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Ellington v Heinrich Constructions Pty Ltd

 

[2004] QSC 155

 

SUPREME COURT OF QUEENSLAND

  

PARTIES:

FILE NOS:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

DELIVERED ON:

21 May 2004

DELIVERED AT:

Brisbane

HEARING DATE:

16, 17, 18 February 2004

JUDGE:

Muir J

CATCHWORDS:

DAMAGES - MEASURE OF DAMAGES IN ACTIONS FOR TORT- PERSONAL INJURIES - MEDICAL AND HOSPITAL EXPENSES - LOSS OF EARNINGS AND EARNING CAPACITY- PERSONAL INJURIES - PAIN AND SUFFERING - LOSS OF AMENITIES

TORTS- NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE- REASONABLE FORESEEABILITY OF DAMAGE- GENERALLY - whether the second defendant ought reasonably to have foreseen the risk of injury

GUARANTEE AND INDEMNITY-INDEMNITIES-CONSTRUCTION OF CONTRACT - where a sub-contract exists between the second and third defendants - whether the indemnity clause within the sub-contract indemnifies the second defendant only against loss occasioned by the trespass, nuisance or negligence of the third defendant- or alternatively against loss occasioned by its own negligence

CONTRACT - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - where a clause of the sub-contract required the third defendant to effect an insurance policy - whether the policy extended to loss of the second defendant beyond that against which the third defendant agreed to indemnify

TORTS-JOINT OR SEVERAL TORTFEASORS - CONTRIBUTION- GENERALLY- where the second defendant sought contribution from the plaintiff- ss 6,7 Law Reform Act 1995 (Qld) what is ‘just and equitable having regard to the extent of the person’s responsibility for the damage’

Law Reform Act 1995 (Qld), ss 6,7

WorkCover Queensland Act 1996 (Qld), s 12 (1)

Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191

Astley v Austrust Limited (1999) 197 CLR 1

Baird v Roberts [1977] 2 NSWLR 389

Canberra Formwork Pty Ltd v Civil & Civic Ltd (1982) 41 ACTR 1

Darlington Futures v Velco Australia Pty Ltd [1986] 161 CLR 500

Davis v Commissioner for Main Roads (1968) 117 CLR 529

Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd [1973] QB 400

Fink v Fink (1946) 74 CLR 127

Van Der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157

James Hardie and Coy Pty Ltd v Roberts (1997) 72 ALJR 65

Naylor v Yorkshire Electricity Board (1968) AC 529

Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492

Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1978) 139 CLR 231

Purkess v Crittenden (1965) 114 CLR 164

Raimondo v State of South Australia (1979) 23 ALR 513

Smith v South Wales Switchgear Limited [1978] 1 WLR 165

Smith v Topp [2003] QCA 397

State of New South Wales v Moss (2000) 54 NSWLR 536
State of NSW v Tempo Services Ltd [2004] NSWCA 4

Sydney Corporation v West (1965) 114 CLR 481

Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353

Wynbergen v Hoyts Corporation Pty Ltd (1997) 72 ALJR 65

COUNSEL:

T Matthews, with D J Schneidewin for the plaintiff

P D Lane for the first defendant

R B Dickson for the second defendant

J B Rolls, with  K Phillips for the third defendant

SOLICITORS:

Quinlan Miller & Treston for the plaintiff

Barry & Nilsson for the first defendant

Jensen McConaghy for the second defendant

Minter Ellison for the third defendant

Introduction

[1] The plaintiff, born on 27 February 1955, was injured on 30 June 1999 in the course of his employment by the third defendant when, whilst assisting others in positioning a pre-fabricated steel beam, he fell from formwork some four metres onto the ground below. The subject works were part of the Brisbane Cricket Ground redevelopment for which the second defendant, Watpac Australia Pty Ltd, was the head contractor. The third defendant was a subcontractor of the second defendant with responsibilities, relevantly, for pre-fabricating and placing reinforcing steel. The first defendant, another of the second defendant’s subcontractors, had responsibility under its subcontract for the construction of the formwork preparatory to the placement of the reinforcing steel and the pouring of concrete.

[2] Before considering the plaintiff’s allegations against each defendant and the second and third defendants’ claims for contribution, it is useful to consider, in a little more detail, the nature of the works and the circumstances in which the accident occurred.

[3] The plaintiff fell from wooden formwork erected on top of reinforced concrete piers on which reinforcing steel, measuring 900 mm x 800 mm x 26 m and described as “beam 3B8”, was being placed in position. Although referred to as a beam, the reinforcing steel, at the time of the accident, was the steel core around which concrete was to be poured in order to constitute a horizontal beam. Prefabricated concrete “planks” were then to be placed over the beam and adjoining beams to provide flooring.

[4] The formwork, the base of which was about 4.1 m above ground level, consisted of: large vertical uprights referred to as “whalers”; plywood flooring supported by horizontal wooden beams and smaller pieces of timber nailed to the whalers and the wooden horizontal beam forming the edge of the formwork flooring. The latter pieces of timber, which are at an angle of perhaps 45 degrees to the whalers, are described as “soldiers”.

[5] The steel reinforcing was being lowered onto the floor of the formwork by an appropriately positioned crane. Steel fixers, including the plaintiff, were positioned on ledges about 330mm wide formed by that part of the base of the formwork outside the whalers in order to guide the steel into position inside the whalers. They were required also to place on the formwork underneath the reinforcing steel appropriately spaced 40 millimetres high pieces of plastic called “chairs”, in order to ensure that the reinforcing was properly positioned within the concrete when poured.

[6] Also assisting in this operation was a “dogman” whose role was to communicate with the crane operator.  A steel fixer engaged in the activity I have just described faces an appreciable risk of falling from the ledge while concentrating on the job of positioning the beam and chairs. In response to that risk the second defendant, in the case of previously constructed beams, had caused steel guard rails, consisting of an upper rail and a mid rail, to be fixed along the outside of each ledge.  No such precaution was taken in relation to beam 3B8.

