Lovric & Anor v WorkCover Authority of New South Wales & Ors

Lovric & Anor v WorkCover Authority of New South Wales & Ors - [2007] NSWSC 898 - NSWSC 2007 case summary — Zoe

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JUDGMENT 1 HARRISON J: Dusan Lovric ("Mr Lovric") and Todora Lovric ("Mrs Lovric") are married. They have each sued the defendants. Their respective causes of action arise out of the same circumstances, in which Mr Lovric was severely injured in an explosion. Mr Lovric claims damages for those injuries. Mrs Lovric claims damages for psychological injury, which she sustained when she became aware of the extent of her husband's injuries. 2 The first defendant has moved the court by notices of motion in each case seeking to dismiss or to strike out the statements of claim against it on the ground that they disclose no reasonable cause of action or alternatively to strike out specified paragraphs of the statements of claim upon the ground that the paragraphs tend to cause prejudice, embarrassment or delay, or are otherwise an abuse of the process of the court. Background 3 On 10 June 2003 the plaintiff was critically injured in an explosion that occurred at a fireworks factory at Leppington ("the premises"). For many years up to and including that date the second defendant operated a business that manufactured, assembled and stored fireworks at the premises. On the day that he was injured the plaintiff was engaged in the manufacture of fireworks at the premises and was operating a machine known as a Manesty Betapress tablet press that was used for that purpose. 4 Some years earlier, the second defendant had employed Teuira David Maireriki who had worked in the business at the premises. On 3 August 2000 Mr Maireriki was assembling fireworks at the premises when a series of explosions occurred resulting in a fire and his death. 5 Following Mr Mareriki's death the first defendant, through its officers, attended the premises and subsequently carried out an investigation into the circumstances of his death. In due course the first defendant prosecuted the second defendant pursuant to s 15(1) of the Occupational Health and Safety Act 1983 ("the Act"). In that prosecution the first defendant charged that the second defendant had failed to: -

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(vi) providing appropriate personal protective equipment to such persons or complying by any other means." 7 On 24 May 2001 the first defendant issued a prohibition notice to the second defendant pursuant to s 93 of the Occupational Health and Safety Act 2000 requiring that activity relating to the preparation of fireworks display items on the premises cease immediately and not be resumed until the matters giving rise to the risk had been remedied. The prohibition notice repeated the measures to be taken listed above. 8 The plaintiffs allege that notwithstanding the issue of the Improvement and Prohibition Notices, the second defendant, in effect, continued to manufacture fireworks at the premises whilst simultaneously and flagrantly disregarding them. The plaintiffs allege that the second defendant failed to implement all the measures that the first defendant required it to take and that this position continued unabated up until the date when the plaintiffs were injured. 9 The plaintiffs allege against the first defendant that it owed them both a duty of care and a statutory duty to ensure that the second defendant complied with the notices that it had issued and that their injuries were caused by breaches of those duties. 10 The first defendant's notices of motion were filed on 5 June 2007 and seek orders in relation to the plaintiffs' statements of claim filed on 8 June 2006. By their own notices of motion filed on 12 June 2007, however, the plaintiffs in each case sought leave to amend their statements of claim and to rely upon amended statements of claim, copies of which are annexed to affidavits of Kathryn Williams sworn 8 June 2007. None of the proposed amendments to the plaintiffs' statements of claim accommodates the complaints made by the first defendant in its notices of motion. In those circumstances, it is convenient to deal with the first defendant's notices of motion upon the basis that they apply to the proposed amended statements of claim and to postpone consideration of the plaintiffs' applications to amend until after that has occurred. 11 The issues raised in each case before me are similar. As a matter of convenience, therefore, I shall hereafter refer only to the case of Mr Lovric. 12 Paragraph 34 of the proposed amended statement of claim alleged that the first defendant owed the following statutory duties to the plaintiff:

