Lapcevic v Collier [2002] NSWCA 300 | Case summary

Lapcevic v Collier [2002] NSWCA 300 | Case summary | Zoe

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Wednesday, 20 November 2002 LAPCEVIC v COLLIER JUDGMENT 1 BEAZLEY JA: The respondent sustained an injury to his knee on 30 July 1997 in the course of his employment with Carly Investments Pty Limited, trading as Advance Furniture Removals (Advance). At the time of the injury, Advance occupied warehouse premises at Perry Street Matraville, owned by the appellant and leased to Advance. The respondent brought proceedings against the appellant claiming that it was negligent in failing to ensure that a large door through which access to the warehouse was gained, was in a satisfactory state. 2 The matter was heard by Garling DCJ who entered a verdict in favour of the respondent in the sum of $348,291. The appellant appeals against his Honour's findings as to liability, contributory negligence and damages as well as the manner in which his Honour construed the provisions of s 151Z of the Workers Compensation Act 1987 (NSW). 3 The leased premises comprised a warehouse facility. Entrance to it was gained through a large warehouse door, approximately five metres high by five metres wide, fabricated from metal sheeting with metal cross supports. The respondent estimated the weight of the door to be approximately three tonnes, although there was other evidence that it weighed one to one and a half tonnes. The trial judge made no finding as to the weight of the door other than that it was "very heavy". 4 The accident occurred in circumstances where the respondent and a fellow employee, Peter Clarke, were opening the door. The respondent described the door as being heavy and difficult to move. As he was pushing the door it jumped and jammed, causing the respondent to fall and he struck his knee on the ground. Mr Clarke gave evidence to the same effect. 5 A number of witnesses, all fellow employees, gave evidence that from the time they moved into these premises there had been problems with the door in that it was always difficult to open. They had developed a method of opening it by putting their shoulders against the door, a process which was described in the evidence as "if they were in a rugby scrum" and then pushing. Even with that method, it was not unusual for the door to jump and jar and it could throw them off balance. It was always necessary for at least two men to open the door. There had been one occasion where the door had jammed so badly that a forklift had to be used to move it. There were other occasions when it jumped off the track and a forklift was used to reinstall it. 6 Mr Martin, who was a director of Advance, gave evidence that, as at the commencement of the lease, the premises were "in a very poor state" and, in particular, the large sliding doors (of which the door which jammed was one) at the front of the premises were in "very poor condition prior to signing the lease". The appellant had re-clad the outside of the doors prior to Advance taking up occupancy of the premises. Mr Martin also said that the doors were "just very hard to operate". Prior to signing the lease, he observed that, at times, the then tenant used a forklift to open the doors. Mr Martin said that before entering into the lease he raised the condition of the doors with the appellant and that "that was one of many things that they'd rectified before we moved in". In particular, he said it was not necessary to use a forklift to open the doors when they moved in. However, the doors were very solid and it was never a "one man operation". He attributed this, however, to the weight of the door. 7 According to the previous tenant of the premises, Mr Tzaneros, he had had no difficulty in opening the door although he agreed he had to put a fair bit of strength behind it. He conceded that the door had to be fixed at the time of his departure, although this appeared to relate to re-cladding the doors at the end of his tenancy. 8 On 29 January 1997, shortly after having moved into the premises, Advance wrote to the appellant referring to the fact that rain over the previous two days had "highlighted the repairs to the warehouse [needed] to prevent water entering … [as well as] a number of repairs [that] we have requested previously that haven't been done as yet". There was no mention of the doors in this complaint. 9 Mr Martin was cross-examined about his letter of 29 January 1997, and in particular about the absence of any mention of the doors. He explained that the letter related only to the plumbing problems which they were experiencing, which had been exacerbated by rain. He also maintained that although he could not recall whether he had made any written complaint about the condition of the doors, he had orally complained. As he put it "I strongly did, and that's why we had new bearings put in". He was insistent that the bearings had been replaced after they had taken up occupancy of the premises, although initially he could not remember when the bearings were changed. He could only recall a conversation about there being difficulty replacing the bearings and the fact that they did source a new lot of bearings at one time. Later in his evidence, he appears to accept that the bearings were changed after the accident. 10 It seems clear that there was a faulty bearing and the appellant replaced it very shortly after the accident. Mr Lapcevic's evidence on this was that the rollers "caused" the doors to work and for the doors to work efficiently, the "rollers had to be straight on the doors" and further that "when the rollers are working perfectly [the doors] work quite well". I understand that the expressions "bearers" and "rollers" were used interchangeably in the evidence. He said that after the accident he "inspected [the] doors and … just replaced one roller … because it was damaged". He also conceded in response to the question: "Q You knew there had been some damage to the rollers because of the complaints made?