Aspects of site safety

[7] Prior to the accident, the second defendant caused a Workplace Health and Safety committee to be constituted for the project. The committee held meetings at approximately fortnightly intervals. Those meetings were chaired by Mr Gildea, the site manager of the second defendant and Mr Houston, also an employee of the second defendant and the site safety officer for the project. Representatives of various subcontractors, including the first defendant, but not including the third defendant, attended the meetings. The minutes of the meeting of the committee of 21 May contain the entry “5.07 Workers at heights are to have edge protection (i.e. handrails) or are to use harnesses”. The minutes of the meeting held on 4 June 1999 record “5.03 Barricades/handrails/signs/ to be observed”.

[8] Prior to the accident Mr Houston, in his capacity as site safety officer, had reviewed a safety plan dated 10 March 1999 submitted to the second defendant by the third defendant. It contained the following entry:

“a.      Generally, these facilities are to be provided by the Builder or other sub-contractor, but we must observe the following points:

  1. No worker is to use makeshift or unsafe scaffolding, or work in an area with inadequate handrails.
  2. All scaffolding to be erected by qualified personnel, to Health and Safety regulations.”

Events on site immediately prior to the accident

[9] On 30 June, prior to the accident, Mr Houston, when speaking to Mr Bussel, the third defendant’s site supervisor, noticed one of the third defendant’s employees working on a beam which had no handrails. He informed Mr Bussel that “We can’t be working anywhere where there isn’t any handrails” and Mr Bussel instructed the employee to cease working on the beam. Mr Houston’s evidence was that this exchange occurred before “we had our smoko break and smoko is at 9.30”.

[10] Mr Carter, one of the second defendant’s site managers, gave the following account of events in two statements to Workplace Health and Safety inspectors in July 1999.

[11] On the morning of 30 June 1999, Mr Gildea, Mr Carter’s superior, instructed that work commence on the subject beam. That was sometime after morning tea. At the time Mr Carter was standing beside Mr Bussel who heard the instruction. Mr Carter was aware that no safety rails were in position on the subject site as was Mr Gildea. It seems that there were no spare handrails on site. Nevertheless, work proceeded. There had been discussions between representatives of the second defendant and representatives of the first defendant concerning the erection of wooden handrails prior to work proceeding but a decision was taken by the second defendant not to proceed with that option. Mr Carter was not unduly concerned about the lack of safety because he thought it was “safe enough to drop the beams in”.

[12] In one part of his statement of 21 July, Mr Carter appears to be suggesting that he was unaware that wooden handrails had not been erected on the subject site. His statements, however, properly considered, should be seen as an admission of his awareness that no rails were on the subject site at the time of the accident. In any event, the statements, to which no objection was taken, provide evidence of Mr Gildea’s knowledge of the lack of railings at material times.

[13] It was argued on behalf of the second defendant that Mr Houston’s conversation with Mr Bussel may have occurred after Mr Gildea gave his instructions to Mr Carter and Mr Bussel. The evidence, to which I have referred, does not support that conclusion and I find to the contrary.

[14] Neither Carter nor Gildea was called by the second defendant to give any explanation or to make any clarification or correction of Mr Carter’s statements.

The accident

[15] On the morning of 30 June 1999 the plaintiff and two other work mates were directed by Mr Bussel to go to the subject formwork to work on the positioning of the beam. They were met at the site by other employees of the third defendant and a dogman. The workmen positioned themselves on the formwork ledges in order to perform the tasks described earlier. The beam, when being lowered, became caught on an obstruction and had to be lifted. While it was being lifted, the plaintiff moved to his left and took hold of a soldier with his right hand. It gave way and he then fell backwards off the ledge on to the ground some 4.1 metres below, landing on his heels.

[16] Mr Collins, a colleague of the plaintiff working on site, whose evidence I accept, recalls that he was on a ledge of the formwork opposite to the ledge on which the plaintiff was standing, one of the ends of the beam was not sitting correctly and had to be lifted. As that was happening he observed the following: “And Bob stood back, stood up and grabbed one of the soldiers and it give (sic) way straightaway and he went backwards”.

The plaintiff’s injuries

[17] The plaintiff was admitted to the Princess Alexandra Hospital on the day of his accident, where an x-ray revealed “bilateral comminuted intra-articular fractures of the calcaneum with severe disruption of the subtalar joints bilaterally”. The injuries were unable to be alleviated by any surgical procedure and, for a time, the plaintiff was confined to a bed or wheelchair and given physiotherapy treatment. He was discharged on 6 July 1999. The plaintiff was still using a wheelchair when he was seen by the hospital’s orthopaedic registrar in August 1999. The registrar commented in her report of 18 November 1999 that at that time the plaintiff had “stiff and painful subtalar joints” and had developed a pressure area over the right heel. The registrar observed that on 30 September 1999, when she next saw the plaintiff, “he was mobilising on crutches with some discomfort”. She further noted that the plaintiff had not been attending the physiotherapy sessions which she had directed and that when he presented on 11 November 1999 he still had not “bothered to attend physiotherapy”.

[18] Dr Curtis, orthopaedic surgeon , in a report of 30 January 2002, observed –

.There is a broadening and flattening of both hind feet;

.There is a gross and symmetrical wasting of both calves;

.There is a swelling of both hind feet and ankles with .5 cm  of increased girth on the right side;

.There is considerable sclerosis throughout the calcaneus;

  .The fractures are now united with considerable residual deformity producing pain and stiffness and deformity of both feet;

.There is considerable restriction of movement of both ankle joints and mid tarsal joints and virtual ankylosis of the subtalar joints.”

