HAMPIC PTY LTD v ADAMS

Court of Appeal (NSW)|1999-08-12|Before: Mason P, Giles JA

New South Wales Court of Appeal CITATION : HAMPIC PTY LTD v ADAMS [1999] NSWCA 455 FILE NUMBER(S) : CA 40691/97 HEARING DATE(S) : 12 August 1999 JUDGMENT DATE : 10 December 1999

PARTIES : HAMPIC PTY LTD v JANETTE BARBARA ADAMS JUDGMENT OF : Mason P at 1; Giles JA at 66; Davies AJA at 1

LOWER COURT JURISDICTION : District Court LOWER COURT FILE NUMBER(S) : 9/93 LOWER COURT JUDICIAL OFFICER : McDonnell ADCJ

COUNSEL : Appellant: D L Davies SC and K Smark Respondent: G Graham and T Bates SOLICITORS : Appellant: Phillips Fox, Sydney Respondent: Borthwick Wilson Smith CATCHWORDS : DAMAGES - Action for damages - Claim under Trade Practices Act s52, s82 - Misleading or deceptive conduct - Inadequacy of product label on cleaning substance - Employee suffered injury - Requirement of causation - No requirement that damages can be recovered only where the applicant relies directly upon the conduct of the party constituting contravention of the relevant provision; DAMAGES - Application for reduction of damages - Application of Workers Compensation Act 1987 s151Z - Apportionment of liability between manufacturer and employer - Causative impact of their respective actions - Common liability not destroyed by the way the cause of action was framed DECISION : Appeal allowed in part; See par 65

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40691/97 DC (Newcastle) 9/93 MASON P GILES JA DAVIES AJA

HAMPIC PTY LIMITED v Janette Barbara ADAMS The respondent was working as a cleaner in the employment of the Newcastle City Council ("the employer"). On 7 February 1990 she was directed to use a cleaning product called "Power Kleen" manufactured by the appellant to remove boot polish from the surface of a table in a babies' change room. She wore vinyl gloves issued by the employer with white cotton gloves underneath and she checked that the gloves had no holes in them before she put them on. The cleaning task took about ten minutes.

After the task which involved using dipping a pad into the undiluted cleaning fluid it became obvious that the cotton gloves had changed colour and developed a hole. The respondent suffered itchy, burning sensations and blistering shortly afterwards. On consultation with a skin specialist it was confirmed that she had contracted dermatitis and on the advice of her specialist she was forced to cease employment on the 17 May 1990.

The appellant distributed the cleaning product in 25 litre drums with a warning label on the side indicating the dilution requirements and the necessity to wear rubber gloves with prolonged use. The respondent's cleaning supervisor distributed the product to individual cleaners in smaller tin containers which did not carry any label or warning notice.

The respondent commenced proceedings in the District Court against the appellant in relation to the inadequacy of the labelling on the drum in a context where it was shown to be capable of causing injury when used in a manner applied by the respondent. McDonnell ADCJ found that the conduct of the appellant was misleading such as to attract s52 of the Trade Practices Act 1974 (Cth). The respondent was found to have acted responsibly in her use of the product and damages were assessed in the sum of $250,520.

On appeal, the appellant submitted that its conduct was not misleading or deceptive, that the respondent did not rely on the conduct found to be misleading or deceptive, that its conduct did not cause the respondent's loss and that the damages should have been reduced having regard to s151Z of the Workers Compensation Act 1987.

HELD by Mason P and Davies AJA, allowing the appeal in part:

The trial judge was correct in concluding that the label was misleading or deceptive or was likely to mislead or deceive as enunciated by s52 of the Trade Practices Act. Australian Competition & Consumer Commission v Glendale Chemical Products Pty Ltd (1998) ATPR ¶41-632 and (1999) ATPR ¶41-672 (considered)

The failure adequately to label the substance contributed to the plaintiff's injury and this is sufficient to warrant a claim for damages. The requirement of causation is not a stringent one for the purposes of an action for damages under s82 of the Trade Practices Act. There is no requirement that the damages can be recovered only where the applicant relies directly upon the conduct of the party constituting contravention of the relevant provision. Anderson v City of Enfield (1983) 34 SASR 472 (applied); Jansen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526, Marks v GIO Australia Holdings Ltd (1998) 73 ALJR 12 (followed); Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25, Betts v Whittingslowe (1945) 71 CLR 637, Chappel v Hart (1998) 195 CLR 232 (referred)

