Lipman Pty Ltd v McGregor & Ors

LOWER COURT District Court JURISDICTION : LOWER COURT 9700/00 FILE NUMBER(S) : LOWER COURT Patten DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40165/03

SHELLER JA SANTOW JA GZELL J

LIPMAN PTY LTD v ROBERT MCGREGOR & ORS Judgment 1 SHELLER JA: I agree with Gzell J. 2 SANTOW JA: I agree with Gzell J. 3 GZELL J: The appellant was the head contractor for a multi-storey residential unit development. The first respondent was injured on the building site. He was an employee of the second respondent which had subcontracted to provide scaffolding works. The third respondent was the second respondent's workers compensation insurer. 4 The second respondent took no part in the proceedings before Patten DCJ and took no part in the appeal. His Honour found the appellant liable in tort for the first respondent's injuries and found the second respondent had not breached its duty of care to its employee. His Honour also rejected a claim by the appellant against the second respondent under an indemnity clause in the subcontract. In consequence, the appellant also failed against the third respondent. 5 The first respondent worked under the supervision of Mr Knight, another employee of the second respondent. They were directed by the appellant to raise internal scaffolding in one of the apartments. Having transported scaffolding parts to the floor in question, they began to assemble the scaffold from the floor up. The first respondent worked on the scaffold accepting parts handed to him by Mr Knight below. As each stage was completed, a ladder was fixed to it from the stage below so that workmen could ascend and descend the scaffold. 6 The apartment in question was described as a two-storey loft apartment. There was an internal staircase to a second level. To tie off the scaffold at its final level, Mr Knight ascended the staircase. When he and the first respondent had completed this task, they began to descend the staircase. It collapsed and the first respondent was injured. 7 The staircases for each apartment were stored on lower floors before installation. In order to transport them to higher floors, they had to be cut in halves. Prior to installation, the two sections were joined by gang nails or fish plates. These were metal plates with a series of spikes that could be driven into the timber stringers. This was a temporary form of fastening. After initial installation with the temporary fastening, bracing was installed to secure the two sections. Only the temporary form of fastening had been effected when the staircase collapsed. It was not in issue that, in this form, the staircase was unsafe. 8 The standard procedure was to erect three staircases with temporary fastening before returning to the first to install the braces. The standard instruction to the appellant's employees was to affix red and white safety tape from the bottom hand rail post to the wall at the completion of the first stage of installation and until the staircase had been securely fastened by the subsequent installation of bracing. 9 His Honour accepted the evidence of the first respondent and Mr Knight that there was no safety tape on the staircase. Both said that had there been, they would not have used the staircase. 10 Mr Barry, the safety foreman of the appellant, gave evidence of his instructions for the use of safety tape. He came upon the scene shortly after the accident. He did not recall seeing any safety tape within the area of the broken staircase. Mr Warren was a site foreman of the appellant. When he arrived on the scene, he said he had an impression of the presence of safety tape but he could not remember whether it was attached to anything or wrapped around any piece of timber. Mr Dagger was employed by the appellant as a leading hand carpenter. He installed the staircase and said he wrapped safety tape around the hand rail post at the bottom of the staircase and used duct tape to affix it to the wall. When he came upon the scene of the accident, he said he did not recall seeing any tape. 11 As his Honour observed, Mr Dagger was mistaken in several respects. He said that he began to install the staircase about midday on the day of the accident. The first respondent and Mr Knight commenced work at 7 am and the accident occurred about 11 am. Mr Dagger said that when he commenced constructing the staircase, Mr Knight was carrying out scaffolding construction some 30 to 40 metres away on the other side of the building. 12 His Honour rejected the evidence of Mr Warren and Mr Dagger as unreliable and concluded that, for whatever reason, there was an omission by the employees of the appellant to ensure that safety tape was in place. 13 Mr Carmody, an inspector of the WorkCover Authority, made a report in which he said that carpenters, in the process of installing the staircase, taped off access to it with the intention of returning to install fish plates and, prior to their return, someone had removed the safety tape. 14 His Honour did not refer to this evidence in his reasons for judgment. The appellant submitted that he should have regarded it as a contemporaneous independent record of events and concluded that safety tape was present at the time of the accident. 15 The report did not identify the sources of information that led Mr Carmody to his conclusions. None of the witnesses before the Court gave Mr Camody the information. Its admission into evidence was opposed. In admitting it, his Honour noted: "It's probably admissible as a business record isn't it, as an accident report. Its probative value is fairly limited in respect of unattributed statements I would think." 16 The report was hardly contemporaneous having been written one month after the accident. Mr Barry took some photographs the day after the accident. No explanation for their non-tender was forthcoming. 17 A Judge may fall into error if significant documentary evidence is not considered in the reasons for judgment (State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 73 ALJR 306). That is not the case in the instant circumstances, however. His Honour's appraisal of the weight to be given to Mr Carmody's report could hardly give it significance. The failure to refer to some of the evidence does not, of itself, indicate that a Judge has failed to discharge his or her duty (Mifsud v Campbell (1991) 21 NSWLR 725 at 728). 18 In the absence of any evidence of the basis for Mr Carmody's conclusions, his Honour was entitled to reject that documentary evidence and prefer the first hand evidence before him. His failure to mention it in his reasons for judgment did not put him in error. This is not a case of ignoring incontrovertible facts or uncontested testimony to the contrary of his Honour's conclusion. Nor is his conclusion glaringly improbable or contrary to compelling inferences (Fox v Percy (2003) 77 ALJR 989 at 995). 19 In my view, his Honour was entitled to conclude that no warning tape had been placed on the staircase and, in consequence, the appellant was liable to the first respondent in tort. 20 It was next submitted that the second respondent, as employer of the first respondent, should bear some liability for the injury and a figure of 25% was suggested. It was submitted that Mr Knight should not have assumed that the staircase was safe and should have asked Mr Warren whether it was safe to use it. It was submitted that even in the absence of safety tape, commonsense should have suggested to the first respondent and Mr Knight that the staircase might not be safe. 21 In my view, the evidence upon which reliance was placed for this latter proposition did not go so far. In cross examination of Mr Warren, the following exchange took place: "Q: Would you have been relying only on the red and white tape as being a sufficient warning in itself that tradesmen such as Mr Knight and Mr McGregor should not use the staircase? A: Red and white tape and also commonsense."