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Trial Judge's Findings 17 The trial judge accepted the evidence of the respondent and of his witnesses. He found that Boris Lapcevic, who gave evidence on behalf of the appellant "did not have an accurate memory of what had happened". Generally, his Honour was not impressed by his evidence. 18 His Honour found that from the time the employer occupied the premises, there were problems with the doors. He described these problems as being that the doors were "difficult to open, very heavy, and needed men to get into a crouched position so that they could push them open with their shoulders". His Honour also found that complaints had been made on a number of occasions to Boris Lapcevic, before the respondent's accident, about the state of the door and that Boris Lapcevic said he would attend to them but he did not. His Honour concluded: "But it was also perfectly clear that right from the time that the employer took over these premises, there were problems with these doors, they needed to be fixed, and they were dangerous." 19 He considered that doors that had to be opened in the way described above, with the amount of strength referred to "and which were liable to stop and to bump were potentially very dangerous" and that it was foreseeable that a person could easily be injured whilst opening it. 20 His Honour next considered whether, given those findings, it was the responsibility of the appellant or the employer Advance to repair the doors. In resolving this issue, his Honour construed cl 12.11(xiii) of the lease as not being qualified by the time period specified in the preamble to cl 12.11 so that the appellant had a general, ongoing duty to maintain the doors. 21 His Honour concluded that the appellant owed a duty of care to the respondent and at the same time had a duty under the lease to maintain the doors. He was satisfied that the appellant had breached its duty of care to the respondent, knowing that the doors were faulty and needing repair but having done nothing to repair them.

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Her Honour concluded at paras 92 as follows: "Given that the relationship between a tenant and the members of his or her household involves a greater degree of control and dependence than does the relationship between a landlord and the member of his or her tenant's household, there is no basis for the imposition of a higher duty of care on a landlord than is cast on an occupier of premises. As the occupier of premises is only required to take such care as is reasonable in the circumstances, a landlord should not be subjected to a higher duty to make premises as safe for residential use as reasonable care and skill on the part of anyone can make them. And given that the parties to a tenancy can stipulate as to its terms, there is no reason, in my view, why the duty of landlord should extend beyond a duty to put and keep the premises in safe repair ." (emphasis added) 30 Gummow and Hayne JJ concluded that following Northern Sandblasting, it was not correct, in Australia, to say that a landlord never owed a duty in negligence to occupants in respect of the condition of residential premises (para 166). Their Honours considered, however, that it was of no utility merely to conclude that the duty was to be expressed "simply as one to take reasonable care to avoid a foreseeable risk of injury to a person in the situation of the appellant" (para 167); cf Gleeson CJ at paras 57-58. 31 Their Honours recognised that the difficulty in any particular case lay in determining the nature and extent of any duty and that in doing so, the circumstances to be considered might differ between landlord and tenant and landlord and other persons. They observed that there was "no necessary correlation between the respective duties, although the latter is likely to be less stringent than the former". They also observed that the relevant considerations in respect of a lease of commercial or education or other premises might well differ from the considerations relevant to the letting of residential premises (para 169). Their Honours defined the content of the landlord's duty broadly as being "conterminous with a requirement that the premises be reasonably fit for the purposes for which they are let, namely habitation as a domestic residence" (171). 32 Their Honours expanded upon the nature and extent of the duty at para 173: "The duty requires a landlord not to let premises that suffer defects which the landlord knows or ought to know make the premises unsafe for the use to which they are to be put. The duty with respect to dangerous defects will be discharged if the landlord takes reasonable steps to ascertain the existence of any such defects and, once the landlord knows of any, if the landlord takes reasonable steps to remove them or to make the premises safe." 33 Their Honours further observed at para 177 that liability for disrepair will ordinarily fall upon the party with the obligation to repair and that liability for negligent repair will ordinarily fall upon the repairer. Their Honours then considered a number of cases dealing with dangerous defects and ordinary use. They said at 178: "The thread running through these cases is that a dangerous defect will, or may, cause injury to persons using the premises in any ordinary way. They are defects in the sense that they are more than dangerous; they are dangerous in a way not expected by their normal use." 34 Their Honours continued (195-197): "The general principle, consistently with Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479, is that liability for injury suffered by an entrant upon residential premises primarily will rest with the occupier. A tenant in occupation, rather than the landlord, has possession and control with power to invite or to exclude, to welcome in or to expel. Those asserting a duty often will be the guests or invitees of the tenant or persons present on the tenant's business or for their business with the tenant. It will be the tenant who is best placed to inform such persons of any dangers or defects ( Gorman v Wills (1906) 4 CLR (Pt 1) 764 at 771-772), and the tenant who 'is more directly in touch with emerging repair needs than a landlord who has surrendered possession' ( Austin v Bonney [1999] 1 Qd R114 at 119). However, dangerous defects are unlikely to discriminate between tenants and those on the premises whether as an incident of a familial or other personal relationship, as in this case, Cavalier v Pope , and Northern Sandblasting , or some other social or business relationship or occasion. The landlord's duty to take reasonable care that the premises contained no dangerous defects, owed in the sense earlier described to the tenants extends to those other entrants we have identified. Nevertheless, the duty of the landlord owed to these third parties, in many cases, will be narrower than that owed to them by an occupier such as a tenant. An example of facts not involving the placing of a duty on a landlord is a slippery floor; an unsecured gate to a fenced swimming pool may be another. The duty of care of the landlord to the third party is only attracted by the presence of dangerous defects in the sense identified earlier in these reasons . These involve dangers arising not merely from occupation and possession of premises, but from the letting out of premises as safe for purposes for which they are not safe. What must be involved is a dangerous defect of which the landlord knew or ought to have known ." (emphases added) 35 The lease in this case was not of residential premises but of commercial premises. Gummow and Hayne JJ in particular were careful to indicate different considerations might apply in such circumstances. Nonetheless, I am satisfied that the appellant owed the respondent a duty of care. My reason for so concluding is principally based upon the appellant's obligations under the lease in so far as the lease related to the door. 36 This door was no ordinary door. It was a major structural feature of the premises. There were problems with opening it from the commencement of the lease. The appellant was aware of those problems. For reasons to which I will come, he bore the responsibility for putting the door in working order. There was no obligation on Advance under cl 5 of the lease (being the only potentially relevant clause as to its obligations) to fix the door. Its obligation was to keep the door in "good and substantial tenantable repair and condition". As his Honour found that the door had not operated properly from the commencement of the lease Advance did not have any obligation under cl 5 as the "problem was not due to wear and tear". 37 Although senior counsel for the appellant referred to cl 5, the focus of his argument on this issue was cl 12. Clause 12 was a 'negotiated clause' specifically related to the state of the premises at the commencement of the lease and directed to bringing the premises to a satisfactory condition for the purposes of Advance's tenancy. The premises were generally in a significant state of disrepair prior to the commencement of the lease and the door did not open properly as already described. Clause 12 required the landlord, within 28 days, to carry out specific work: see for example cl 12.11(v) which required the landlord to "clear the drains on the property and to install further suitable drainage in the western warehouse". Clause 12.11(vi) required it to "repair the damaged concrete areas in front of the warehouses and the driveways leading into the premises so they are suitable for commercial trucks". In all there were four sub-clauses in cl 12.11 which imposed a specific "repair" obligation on the appellant. There were a number of provisions requiring cleaning and clearing up of the premises. Painting was required to be done. The warehouse floor was to be levelled "to assist drainage and stacking of containers". Machinery was to be removed and a number of items were to be checked "to ensure" they were in working order. 38 Clause 12.11(xiii) in one sense reads differently from these other subclauses. Subclauses (i) to (xii) were all 'one off' obligations to be carried out in the time specified in the preamble. Subclause (xiii), however, imposed an obligation to "maintain". "Maintain" usually bears the sense of an ongoing obligation to keep in good condition. This is to be contrasted with the word "repair" which when used on its own usually means to "fix" and as used in the other subclauses of cl 12.11 bore this meaning: see for example cl 12.11(vi). The subclause, read as a whole, contains a number of indications that "maintain" meant "maintain" according to its usual meaning. For example, the appellant was not required to 'maintain' the door if damage was caused by Advance, in which case Advance was liable "for their (sic) repair". To have any real effect this part of the clause would have to operate over the life of the tenancy. If that was so, his Honour's construction of the clause was correct. However, if subcl (xiii) was subject to the time constraint specified in the preamble to the clause, the word "maintain" would seem to indicate that the requirement was to repair or fix or put in proper working order. 39 Neither party argued that given the significant ambiguity in subcl (xiii), that resort should be had to the surrounding circumstances in which the contract was made: see Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, especially at 350-352. However, it appears from the evidence of Mr Martin that clause 12.11, including subcl (xiii) was inserted to provide for specified work to be carried out in the relevant period. Mr Martin said: "Q Not only did you have a good look at the premises but you brought to Boris Lapcevic's attention a number of matters that you wanted attended to before you took occupation? A Correct. Q One of the matters that you brought to his attention before taking occupation was the state of the sliding doors that you've been asked about? A Would have been one of them. Q Those doors being the doors that were involved in the accident with Mr Collier? A Mm. Q So far as you were concerned I take it, you made it clear to Mr Lapcevic that Carly Investments was not taking occupation of these premises until those doors were operating satisfactorily, correct? A Correct." 40 Mr Lapcevic said: "No, sir, the only reason that clause was put in is because I instructed my solicitor to put that clause in because the doors were working perfectly when Carly Investments moved in."

