Copious culpabilities: liabilities of dual employers and sole-employee companies

When does vicarious liability not lie with a worker's employer? How is negligence assessed for sole-employee companies? Can there be dual vicarious liability?  The Court of Appeal addresses these issues in a judgment that considers the assessment of breach of duty of care and apportionment of liability in multi-party construction sites.

 

Author: Renee Magee
Judgment date: 17 March 2020
Citation: Hallmark Construction Pty Ltd v Brett Harford [2020] NSWCA 41
Jurisdiction: NSW Court of Appeal

Principles


  • Companies relying upon labour-hire workers may be held vicariously liable for not only their direct employees but anyone they confer authority on
  • Whether a sole employee company owes a duty of care will depend upon a prospective and objective assessment of what a reasonable employer would have done in the circumstances and should not be confused with what steps the employer actually took.

Background

Circumstances of the accident

On 24 May 2013, Brett Harford (plaintiff) was delivering building blocks to a construction site when he attempted to move a wooden pallet lying on the ground and subsequently fell 4 metres into a stormwater retention pit underneath the pallet, suffering severe injuries.

Hallmark Construction Pty Ltd (Hallmark) was the head contractor of the site and subcontracted bricklayers, Copeland Building Services Pty Ltd (Copeland), to construct the walls of the townhouses. ANM Building Services Pty Ltd (ANM) was a labour hire company that supplied a site supervisor, Mr Isaia, to Copeland. Copeland ordered building supplies which were delivered by Harford Transport Pty Ltd (Harford), the plaintiff's company of which he was the sole employee, and Mr Isaia directed the plaintiff in where to unload the supplies.

Liability was only in issue at the hearing. Damages were agreed at $1.6 million.

Supreme Court proceedings

The primary judge1 found that Hallmark was negligent for permitting the pit to have an inadequate covering.  Copeland was liable for the uncovered pit as a joint occupier of the site and was also found to be vicariously liable for the negligence of Mr Isaia in directing the plaintiff to unload the supplies in the vicinity of the pit without warning him of the pit. Liability was apportioned equally between Hallmark and Copeland. As there could be no dual vicarious liability for Mr Isaia's actions, the proceedings against ANM, Mr Isaia's employer, were dismissed.

In relation to the contribution of the plaintiff and his company, it was held that Harford had adopted a safe system of work in delivering the goods to the site and could not have reasonably been expected to encounter a retention pit on site. There was no prompt to put the plaintiff on enquiry as to a possible danger underneath the pallet. As such, there was no contribution to Hartford or the plaintiff.

The Supreme Court reaffirmed that an assessment of breach of duty for a sole employee company is not a question of what the individual ought to have done in the circumstances but rather a prospective and objective assessment of what a reasonable employer would have done.

Hallmark and Copeland appealed the decision challenging the findings of liability against ANM, Hartford and the plaintiff and apportionment between the parties.

Decision

In a unanimous judgement, the Court of Appeal2 re-apportioned liability 25%/75% in Hallmark's favour on the basis that Copeland exercised a more immediate level of control than Hallmark over the area and were responsible for inviting the plaintiff onto the site.

As to the issue of vicarious liability, the Court of Appeal applied Day v The Ocean Beach Hotel Shellharbour Pty Ltd (2013) 85 NSWLR 335; [2013] NSWCA 250 in refusing to recognise dual vicarious liability in circumstances where two different entities had legal control over a tortfeasor. Copeland's conferral of authority onto Mr Isaia was exemplified in his control of the site. The supervisor directed where the Plaintiff was to unload his truck as a representative of Copeland, not ANM who merely provided the employee contract.  Accordingly, the finding in favour of ANM was upheld.

The findings of no liability against Hartford and no contributory negligence by the plaintiff were also upheld. In his judgment, Justice Basten noted "there is a danger in assessing the company's obligation through the lens of the plaintiff's conduct" and warned of equating the care an individual takes for his own safety with the steps an employer ought to take in devising a safe system of work. His Honour stressed the correct approach requires standing back and providing an objective assessment of whether or not an employer had breached its duty to provide a safe system of work.

Why this case is important

  1. The judgment demonstrates the Court is more interested in which entity has control over a worker rather than which entity is the worker's employer when determining who is liable for a worker's negligence. The judgment also reaffirms earlier decisions rejecting the principle of dual vicarious liability.
  2. The case reinforces a trend the Court has been taking by not arbitrarily applying a 25% reduction in apportioning liability where employers are involved in multi-party cases. It serves as another reminder that the threshold for establishing a breach of duty of care requires a direct causal relationship between an employer's control of the system of work and the accident.


1 Fagan J
2 Basten JA; Meagher JA & Emmet JA agreeing

Contributors

Gerry Tzortzatos Special Counsel
Renee Magee Lawyer