[19] Dr Curtis expressed the opinion that the plaintiff’s disabilities amount to 30% impairment of his right lower limb as a whole and 25% impairment of the left lower limb as a whole.

[20] Dr Curtis was further of the opinion that the plaintiff would be unable to resume his occupation as a steel fixer or to undertake work of that nature but that he would be capable of “some suitable light alternative work of a sedentary nature at which he is predominantly sitting down, such as a car park attendant, gate keeper etc”.

[21] In cross-examination, Dr Curtis said that the plaintiff could possibly work as a service station attendant “provided he would not have to stock shelves or carry heavy objects”. In his report, he stated the opinion that consideration may need to be given to bilateral subtalar fusions and that there was a 10% to 20% chance that such a procedure would be required. His opinion, given in oral evidence, was that if such a procedure was required it would be necessary within 12 years, after which time it would tend to become ineffective.

[22] Dr Saxby, orthopaedic surgeon, who saw the plaintiff in September 1999, was also of the opinion that the plaintiff would not be able to work as a steel fixer but was capable of sedentary work for example, as a night watchman, console operator at a service station or gate keeper if “he could sit down for some of the time”.

[23] Dr Landy, consultant neurologist, agreed that the plaintiff was unsuited for work in the building industry.

[24] Another orthopaedic surgeon, Dr Kwa, had treated the plaintiff in 2000. Dr Kwa’s opinion as to the plaintiff’s employability coincided generally with that of Dr Curtis. He considered that the plaintiff would need to be able to sit for long periods while performing his duty and would not be able to undertake work which required his walking on uneven ground.

The plaintiff’s pre-accident history

[25] The plaintiff left school at age 16.  After that time he had a variety of occupations.  Initially he worked part and full time as a painter and docker.  He also worked as a storeman and as a labourer.  Of recent years however, he has worked only  as a steel fixer. 

[26] The plaintiff does not appear to have been active in any sporting pursuits prior to the accident.  He did say however that prior to the accident “we used to play a bit of touch football, golf, fishing”.

The plaintiff’s post-accident history

[27] The plaintiff is still able to enjoy fishing but is denied participation in the other more active sports. It is not suggested that he ardently pursued his sporting activities before the accident or that his inability to continue to engage in them has caused him any great distress.

[28] The plaintiff was hospitalized for about a week after the accident.  He was then reliant on a wheelchair for mobility for about three months during which time he lived with his sister and brother-in-law at their home.  He experienced intermittent pain during this period.  After three months he was able to move with the assistance of crutches.

[29] His movement remains restricted. He is able to walk for about a kilometre, provided the ground is reasonably flat, before his aching feet require him to rest. 

[30] He finds difficulty in walking on uneven and hilly ground and has had to give up touch football and golf. Dr Landy’s report reveals that the plaintiff informed him that he had done a three day computer course and also a seven day typing course.  He has not attempted to obtain employment or, as far as one can tell, to investigate employment opportunities.

Pain, suffering and loss of amenities of life

[31] The plaintiff was not very forthcoming about the aftermath of his injuries and, in particular, about the pain, discomfort and disability flowing from them. He has borne his sufferings with admirable stoicism.  One can detect, however, from the  nature of the plaintiff’s injuries and from the medical evidence that the plaintiff has experienced a considerable amount of pain and discomfort.  He also suffers from the considerable disadvantage of having his everyday freedom of movement curtailed.

[32] I accept the submission on behalf of the third defendant that an appropriate award under this heading is $70,000. That figure is supported by the comparable awards to which I was referred by counsel.  Interest at 2% is allowed on $25,000. 

Special damages

[33] Mr Rolls, for the third defendant, put forward a figure of $11,848 which was accepted by Mr Matthews, for the plaintiff.

[34] There was no dispute as to the plaintiff’s claim for interest on special damages of $438 and that figure will be allowed.

Griffiths v Kerkemeyer (past gratuitous care)

[35] Mr Matthews relied on a schedule based on the evidence of the plaintiff’s sister and brother-in-law to arrive at a figure of $16,564.  The evidence, necessarily, was quite general.  Mr Dickson, for the second defendant, invited me to “adopt a broad brush approach”, and award $10,000 for past gratuitous care.  He relied particularly on a concession made by the plaintiff that he was able to cook, clean, feed and look after himself from six months after the accident.  That evidence was not entirely unqualified and did not take into account difficulties experienced by the plaintiff in moving up and down stairs, over rough ground and the restrictions resulting from his pain.  In the light of these matters it is appropriate to discount the claimed figure by 20% and I allow $13,160.  Interest is allowed on that figure at 5% per annum.

Griffiths v Kerkemeyer (future gratuitous care)

[36] The plaintiff claims $21,393.  That is calculated on the basis of one hour per week at $22.90 for 30 years, discounted by 10% for contingencies and further discounted on the 3% tables.

[37] In reliance on the evidence referred to under the last heading, Mr Dickson submitted that nothing should be allowed on account of future gratuitous care.  I accept that the evidence supporting the claim is modest but, in my view, the general evidence of the plaintiff’s incapacity supports a claim of to the order of one half hour per week and I allow $10,000 (calculated generally on the basis put forward by Mr Matthews).

Fox v Wood

[38] This figure is agreed at $9,227.

WorkCover Queensland refund

[39] Agreed at $96,571.

Past Economic Loss

[40] I generally adopt the plaintiff’s calculations.  They appeared to me to more nearly reflect the income the plaintiff would have received had he not been injured than did the calculations put forward on behalf of the third defendant. One difficulty with those calculations is that they sought to draw a mean between net earnings in the year ended 30 June 1999 and those established at 1 March 2004.  The calculation was thus necessarily general and did not give an accurate reflection of the true rate of remuneration resulting from changes in rates of pay at relevant times. 