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(e) To issue an investigation notice requiring the use and operation of the Betapress machine for the purpose of manufacturing fireworks to cease until an occupational and safety assessment report was provided by an independent expert in explosives." The first defendant's submissions 14 The essential argument for which the plaintiff contends is that the first defendant, a public authority, had a duty to exercise its statutory powers in a way that would have prevented the incident that occurred on 10 June 2003. A public authority, which is under no statutory obligation to exercise a power generally, owes no common law duty of care to do so. However, an authority may by its conduct attract a duty of care that requires the exercise of a power. See, for example, Graham Barclay Oysters Pty Limited v Ryan (2002) 211 CLR 540. 15 The first defendant emphasised two propositions. First, the common law does not ordinarily establish a liability in a person to protect another from a risk of harm unless the person has created the risk. Public authorities are in no different position. The mere existence of a statutory scheme to empower an authority to protect the public from a particular harm does not by itself give rise to a duty of care: see, for example, McHugh J in Barclay (supra) at [81]. Secondly, merely because it is foreseeable that harm may result if a public authority fails to exercise its powers does not of itself give rise to a duty of care: see Gummow and Hayne JJ in Barclay (supra) at [145]. 16 What is required is a close examination of the statute that empowers the authority to act: see McHugh J at [78], Gummow and Hayne JJ at [146]. The purpose is to examine the relationship between the authority and individual members of the public to determine whether the legislation establishes a duty to specific individuals, as opposed to the public at large: see Gummow and Hayne JJ at [146] and [149]. These judgments referred particularly to the following elements of that relationship (McHugh J at [84], Gummow and Hayne JJ at [149]): 16.1 The degree and nature of control exercised by the authority over the risk of harm that eventuated.

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18.5 Whether the recognition of a duty of care would render the State liable to a "massive obligation" (citing Callinan J in Barclay at [665]). 19 According to the first defendant, the plaintiff has not alleged that it had specific knowledge of the Betapress machine prior to the incident on 10 June 2003 or that it made any specific directions with respect to it. The facts are clearly distinguishable from those in Pyrenees Shire Council v Day. On the contrary, the plaintiff's allegations involve the first defendant issuing Improvement Notices pursuant to s 91 of the Occupational Health and Safety Act 2000 on 6 and 28 March 2001, which were specifically directed to the assembly of fireworks, rather than to the operation of the Betapress machine. 20 Even though the first defendant had statutory powers to enter the premises and to issue notices to the employer prohibiting work, or directing the employer to improve the system of work, it was the plaintiff's employer who controlled the system of work, and directed the plaintiff. According to the first defendant, such control is fundamental to the relationship of employer and employee and the plaintiff's attempt to shift the issue of control to the first defendant is impermissible: see Amaca v State of New South Wales at [147]. 21 The first defendant pointed out that the plaintiff made no allegation that he was in a position of special vulnerability. Any vulnerability of the plaintiff arose from his work in the fireworks industry, and his position was no different to other workers employed in industries where there is a high degree of risk or potential for injury. Further, any special vulnerability of the plaintiff arose as a result of the actions of his employer, rather than the actions of the first defendant. 22 The imposition of a duty of care on the first defendant in the circumstances and in the manner alleged by the plaintiff would create the potential for indeterminate liability. Any situation in which the first defendant inspected the premises and issued, or failed to issue, a Prohibition Notice or an Improvement Notice could give rise to potential liability. Such potential liability would render the exercise of the first defendant's statutory functions unreasonably onerous. 23 The statutory powers relied upon by the plaintiff arise under the Occupational Health and Safety Act 2000, the Workplace Injury Management and Workers Compensation Act 1998, the Dangerous Goods (General) Regulation 1999 and the Occupational Health and Safety Regulation 2001. 24 The objects of the Occupational Health and Safety Act 2000 are contained in s 3. The obligations are broad and are not imposed exclusively upon the first defendant. The power to issue Improvement Notices and Prohibition Notices is contained in Part 6 of the Act. The issue of such notices involves the exercise of discretion. Importantly, a failure to comply with an Improvement Notice or a Prohibition Notice, without reasonable excuse, is a criminal offence: see ss 92 and 94. The imposition of a criminal sanction on the unreasonable failure to comply with an Improvement Notice or a Prohibition Notice is consistent with the obligation to comply being imposed on the recipient of the notice - in this case, the plaintiff's employer. 25 Paragraph 15 of the proposed amended statement of claim alleges that the first defendant issued two Improvement Notices. After these notices were issued, the plaintiff's employer was obliged to comply with them. In the first defendant's submission, a failure to comply with the notices could not have been the responsibility of the first defendant. 26 The first defendant also points to the power to prosecute conferred under Part 7 of the 2000 Act. The first defendant submits that this is an important statutory power. It is uncontroversial, and the plaintiff in fact pleads, that the first defendant successfully prosecuted entities associated with the second defendant for the incidents that occurred on 3 August 2000 and 10 June 2003. In the first defendant's submission, its prosecution powers are an important responsibility, and the alleged duty of care is inconsistent with the immunities which the law recognises in respect of investigators and prosecutors: see, for example, Hill v Chief Constable of West Yorkshire [1989] AC 53; Elguzouli-daf v Commissioner of Police of the Metropolis [1995] QB 335; Sullivan v Moody (2001) 207 CLR 562 and State of New South Wales v Klein [2006] NSWCA 295. 27 The first defendant drew attention to ss 22 and 23 of the 2000 Act. These sections were said to refer to the public at large and not to a specific class of persons of which the plaintiff was a member. It was submitted that such broad functions did not create a specific duty of care in the manner alleged by the plaintiff. 28 It is to be observed that the plaintiff did not allege that the first defendant engaged in any positive act that created a risk that materialised on 10 June 2003. A number of English cases, particularly those involving the activities of fire fighting authorities, distinguish situations where there has been a positive act of a statutory authority that created a risk (where a duty of care arose) and those where there has been a failure of the statutory authority to act (where a duty of care did not arise). 29 The plaintiff alleges that the first defendant breached a relevant statutory duty. The first defendant submitted that the plaintiff has not satisfied the principles that relate to the imputing to the legislature of an intention to create a private right of action for the breach of a provision of the legislation. See, for example, Sovar v Henry Lane Pty Limited (1967) 116 CLR 397; O'Connor v S. P. Brady Limited (1937) 56 CLR 464. 30 The first defendant submitted that any imputation of a legislative intention to create a private law duty of care for breach of statutory duty conflicts with the public law duty of a prosecutorial agent of the executive government which is entitled to an absolute immunity in respect of its prosecutorial functions: see Elguzouli-daf v Commissioner of Police of the Metropolis (supra). 31 The first defendant submitted that the plaintiff has not identified any specific breach of statutory duty that does not arise from precisely the same circumstances as those upon the basis of which the plaintiff alleges negligence. Accordingly, so it is submitted, the first defendant owes no statutory duty for the same reasons that it owes no common law duty. 32 The first defendant also relied upon s 42 of the Civil Liability Act 2002. That section is in the following terms: -

