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Developments in labour hire liabilities

In Victoria workers who suffer a Serious Injury have a right to seek common law damages against the worker’s employer and, where applicable, against other negligent third parties. Such actions have been frequent in labour hire situations, e.g. where a temporary employee is placed with a host employer. Insurers will be aware of the frequency and exposure of these claims as the liability of the host employer falls under a general liability policy.

On 21 May 2009, after a 19 day trial, Justice Beach handed down his decision in (1) Papadopoulos v MC Labour Hire Services Pty Ltd & Anor (No 4) [2009] VSC 193 and (2) Victorian WorkCover Authority v Concept Hire Ltd & Ors [2009] VSC 194. The first judgment is of interest to those in the industry who deal with Òlabour hireå cases from the Victorian Workcover Authority and other statutory bodies seeking to recover from allegedly negligent third parties.

The feature of the case is the legal consequences of the fact that the Plaintiff, Mr Christopher Papadopoulos (the Plaintiff), had suffered an antecedent work injury which he reported to his labour hire employer, MC Labour Hire Services Pty Ltd (MC Labour). MC Labour took a conscious decision not to refer the Plaintiff’s WorkCover claim to the Authorised Insurer as required by the Accident Compensation Act (the Act). Instead, after surgery and an extended period off work, MC Labour sent him off to a host employer, Concept Hire Ltd (Concept), to work as a labourer. It did not put in place a documented Return to Work plan (RTW) prior to his placement as required by the Act and it did not tell Concept about the injuries.

The Plaintiff suffered a further workplace injury on 10 May 2001 and successfully sued both MC Labour and Concept. MC Labour’s interests were indemnified by Victorian WorkCover Authority.

The key issue in the judgment is that MC Labour was held 50% liable, which is a significant amount in the context of the usual awards in this area. It represents a landmark decision since up to now the usual range for liability of a labour hire company was, at most, 35%. Accordingly, the case will be studied carefully going forward.

This case also demonstrates the importance of making an early, well-considered Offer to Contribute in multi-defendant actions. The final outcome was that MC Labour was ultimately ordered to pay Concept’s party-party costs as and from the date of the offer including the costs of the 19 day trial.

Andrew Seiter, a Senior Associate with Wotton + Kearney, represented Concept.

The facts

The Plaintiff brought a proceeding in respect of lumbar spine injuries he alleged he sustained on 10 May 2001 when working at a building site controlled by Concept.

The Plaintiff was a qualified carpenter. On 25 June 2000 he commenced employment with MC Labour, a labour hire company. Essentially, he worked as a labourer.

On 19 September 2000 he injured his right knee whilst climbing down a ladder at a construction site where he had been sent by MC Labour. The Plaintiff completed a WorkCover claim which was handed to MC Labour. Although it was required to do so by the Act, MC Labour did not lodge the claim with the WorkCover Insurer. Justice Beach held that the reason was that Òit looks bad on [MC Labour’s] bookså and would affect its WorkCover premiums. MC Labour chose to self-manage the claim and agreed to pay the Plaintiff’s medical bills and his wages for time off work relating to the injury.

The Plaintiff continued to work for MC Labour between October 2000 and March 2001. He had several days off work due to the knee injury.

In late March 2001 the Plaintiff underwent arthroscopic surgery on his knee. MC Labour paid the full cost of the surgery and his time off work. The Plaintiff then had what he described as a Òniggleå in his back. Three days after the surgery, as he was getting dressed, he experienced severe pain in his buttocks and down his left leg.

The Plaintiff was diagnosed with Òlumbar disc prolapse of the nuclear typeå. He was prescribed a back care programme, traction and physiotherapy.

The evidence was that the Plaintiff’s condition improved. As a result, he was advised he should be right to go back to work but to initially Òdo a little bit of light dutieså. The Plaintiff gave evidence he told MC Labour of his back injury. This evidence was accepted by Justice Beach over MC Labour’s denials.

The Plaintiff’s first placement after the March surgery was on 24 April 2001 with Concept.

On 10 May 2001 the Plaintiff suffered further lumbar spine injuries while lifting a roll of membrane. The estimates of the weight of the 1.2 metre long roll ranged between 25 to 50 kilograms.

The jury verdict and apportionment

The Plaintiff’s proceeding was heard by a Jury as is permissible in Victoria. The Jury awarded the Plaintiff damages of $677,825 after reduction of 11.5% for contributory negligence (the Damages Award) and WorkCover payments received to that date.

MC Labour and Concept sought apportionment of the Damages Award.

In apportioning Justice Beach was required to take into account the comparative culpability of the two defendants. The judgment is interesting in its detail.

MC Labour submitted Concept was more culpable as it had actual control of the site and directed the work. Concept submitted that MC Labour was significantly more culpable because of its failure to comply with the RTW process and to inform it of the Plaintiff’s recent injuries.

However, Justice Beach found that had MC Labour complied with its statutory RTW obligations there would have been consultation with the plaintiff’s general practitioners, if not other appropriately qualified rehabilitation specialists. Further, Justice Beach found it likely that the plaintiff would have been placed on a RTW programme which required no heavy lifting for at least one month following his return to work and thus, even if the plaintiff was employed at Concept’s site and was directed to lift an inappropriate weight (it having required him to do so on 10 May 2001), it was likely he would not have complied or would have sought appropriate assistance, thereby avoiding injury.

Justice Beach thus found a causal link between MC Labour’s conduct in not properly managing its RTW obligations in accordance with law and the happening of the injury.

On the other side of the coin, Justice Beach held that Concept had controlled the premises, it supplied any plant and equipment and it was wholly responsible for devising, instituting and maintaining the system of work. Whilst both defendants bore a responsibility for the Plaintiff’s training and safety induction, MC Labour did not have an ability independently of Concept to avert the hazard caused by attempting to lift the roll.

Justice Beach went on to say that having regard to the more significant negligence of MC Labour (over a prolonged period) compared with the more significant causal potency of Concept’s acts, the appropriate apportionment was 50/50.

The cost consequences

MC Labour and Concept were ordered to each pay 50% of the Damages Award.

Concept had served MC Labour with a Notice of Contribution some six months prior to the trial offering to contribute 50.01% towards any judgment or settlement sum.

Justice Beach ordered that MC Labour pay Concept’s party/party costs from the date of the offer. As such, MC Labour bore the bulk of the significant costs incurred by Concept in defending the action from shortly after the mediation of the matter, including a 19 day trial.


The decision raises a number of issues to consider in labour hire and Section 138 recovery actions (which is the action brought by the VWA to recover compensation benefits paid by it to a worker):

+ the liability of the labour hire employer for breach of its duty of care to the worker was 50% which is the highest known award in this area;

+ the potential relevance of a labour hire company’s conduct prior to placement of the worker. Consistent with the decision, it may be relevant to apportionment to consider what steps the labour hire company took in determining the suitability of a particular employee to a placement with a èÏhost’employer; and

+ the importance of serving a well-considered Offer of Compromise at an early stage in order to protect the client against unavoidable trials.

© Wotton + Kearney 2009
This publication is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this publication. Persons listed may not be admitted in all states and territories.