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The effect of this comment, in my opinion, is that because Mr Lapcevic considered the doors were in proper working order at the commencement of the lease, the provisions of subcl (xiii) in fact placed no obligation on him so that he was indifferent to its inclusion. 41 In my opinion, the better view is that, as a matter of construction, subcl (xiii) required the doors to be put into working order within 28 days of the commencement of the lease. Such a construction gives the preamble work to do in respect of subcl (xiii) and is consistent with the overall purpose of Section XII that the appellant was to undertake specific work to get the premises into a condition satisfactory for Advance's purposes. If this is a case where the ambiguity is such that resort is properly had to surrounding circumstances, the evidence to which I have referred supports that construction. Given that construction, I am of the opinion that the appellant owed a duty of care to the respondent as a user of the premises to fix the doors within 28 days of the commencement of the lease, so that they could be opened without a risk of injury. 42 If, contrary to my conclusion, his Honour's construction of the clause is correct, that construction placed an obligation upon the appellant throughout the term of the lease to keep the door in a condition where it could be opened properly. In that case, the appellant owed a duty of care to the respondent to keep the doors in a condition that they could be opened throughout the term of the lease. 43 It was the appellant's position, however, that it was not in breach of the subcl (xiii) and not therefore, otherwise in breach of its duty of care. This argument had two premises. Both were based on the appellant's contention that such obligations as he had under subcl (xiii) were confined to the 28 day period from the commencement of the lease. 44 On the first premise, it was submitted that the appellant had no obligation under the clause because Advance had caused some damage in the form of scratch marks and "a few dents" to the cladding. It was thereby absolved by the second part of subcl (xiii) of any obligation under the clause. There was no evidence, however, that such damage had been caused in the 28 day period. It might also be arguable that upon its proper construction the damage referred to in the second part of the subclause had to relate to the required repair. Neither party referred to how the subclause was to be construed (presumably because the appellant only argued this point faintly) and, as there was no evidence to support the appellant's argument, it is not necessary to resolve the question for the purposes of this appeal. 45 Secondly, the appellant submitted that he had "fixed" the doors in the 28 day period and "they were working perfectly on 1 January 1997"; "they [were] easy to move" and that he "had no troubles moving the doors". He did not agree they needed "a fair bit of strength to move". The appellant argued that the 'problem' with the doors occurred later due to a deterioration in their condition after the 28 day period. However, the evidence accepted by his Honour was that from the very beginning the doors were never easy to move, could not be moved by one man and were a danger. These findings were open to his Honour. The consequence is that on the different construction I have given to the lease than that given by his Honour, it was the appellant's responsibility to fix the door and that it failed to do so properly within the 28 day period. It was, therefore, in breach of its contractual obligation under subcl (xiii) and thereby in breach of his duty of care to the respondent. 46 I have already referred to his Honour's finding that the door was "very dangerous". In my opinion, this was a finding that there was a dangerous defect in the sense used in Jones v Bartlett. The appellant was aware of the dangerous defect not only because of its contractual obligations to fix the door but because of the continuing requests from Advance to the appellant that the door be attended to. It is arguable, for the reasons expressed in Jones v Bartlett, that, on this basis alone, quite independently of the contractual provision on either of its constructions, the appellant owed a duty to a person such as the respondent, who was required to open the door in its dangerous condition. It breached that duty by failing to fix the door. The duty of care was not abrogated by Advance's duty to the respondent, which was an independent non-delegable duty.

