Principal’s duty to employees of a contractor

By Robert Sheldon

Waco Kwikform Ltd v Perigo and Workers Compensation Nominal Insurer [2014] NSWCA 140

TORTS – negligence claims by employee of independent sub-contractor against his employer and principal sub-contractor – employee injured whilst dismantling birdcage scaffolding – scope of duty of care of principal sub-contractor where had assumed responsibility to devise and supervise safe system of work for employees of independent sub-contractor – whether evidence to support finding of breach of duty – TORTS – causation – no question of principle – TORTS – contributory negligence – whether employee’s inadvertence and inattention compatible with conduct of a reasonable and prudent worker – relevance of repetitive and tedious nature of the work – DAMAGES – apportionment – no question of principle.

Beazley P at [1]; Macfarlan JA at [2]; Meagher JA at [3]

43 In Leighton Contractors it was recognised at [20] that “in some circumstances a principal will come under a duty to use reasonable care to ensure that a system of work for one or more independent contractors is safe”.

44 Those circumstances are described in Brennan J’s statement of the relevant principles in Stevens v Brodribb at 47-48:

“An entrepreneur who organizes an activity involving a risk of injury to those engaged in it is under a duty to use reasonable care in organizing the activity to avoid or minimize that risk, and that duty is imposed whether or not the entrepreneur is under a further duty of care to servants employed by him to carry out that activity. The entrepreneur’s duty arises simply because he is creating the risk (Sutherland Shire Council v Heyman (1985) 59 ALJR 564 at 587; 60 ALR 1 at 42) and his duty is more limited than the duty owed by an employer to an employee. The duty to use reasonable care in organizing an activity does not import a duty to avoid any risk of injury; it imports a duty to use reasonable care to avoid unnecessary risks of injury and to minimize other risks of injury. It does not import a duty to retain control of working systems if it is reasonable to engage the services of independent contractors who are competent themselves to control their system of work without supervision by the entrepreneur. The circumstances may make it necessary for the entrepreneur to retain and exercise a supervisory power or to prescribe the respective areas of responsibility of independent contractors if confusion about those areas involves a risk of injury. But once the activity has been organized and its operation is in the hands of independent contractors, liability for negligence by them within the area of their responsibility is not borne vicariously by the entrepreneur. If there is no failure to take reasonable care in the employment of independent contractors competent to control their own systems of work, or in not retaining a supervisory power or in leaving undefined the contractors’ respective areas of responsibility, the entrepreneur is not liable for damage caused merely by a negligent failure of an independent contractor to adopt or follow a safe system of work either within his area of responsibility or in an area of shared responsibility.”

45 It was Mr Perigo’s case that in organising the activity of erecting and dismantling the scaffold, Waco was under a general law obligation to use reasonable care to avoid unnecessary risks of injury and to minimise other risks of injury. It was not suggested that this obligation required that it retain control of the scaffolding subcontractor’s system of work, or that it was unreasonable for Waco to subcontract that task. Nor was it part of Mr Perigo’s case that in doing so Waco had failed to engage a competent contractor; or that at some stage it should have terminated its contract with BTSS because it no longer answered that description. Mr Perigo’s case was that from 12 May 2006 Waco assumed control of its subcontractor’s system of work because it was no longer satisfied as to its competence; and that in doing so its general law obligation to exercise reasonable care extended to the prescribing of a safe system of work to be employed by BTSS. 46 Contrary to the submissions made by Waco, that case respects the distinction that the common law draws between the duty a principal owes to its own employees and the duty it owes to its independent contractors and their employees. As the analysis above shows, Mr Perigo does not contend for a more extensive obligation in the circumstances of this case than that recognised in Stevens v Brodribb. Here the primary responsibility for the adopting and following of a safe system of work with respect to the task of dismantling the scaffold was assumed by Waco. From that point in time it had taken primary responsibility for adopting such a system out of the “contractor’s hands”: see Stevens v Brodribb at 48; Leighton Contractors at [59]. 47 That conclusion accords with the following statement of the Court in Leighton Contractors at [59]:

“However, provided that the contractor was competent, and provided that the activity of concrete pumping was placed in the contractor’s hands, [the principal] was not subject to an ongoing general law obligation with respect to the safety of the work methods employed by the contractor or those with whom the contractor subcontracted.”

48 It is also consistent with the statement of this Court (Allsop P, Beazley and Giles JJA) in Pacific Steel Constructions Pty Ltd v Barahona [2009] NSWCA 406 at [122] that a principal contractor which has engaged an independent contractor to perform an activity nevertheless might owe a duty to an employee of the independent contractor to exercise reasonable care in the supervision of that employee’s work where there has been an assumption of responsibility for that supervision by the principal contractor.

 David Cormack – Brisbane Barrister.

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