Recently, the Court of Appeal of the Supreme Court of NSW in Fox v Leighton Contractors Pty Ltd & Ors [2008] NSWCA 23 upheld an appeal by an injured contractor (Mr Fox) against both the principal contractor and another subcontractor on the site, holding that both had breached their general law duty of care. Mr Fox was awarded $472,562 in damages.

Facts

Leighton Contractors Pty Ltd (Leighton) was the principal contractor at a building works site at the Hilton Hotel in Sydney. As part of the works, Leighton had contracted with Downview Pty Ltd (Downview) to carry out concreting works. In early 2003, Downview contracted with another company (Aggforce Concrete) to supply a concrete pumping truck and two personnel to operate it. The two personnel supplied were Mr Stewart and the appellant, Mr Fox. Both were supplied not as employees of Aggforce but as independent contractors.

On 7 March 2003 Mr Fox was injured when the pumping pipe struck him in the head during cleaning. The evidence at trial revealed that two contributing factors for the injury included:

• the polyurethane ball (or sponge) used to clean out the pipe was the incorrect size, resulting in a worker on the site improvising and using a cement bag filled with insulation. This bag got stuck in the pipe and required higher than normal air pressure to be flushed out of the pipe, and
• the pipe was not secured to the bin used to collect the concrete. When combined with the higher pressure required, this resulted in the pipe being flung around and striking Mr Fox.

Importantly, the Court frequently referred to clause 32.1 of the contract between Leighton and Downview (Contract) during the appeal. This clause stated that:

All persons to be engaged on Site on the work under the Works Contract must attend a Site Induction prior to commencing work on the Site. The Contractor shall provide Leighton with written details of persons that the Contractor or its Secondary subcontractors propose to engage on Site on the work under the Works Contract. A person’s details shall be provided to Leighton in the form required by Leighton not less than 5 Business Days prior to the date that the Contractor or its Secondary subcontractors proposes that the person will commence work on the Site… The Site Induction…does not relieve the Contractor of its responsibility to properly induct persons engaged to perform the work under the Works Contract as to particular procedures and requirements relevant to that Work.”

At first instance, the District Court dismissed Mr Fox’s claims against Leighton and Downview, and only found another company, Warren Stewart Pty Ltd (the company which supplied Mr Stewart’s services) liable for damages. Mr Fox appealed to the Supreme Court.

Issues considered by the Court

There were four main issues that Giles, McColl and Basten JJA considered in the appeal:

• Was Leighton liable for the injury to Mr Fox?
• Was Downview liable for the injury to Mr Fox?
• Was Mr Fox contributorily negligent?
• Depending on the answers to the above questions, should Downview be liable for contribution to Leighton?

Held

Issue 1: Was Leighton liable?

Although equally applicable to Downview and Issue 2 above, the Court noted that the Contract between Leighton and Downview viewed safety issues as being of high importance. This was reflected in two ways; first, under clause 6.4 any serious failure by Downview to meet its safety obligations would allow Leighton to terminate the Contract, and secondly, by virtue of clause 32.1 of the Contract.

The Court held that the obligation of Leighton to provide induction training to its subcontractors (and those who enter a construction site within Leighton’s control) was part of its general law duty of care. However, noting that it is now well known that a principal contractor is required to provide its subcontractors with a reasonable level of safety, Basten JA (Giles and McColl JJA agreeing) stated that the principles for determining whether a person is responsible for the negligent acts of a third party are not clearly defined. His Honour went on to say that “[w]here an injury occurs due to the negligent act of an employee, the employer will be held responsible; where the negligent act was that of an independent subcontractor, however, the principal will generally not be responsible for any damage suffered.”

Despite holding the above duty existed, the Court qualified this duty by stating that a head contractor (in this instance, Leighton) does not have a non-delegable duty to persons coming onto the site to take care of their safety. This is because such an obligation is inconsistent with the relationship between a principal and independent contractor and instead reflects that of an employer who retains a degree of control over his employees. However, such a line of reasoning did not assist Leighton, as both the provisions of the Contract and the Occupational Health & Safety Regulation 2001 (NSW) (Regulations) showed that at no stage had Leighton delegated its responsibility. In fact, the Court noted that Leighton maintained a high level of control over the site, evidenced by Leighton rejecting Downview’s work method statements and issuing green cards to individuals who had completed induction training.

Aside from its general law duties, Leighton was also held to have failed to comply with the statutory duties imposed on a principal contractor under the Regulations. Specifically, the Court referred to clause 213 which states that “a principal contractor for a construction project must not direct or allow another person to carry out construction work on the construction project unless the principal contractor is satisfied that the person had undergone OHS induction training”. On the evidence before the Court, this duty was clearly breached as Messrs Fox and Stewart received no induction training.

Issue 2: Was Downview liable?

Downview’s liability, as compared to Leighton, was easier for the Court of Appeal to establish. This was because, in addition to the contractual obligations Downview had to Leighton (including under clause 32.1 of the Contract), Downview also had a general duty at law to conduct its operations safely and to contract with properly trained and competent subcontractors/operators when performing the works under the Contract.

The Court held that such a duty was breached in these circumstances on the basis of Downview’s “organisation”, or rather lack thereof. Downview not only was found to have a haphazard system in arranging its subcontractors; it had also allowed its own subcontractors to arrange for the services of Messrs Stewart and Fox to be obtained, thereby effectively abandoning its own responsibilities under general law.

The evidence also revealed Downview failed:

• to ensure its subcontractors knew only inducted workers could perform the works on site, and
• to comply with clause 32.1 by not:

Basten JA summed up the above where he said “One difficulty for Downview in these circumstances was that, whilst they had quite precise and constraining obligations under their contract with Leighton, their failure to obtain similar conditions in a contract with the entity to which Downview subcontracted rendered Downview at risk of any departure from the obligations it had undertaken with Leighton.”

Issue 3: Contributory negligence

Although Basten JA held that Mr Fox should be liable for contributory negligence in the amount of 15%, the Court held 2:1 (Basten JA disagreeing) that Mr Fox should not be liable for contributory negligence. This is because the standard of care relevant for contributory negligence for someone in Mr Fox’s position (an individual brought onto the site for a one-off concrete project as an “off-sider”) would not have required Mr Fox to raise issues about his lack of induction training.

Issue 4: Contribution

As indicated above, both Leighton and Downview were held to have breached their general law duty of care towards Mr Fox. Leighton submitted a cross-appeal claiming contribution from Downview for its part of Mr Fox’s injury. The Court upheld Leighton’s appeal and stated that contribution should be 20:80 (Leighton : Downview) on the basis that Leighton’s failure could largely be attributed to Downview’s failure to comply with the Contract (clause 32.1) and Downview’s lack of organisation regarding the hiring (and notification to Leighton) of its subcontractors.