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(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…" 49 In this case, the employer, Advance, failed to provide a safe place of work. It was thus in breach of its duty of care to the respondent. The respondent was entitled to take proceedings at common law, independently of the Workers Compensation Act, against Advance claiming damages arising out of this breach. As the respondent was also entitled to take proceedings against the appellant/non-employer for his breach of duty, and, on the conclusion to which I have come, was successful in doing so, this case satisfied the preconditions to the operation of s 151Z (2) specified in paragraphs (a) and (b) of the subsection. 50 As the judgment at first instance in this matter demonstrates, the application of s 151Z continues to confound those concerned with its operation. Or, as Meagher JA preferred to put it in State of New South Wales v Kennelly (No 1) [2001] NSWCA 71 at para 1: "… anyone who plunges into the murky waters of s 151Z of the Workers Compensation Act 1987 (NSW) might well be expected to reach a different destination from other explorers of these waters." 51 The difficulty with the subsection lies in the construction and application of paras (c) and (d). The construction of the subsection was considered by Allen J in Leonard v Smith (1992) 27 NSWLR 5 and applied by this Court in Grljak v Trivan Pty Ltd (1994) 35 NSWLR 82 per Kirby P, Mahoney and Priestley JJA (adopting the reasoning of Cole J at first instance: unreported, Supreme Court of New South Wales, 4 June 1993). 52 In Leonard v Smith, Allen J said at 8: "[T]he plaintiff's right is treated not as a right to recover the full amount of damages from whichever tortfeasor (or tortfeasors) he chooses to sue but as if his right is to recover damages from each of the individual tortfeasors sued (including the employer) in accordance with the degree of the responsibility of that tortfeasor for the accident applied to the amount of the damages for which that tortfeasor would be liable to the plaintiff if he alone had been responsible for the accident. The plaintiff, far from being disinterested in the measure of the contributions between the tortfeasors inter se, becomes directly concerned." 53 His Honour went on to describe how the plaintiff's entitlement was to be calculated at 11-12: "What par (d) does is to apply the percentage of the employer tortfeasor's share in the responsibility for the accident not to the amount of the damages payable to the plaintiff by the other tortfeasor but to what the worker damages would have been if the plaintiff sued the employer … ('damages … assessed in accordance with the provisions of Division 3' of Pt 5). So the financial burden upon the employer tortfeasor is calculated as being his fault proportion applied to the damages he would have had to pay the plaintiff if sued alone - not that fault proportion applied to damages to which the other tortfeasor is liable.

