the other 75% (generally paid by their public liability insurer).

However, this case serves as a timely reminder for both labour hire agencies and host employers, and those representing their interests, that apportionment in such cases is not fixed, and it is always important to assess apportionment with reference to the particular facts of each case.

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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