[41] The plaintiff’s past economic loss schedule, was not subjected to any specific challenge.  From it however, must be deducted the travel allowance and the meal allowance.  Those allowances are to accommodate extra costs occasioned by travel and by being away from one’s place of residence during the working day.  The third defendant also submitted that past economic loss should be discounted by 15% whereas the plaintiff’s calculations allow for a 10% discount on account of contingencies.  Having regard to the evidence of the close down in the industry in the Christmas/New Year period, the likelihood of changes in jobs, downturns between employee’s jobs and time off for injuries and ill health I conclude that 15% is the more appropriate figure.  There will be interest on the figures so calculated, net of WorkCover benefits and Centrelink benefits, totalling $60,669.50 at 5%.

Future Economic Loss

[42] The plaintiff submits that a figure of $536,761 is an appropriate award calculated on the basis of $1,235 per week net for 16 years to age 65 ($715,682.50), discounted by 25% for contingencies and residual earning capacity. The third defendant’s submissions accept a prospective retirement age of 65 years but are calculated on a net wage of $877 per week for 16.4 years giving a total sum of $509,140.  It is then submitted that a 40% discount should be applied to arrive at a figure of $305,484.  No doubt has been cast on the plaintiff’s income calculations and I adopt them except that they must be re-adjusted to exclude the figures on account of travel allowance and meal allowance.  Additionally, I consider that the discount for contingencies and residual earning capacity should be 331/3%.

[43] The work of a steel fixer is quite heavy in nature.  Some workers are able to continue to do it until normal retirement age but many cannot. There is a high attrition rate, as one might expect. It is relevant also that the plaintiff, in my estimation, is not a highly motivated person and would be unlikely to persist in  work which caused him substantial physical pain or discomfort.  Relevant also are periods of industry downturn and, as mentioned above, gaps in remuneration between jobs and during industry breaks. 

[44] The plaintiff’s residual income earning capacity must be taken into account.  The medical evidence discloses that it is substantial. The income which could be expected as a result of that capacity was not explored in evidence, it being the position of the second and third defendants that the plaintiff had the onus of proof whilst the plaintiff contended that the defendants bore the onus. 

[45] The legal onus of proving that damage has been suffered and the quantum of the damage rests with the plaintiff[1].  It was thus for the plaintiff to establish the extent of his loss, particularly as the plaintiff’s own evidence revealed the existence of a substantial income earning capacity. 

[46] In the absence of other than minimal evidence about the availability of work within the plaintiff’s capacity and the remuneration for such work, there are obvious difficulties in quantification but the plaintiff’s claim does not fail on that account.  The Court is entitled, and perhaps obliged, to make the best estimate it can in the circumstances[2].  In determining loss resulting from diminution in earning capacity courts have a broad discretion and may make awards on the basis of little evidence[3].

[47] The plaintiff having regard to his limited education and clerical attainments will require some training and the range of jobs available to him is restricted because of his physical limitations, including his need to sit periodically. 

Future medical expenses

[48] The plaintiff claims $8,000. The third defendant’s schedule allows for $6,711.The difference between the two figures is essentially the difference between the 10% and the 15% discounting factors for which they respectively contend.  In my view 10% is appropriate and I allow $8,000.

Conclusions

[49] There will be judgment for the plaintiff against the second and third defendants.  The first defendant is entitled to judgment against the plaintiff with costs.  I invite the parties to agree a calculation of damages and to bring in minutes of order to give effect to the foregoing reasons.

The plaintiff’s claims against the second and third defendants

[50] Counsel for the second and third defendants did not argue in addresses that their respective clients were not liable to the plaintiff.  The implicit concessions were properly made.  It is plain that these parties each breached a tortious duty of care to the plaintiff.

The plaintiff’s claim against the first defendant

[51] In submissions, reliance was placed on the following particulars of negligence –

“11.  ...

(c)failing to take any or any adequate or proper precautions to ensure that the ‘soldiers’ it had affixed did not become or remain a danger to the plaintiff;

(d)causing or permitting the soldiers to be or become or to remain fixed in a manner which presented a danger to the plaintiff in that the same may be utilised as a handhold in the absence of guard or hand rails or scaffold;

(e)failing to give to the plaintiff any or any adequate or proper warning as to the condition of and/or danger presented by the soldiers prior to the commencement of his work;

(g)failing to erect any or any proper or adequate system of scaffolding, hand rails, guard rails or any other form of fall protection;”.

[52] The essence of the plaintiff’s case against the first defendant is that the soldier which gave way was not securely nailed and that the first defendant was aware or ought reasonably to have been aware that in the absence of protective railings, persons working on the formwork could use the soldiers for “some form of support”.

[53] The difficulty with the plaintiff’s case is that the evidence does not suggest that the first defendant ought to have appreciated that workmen would work on the subject formwork unprotected by appropriate protective railings. The evidence is to the contrary.  The degree of risk of an accident occurring and the degree of injury likely to result from such an accident are relevant to a determination of whether there is a breach of a duty to take reasonable care.[4]

[54] There is no evidence either from which one could form a sensible appreciation of the risks presented by a loose soldier where a protective railing had been erected. The width of the ledges is such that a worker using them would, at all times, have the railings available for immediate support. They would provide protection, not only against the risk of falling off the platform but against the risk of a fall resulting from a loose soldier giving way. In those circumstances, I am unable to find a breach of any pleaded duty of care on the part of the first defendant.

Is the second defendant entitled to indemnity under the first limb of clause 16 of the subcontract?