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[para (c)] deals with the damages which the plaintiff worker may recover from the tortfeasor other than the employer tortfeasor in the proceedings which the plaintiff has taken for damages against that tortfeasor - be that tortfeasor an ordinary tortfeasor or a motor accident tortfeasor. Paragraph (c) provides for a reduction in the damages otherwise recoverable." 54 This approach was accepted as correct by this Court in Grljak. I refer to Grljak below. The effect of paras (c) and (d), therefore, is to reduce the damages for which a non-employer tortfeasor is liable, and which the worker is thereby entitled to recover. 55 The appellant submitted that he was entitled to have the damages he was liable to pay to the respondent reduced under the provisions of the section as he was a joint tortfeasor with Advance. The respondent made two direct responses to this submission. First, it was said that Advance, by making its many attempts to have the appellant repair the door, would, on a cross claim by the appellant for contribution, have been found to have done all it could have to satisfy its duty of care to him. Therefore, its contribution would have been assessed at nil. Secondly, it was submitted that, in any event, in any contribution proceedings brought by the appellant under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, Advance would have had available to it a defence that the appellant was in breach of its lease agreement by failing to have adequately repaired the door. For that reason also, its contribution would be assessed at nil. 56 This last submission became one of two core issues raised in respect of the application of s 151Z(2). 57 Senior counsel for the appellant submitted that the potential outcome of any cross-claim brought under s 5 of the Law Reform (Miscellaneous Provisions) Act (NSW) 1946 was irrelevant to the question to be considered by a Court in determining the quantum of damages to be paid by the non-employer tortfeasor to a worker under s 151Z(2). Rather, the Court was concerned with a "notional analysis to work out how much has to come off the plaintiff's overall entitlement". He pointed to the practical difficulties of the respondent's argument to illustrate that the subsection involves a notional assessment only. The appellant argued that the effect of the respondent's submission was that the Court would have to be concerned with the hypothetical trial of a contribution action brought by the appellant against Advance. The notion of a trial within a trial is a well known concept: for example, negligence actions against solicitors for failing to bring proceedings within time; see Walsh v The Commonwealth (1998) 155 ALR 182. However, in such cases, a plaintiff subject to such a procedure has control over the relevant evidence. Here, that may not and almost inevitably would not be the case. The evidence relevant to the contribution proceedings would be in the "control of the unfriendly appellant and the employer". A worker falling within the provisions of s 151Z(2) could thus be seriously disadvantaged if s 151Z was applied in the manner suggested by the respondent. The appellant submitted that this could not have been the intention of the legislature. 58 In my opinion, the appellant's submission as to the proper construction of s151Z(2) is correct, directly reflecting what this Court said in both in Leonard v Smith and in Grljak. In Grljak, Cole J at 13-14 explained the purpose of the section: "Section 151Z(2) is directed to determining the amount of common law damages which a third party who has been sued must pay to the plaintiff worker. It is not addressing the amount of common law damages payable by the employer, if sued. That is dealt with by Division 3 (section 151E - 151T). It is addressing a legislative requirement that in determining the amount of common law damages which a third party sued in respect of an injury must pay, regard must be had to the circumstance that workers compensation is payable under the Act, and further that regard is to be had additionally to any entitlement, whether exercised or not, to sue the employer for common law damages. 59 His Honour then analysed how this was achieved through the operation of para (c) of s 151Z(2): "Against that background section 151Z(2)(c) provides that in the worker's action against the third party, common law damages which the worker otherwise would recover are to be reduced. The amount of the reduction is the excess of the contribution which the third party would, except for Part 5, be entitled to recover from the employer (whether as joint tortfeasor or otherwise) over the amount of the contribution recoverable from the employer."