As to whether there should be a reduction of the respondent's damages pursuant to s151Z of the Workers Compensation Act 1987, the section extends to actions for breaches of statutory duty and so is clearly capable of application to the present case. The primary judge erred in concluding that there should be no reduction in the respondent's damages due to any apportionment against her employer. I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486, Leonard v Smith (1992) 27 NSWLR 5, Grljak v Trivan Pty Ltd (in liq) (1994) 35 NSWLR 82 (referred)

While the cause of action upon which the party is seeking contribution is not itself an action in tort, it is nonetheless open to the appellant to seek statutory contribution if the facts would establish such entitlement. A common liability is not destroyed by the fact that the appellant may have framed a cause of action in one way or another. Dering v Earl of Winchelsea (1787) 1 Cox 318, 29 ER 1184, Moule v Garrett (1872) LR 7 Ex 101, Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38, Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342, Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588, Jones v Mortgage Acceptance Nominees Ltd (1996) 63 FCR 418, Law Reform (Miscellaneous Provisions) Act 1946 s5(1)(c), American Surety Co of New York v Wrightson(1910) 103 LT 663, Government Insurance Office of New South Wales v Crowley [1975] 2 NSWLR 78, Commercial Union Assurance Co Ltd v Hayden [1977] 1 QB 804, Bialkower v Acohs Pty Ltd (1998) 83 FCR 1, Employers Corporate Investments Pty Ltd v Cameron (1977) CLC ¶40-365, Rap Industries Ltd v Royal Insurance Australia Ltd (1988) 5 ANZ Ins Cas ¶60-876, AWA Ltd v Daniels (1992) 7 ACSR 759 (discussed)

The negligence of the appellant was more potent in its causative impact than that of the employer. The responsibility should be apportioned 60% to the appellant and 40% to the employer. Wynbergen v Hoyts Corporation Pty Ltd (1997) 149 ALR 25, Bitupave Ltd v McMahon [1999] NSWCA 330, James Hardie & Co Pty Ltd v Roberts [1999] NSWCA 314 (referred)

HELD by Giles JA, dismissing the appeal with costs:

In relation to the appellant's liability to pay damages for misleading or deceptive conduct, the appeal should be dismissed.

As to whether the respondent's damages pursuant to s151Z of the Workers Compensation Act 1987 should be reduced, the Council is not liable to pay damages for breach of its duty to take care not to expose the respondent to unnecessary risk of injury. Given the instructions on the label of the drum, the Council was not required to do more than provide appropriate gloves for the respondent to use and it did so. The Council was not required to tell the respondent to ensure that the undiluted product did not come into contact with her skin and failure to tell her was not an omission relevantly causative of the respondent's injury.

Direct appellant to bring in short minutes of order to give effect to the judgment, with liberty to apply.

Respondent to pay the appellant's costs and to have a certificate under the Suitor's Fund Act 1952.

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40691/97 DC (Newcastle) 9/93 MASON P GILES JA DAVIES AJA Friday 10 December 1999

HAMPIC PTY LIMITED v Janette Barbara ADAMS JUDGMENT

1 MASON P and DAVIES AJA: The respondent was working as a cleaner in the employment of the Newcastle City Council ("the employer"). On 7 February 1990 she was directed to use a cleaning product manufactured by the appellant to remove boot polish from the surface of a table in a babies' change room. 2 She wore vinyl gloves issued by the employer with white cotton gloves underneath. Before putting on the vinyl gloves, she blew into them to pop the fingers and thereby check that there was no hole in them. She used a pad which she dipped into the cleaning fluid contained in a small tin container supplied by the employer. The particular cleaning task took about ten minutes. 3 During the morning tea break, the respondent's work colleagues noticed that the white cotton gloves had changed colour. She noticed a hole in the gloves which came, she presumed, from the pressure she was putting on the pad that she was using (BB 6). 4 The respondent's hands were burning and itchy and on the two centre fingers of her right hand there were white blisters and purplish-red colouring. She washed her hands and then creamed them to try to stop the burning sensation. 5 Some time later, the respondent consulted her general practitioner and was referred to a skin specialist, Dr Watson. Between 6 March and 19 April she was off work on the doctor's advice. She returned for about a month but then ceased employment on 17 May 1990, again on the advice of her specialist. She had contracted dermatitis. 6 Under Dr Watson's treatment the condition improved to a degree, but it remained a serious and permanent disability. Dr Watson opined that the respondent had a particular susceptibility which contributed to the delay in healing. However, it was not suggested that the condition was so unusual as to negate any relevant duty. 7 The evidence of the respondent and of her treating doctor plainly supported the finding that the cleaning fluid had caused the dermatitis. 8 It was not seriously in dispute that the fluid was a product called "Power Kleen". It is described as a water soluble safety solvent. The appellant distributed the product in twenty-five litre plastic drums. The label on the drums read: DIRECTIONS FOR USE: RECOMMENDED AVERAGE STRENGTH ONE PART POWER KLEEN WITH 15 PARTS WATER. MAY BE USED STRONGER OR WEAKER AS REQUIRED. MOP, SPRAY, BRUSH OR WIPE THE SURFACE TO BE CLEANED. ALLOW COUPLE OF MINUTES PENETRATION THEN RINSE WITH WATER. NOTE: A HEAVY SOLUTION CAN CAUSE ETCHING ON POLISHED SURFACES, IE GLASS AND STAINING OF ANODISED ALUMINIUM AND SHOULD BE RINSED OFF QUICKLY. WARNING: RUBBER GLOVES SHOULD BE WORN WITH PROLONGED USE.