[55] As against the third defendant, the second defendant relies on clause 16 of the subcontract entered into between those parties to claim an indemnity against it in respect of the plaintiff’s claim.  The second defendant also claims damages arising out of the third defendant’s alleged failure to provide the insurance stipulated in the clause. Clause 16 provides as follows –

Liabilities, Indemnities and Insurances The Subcontractor shall not commit any act of trespass or commit any nuisance or be guilty of any negligence and shall effectually protect and hereby indemnifies the Builder and the Builder’s employees against all loss, damage, injury or liability whatsoever that may occur in respect of the Works or through the execution of the Works and in case of any such loss, damage, injury or liability occurring the Subcontractor shall make full compensation and shall make good all such loss, damage, injury or liability and if the Builder is required to pay any damages for such loss, damage, injury or liability the amount of such damages may together with all costs which the Builder may have incurred in defending or settling the claim for such damages may be deducted from any monies due or becoming due to the Subcontractor under this Contract or may be recovered from the Subcontractor as liquidated damages in that respect incurred and without any way affecting the generality of the foregoing the Subcontractor expressly covenants and agrees with the Builder that in respect of –

(a) Injury to Persons and Property

The Subcontractor shall effect a Public and Products Liability Insurance Policy in the joint names of the Proprietor, the Builder and the Subcontractor, for an amount not less than that stated in the Second Schedule in respect of any one occurrence. The Policy shall include a Cross Liability Clause, in which the Insurer waives all rights of subrogation against any of the parties comprising the Insured, and accepts that each of these parties is considered as if a separate Policy had been issued to each of them. The Policy must indemnify the Insured parties in respect of claims made against them by any person who is not defined as a ‘worker’ under the WorkCover Queensland Act 1996. The Policy shall be maintained until the Final Certificate under the Head Contract is received by the Builder.

(b)Injury to Employees and PPS Workers

The Subcontractor shall insure and keep insured against any liability, loss, claim or proceedings whatsoever whether arising at Common Law or by virtue of any statute relating to Workers Compensation or Employer’s Liability by any person employed by him in or about the execution of the Works. The amount of insurance in respect of Common Law Liability shall be for an unlimited amount. The Subcontractor shall also insure any person engaged by them, who is not defined as a ‘worker’ under the WorkCover Queensland Act 1996, under an Eligible Persons cover or Income Protection Insurance.”

[56] The scope of the indemnity is limited, to an extent, by the definition of Works which is –

“Provide all supervision, labour, materials, plant and equipment necessary to place and fix of all the steel reinforcement and associated works, in accordance with the plans, specification and tender documentation.”

[57] The third defendant disputes the applicability of the first limb of clause 16 on the basis that, properly construed, it indemnifies the second defendant only against loss it suffers occasioned by the trespass, nuisance or negligence of the third defendant. That result is said to flow from the introductory words of the clause. It is submitted, in reliance on the following passage from the reasons of Lord Dilhorne in Smith v South Wales Switchgear Limited[5] that, as the clause seeks to have one person indemnify another against loss occasioned by its own negligence or fault, it should be strictly construed –

“While an indemnity clause may be regarded as the obverse of an exempting clause, when considering the meaning of such a clause one must, I think, regard it as even more inherently improbable that one party should agree to discharge the liability of the other for acts for which he is responsible.”

[58] Reliance is placed also on Canberra Formwork Pty Ltd v Civil & Civic Ltd[6] in which a provision, almost identical to the first limb of clause 16, was construed in the manner for which the third defendant contends. There is considerable similarity between the facts in Canberra Formwork and those in this case. In the former, the plaintiff, a formwork contractor contracted with the first defendant builder to supply and construct formwork for the concrete to be used in constructing a multistorey building. That contract contained the indemnity clause to which reference has been made. An employee of the plaintiff was killed in an accident on formwork erected by the plaintiff and his widow succeeded in an action against the plaintiff. The plaintiff then sought contribution from the first defendant and the second defendant, who was the first defendant’s site engineer. It was held that the second defendant had failed to take reasonable steps to prevent injury to the deceased and would have been liable to his widow and further that the first defendant, as the second defendant’s employer, would have been vicariously liable to the widow. It was held also that each defendant was liable to contribute one-third of the amount of the plaintiff’s liability.

[59] In the course of his reasons Blackburn CJ analysed the clause as follows:

“The vital question is whether the words ‘any loss, damage, injury or liability that may occur’ in the second limb extend to those caused by the fault of the general contractor. The third limb does not help in this problem because the word ‘such’ shows that its meaning is co-extensive with that of the second. The first limb is clear in itself. Were it followed by a full stop, and a fortiori if the second limb began a new clause or a new paragraph, there would be a strong argument that the first limb does not affect the sense of the second. But as the clause stands, I think that the first limb indicates the extent of meaning of the phrase ‘loss, damage, injury or liability’ in the second and third limbs – that is, loss etc occasioned by fault of the kind indicated by the first limb. To construe the second limb more extensively is to attribute to the draftsman a grossly forced conjunction of two distinct provisions. Construed as I think it should be, the second limb does not extend to loss etc occasioned by the fault of the general contractor. It indemnifies the general contractor against liability for breach of a non-delegable duty (eg one imposed by statute) or for strict liability eg under the Rylands v Fletcher [1861-73] All ER Rep 1, doctrine), occasioned by the trespass, nuisance, or negligence of the sub-contractor, but not against liability arising from the fault of the general contractor itself.”

[60] Blackburn CJ then found support for his conclusions in the application of the contra proferentem rule and from the general unlikelihood, in his view, that the parties intended that one indemnify the other against the latter’s own default. He referred to the following passage from the reasons of Buckley LJ in Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd – [7]

“It is … a fundamental consideration in the construction of contracts of this kind that it is inherently improbable that one party to the contract should intend to absolve the other party from the consequences of the latter’s own negligence.”

[61] He referred also to like observations by Kitto J in Davis v Commissioner for Main Roads – [8]

“It seems to me impossible to suppose that the parties were intending that the appellant should indemnify the respondent against claims based upon the respondent’s negligence.”

