Court of Appeal (WA)|2004-11-26|Before: Malcolm CJ

Manufacturers Mutual Insurance Ltd v Murray River North Pty Ltd & Anor [2004] WASCA 276 (26 November 2004)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : HOWELLS & ANOR -v- MURRAY RIVER NORTH PTY LTD & ORS [2004] WASCA 276

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : HOWELLS -v- MURRAY RIVER NORTH PTY LTD & ORS [2002] WADC 222

Negligence - Employer's liability - Breach of statutory duties - Breach of duty of care - Safe system of work - Whether alternative system "reasonably practicable" - Contributory negligence - Voluntary assumption of risk - Liability of insurer under employer's liability policy

Workers' Compensation and Rehabilitation Act 1981 (WA), s 10A, s 160

Judgment for plaintiff against first and second defendants

Order that second appellant indemnify first and second respondents

Second Appellant (Second Third Party) : Mr J R Criddle

First Respondent (First Defendant) : Mr R J L McCormack

Second Respondent (Second Defendant) : Mr R J L McCormack

Third Respondent (First Third Party) : Mr M W Odes QC & Mr G C Richards

Second Appellant (Second Third Party) : J R Criddle

First Respondent (First Defendant) : Blake Dawson Waldron

Second Respondent (Second Defendant) : Blake Dawson Waldron

Third Respondent (First Third Party) : Srdarov Richards

Cianciarulo v HP Products Pty Ltd [1959] VicRp 25; [1959] VR 170

Hewertson v Courtaulds (Australia) Ltd (1957) 57 SR (NSW) 398

Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21

Insurance Commissioner v Joyce [1948] HCA 17; (1948) 77 CLR 39

Jeffries v Fisher [1985] WAR 250

Kelly v Farrans Ltd [1954] NI 41

Roggenkamp v Bennett [1950] HCA 23; (1950) 80 CLR 292

Woods v Multi-Sport Holdings Pty Ltd [2002] HCA 9; (2002) 208 CLR 460

Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40

Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385

Climaze Holdings Pty Ltd v Dyson (1995) 13 WAR 487

Container Handlers Pty Ltd v Insurance Commission of Western Australia [2001] WASCA 304; (2001) 25 WAR 42

CSR Ltd v Wren (1998) 44 NSWLR 463

DHN Food Distributors Ltd v London Borough of Tower Hamlets [1976] 3 All ER 462

Fennell v Supervision & Engineering Services Holdings Pty Ltd (1988) 47 SASR 6

Fluor Daniel Constructors Pty Ltd v Zurich Australian Insurance Ltd [2002] WASCA 218

Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672

March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506

Miller v BP (Fremantle) Ltd & Anor [2002] WASCA 201

Monarch Insurance Co Ltd v Steel Mains Pty Ltd [1986] VicRp 80; [1986] VR 831

Narich Pty Ltd v Commissioner of Pay-roll Tax (1983) 50 ALR 417

Schmitz v Pilpel (1988) A Torts Rep 80-178

Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324

State Government Insurance Commission v Sinfein Pty Ltd (1996) 15 WAR 434

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16

Wesfarmers Insurance Ltd v Cotter and Velint Pty Ltd (1990) 1 WAR 493

Wooldridge v Sumner [1962] EWCA Civ 3; [1963] 2 QB 43

1 MALCOLM CJ: I have had the advantage of reading in draft the reasons to be published by Murray and Wheeler JJ. In my opinion, this was a difficult case to resolve because of the factual context in which the appellant's accident occurred and the limited accommodation on the truck in question.

2 There was an issue whether the first respondent, Murray River North Pty Ltd ("MRN"), and/or the second respondent, Gaucho Pty Ltd ("Gaucho") were, or each of them was, an employer of the appellant. As at the date of judgment in the District Court on 21 March 2003, the appellant was aged 21. He was a qualified plumber. MRN had a construction contract at Balgo Mission in the far north-west of the State. They provided cartage and construction services and utilised a road train for transport. This comprised a prime mover and three trailers. It was about 150 feet long. It was equipped with a single bunk bed which at the material times was utilised by Mr Stephen Grahame, a cartage contractor and construction worker of some 20 years' experience. Mr Grahame and his son slept in the bunk bed "head to toe".