9 The respondent had used Power Kleen twice before in her employment. On the first occasion (in November 1987) she cleaned the cord of a vacuum cleaner. The evidence does not indicate that her hands came into contact with the fluid on this occasion. Some time later, she was using Power Kleen with a cloth and a spray bottle. She had nothing to protect her hands and she noticed that the skin on her hands was all dried. She mentioned the matter to her supervisor and following that she was supplied with gloves. 10 The respondent's cleaning supervisor in 1990 was Mr Ling. He had ordered Power Kleen after seeing a demonstration from an unidentified person who had used the product on a bit of rag which he rubbed on a surface. 11 Mr Ling read the label on the front of the drum, agreeing in evidence that it was "a warning". He then decanted liquid from the plastic drum into smaller tin containers including the one used by the respondent. Those containers held undiluted Power Kleen and did not themselves have any label or warning notice. Under cross-examination by counsel for the appellant at trial, Mr Ling agreed that he knew that the product should have been diluted. He also acknowledged as "probably correct" that a better practice would have been to dilute the product when it was put in the tin because otherwise there was a risk that a cleaner using it could use it in an undiluted solution (BB 39-40). Nevertheless, it was not "at the time" the employer's policy to put a warning on the tin similar to that placed on the plastic drum (BB 36).

Proceedings in the District Court 12 The respondent sued the appellant and four officers of the appellant. The claim against the officers was dismissed and is of no continuing relevance. 13 The claim against the appellant related to the misleading or inadequate labelling on the drum. Neither party called expert evidence about the chemical analysis of the solvent or as to proper or conventional safety standards. The nub of the dispute related to the inadequacies of the label and its capacity to mislead in a context where it was shown to be capable of causing injury when used in the manner applied by the respondent. It was not the respondent's evidence that she had read the label or relied directly upon it. 14 It is not always clear in the judgment of McDonnell ADCJ where his Honour is recounting evidence and where findings are made. Nevertheless, the critical finding was that the conduct of the appellant in respect of the labelling was misleading such as to attract s52 of the Trade Practices Act 1974 (Cth). Earlier in the judgment, his Honour had held that the label's sole instruction on safety directed the wearing of protective gloves only with prolonged use of the cleaning product. A reasonable understanding of such directions clearly suggested that short-term use of the product, without protective gloves, would have no ill effect on the user. This, coupled with the absence of advice about proper first aid treatment, tended to allay concern as to the effect of the product (judgment pars 7.12-7.14). 15 As to causation, his Honour found that the respondent had acted reasonably in following her supervisor's instructions on the use of the product, and that she had acted in a responsible fashion based on her own information about the use and effect of the product. His Honour referred to March v E & MH Stramare Pty Ltd (1991) 171 CLR 506. He rejected the submission that any intervening action displaced the consequences of the appellant's action in failing to issue proper warnings. And he rejected the submission that the respondent had been negligent in her own conduct, finding that she had acted precisely as she had been told by her supervisor. 16 Damages were assessed in the sum of $250,520. 17 The appellant had argued that the damages should be reduced having regard to the appellant's right to contribution from the respondent's employer (Workers Compensation Act 1987, s151Z(2)(c)). This submission was rejected. His Honour referred to the evidence of Mr Ling which has been summarised above. He held that the accidental breakdown in the protection afforded by the vinyl gloves was insufficient to relieve the appellant of its full liability for the injuries visited on the respondent.

Issues on appeal: 18 The appellant submitted that: (1) its conduct was not misleading or deceptive;

(2) the respondent did not rely upon the conduct found to be misleading or deceptive;

(3) its conduct did not cause the respondent's loss;

(4) the damages should have been reduced having regard to s151Z.

It is convenient to address the first three issues together.