[62] The second defendant argues that Canberra Formwork is distinguishable as the word “whatsoever” in the fourth line of clause 16 has no counterpart in the clause under consideration in Canberra Formwork. It does not seem to me though that the deletion of that word from clause 16 would alter its sense. The indemnity is against “all loss, damage, injury or liability… that may occur in respect of the Works …”. Placing “whatsoever” after “liability” does no more than emphasise that “all” should be read literally. It cannot operate to change the nature of the loss etc. to which the indemnity extends.

[63] The second defendant urged also that support for its construction was to be derived from State of NSW v Tempo Services Ltd[9] and Astley v Austrust Limited.[10] The former case concerned the construction of an indemnity clause in a contract between the State of New South Wales and the respondent company which carried on a business of contract cleaning. The clause relevantly provided –

“The Contractor shall be liable for and indemnifies and shall keep indemnified the Government against any liability, loss, expense, damages, claims, suits, actions, demands or proceedings, whether arising under any statute or at common law, in respect of personal injury (including illness) to or death of any person arising out of or in connection with or caused by the performance of the Services.”

[64] A cleaner employed by the respondent tripped in the courtyard of a school premises the subject of a cleaning contract between the State and the respondent. The cleaner had a “back pack” vacuum cleaner strapped to her back, was holding a mop and when injured was crossing the school courtyard in order to commence her cleaning activities within the school building.

[65] The primary judge, for a variety of reasons, held that the indemnity clause did not apply. One such reason was that the clause was not intended to apply in circumstances in which there was no blame attributable to the State of New South Wales and no “causal connection” between the injury and the performance of the services.  The reasons in the Court of Appeal, which allowed the appeal, point out that the question which the primary judge had to decide was one of contractual construction into which questions of fault did not intrude.  The case, as I think is apparent from the foregoing account, being on the construction of a provision of a contract markedly different to the provision under consideration here, can offer little, if any guidance.

[66] In Astley it was observed that it was common place for contracts to contain provisions regulating liability for breach of a duty to take reasonable care.  It was then said in the joint judgment –

“Commercial people in particular prefer the certainty of fixed rules to the vagueness of concepts such as ‘just and equitable’.  That is why it is commonplace for contracts to contain provisions regulating liability for breach of a duty to take reasonable care, whether by excluding liability altogether or limiting it in some other way.

Absent some contractual stipulation to the contrary, there is no reason of justice or sound legal policy which should prevent the plaintiff in a case such as the present recovering for all the damage that is causally connected to the defendant’s breach even if the plaintiff’s conduct has contributed to the damage which he or she has suffered.  By its own voluntary act, the defendant has accepted an obligation to take reasonable care and, subject to remoteness rules, to pay damages for any loss or damage flowing from a breach of that obligation.  If the defendant wishes to reduce its liability in a situation where the plaintiff’s own conduct contributes to the damage suffered, it is open to the defendant to make a bargain with the plaintiff to achieve that end.  Of course, the result of such a bargain may be that the defendant will have to take a reduced consideration for its promise to take reasonable care.  But the bargain will be the product of the parties’ voluntary agreement to subject themselves to their respective obligations.”[11]

[67] Principles applicable to the construction of exclusion and limitation clauses are expounded in Darlington Futures v Velco Australia Pty Ltd[12] in which, after referring to four earlier decisions of the Court, [13] it was said –

“These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity.  Notwithstanding the comments of Lord Fraser in Ailsa Craig [1983] 1 All E.R., at p. 105, the same principle applies to the construction of limitation clauses. … And the principle, in the form in which we have expressed it, does no more than express the general approach to the interpretation of contracts and it is of sufficient generality to accommodate the different considerations that may arise in the interpretation of a wide variety of exclusion and limitation clauses in formal commercial contracts between business people where no question of the reasonableness or fairness of the clause arises.”

[68] In Van Der Sterren v Cibernetics (Holdings) Pty Ltd,[14] Walsh J drew attention to the necessity of ascertaining the parties’ intention –

“The terms of exception clauses must sometimes be read down if they cannot be applied literally without creating an absurdity or defeating the main object of the contract … But such a modification by implication of the language which the parties have used in an exception clause is not to be made unless it is necessary to give effect to what the parties must be understood to have intended.”

[69] Another illustration of the way in which the parties’ intention may depart from the meaning of a clause literally construed is provided by Sydney Corporation v West.  It was a parking ticket case in which the ticket contained the clause –[15]

“The Council does not accept any responsibility for the loss or damage to any vehicle … however such loss, damage … may arise or be caused. … The plaintiff’s car was taken from the parking station by an unauthorized person who surrendered to the attendant a duplicate parking ticket relating to another car which he had obtained by falsely representing that he had lost his ticket.  It was the attendant’s duty not to allow cars to proceed out of the station otherwise than upon the surrender by the driver of the appropriate ticket.”

[70] Barwick CJ and Taylor J, in explaining why the clause did not exclude the defendant from liability, said:[16]

“… in the case where a contract of bailment contains an exempting clause such as we have to consider the protection afforded by the clause will be lost if the goods the subject of the bailment are stored in a place or in a manner other than that authorized by the contract or if the bailee consumes or destroys them instead of storing them or if he sells them.

...

But we would deny the application of such a clause in those circumstances simply upon the interpretation of the clause itself.  Such a clause contemplates that loss or damage may occur by reason of negligence on the part of the warehouseman or his servants in carrying out the obligations’ created by the contract.  But in our view it has no application to negligence in relation to acts done with respect to a bailor’s goods which are neither authorized nor permitted by the contract … Negligence in these circumstances would be right outside the purview of the clause.”

[71] The following often quoted observations of Diplock LJ in Antaios Compania Naviera SA v Salen Rederierna AB are also pertinent:[17]

“… if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.”  