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(2) The court may receive evidence on the hearing of an application for an order under subrule (1)." 36 The first defendant carries a significant burden successfully to invoke these rules: see generally General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. The Court must look to the substance of the pleading and not merely whether it has defective wording: Republic of Peru v Peruvian Guano Co Ltd (1887) 36 Ch D 489 at 496. The Court must assume that the allegations in the pleadings are true: Lonrho plc v Fayed (No 2) [1991] 4 All ER 961 at 965. No evidence on the merits is admissible: Peruvian Guano (supra) at 494. The General Steel formula is variously described as "so obviously untenable that it cannot succeed", "manifestly groundless" and "discloses a case which the court is satisfied cannot succeed". 37 The circumstances where a Court will dismiss proceedings or strike out pleadings will necessarily be rare but it will do so in appropriate circumstances: for example, Sullivan v Moody (supra). Moreover, there is authority for the proposition that the General Steel test should be modified to take into account the principles which underpin the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005: see Kent v Griffiths [2000] 2 WLR 1158, referred to by Brereton J in Integral Home Loans Pty Ltd v Interstar Wholesale Finance [2006] NSWSC 1464. This should be contrasted with the remarks of Young CJ in Eq in State of New South Wales v Klein (supra) at [44] that until the General Steel test is overruled by the High Court, it remains the law. The plaintiff's submissions 38 The legal principles were not in dispute. The plaintiff submitted that his pleaded claims in negligence and breach of statutory duty were tenable causes of action. It was submitted that if a claim raises an arguable point of law, a court at first instance, in the exercise of its discretion, should not make an order for summary dismissal. In any event, the first defendant's reliance upon Rule 14.28 was misguided for the reason that no defect in the pleading has been identified. Rather, the significant thrust of the first defendant's submissions was that the proposed amended statement of claim disclosed no reasonable cause of action. 39 In summary, the case pleaded against the first defendant is that it was under a duty of care in the exercise of its statutory functions and powers to take reasonable care to avoid foreseeable risk of injury to the plaintiff. That duty also encompassed a claim against the first defendant in respect of negligently exercising its statutory power. The principal allegation relates to the first defendant's failure to take affirmative action to ensure the safety of the plaintiff in the workplace such as directing the cessation of work activities until the measures that the first defendant required the second defendant to undertake had been performed. 40 The plaintiff emphasised that the first defendant is a statutory corporation constituted pursuant to s 14 of the Workplace Injury Management and Workers Compensation Act 1998. It has a board of directors. The first defendant may delegate any of its functions to an authorised person such as an inspector. 41 According to the plaintiff, these functions relevantly include ensuring compliance with the workers compensation legislation and the occupational health and safety legislation, as well as the investigation of workplace incidents. In exercising its functions, the first defendant is empowered to promote the development of safe places of work. 42 The first defendant also performs an important function in monitoring compliance with relevant legislation. In doing so, its authorised inspectors are directly involved with compliance activities in the workplace. The power to issue Improvement Notices and Prohibition Notices are two of the enforcement procedures available to inspectors. 43 The plaintiff submitted that, when inspectors from the first defendant investigated the death of Mr Maireriki, it was clear on the face of the improvement and prohibition notices, which were issued that those inspectors had knowledge of serious risks of injury to workers including the plaintiff at the premises. The plaintiff submitted that, in such a situation, the first defendant was in a position to take reasonable steps to control or minimise those risks. In the case of the improvement notices, each notice required a potential risk to the safety of workers, including the plaintiff, to be rectified within a specific timeframe. The notices identified particular hazards that required rectification. The records show that those inspectors returned to the workplace following the issue of those notices. However, the plaintiff alleges that the first defendant failed reasonably to ensure that the second defendant complied with them. 44 Inspectors on behalf of the first defendant subsequently issued a Prohibition Notice. Again, the plaintiff alleges that work continued at the premises notwithstanding that the measures called for had not been complied with and that there remained a potential risk of serious injury to workers such as the plaintiff engaged in the manufacture of fireworks. In these circumstances, the plaintiff contended that the powers, duties and functions conferred on the first defendant were compatible with the exercise of a duty of care. According to the plaintiff's submission, the legislation under which the first defendant operates is not inconsistent with the existence of such a duty. 45 The plaintiff pointed out that the relevant legislation contains no blanket immunity from suit. It was open for the legislature totally to exclude liability for otherwise negligent acts. No such immunity has been formulated. 46 The plaintiff submitted that at the relevant time the first defendant was vested with statutory powers and obligations conferring upon it certain functions in relation to the occupational health and safety of workers such as the plaintiff at the premises. Those statutory powers and obligations allegedly arose from the following: -