Misleading or deceptive conduct; reliance; causation 19 The notice of appeal challenged the finding that the appellant's conduct was misleading or deceptive. However, the written submissions advanced no such contention. In his oral submissions, senior counsel for the appellant seemed to concede that the appellant's conduct was misleading or deceptive, but at a later stage he submitted to the contrary. 20 The principal submissions relate to reliance and causation. 21 As to reliance, it is observed that the trial judge held that a user of the product could reasonably be expected to rely on instructions issued by the manufacturer for the safe use of the product. However, there was no finding that the respondent so relied. Indeed, the only evidence of direct reliance by the respondent was reliance upon Mr Ling's instructions to use the gloves provided. 22 As to causation, the appellant submits that the respondent failed to show that what appeared on the label caused or materially contributed to her injuries. Two matters are relied upon. First, the respondent used the product in undiluted form. Secondly, she rubbed with a pad dipped in the product for at least some of the period of about ten minutes she was engaged in the cleaning task rather than mopping, sponging, brushing or wiping, allowing to remain and then rinsing. Because the respondent did not use the product in accordance with the directions on the label, it is submitted that she failed to prove that the appellant's conduct caused her injuries. 23 The statutory case as pleaded relied solely upon s52 of the Trade Practices Act and s42 of the Fair Trading Act 1987. The pleading did not invoke Part VA of the Trade Practices Act, which is a regime dealing with the liability of manufacturers and importers of defective goods. In that Part, s75AC gives an extended definition of goods having a defect and it includes aspects of marketing and packaging. Section 75AD gives an individual who is injured because of a defect the right to sue the corporation that manufactured and supplied the goods. 24 At trial, counsel for the plaintiffs sought to rely upon s75AC and s75AD (BB 63). Objection was taken by counsel for the defendants (BB 65-6). The plaintiff declined to amend, contending that the sections were procedural and consequential upon s52 (BB 67). This contention is erroneous. Part VA of the Trade Practices Act does not exclude rights otherwise arising (see s75AR) including the right to damages conferred by s82 with respect to conduct that contravenes s52. However, Part VA is an independent regime. In the light of the way the matter was fought at trial, reliance upon Part VA is not available to the respondent. 25 The manner in which inadequate labelling of a product can lead to contravention of s52 is illustrated by Australian Competition & Consumer Commission v Glendale Chemical Products Pty Ltd (1998) ATPR ¶41-632. The ACCC sought orders restraining Glendale from engaging in conduct contrary to s52 and s53(c) in relation to "Glendale Caustic Soda". The ACCC also sought orders that Glendale pay compensation to Mr Barnes who had suffered injury as a result of a defect of the product within the meaning of s75AC. 26 Mr Barnes had purchased the product to unblock a drain in his shower recess. At the point of purchase, a friend advised him to pour hot water down the drain first and then tip the whole of the contents of the product down the drain. Mr Barnes used the product in this manner (actually using boiling water) and he was injured when a column of water rushed out of the pipe and struck him in the face. In applying the product this way, he relied on what his friend had said to him and on the label on the product. The label on the product advised the user to dissolve the product in water before pouring it down the drain. It did not contain a warning not to use hot water. 27 Emmett J found the label to be defective within the meaning of s75AC(2). The essence of his reasoning was (at 40,972): Persons generally are entitled to expect to be warned of a danger or lack of safety in respect of a use to which goods might reasonably be expected to be put. The description of the method for using caustic soda to make a cleaning liquid for the removal of grease from drain pipes and gully traps contains no hint of warning that caustic soda should only be used in that way for cleaning drains. While there is a warning that the contents of the container are corrosive and that contact with eyes and skin should be avoided, that is not adequate having regard to the nature of caustic soda and the purpose for which it was marketed.