[72] There is obvious difficulty in construing clause 16 as if the words “caused by any such trespass” appeared after “loss, damage, injury or liability whatsoever”.  Not only do those words not appear in the clause but the introductory words of prohibition do not naturally qualify “loss, damage etc”.

[73] On balance, and with consideration hesitation, I accept the defendants’ construction.  I adopt, with respect, much of the reasoning of Blackburn CJ.  In particular, I regard it as significant that the introductory words are not contained in a separate sentence let alone a paragraph.  Unless the clause is construed in this way the introductory words are quite incongruous and, being limited in scope, in contrast with the indemnity provisions, have a limited role.  That role would appear to be to give rise to an act of default under clause 16 in the event of breach.

[74] Unless the clause is construed in this way, the subcontractor would be liable for losses sustained by the builder as a result of its negligence, its breaches of the head contract or breaches of statutory duty.  It may even be arguable that the subcontractor would be liable for damages sustained by the builder as a result of its own deliberate wrongdoing. The parties, of course, may make such a contract if they wish, but in ascertaining the parties’ intention, it is appropriate to have particular regard to textual indications that no such consequences were intended.

[75] The fact that the subject provisions were agreed to by the parties well after the reported decision in Canberra Formwork Pty Ltd supports the conclusion I have reached.

Was there a breach by the third defendant of its obligations under clause 16(a) of the subcontract?

[76] Sub-clause (a) of clause 16 creates an obligation on the part of the third defendant to effect a Public and Products Liability Insurance Policy “in respect of any one occurrence”. It does not elaborate on the risk against which the insurance is to be effected. The third defendant argues that to determine the scope of the obligation it is necessary to go to the first sub-clause of clause 16.  By this process it may be ascertained that the risk is that against which the third defendant has indemnified the second defendant namely, “all loss, damage, injury or liability whatsoever that may occur in respect of the Works or through the execution of the Works”.

[77] The wording of sub-clause (b), however, is inconsistent with that approach. It requires that a Public and Products Liability Insurance Policy be taken out against injury to persons and property. It is implicit that it is in respect of “the works”. The insured are to be “the Proprietor, the Builder and the Subcontractor”. The insurer is to have no right of subrogation against any of the insured parties and each is to be “considered as if a separate policy had been issued to each of them”. The language of the sub-clause thus does not suggest that the policy is to be limited to the liability indemnified against under the first limb of clause (16).

[78] Reference to sub-clause (c), headed “Injury to Employees and POS workers”, shows that there is no correlation between the indemnity given under the first limb of clause 16 and the scope of the insurance required under that sub-clause. The insurance is required to be against loss arising from statutory as well as common law claims.

[79] Sub-clause (b) defines the nature of the required policy in greater detail than does sub-clause (a) but the reason for that, in my view, lies in the nature of the subject policies. In respect of the “Public and Products Liability” policy required under sub-clause (a), it is unnecessary to go beyond specifying that the “Policy must indemnify the Insured parties in respect of claims made against them by any person…” It was not argued that a clause in such terms would be so indefinite in its meaning as to be void for uncertainty. Nor was it argued that its terms would not extend to loss or damage of the nature of the subject loss and damage.

[80] Also, there is nothing unusual from a commercial viewpoint in requiring a subcontractor to be responsible for effecting the insurance cover required for its part of the works. The considerations underlying the construction of the first limb of clause 16 are thus generally inapplicable to the construction of sub-clause (a).

[81] Finally, on this aspect of the matter, I mention that it was not pleaded or argued that there should be some discounting of the damages recoverable by the second defendant to take into account the risk that the insurer may not pay out in full or at all.

[82] It was argued that there was no obligation to effect the policy of insurance as it did not apply to any person defined as a “worker” under the WorkCover Queensland Act 1996 (Qld).  Section 12(1) of that Act contains the following definition –

12.(1)  A ‘worker’ is an individual who –

(a) works under a contract of service; and

(b) is a PAYE taxpayer in relation to the remuneration or other benefit received for the performance of work under the contract of service.”

If that provision is construed literally, the clause would not apply to claims by a person who, in effect, was an employee of any person, firm or company.  It is highly unlikely that was the intention of the parties.  Nor do I consider it likely that the parties intended that the policy not apply to a claim against the proprietor or builder by a person who was not a “worker” in respect of the proprietor or builder, as the case may be.  The more obvious intent was that the policy not apply to a claim against a named insured by an employee of that insured.  That construction, as it should, takes into account the operation of sub-clause (b) which requires the subcontractor to have appropriate insurance cover in respect of its workers.

[83] The evidence discloses that the third defendant failed to take out the policy required under sub-clause (a). It was thus in breach of contract. Nothing in the third defendant’s pleaded case or in the evidence suggests that the loss suffered by the second defendant in consequence of the breach is not commensurate with the extent of the loss recoverable by the plaintiff against the second defendant and its costs.

Contribution between the second and third defendants

[84] Each of the second and third defendants claims contribution against the other. In view of previous findings, the second defendant’s obligation to make contribution to the third defendant will not result in any practical benefit for the third defendant: the second defendant’s loss resulting from the third defendant’s breach of clause 16(a) will be increased to the extent of the contribution. It is necessary, however, to make findings in relation to contribution in case the matters goes on appeal.

[85] Apportionment of liability between joint tortfeasors is effected under s 6 and s 7 of the Law Reform Act 1995 (Qld).

[86] Section 7 provides that the contribution recoverable from any person “shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage”.