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50.6 Are there any other supervening reasons in policy to deny the existence of a duty of care (e.g. the imposition of a duty is inconsistent with the statutory scheme, or the cases concerning pure economic loss and the application of the principles in that field deny the existence of a duty)? If yes, then there is no duty. 51 The plaintiff emphasised cases in which it had been held a common law duty of care arose from the failure of the statutory authority to ascertain that the relevant statutory requirements had been satisfied. The plaintiff relied upon Voli v Inglewood Shire Council (1963) 110 CLR 74 where the High Court held that there was a breach by the Council of the common law duty arising from the failure of council officers who examined the plans and specifications of a building to ascertain that its by-laws relating to public buildings had complied with statutory requirements. 52 Rice v Secretary of State for Trade and Industry [2006] EWHC 1257 decided as a preliminary issue that a statutory authority owed a duty of care to workers to take reasonable steps to protect their safety as registered dock workers pursuant to certain statutory powers. 53 In Tilba Tilba Stud (WA) as Trustee for the Tilba Tilba Stud Trust v The Executive Officer of Agriculture Western Australia (2004) Aust Torts Reports ¶81-736, the Supreme Court of Western Australia held that the stock inspector and officials within the Department of Agriculture owed the plaintiff, the proprietor of a farming property, a duty to exercise both the power to issue a quarantine order and the power to release land and sheep from a quarantine order, with due care, skill and diligence. 54 In Gordon v James Hardie and Co Pty Ltd (1987) Aust Torts Reports ¶80-137, McInerney J refused to strike out a statement of claim in which it was alleged that the State of New South Wales had been negligent, because inspectors had warned the owners of a mine of impending inspections, giving the mine owners the advantage of being able to clean up asbestos dust and slow down the operation of the mine so as to reduce the level of dust before the inspection took place. His Honour held that if the plaintiff's allegations were established, the inspectors would clearly have been negligent in the manner in which they carried out their inspection and that the injuries suffered by the plaintiff, who was a miner at the asbestos mine, could be regarded as having been materially contributed to by the State. 55 The plaintiff submitted that the first defendant owed him a common law duty to take reasonable care to avoid causing injury in the ways identified in the pleadings summarised at par [12] above. 56 The plaintiff also pleaded breaches of statutory duty. The plaintiff submitted that such an action might lie even though the conduct of the first defendant was neither intentional nor negligent. Once it were found that the statutory provision was intended to protect a class of persons, it would only be necessary to show that the first defendant's conduct was contrary to that legislative command or proscription, without further classification of that conduct as either intentional or negligent. The plaintiff submitted that the relevant statutory provisions might be read as protecting persons at the premises, including the plaintiff, so that breaches of the statutory provisions provided a second cause of action in tort for the plaintiff. Consideration 57 In Amaca (supra) at [19], Ipp J said this: -

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