28 We do not read this conclusion as turning upon the language of s75AC(2). His Honour's reasoning is equally applicable to proof of contravention of s52, because it is self-evident that a misleading half truth may contravene s52. 29 As to the ACCC's alternative claim based on s52, his Honour said that, even if there were conduct contravening s52, he was not satisfied that Mr Barnes had suffered loss or damage by that conduct. There was no evidence that Mr Barnes understood the label as constituting a representation such as had been pleaded. And there was certainly no evidence that he had relied on such a representation in doing what he did. His Honour did nevertheless add (at 40,973) that: Of course, one might be able to draw the inference that if there had been a warning in express terms against use of the Product with hot water in a confined space, Mr Barnes may well not have done what he did. That, however, is a different question from whether Mr Barnes was induced to act as he did in reliance upon an implied representation in the label. 30 Glendale appealed to the Full Court of the Federal Court. The ACCC lodged a notice of contention challenging the finding that the ACCC had failed to establish contravention of s52 or s53 (see Glendale Chemical Products Pty Ltd v Australian Competition & Consumer Commission (1999) ATPR ¶41-672). 31 The appeal was dismissed, principally on the ground that Emmett J had not erred in relation to Part VA. Most of the judgment is not of present relevance. However, the Full Court (Wilcox, Tamberlin and Sackville JJ) cited the passage we have quoted from Emmett J's judgment (par 28 above). Their Honours added (at 42,596): The instruction [on the label] said "Always wear rubber gloves and safety glasses when handling caustic soda". We think the conjunction of rubber gloves and safety glasses, especially when limited by the words "when handling", would cause the average reader to understand that the relevant risk was that of dry caustic soda coming into contact with the handler's skin; the words would not alert a reader to the extreme inadvisability of allowing any part of the body to be in the vicinity of hot water to which caustic soda had been added. The lack of such a warning was a "defect" in the Product, within the meaning of s75A of the Act. 32 As to the notice of contention relating to s52 and s53(c), the Full Court observed that Emmett J had held that no representation of safety should be implied so as to enliven s52. The Full Court found it unnecessary to express a final view on s52 having regard to the conclusions reached on the other aspects of the case. 33 Nothing in Glendale Chemical Products assists the present appellant. The dicta which we have quoted support the conclusion, by analogy, that the label in the present case was deceptive and misleading or likely to mislead or deceive. 34 In our view, the trial judge was correct to conclude that the label was misleading or deceptive or was likely to mislead or deceive. To anyone who read it, it had the capacity to lull into a false sense of assurance. True, it warned that rubber gloves should be worn; but the warning was qualified by the words "with prolonged use". And true, the recommended average strength was one part Power Kleen with fifteen parts water; but the label added that the product may be used "stronger or weaker as required". The absence of first aid directions would further have contributed to a representation that the product was not as potentially harmful as it turned out to be. 35 Section 82 of the Trade Practices Act gives a cause of action for damages to "a person who suffers loss or damage by the conduct of another person" that was done in contravention of s52 and certain other provisions of the Act. The section does not stipulate any particular manner in which the loss or damage must be suffered. The requirement of causation is not a stringent one (see generally Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25). In Jansen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526 Lockhart J held that there is no requirement that damages can be recovered only where the applicant relies directly upon the conduct of the party constituting contravention of the relevant provision. This decision has been followed in several later cases and the reasoning was expressly approved by Gummow J in Marks v GIO Australia Holdings Ltd (1998) 73 ALJR 12 at 30-1. 36 There is a point of distinction between this case and Glendale. The present respondent never saw the label. Nevertheless, we would not regard this as precluding reliance upon s82 on the basis of the claim for damages. Mr Ling read the misleading label and his response was to distribute the product in an undiluted state and without adding warnings of his own that might have offset, at least in part, the absence of repeating such warnings as there were on the label. 37 Mr Ling provided gloves but never added a warning that the undiluted liquid should never come in contact with the skin. It was certainly on the cards that skin contact could occur in a number of ways, including the way that happened in this case, when the cleaner rubbed a small hole in her glove. But for a warning that did not contravene s52, it is probable that Mr Ling would have acted differently and, in consequence, so too would the respondent. In view of the obvious purpose of a warning in relation to a substance capable of causing injury, the Court can readily and properly infer the necessary causal link (cf Betts v Whittingslowe (1945) 71 CLR 637 at 649 as discussed generally in Chappel v Hart (1998) 195 CLR 232). 38 There is a useful and cogent analogy in the decision of King CJ in Anderson v City of Enfield (1983) 34 SASR 472. The case is in point on all three issues under discussion. A manufacturer distributed a cleaning compound containing a substance likely to cause dermatitis if incorrectly handled. The label contained an insufficient warning. One employee of the City Corporation mixed a solution of the compound in an open drum. The plaintiff was another employee who proceeded to wash a vehicle by dipping a rag into what he thought was a detergent. He contracted dermatitis. He sued his employer and the employer sought indemnity or contribution from the manufacturer. 39 The product was intended to be used as an aid to steam cleaning and was not intended for use of the kind to which the plaintiff put it. Nevertheless, it was held that it ought to have been in the contemplation of the manufacturer that, in the absence of adequate warning as to danger to the skin, a person being unaware of the danger might attempt to use it as an ordinary detergent. "After all, one purpose of including a caution on a label is to warn people against unintended use such as taking internally" (at 476). 40 The particular warning was held to be inadequate to suggest the seriousness of the potential consequences. The third party claim against the manufacturer depended on proof of the manufacturer's negligence to the plaintiff. The present case is not of that nature, but so long as the label can be shown to have been misleading in the s52 sense, then the reasoning in Anderson is applicable. The reasoning on the causation issue is in my view capable of direct application to the present case. King CJ recognised that the negligent act which was the immediate cause of the plaintiff's injury was the leaving of the open drum containing the solution for use by the employees, without a warning as to the danger involved in allowing the substance to come into contact with the hands. This was held to have occurred by reason of lack of realisation by the employee who mixed the solution. The failure to label the substance adequately was found to have contributed to that employee's failure of realisation of danger. Accordingly, his Honour inferred on the probabilities that the inadequacy of the labelling contributed to the plaintiff's injury. 41 We shall return to the issue of apportionment as between the appellant and the employer in the context of the s151Z issue. But the employer's negligence (through Mr Ling) did not bring about the situation that the appellant ceased to bear responsibility for having contributed to the respondent's injury through its misleading labelling of the product. Indeed, the misleading label contributed to Mr Ling's negligence which in turn contributed to the respondent's injury.