The witness did not say that in the absence of safety tape, commonsense would suggest that the staircase should not be used. Both Mr Warren and Mr Knight gave evidence that if safety tape was present, it acted as a stop sign or red light and its absence acted like a green light. 22 Reliance was placed upon the decision of this Court in TNT Australia Pty Ltd v Christie [2003] NSWCA 47. In that case, an employee sent to work at a third party's brewery was injured when the pallet jack he was using malfunctioned and moved backwards over his foot. While the third party was held liable for the injury, the employer was also held to have breached its non-delegable duty of care and damages was apportioned to it as to 25%. 23 It was the duty of the employer to provide its employee with equipment that was safe for the purpose of the tasks he was required to carry out by the third party. The equipment in question was defective. That being so, the employer's duty of care could not be fulfilled by assuming that the third party would fulfil a like duty. 24 That is a far cry from the instant circumstances. The defective staircase was not part of the equipment provided by the second respondent. It was installed by the appellant under a system that suggested it was safe if no safety tape was attached to it. The first respondent was aware of the significance of this system. He said that if the safety tape had been attached he would not have used the staircase. 25 If there was no safety tape on the staircase, there was no cause for Mr Knight to make any inquiries of Mr Warren as to its safety. The absence of safety tape invited the use of the staircase as fit for its purpose. I see no reason to interfere with his Honour's conclusion that there had been no breach of the non-delegable duty of care owed by the second respondent to the first respondent. 26 The subcontract between the appellant and the second respondent contained the following clause: " Indemnity 10a) The subcontractor must indemnify Lipman against each of the following liabilities: ii) liability to the Principal; iii) liability in respect of personal injury, death or property damage arising out of the Works; iiii) liability for infringement of any intellectual property right relating to the Works; ivi) liability for any losses, costs, expenses or damages incurred by Lipman arising as a result of the subcontractor's negligence or a breach by the subcontractor of this Agreement." 27 The appellant argued that there was a liability in respect of personal injury and the second respondent was liable to indemnify it. 28 His Honour rejected this submission on the basis that the injury did not arise out of the "Works", a term which, in any event, his Honour regarded as void for uncertainty. 29 The term "Works" was defined in the subcontract to be the erection and dismantling of scaffolding. Thus the indemnity extended to the appellant's liability in respect of personal injury arising out of the erection or dismantling of scaffolding. 30 It was submitted that the injury arose out of scaffolding work in the sense that the descent of the staircase was work on site referable to the performance of the subcontract. I reject that submission. It would mean that the appellant was entitled to indemnity from the second respondent in respect of any on-site injury to its employees, however caused. 31 The clause is infelicitously drawn. The first head of indemnity must be read down. It could not have been the intention of the parties that the second respondent assumed liability for any liability of the appellant to the principal. There is no reason to suppose that the second head of indemnity should be given an extended meaning. This is not a case like Davis v Commissioner for Main Roads (1967-1968) 117 CLR 529 in which a contractor undertook the whole risk of carrying out the contract. 32 The second head of indemnity is limited to liability for personal injury arising out of the erection or dismantling of scaffolding by the second respondent. The injury in question arose from the use of the appellant's staircase. That was not part of the process of erection or dismantling of scaffolding. 33 If the second respondent had been liable under the indemnity but not liable in tort, the question would have arisen whether the statutory policy issued by the third respondent under the Workers Compensation Act 1987 extended to cover the second respondent's liability in contract. Nigel Watts Fashion Agencies Pty Ltd v GIO General Ltd (1995) 8 ANZ Insurance Cases 61-235 in this Court is authority against that proposition. It was submitted that support for it could be found in some observations of the High Court in State Government Insurance Office (Q) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228. 34 In light of my view that liability under the indemnity clause does not arise, it is unnecessary to consider this issue. This is not an appropriate vehicle in which that issue should be canvassed. It deserves more than an obiter dictum observation. 35 I would dismiss the appeal with costs.

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