High Court reaffirms principals’ duties to contractorsAuthor : Charles Simon and Cassandra Wright

Construction and Contract Works

On 2 September 2009, the High Court of Australia (French CJ, Gummow J, Hayne J, Heydon J and Bell J) delivered a unanimous decision in Leighton Contractors Pty Ltd v Fox & Ors and Calliden Insurance Limited v Fox & Ors[1] and reaffirmed the duties owed by principals to contractors on construction sites.  The High Court reinforced the principles enunciated in Stevens v Brodribb Sawmilling Co Pty Limited [2]and held that:

+     a head contractor owes no stringent or strict common law duty to train subcontractors engaged to work on a site in the manner in which the subcontractor is to perform its speciality work; and

+     a contractor who subcontracts work on a construction site to a competent subcontractor is not subject to an ongoing general law obligation with respect to the safety of the work methods employed by the subcontractor.

Facts

Mr Fox, the respondent, suffered injuries to his neck and head whilst working at a construction site at the Hilton Hotel in Sydney (the construction site).  Leighton Contractors Pty Limited (Leighton), the principal contractor, contracted Downview Pty Limited (Downview) to carry out concreting.  Downview subcontracted the concrete pumping to Toro Constructions (Toro).  Toro’s pump purportedly failed which lead to Toro contracting Aggforce Concrete Pty Limited (Aggforce) to supply a pump to pump the concrete.  Aggforce retained Warren Stewart Pty Limited (Stewart) to operate the pump.  Mr Fox, an independent contractor, attended with Stewart to act as his general labourer.

On 7 March 2003, Mr Fox was cleaning the concrete delivery pipe at the construction site when the end of the pipe struck him on the head.

The courts below

At first instance, Mr Fox sued Leighton, Downview, Stewart and Toro.  Gibb DCJ in the District Court of NSW found that the accident was caused by the negligent conduct of Stewart and awarded damages of $472,562.  The claims against Leighton and Downview were dismissed (the claim against Toro having been discontinued during the course of the hearing).

Mr Fox appealed to the NSW Court of Appeal (CoA) against the dismissal of his claims against Leighton and Downview.  The CoA held that Leighton was subject to a general law duty of care to subcontractors coming onto the construction site, the scope of which included induction training in matters of safety associated with the tasks to be performed by the subcontractors.  The CoA held that the only way Leighton could discharge its duty of care was to ensure that all persons coming onto the site had undergone relevant induction training.  While the evidence before the primary judge was that all persons coming on site were given a general induction of general hazard and safety issues, the CoA inferred that the induction training of Stewart and Mr Fox would have included training in relation to pipe line cleaning and those matters addressed in the WorkCover Authority of NSW’s Code of Practice: Pumping Concrete (approved as an industry code of practice under section 44 of the Occupational Health & Safety Act 2000 (NSW)) (OH&S Act).  Leighton was held to have breached its duty of care by allowing Mr Fox to enter the site without having undergone induction training.

The CoA found that Downview had a general law obligation to its subcontractors to conduct its operations safely.  The CoA held that Downview’s conduct in failing to instruct them on the procedures and requirements relevant to the contract works equated to a breach of its duty of care.

The CoA found that both Leighton and Downview were subject to a common law duty of care for the benefit of Mr Fox and that each was in breach of that duty.  Accordingly, Mr Fox was successful.  The CoA apportioned liability 80% to Downview and 20% to Leighton.

The High Court

The High Court unanimously upheld Leighton and Downview’s appeal.   Both Leighton and Downview successfully argued that the imposition on each of them of a common law duty of care owed to Mr Fox, an independent contractor, involved an unwarranted extension of the liability of principals for negligent acts of independent contractors engaged by them.

A critical consideration for the High Court was the extent of the duty owed by a head contractor to induct subcontractors coming onto its site in matters relevant to safety associated with the tasks to be performed by that subcontractor and/or addressed in an industry code of practice as may be applicable to that speciality.

The High Court acknowledged that whilst obligations under statutory enactments have relevance to determining the existence and scope of a duty, it is necessary to exercise caution in translating those obligations into a duty of care at common law.  This is consistent with the High Court’s decision in Roads and Traffic Authority (NSW) v Dederer [3]  where it was held that œwhatever their scope, all duties of care are to be discharged by the exercise of reasonable care.  They do not impose a more stringent or onerous burden.

While the High Court recognised that a head contractor owed a duty to persons coming onto its site to use reasonable care to avoid physical injury to them, it emphasised that the common law does not recognise a œspecial or strict liability flowing from breach of a duty to provide induction training.  To do so would impose a burdensome obligation on a principal/head contractor to provide training in the safe method of every trade on site.   The High Court found that such a duty was inconsistent with the distinction drawn at common law between employers and their employees and of principals to subcontractors.

With reference to Downview’s liability, the High Court stated that had Downview failed to engage a competent subcontractor, it may not have avoided liability for negligent failure of the subcontractor to take reasonable care to adopt a safety system of work.  In the absence of such a finding, the Court recognised that a contractor was not subject to an ongoing general law obligation with respect to the safety of the work methods employed by its subcontractor or those with whom that subcontractor subcontracted.

Implications

The High Court’s findings are of relevance to insurers of construction risks.  Had the High Court refrained from interfering with the CoA’s decision, it would have signified a widening of the scope of the duty of care of principals with respect to independent contractors which would have had the potential to impact significantly on how parties to construction projects assess and allocate their risks.

The High Court’s decision signifies:

+     that while a principal/head contractor owes a duty to persons coming onto its site to use reasonable care to avoid physical injury to them, the principal/head contractor is not under a stringent or more onerous duty to provide training in the safe method of every trade on site;

+     that a contractor who contracts work on a construction site to a competent subcontractor is not subject to an ongoing general law obligation with respect to the safety of the work methods employed by the subcontractor or those with whom that subcontractor subcontracted; and

+     while obligations under statutory or other enactments have relevance to determining the existence and scope of duty, it is necessary to exercise caution in translating the obligations imposed on employers, principal contractors and others under the OH&S Act and Regulations into a duty of care.

[1] (2009) HCA 35 “ Calliden Insurance Limited was substituted for Downview Pty Ltd pursuant to section 6 of the Law Reform Miscellaneous Provisions Act 1946

[2]  (1986) 1960 CLR 16

[3] (2007) 234 CLR 330

03/09/2009