Reduction of damages (Workers Compensation Act 1987, s151Z) 42 Section 151Z of the Worker's Compensation Act 1987 is a detailed regime that addresses the situation of an injured worker entitled both to compensation under the Act from an employer and to damages at common law from a third party. It regulates the worker's rights against the employer and the third party and the ultimate burden as between the employer and the third party. The history of the provision is traced by Giles AJA in I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486. 43 The section is capable of application to the present case, because the work injury suffered by the respondent was obviously compensable. Section 151Z(2) relevantly provides: (2) If, in respect of an injury to a worker for which compensation is payable under this Act: (a) the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker's employer, and

(b) the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer, the following provisions have effect: (c) the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable, (d) the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages; … 44 The operation and application of these provisions is explained in Leonard v Smith (1992) 27 NSWLR 5 and Grljak v Trivan Pty Ltd (in liq) (1994) 35 NSWLR 82. As summarised by Mahoney JA in Grljak (at 88): Paragraphs (c) and (d) provide for the reduction of the amount of damages which otherwise would be recoverable by a worker from a third party. The legislature has chosen to apply a formula to achieve that reduction. That formula involves, conceptually, three steps: the Court must first decide what is the amount of the contribution which the third party would (but for Div 3) be entitled to recover from the employer as a co-tortfeasor or otherwise at common law; it must then decide what is "the amount of the contribution recoverable" within par (c) and par (d); and it must then deduct the second from the first to determine the amount by which the worker's common law damages from the third part are to be reduced.