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The reference to Part 5 is a reference to Part 5 of the W orker's Compensation Act under which common law damages recoverable by a worker from an employer are limited in amount. 60 The quantification of the process required by para (c) is then provided for in para (d). Cole J explained: "Subsection (2)(d) then addresses the amount of the contribution which is recoverable from the employer, whether as a joint tortfeasor or otherwise. The amount entitled to be recovered is to be determined as if the whole of the worker's common law damages were assessed in accordance with the provisions of Division 3 [of Part 5]. Subsection (2)(d), in addressing the amount that the third party 'is entitled to recover' from the employer, is not addressing the first integer in subsection (2)(c), namely, the amount of the contribution which the third party 'would (but for this Part) be entitled to recover from the employer', whether as joint tortfeasor or otherwise. Accordingly, one must assess the amount of contribution which, absent Part 5, the third party would have been entitled to recover from the employer, and deduct from that sum the amount which is in fact recoverable upon the basis that damages are assessed, not on a basis absent Part 5, but upon the basis that the contribution recoverable is calculated by reference to damages assessed in accordance with Part 5, and in particular Division 3." 61 When this explanation is coupled with Allen J's explanation in Leonard v Smith as to the operation of the section, to which I have referred at para 54 above, it seems to me that the section is directed to a notional situation based upon the responsibility the employer and non employer tortfeasor has respectively for the accident. It is not directed to a calculation of a plaintiff's damages by taking into account fortuitous circumstances, whereby a relationship between the tortfeasors, not connected with the tortious or related conduct of each, such as here, may affect the issue of contracts between the parties under, for example, the Law Reform (Miscellaneous Provisions) Act or a contract of indemnity between them. 62 If I am correct in this view the appellant is entitled to have the amount of damages he is liable to pay calculated in accordance with the section. The trial judge did not enter upon this task. Both parties indicated that if the appellant's construction of the section is accepted, this Court should assess the percentage contribution the appellant would be entitled to recover from the employer. 63 Each party argued for a greater or lesser percentage depending upon which was the more favourable to him. In the appellant's case in particular, it was submitted that Advance, having breached its non-delegable duty of care to the respondent bore by far the greater responsibility for the accident. For his part the respondent relied upon the same arguments which, he said, would have resulted in Advance's liability being assessed at nil. 64 In my opinion the contribution should be assessed at 50%. Advance had a non-delegable duty of care to the respondent. It commenced its business operations in these premises before they were completely safe. It, in effect, required its employees to bear the consequences of this by subjecting them to an unsafe place of work and an unsafe system of work. The appellant, for its part, had a contractual obligation directed specifically to the state of the door which caused the respondent's injury. It not only breached that contractual obligation. It ignored it for months. I cannot, in those circumstances see that either was more or less responsible than the other. 65 The respondent raised a quite separate argument namely that s 151Z(2) did not apply as the respondent had ceased to be entitled to take proceedings independently of the Act against the employer Advance when he elected under the then s 151A of the Act to claim permanent loss compensation. Mr Hislop submitted that, because of the election which the respondent had made, and because of s 151D(2) of the Act (which is a limitation provision), he was not entitled to take proceedings independently of the Act to recover damages from Advance. Therefore, he submitted, s151Z(2) did not apply. 66 A very similar submission put by Mr Hislop was rejected in State Rail Authority of New South Wales v Barnes [2001] NSWCA 133, where Rolfe AJA, with whom Heydon JA and Davies AJA agreed, said: "53. Mr Hislop's submission was that as the respondent could not have recovered any damages from Bathurst Glass because of the election, his Honour should have made no deduction from $116,657.90 and that that amount should have been deducted from $466,631.98 giving $349,974.08 from which the workers compensation payments should have been deducted to arrive at a judgment figure of $164,847.56. Mr Capelin submitted that his Honour had approached the matter properly and, as I have indicated, I agree with that submission. 54. The starting point is Mr Hislop's concession that the conditions required by sub-section (2)(a) and (b) had been met. His submission was that while the respondent was entitled to take proceedings against Bathurst Glass the amount of damages would have been nil because of his election. It was not argued that because that was the amount of damages proceedings could not be taken and hence no challenge was made to this Court's decision in Grljak v Trivan Pty Limited (1994) 35 NSWLR 82. Once those conditions were met sub-sections (c) and (d), relevantly for present purposes, operated. … 56. Sub-section (d) prescribes that the amount of the contribution recoverable from Bathurst Glass as a joint tortfeasor 'or otherwise' is to be determined notionally 'as if the whole of the damages were assessed in accordance with the provisions of Division 3 as to the award of damages'. Of course, there may be cases where no such damages can be assessed because the requirements of the Act entitling an injured employee to damages have not been met. But it was conceded that that is not this case. Accordingly, his Honour made the notional assessment and thus, conformably with the Act, he reduced the amount of damages by deducting the second amount referred to in sub-section (c) from the first with the consequences to which I have referred. 57. In my opinion, Mr Hislop's submissions are inconsistent with the words of s 151Z(2) and with the provisions in s 151Z(1), which make clear that it matters not, at least for the purposes of the relevant sections, whether compensation or damages are recovered first. This makes the more explicable the finding of a notional figure under sub-section (d) to make the financial adjustment required by sub-section (c)." 67 To like effect is the judgment of Mahoney JA, with whom Kirby P and Priestley JA agreed, in Grljak v Trivan Pty Limited (In Liq) (1994) 35 NSWLR 82, where his Honour said at 88: "It was then submitted that Mr Grljak was not 'entitled to take proceedings' to recover damages from Gawa because, as the event showed, the result of such a proceedings would be that no damages would be recovered. I do not think that this is the intended operation of par (b). The test which in this regard par (b) applies is 'entitlement'. The entitlement is entitlement 'to take proceedings' not 'to recover damages'. It looks, I think, to the existence of what conventionally is described as a cause of action rather than to whether the enforcement of that cause of action will result in an award of damages. I am conscious that, in principle, a right of action in negligence or for breach of statutory duty involves the proof not merely of duty and breach of duty, but also of loss by the plaintiff. I do not think that it was the intention of the 1989 amendments to alter the nature of a proceeding of this kind at common law. The purpose and effect of the 1989 amendments was to change and, in many respects, to limit the damages which could be awarded and the way in which they were to be quantified. But that, in the relevant sense, does not go to the 'entitlement' to bring the proceeding; it goes rather to the quantum of the damages which (if any) may be recoverable. Accordingly, the fact that, in the proceeding to recover damages, the assessments made by the trial judge are such that, in the event, no damages are awarded does not mean that, within par (b), the worker was not 'entitled to take proceedings … to recover damages from' the employer."