[87] In Wynbergen v Hoyts Corporation Pty Ltd,[18]  Hayne J, with whose reasons the other members of the Court agreed, referring to sections 7-10 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW) said –

“This and other apportionment legislation is predicated upon a finding that a person suffers damage as the result partly of the person’s own fault and partly of the fault of any other person or persons. No doubt the making of the apportionment which the legislation requires involves comparison of the culpability of the parties, ie, the degree to which each has departed from the standard of what is reasonable, but that is not the only element to be considered. Regard must be had to the ‘relative importance of the acts of the parties in causing the damage’ and it is ‘the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination’ (italics added).

No doubt also, as the Court said in Podrebersek v Australian Iron & Steel Pty Ltd ‘[t]he significance of the various elements involved in such an examination will vary from case to case’ and ‘the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance.’” (Footnotes omitted)

[88] Wynbergen and Podrebersek[19] were concerned with contribution between an injured claimant and a wrongdoer, but as Sheller JA, with whose reasons Spigelman CJ and Stein JA agreed, observed in James Hardie and Coy Pty Ltd v Roberts[20] there is no reason to think that any different principles apply when considering contribution as between tortfeasors.

[89] The conduct of the second and third defendants is comparable to the extent that they were both aware that: steel workers were being required to work on the site without the protection of railings; such railings had been provided when similar work had been undertaken elsewhere on the site and that the provision of appropriate railings was necessary if a foreseeable risk of injury resulting from a fall from a considerable height was to be obviated or, at least, minimised.

[90] The relevant points of difference in those parties’ conduct appear to me to be these. The third defendant had the direction and control of the plaintiff’s activities and a duty to provide a safe system of work. The second defendant had the overall control of the site, including the general management of site safety. It had the responsibility of erecting protective railings where they were needed. It had assumed that responsibility in the past and the first and third defendants looked to it to continue with that role.

[91] It was the second defendant which made the decision that the subject work be done despite the absence of the safety precautions which it deemed necessary. It directed the third defendant to undertake the work and thus created the opportunity for the plaintiff’s accident.

[92] The second defendant’s conduct and, in particular, its direction to do the subject work, cannot excuse the third defendant’s dereliction of its duty to its employee. The reality of the situation, however, was that the subcontractors such as the third defendant would tend to rely on the second defendant in relation to matters of safety and would tend to follow its directions concerning the work to be undertaken.  That is particularly so where, as was the case here, the builder’s site foreman was requiring significant aspects of the works to be performed immediately or virtually so.

[93] For these reasons, I conclude that the second defendant is more culpable and that its acts and omissions played a more significant role in causing the plaintiff’s damage than did those of the third defendant. Accordingly, I conclude that the appropriate apportionment is two-thirds to the second defendant and one-third to the third defendant and that the third defendant is entitled to recover contribution from the second defendant for two-thirds of the damages and costs it is liable to pay the plaintiff. The second defendant is entitled to recover contribution from the first defendant for one-third of its damages and costs. The consequences of those findings, however, need to be assessed in the light of the third defendant’s breach of clause 16 and the damages flowing therefrom.

Contribution between the plaintiff and each of the second and third defendants

[94] The third defendant did not seek contribution against the plaintiff. The second defendant, however, did seek such contribution.  That claim fails.  The plaintiff did what he was told to do directly by his employer and indirectly by the second defendant contractor.  The plaintiff knew that there was a site safety officer and it may be inferred that he was aware that careful consideration had been given by his employer and the head contractor to site safety and statutory obligations relating thereto. In the circumstances under consideration (which include the fact that the second defendant is a large corporation of high repute) he was entitled to think that the relevant instructions had issued after due consideration had been given to their implications from an industrial safety viewpoint.

Conclusion

[95] The plaintiff is entitled to judgment with costs against the second and third defendants.

The first defendant is entitled to judgment with costs against the plaintiff.

The second defendant has findings that the third defendant is in breach of clause 16(a) of the subcontract and that the loss flowing from such breach is co-extensive with the quantum of the plaintiff’s claim against the second defendant together with costs recoverable by the plaintiff from the second defendant 

It is appropriate in the light of the above findings, and in view of the necessity to give further consideration to the consequences of the WorkCover Queensland Act, to give the parties an opportunity to consider these reasons and make submissions as to the appropriate consequential orders.

Footnotes

[1] Purkess v Crittenden (1965) 114 CLR 164 at 167, 168.

[2] Fink v Fink (1946) 74 CLR 127 at 143; Naylor v Yorkshire Electricity Board (1968) AC 529 at 548; Baird v Roberts (1977) 2 NSWLR 389; State of New South Wales v Moss (2000) 54 NSWLR 536.

[3] State of New South Wales v Moss (at para 87) and Smith v Topp [2003] QCA 397 para 26.

[4] Raimondo v State of South Australia (1978-1989) 23 ALR 513 at 518.

[5] (1978) 1 WLR 165.

[6] (1982) 41 ACTR 1.

[7] [1973] QB 400 at 419.

[8] (1968) 117 CLR 529 at 534.

[9] [2004] NSWCA 4.

[10] (1999) 197 CLR 1.

[11] At 37.

[12] [1986] 161 CLR 500.

[13] Sydney Corporation v West (1965) 114 CLR 481; Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353; Van Der Sterren v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157, at p 158; Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (1978) 139 CLR 231, at p 238.

[14](1970) 44 ALJR 157 at 158.

[15] At 481.

[16] At 488.

[17] [1985] AC 191, 201

[18] (1997) 72 ALJR 65 at 68.

[19] (1985) 59 ALJR 492.

[20] (1999) 47 NSWLR 425 at 446.

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Editorial Notes

  • Published Case Name:

    Ellington v Heinrich Constructions P/L & Ors

  • Shortened Case Name:

    Ellington v Heinrich Constructions Pty Ltd

  • MNC:

    [2004] QSC 155

  • Court:

    QSC

  • Judge(s):

    Muir J

  • Date:

    21 May 2004

Litigation History

No Litigation History

Appeal Status

No Status