45 Section 151Z is not restricted to claims based upon tortious liability. The concept of "proceedings independent of this Act" extends to actions for breach of statutory duty (Grljak at 88) and is clearly capable of application to the rights against the appellant vindicated in the present case. 46 The trial judge declined to apportion damages, on the basis that the Council was not shown to have breached its duty of care not to expose the respondent to unnecessary risk of injury. 47 The respondent said that she had never seen the warning label. The tin of undiluted liquid contained no label or warning as to the use or dilution of the product. Mr Ling the cleaning supervisor told her to use gloves. He agreed in cross-examination that it would have been a better practice to have diluted the pure Power Kleen because of the risk. It was only after the accident that the respondent was given a document setting out the precautions to be employed when using the product. 48 The trial judge referred to Mr Ling's evidence about having seen the demonstration of the product when the demonstrator wore no gloves. He also recited Mr Ling's evidence that he directed the cleaners "according to the directions supplied by the first defendant from the information contained on the label" (judgment par 10.6, see also 10.3). It is unclear whether this represents a finding accepting that evidence. If it does, we have difficulty with this aspect of the judgment. Not only does it lie most uneasily with the respondent's unchallenged evidence which is summarised in the preceding paragraph. More significantly, it remains an inherently ambiguous finding. Mr Ling's evidence was that he thought he had told the cleaners that what was in the tin was undiluted, but he could not be sure that he had told the respondent. The evidence that comes closest to asserting that he directed the cleaners "according" to the label was his testimony that, having read the label, he told the respondent that she should apply Power Kleen by spraying or brushing or wiping the surface leaving it for a couple of minutes to penetrate and then rinsing it with water. 49 The ambiguities and variations in Mr Ling's evidence reflect his actual conduct. The cleaners were issued with undiluted liquid with no access to the limited warning on the appellant's drum. After the respondent reported problems she was supplied with gloves and she used them as directed. Even on Mr Ling's version taken at its highest, she was not told to ensure that the undiluted product not come in contact with her skin. She was then directed to perform a specific task that involved prolonged rubbing which, we would infer, broke the protection of the gloves. This caused the injury because the undiluted product rubbed onto her skin. Mr Ling's failure to bring home the risks involved in this was careless, even by the standards of the warning on the label. By providing the undiluted product without any or any sufficient warning about its capacity to injure he contributed to the respondent's injury. 50 In these circumstances the primary judge erred in concluding that there should be no reduction in the respondent's damages due to any apportionment against her employer. 51 Having found against the appellant on s52 of the Trade Practices Act the trial judge did not need to determine its liability in negligence. It will, we think, be apparent from our analysis of the South Australian case of Anderson that we would have no difficulty in translating our conclusions on the facts into a finding of negligence as well as a finding of breach of s 52 and its New South Wales counterpart. The right of contribution required to be taken into account by s 151Z(2)(a) is based upon entitlement "to recover from an employer as a joint tortfeasor or otherwise". 52 It was submitted that the appellant's putative right of contribution against the Council lay under general law principles and under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. 53 The basic principle stemming from Dering v Earl of Winchelsea (1787) 1 Cox 318, 29 ER 1184 was described by Willes J in Moule v Garrett (1872) LR 7 Ex 101 at 103 as follows: Where two persons are under an obligation to the same performance, though by different instruments, if both share the benefit which forms the consideration they must divide the burden; if one only gets the benefit he must bear the whole. 54 The inequality of burden stemming from the enforcement or satisfaction of a creditor's or plaintiff's rights against one person when recourse against another or both would have been more equitable is the basis of the obligation (cf Mahoney v McManus (1981) 180 CLR 370 at 388). The principles are not confined to obligations that derive from a single document or transaction and they extend to statutory obligations (see Armstrong v Commissioner of Stamp Duties (1967) 69 SR (NSW) 38; Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342. For a fuller discussion see Mason and Carter, Restitution Law in Australia, Ch 6, (Contribution and Recoupment)). 55 There must be a co-ordinate liability in the sense of the parties being under a common burden. For example, contributing sureties must be sureties in the same degree (Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588). However, a common or coordinate liability is not destroyed by the fact that the plaintiff may have framed a cause of action in one way or another (Jones v Mortgage Acceptance Nominees Ltd (1996) 63 FCR 418). 56 The principles relating to coordinate liability have permitted contribution between directors subjected to statutory obligations imposed by the Corporations Law (Spika Trading Pty Ltd v Harrison (1990) 19 NSWLR 211). In other cases, where total recoupment is appropriate, orders can be made directed to that end (eg Armstrong). In our view these principles are capable of application in determining rights of contribution as between the appellant and the Council. 57 But can equity do anything but apportion equally? 58 In Jones (at 422) Davies J said that he could see no reason why equity "should not aid … the ascertainment of what would be a just contribution". Equity has always looked to the substance and sought to apportion rateably and fairly (Spence, Equitable Jurisdiction (1846) vol 1, pp 662-3). At least in the area of insurance, equity's search for "reason, justice and law" (Albion at 351 per Kitto J, citing Marsack v Webber (1860) 6 H&N 1 at 6, 158 ER 1 at 3) has not invariably confined itself to strict equality (American Surety Co of New York v Wrightson (1910) 103 LT 663, Government Insurance Office of New South Wales v Crowley [1975] 2 NSWLR 78, Commercial Union Assurance Co Ltd v Hayden [1977] 1 QB 804). 59 However, in Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 12-13 the Full Court of the Federal Court doubted whether, apart from statute, a court could order anything but proportional contribution or full indemnity. The Court observed that equity gave effect to its maxim that "equality is equity" and, until statutory intervention, took no intermediate position between the two extremes. The Full Court noted the point but did not resolve it. 60 At this stage we turn to the alternative basis of contribution, s5(1)(c) of the 1946 Act. 61 The application of s 5(1)(c) to claims lying solely within the scope of s52 and s82 of the Trade Practices Act is problematic (see Bialkower at 11). The better view is that s 52 is not to be seen as creating a liability in tort. (Bialkower. See also Marks v GIO Australia Holdings Ltd (1998) 158 ALR 333 at [17]). 62 However, the capacity to use s 5(1)(c) in cases where liability could have been established in tort but was not has been discussed in several cases (see Bialkower at 7-11). It has been held that it is open to a defendant (ie the appellant in the present case) to seek statutory contribution if the facts would establish such entitlement even though the cause of action upon which the party is seeking contribution is not itself an action in tort (see Employers Corporate Investments Pty Ltd v Cameron (1977) CLC ¶40-365, Rap Industries Ltd v Royal Insurance Australia Ltd (1988) 5 ANZ Ins Cas ¶60-876 at 75,519-75,520, AWA Ltd v Daniels (1992) 7 ACSR 759 at 856-857). 63 In the present case the appellant was sued in tort in the alternative, and the facts established liability in tort. Accordingly, resort to the statutory power is open in the apportionment exercise. It is unnecessary to resolve the question whether the general law would permit apportionment otherwise than on a 50/50 basis. 64 The principles governing statutory apportionment amongst tortfeasors have been stated recently (Wynbergen v Hoyts Corporation Pty Ltd (1997) 149 ALR 25 at 29, Bitupave Ltd v McMahon [1999] NSWCA 330, James Hardie & Co Pty Ltd v Roberts [1999] NSWCA 314). Applying those principles, we would apportion 60% of responsibility to the appellant and 40% to the employer. The negligence of each contributed to the respondent's injury, but the negligence of the former was more potent in its causative impact and in its departure from a reasonable standard of care. It was a factor in Mr Ling's own neglect for the care of his fellow employee. 65 Accordingly, we would make the following orders: 1. Appeal allowed in part.