[54]

(v) The appellant to pay 50% of the respondent's costs. The respondent is to have a certificate under the Suitors' Fund Act 1951 (NSW) for the balance, if so entitled. 70 DAVIES AJA: I have had an opportunity to read the reasons for judgment of Beazley JA. I agree with her Honour on all aspects of the case other than one aspect of the application of s 151Z of the Workers Compensation Act 1987 ("the Act"). 71 The appellant, the lessor, had agreed with the respondent's employer, the lessee, that it would "maintain the large warehouse doors". In the circumstances of the case, the appellant was under a contractual liability with the employer to maintain the doors and under a tortious responsibility to do so, for its failure to maintain the doors was likely to lead to an injury to employees working on the premises, including the respondent. The appellant failed to maintain the doors and thereby breached both his contractual duty to the employer and its duty of care to the respondent. The respondent was injured as a direct result of the appellant's failure and is entitled to damages for the injury and loss which flowed from the appellant's negligence. 72 The respondent was entitled to sue both the appellant and his employer for negligence. Each had a duty of care towards him and each failed in that duty. The respondent sued only the appellant. Had the appellant sued both the appellant and the respondent and had contribution been claimed between them, it is my opinion that, absent the application of s 151Z, that the employer would have been entitled to a complete indemnity from the appellant in respect of any damages which the employer was called upon to pay to the respondent. As between the appellant and the employer, the employer did its part by bringing the defects in the door to the attention of the appellant. 73 There have been several authorities which have held that, although an employer was liable to the worker to pay damages for the worker's injury, the employer was entitled to recover full indemnity from a third party who had contracted with the employer to undertake the task, the failure to do which in a safe and proper manner brought about the worker's injury. See Florida Hotels Pty Limited v Mayo (1965) 113 CLR 588; Oxley County Council v Macdonald (unreported, 2 July 1999, NSWCA); Redken Laboratories (Aust) Pty Limited v Docker [2000] NSWCA 100. Cases to the same general effect, although not involving damages for personal injury, include Cockburn v GIO Finance Limited [2001] NSWCA 177 and Alexander (T/as Minter Ellison) v Perpetual Trustees WA Limited [2001] NSWCA 240. The reasoning and the approach taken in Cockburn v GIO Finance Limited was approved by Gaudron ACJ & Hayne J and also by McHugh J in Burke v Lfot Pty Limited [2002] HCA 17. McHugh J also referred to and cited Alexander (T/as Minter Ellison) v Perpetual Trustees WA Limited. 74 In Rolls Royce Industrial Power (Pacific) Limited v James Hardie & Coy Pty Limited [2001] NSWCA 461 Stein JA discussed a number of authorities which had considered the issue of 100% indemnity. At para 143 his Honour concluded: "there is no principal of law that where tortfeasors are independently at fault, there can never be a complete indemnity or exemption."

[55]

Heydon JA in para 174 also held that one of two joint tortfeasors may be regarded as being 100% liable. His Honour referred to Redken Laboratories (Aust) Pty Limited v Docker , to which I have earlier referred. I agreed with the reasons of Stein JA. 75 In the present case, the respondent's injury was brought about by the appellant's failure to put the heavy factory doors into a safe condition and to maintain them in that condition. The evidence which was accepted by the trial judge was that the doors were always exceedingly heavy to move and that their condition deteriorated. As between the employer and the appellant, the obligation to put the doors into a proper condition and to maintain them lay on the appellant. It was his failure that led to the respondent's injury. The employer was entitled to be indemnified by the appellant for any damages which it might be called up to pay to the respondent as a result of that failure. In that circumstance, the appellant was not entitled to recover contribution from the employer under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act or otherwise. I would come to the same view whether the matter were looked at in contract or in tort. 76 Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 provides, inter alia: "5.(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) - … (c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is (2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity." 77 Section s 5(2) of the Law Reform (Miscellaneous Provisions) Act specifically provides that the contribution shall be such as shall be found by the Court to be just and equitable. In the circumstances of the case, it would not have been just or equitable that an order for contribution be made against the employer. As between the employer and the appellant, the obligation to put and keep the doors in a good and safe condition lay upon the appellant. It was his failure to perform his obligation which brought about the respondent's injuries. 78 Section 151Z provides, inter alia:

[56]

"(1) If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury, the following provisions have effect: (a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation, (b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker's injury under this Act, and the worker is not entitled to any further compensation. … (d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages)," (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, (e) if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that: (i) if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise - the indemnity referred to in subsection (1)(d) is for the amount of the excess only, and (ii) if the compensation paid by that employer does not exceed the amount of that contribution - subsection (1)(d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution." 79 Section 151Z achieves a number of ends:

[60]

