Contractor employer can be risk for host employer’s safety shortcomings
The case of Synergy Scaffolding Services Pty Ltd v. Alelaimat [2023] NSWCA 213, considers the operation of section 151Z of the Workers Compensation Act 1987, when a labour hire employer is liable.
On 10 October 2012, the worker (a truck driver) entered a building site in Sydney under the direction of Synergy Scaffolding Services Pty Ltd (Synergy). The worker received instructions from Synergy to assist in the dismantling of three storeys of scaffolding. Whilst carrying out his duties as directed by Synergy, the worker was struck on the back, shoulder, and upper arm by a metal scaffolding plank which fell from above.
At all material times, the worker was employed by DJ's Scaffolding Pty Limited (DJ’s) as a contractor truck driver, despite wearing a Synergy uniform and being under the supervision and direction of Synergy. Much turned on the worker's knowledge of the true identity of his employer for the purposes of a limitation defence raised by Synergy, but the court, both at first instance and on appeal, dismissed Synergy's claim that the worker's action was statute-barred.
Supreme Court of New South Wales decision
Proceedings were commenced in the Supreme Court of New South Wales against Synergy and Workers Compensation Nominal Insurer (WCNI), as the insurer of DJ’s (deregistered).
Justice Campbell found that DJs was the worker's employer and thus owed him the non-delegable duty of care to avoid unnecessary risks of injury. However, he found that DJs had no control of the scaffolding work that the worker engaged in and no power to direct their activities. The worker's claim against DJs was dismissed on the basis that it had not been proven to have breached its duty of care owed to the worker.
The worker's claim against Synergy succeeded, resulting in a substantial award for damages.
New South Wales Court of Appeal decision
Synergy appealed the primary decision of Campbell J.
Synergy did not challenge the finding that it was negligent. The keys issues for the Court of Appeal were:
- DJ's liability to the plaintiff
- DJ’s liability to Synergy
- Was the WCNI entitled to indemnity under Workers Compensation Act section 151Z(1)(d)?
- Was Synergy liable to pay damages representing the worker's medical expenses?
As to DJ’s liability, the Court of Appeal relied on the High Court authority of Kondis v. State Transport Authority (1984) 154 CLR 672 stating that the fact that Synergy was found to have exposed the worker to an unsafe system of work, was sufficient to establish that DJ’s had breached its duty of care to the worker.
As to DJ’s liability to Synergy, the Court of Appeal found that Synergy failed to establish that it was entitled to a just and equitable contribution by DJ’s under the Cross Claim.
As to WCNI’s indemnity, the Court of Appeal acknowledged the complex nature of the question in light of section 151Z of the Act. The Court of Appeal considered the application of section 151Z(1)(d) and followed the recent line of authorities, finding that section 151Z(1) can have no application in circumstances where both an employer and non-employer are liable to the worker.
The Court of Appeal then considered section 151Z(e), which states that:
“if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer."
Therefore, for the WCNI to be entitled to indemnity from Synergy, at least one of two conditions must be satisfied: the plaintiff does not take proceedings against the employer; and that the plaintiff does not accept satisfaction of the judgment. The Court of Appeal found that neither condition had been satisfied and set aside the judgment made by the primary judge in favour of the WCNI against Synergy.
As to Synergy’s liability for the worker’s medical expenses, the Court of Appeal found that in circumstances where the worker was not otherwise obliged to repay the WCNI in respect to medical expenses paid on his behalf (in line with South West Helicopters Pty Ltd v. Stephenson (2017) NSWCA 312) then the amount of medical expense should be deducted from the award of damages.
On the basis of the conclusions reached by the Court of Appeal, the following orders were made:
- Judgment for the worker against Synergy in the sum of $1,356,533.39 set aside.
- In lieu thereof, judgment for the worker against Synergy in the sum of $1,180,691.60.
- Judgment for the WCNI against the worker set aside.
- In lieu thereof, judgment for the worker against the WCNI in the sum of $917,686.
- Synergy indemnify the WCNI pursuant to section 151Z(1)(d) of the Workers Compensation Act in the sum of $246,202.54 set aside.
- Costs reserved.
Why this case is important
This case illustrates the divergence of opinion concerning the liability of a labour hire employer. Cases have been trending away from the principles set out in TNT Australia Pty Ltd v. Christie (2003) 65 NSWLR 1 to decrease the labour hire employer's share of liability. However, in this matter the court accepted that a host employer failing to provide a safe system of work for labour hire employees, is sufficient in and of itself to base a finding of negligence on the part of the employer.
Melissa Fenton is a partner, David Chong is a special counsel, and Anthony Mavris is a graduate, all at Colin Biggers & Paisley in Sydney.