Direct appellant to bring in short minutes of order within 14 days or such longer period as the Registrar may allow to give effect to the judgment, with liberty to apply.

Respondent to pay the appellant's costs and to have a certificate under the Suitor's Fund Act 1952 . 66 GILES JA: I have had the benefit of reading in draft the judgment of Mason P and Davies AJA. I agree that the appeal in relation to appellant's liability to pay damages for misleading or deceptive conduct should be dismissed. I respectfully differ from their Honours in their reduction of the respondent's damages pursuant to s 151Z of the Workers Compensation Act 1987, in that I do not think the Council is liable to pay damages for breach of its duty to take care not to expose the respondent to unnecessary risk of injury. 67 Mr Ling had ordered Power Kleen after a demonstration from someone who, without wearing gloves, "put a bit on a bit of rag and rubbed it". Whether the demonstrator was from the appellant did not appear, but it does not matter because Mr Ling was entitled to rely on the instructions put by the appellant on the label of the drum. The instructions told him that the cleaner could be used at concentrations stronger than the recommended average strength after dilution with 15 parts water and, in effect, that gloves were required only if there was "prolonged use". Implicit in this was that a strong concentration, even undiluted cleaner, could be safely used without gloves provided the use was not prolonged. Mr Ling had no reason to go behind the instructions. 68 According to Mr Ling, he told the respondent what the instructions for use of the cleaner were and how she should use it, because of what he read on the label. While the trial judge referred to this evidence without expressly accepting it, he referred in the same way to a great deal of evidence which he plainly accepted. I do not think that there was conflict with the respondent's evidence, which was that she had not seen the label on the drum: this could readily stand with being told what the instructions for use of the cleaner were and how to use it. A reading of the evidence of Mr Ling does not throw up any reason for the trial judge declining to accept him in this respect, and Mr Ling's evidence abovementioned may be contrasted with his ready acknowledgment that he could not be sure that he had told the cleaning staff that the cleaner in the tin had not been diluted. In my opinion, the trial judge accepted that (in his Honour's words) "the Council directed its employee according to the directions supplied by [the appellant] from the information contained on the label". 69 While Mr Ling agreed in evidence that what was on the label was a warning, the instructions did not warn against less than prolonged use of a strong concentration. Even if he had put a warning on the tin similar to that on the label of the drum, it would not have told the respondent more than she already knew. In any event, because of her early experience with the cleaner the respondent was using gloves, to the knowledge of the Council. The gloves had been provided by the Council, and it had told her to use them. Even if Mr Ling had told the respondent that the cleaner in the tin had not been diluted, on the basis of the instructions he would have been justified in doing no more than was in fact done, providing gloves to be worn by the respondent when using the cleaner. 70 The respondent was injured in using the cleaner not because the Council allowed its use without protection of gloves, but because the gloves developed a hole as she used them. It was not suggested that the gloves provided by the Council were inappropriate for the task, or that the Council was at fault in not warning of the possibility that they might develop a hole. Given the instructions on the label of the drum, the Council was not required to do more than, as it happened, provide appropriate gloves for the respondent to use. It did so. Telling the respondent to ensure that the undiluted product did not come into contact with her skin was not an act required of the Council in the light of the instructions on the label, nor was failure so to tell her an omission relevantly causative of the respondent's injury. 71 In my opinion, the appeal should be dismissed with costs.

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Trade Practices Act 1974(Cth)

(1997) 14 NSWCCR 486

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (39 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (20)