(4) Paragraphs of 151Z(1)(b) to (f) and (2)(e) provide for the adjustment of payments as between the worker, the employer and the other party. 80 The general effect of s 151Z(2) was enunciated by Allen J in Leonard v Smith (1992) 27 NSWLR 5 where his Honour said at 8: "[T]he plaintiff's right is treated not as a right to recover the full amount of damages from whichever tortfeasor (or tortfeasors) he chooses to sue but as if his right is to recover damages from each of the individual tortfeasors sued (including the employer) in accordance with the degree of the responsibility of that tortfeasor for the accident applied to the amount of the damages for which that tortfeasor would be liable to the plaintiff if he alone had been responsible for the accident. The plaintiff, far from being disinterested in the measure of the contributions between the tortfeasors inter se, becomes directly concerned." 81 Mr C R R Hoeben SC, senior counsel for the appellant, submitted that the words "as a joint tortfeasor or otherwise" in s 151Z(2)(c) limited the consideration of contribution to issues concerning joint liability for tort and excluded any consideration of contractual entitlements. 82 Mr Hoeben referred to State of New South Wales v Kennelly [2001] NSWCA 71 where Young J said, inter alia: "There was some argument before us as to whether the words 'or otherwise' after 'joint tortfeasors' in various paragraphs of s 151Z(2) merely meant concurrent tortfeasors or similar or whether it extended to cover situations where contribution was payable as a matter of equity or contract. This matter was addressed by Mathews J in Georgitis v Lend Lease Interiors Pty Ltd (1989) 17 NSWLR 106. Her Honour was then considering an identical phrase in s 150(2) of the Workers Compensation Act 1987 as it existed in 1989 before the present amendments. Although there are some differences in the legislation, the general intent of the sections is the same. After hearing arguments from senior counsel on both sides and remarking that there were difficulties whichever construction one adopted, her Honour came to the view that the words 'or otherwise' meant 'or otherwise in tort'. Nothing has been said in submissions that would weaken the authority of that decision and indeed, with respect, it seems to be perfectly correct. One would wonder why the legislature would employ the words 'joint tortfeasor' if the wider interpretation were correct." 83 In the same case, Meagher JA, after speaking of the right conferred by s151Z(2)(c) said: "The obvious candidate for such an external right in Part 3 s 5 of the Law Reform (Miscellaneous Provisions) Act , 1946 (NSW)." 84 In my opinion, it would be wrong to read the words "as joint tortfeasor or otherwise" as referring solely to liability for joint torts. The statute states the contrary. The words should be given their ordinary and natural meaning. In Hampic Pty Ltd v Adams [1999] NSWCA 455, Mason P and Davies AJA said: "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." 85 In Hampic Pty Ltd v Adams the proceedings against the party who was not the employer were based in part on s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987. In paragraph 61, their Honours pointed out at para 61: "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]."

[61]

This comment was referred to, with apparent approval, by Spigelman CJ in Commissioner of Police v The Estate of Russell [2002] NSWCA 272 at para 70. 86 Their Honours discussed the possible application of general law principles of contribution before concluding that, in the particular case, as the party other than the employer had been sued in tort in the alternative and the facts established liability in tort, although judgment had not been given on that basis, it was open to the Court of Appeal to resort to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act. 87 As is demonstrated by Hampic v Adams, the words in s 151Z(1), "a liability in some person other than the worker's employer to pay damages in respect of the injury" are wide enough to encompass a liability based otherwise than in tort. Section 151Z does not limit its provisions to proceedings based wholly on tort. And s 151Z(2)(c) contains an express provision to the contrary in the words, "as a joint tortfeasor or otherwise". 88 In my opinion, s 151Z should be given the meaning which the words of the section naturally bear. There is no justification for limiting the ordinary and natural meaning of the words. When s 151Z(2)(c) speaks of "the contribution which the person would …. be entitled to recover" it is speaking of the contribution which would have been recovered if the employer and the other party had both been joined in the proceedings and contribution had been litigated between them. Similarly, when s 151Z(2)(e) speaks of "the amount of the contribution recoverable" it is speaking of the contribution actually recovered in the proceedings. 89 In my opinion, there is no sound basis for the submission that the contractual relationship between the employer and the appellant should be ignored or given a limited effect. That relationship was one of the underlying facts out of which the respondent's injury arose. It was an important element of the facts giving rise to the appellant's duty of care to the employees and it was a matter that was central to the issue of contribution as between the employer and the appellant. 90 It should be noted that the decision of Mathews J in Georgitis v Lend Lease Interiors Pty Ltd, to which Young J referred in State of New South Wales v Kennelly, concerned an earlier version of s 151Z(2). The terms of the then s 151Z(2)(c) had an effect materially different from the present provisions. Moreover, Georgitis v Lend Lease Interiors Pty Ltd was decided prior to Hampic Pty Ltd v Adams. 91 On the facts of the present case, the appellant was not, in my opinion, entitled to contribution from the employer. That was not an issue determined by the trial Judge. However, counsel requested the Court of Appeal to determine the issue. 92 I would dismiss the appeal and would order that the appellant pay the respondent's costs. 93 BARRETT AJA: The content of paragraph (xiii) of clause 12.11 of the lease is at odds with any intention that the paragraph should operate only during the initial period of 28 days. A lessor's obligation to "maintain" from which is excluded responsibility for any damage caused by the lessee is not sensibly referable to an initial defects rectification period of such short duration. The introductory "to" in paragraph (xiii) sets its form apart from the form of each of the preceding twelve paragraphs and reinforces the separateness of that particular paragraph from the introduction to the thirteen numbered items. Clause 12.11(xiii) was correctly viewed by the primary judge as the source of a special and on-going regime in relation to the doors which excluded them from the general covenants to repair and obliged the appellant to keep them in reasonable working order, subject only to the imposition upon the lessee of responsibility to repair any damage caused by it. 94 Having regard to clause 12.11(xiii), I am satisfied that there arose a contractual duty on the part of the appellant towards the respondent's employer as lessee producing the result that the appellant would not have been entitled to contribution from the employer had the issue of contribution been litigated between them. 95 I agree with the conclusions of Beazley JA on the duty of care in tort and on the primary judge's credit findings. I agree with Davies AJA as to the meaning and effect of s.151Z of the Workers Compensation Act 1987 and, in particular, that the words "or otherwise" in s.151Z(2)(c) cause the entitlements with which that provision is concerned to include entitlements based in contract. 96 The appeal should be dismissed with costs. **********

Lapcevic v Collier

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