3 Mr Grahame, his son and the appellant set out on a journey from Cotton Creek near Port Hedland. Their destination was Balgo Mission, some 1400 kilometres from Port Hedland. The journey was expected to take three days and two nights. The appellant had previously accompanied Mr Grahame as a co-driver and assistant on many such trips in the State.

4 Other than knowing that the appellant was travelling on the road train to Balgo and would be sleeping in his swag on overnight stops, neither MRN or Gaucho knew the day to day details. The appellant was employed by MRN and paid by Gaucho as a truck driver. His role was to transport equipment and materials from job to job. He sometimes accompanied Mr Grahame as a co-driver. The latter was the senior man.

5 As the learned Judge held, Mr Grahame was the representative or agent of MRN and Gaucho, so that his knowledge was also the knowledge of those two companies.

6 At all material times, the road train comprised a prime mover and three trailers. Each was loaded. One of the trailers, namely, the second or third in line, carried a tip truck and a backhoe tractor digging machine. There was a photograph of a different truck and trailer in evidence, but it was held not to be a reliable guide to the relevant dimensions, particularly as to the height of the tip truck, the subject of this case, above the trailer and ground level.

7 The appellant gave evidence that there was no space on the floor of the trailer upon which the tip truck and backhoe were being carried. Pieces of timber and steel were lying about and all available spaces had been filled with small goods.

8 Both Murray and Wheeler JJ have described the events following the journey from Cotton Creek to Port Hedland, following which the road train was to rendezvous with other vehicles at the Tanami turn-off 17-20 km from Halls Creek. The plan was to camp there overnight and leave for Balgo Mission at dawn on 10 July 1992.

9 The road train needed refuelling when it arrived at the turn-off. A request had been made by radio for the roadhouse at Halls Creek to remain open. Mr Grahame and the appellant drove past the turn-off and refuelled at the roadhouse. They then returned to the Tanami turn-off to spend the night.

10 There were other people in the vicinity where the road train was parked. Mr Grahame and the appellant, together with a small group of others, sat around a campfire and had some refreshments. The appellant's evidence was that he had about two cans of Swan Gold beer.

11 At about 12.30 am on 10 July, all of the men decided to retire for the night. Mr Grahame and his 16-year-old son slept head to toe in the single bunk in the cab of the prime mover. The appellant had his swag, which was his usual practice. He knew he would have to sleep either on the ground or on one of the trailers of the road train. His evidence was that he had done one or other of these things on many occasions. There was evidence that it was the common practice of long-distance truck drivers in the north-west to camp by their trucks in their swags when rest was required.

12 There was also evidence that, occasionally, accommodation could be obtained at a roadhouse or motel, if the need to stop and rest coincided with a settlement. However, given the distances between such places, such a co-incidence was infrequent. As a result, it was common practice for drivers involved in the transport industry to make camp off the track somewhere near a rest stop. Camping out in a swag was something some people enjoyed more than others. According to some of the witnesses called, there was concern about snakes and scorpions. According to one witness, the risk of being invaded by ants was the only concern. Another witness said he had been woken up by the attentions of a wild pig.

13 The learned trial Judge found that, on the night in question, at least three men in the group joined by the appellant had rolled out their swags and slept on the ground around the campfire. The appellant decided not to join them. His reason was that some time in the previous three months to six weeks, his brother-in-law had rolled out his swag outside the Halls Creek roadhouse and went to sleep "under or on the truck". In the early hours of the morning, he had been struck on the head with a bottle by an unknown person. The appellant had been present on that occasion.

14 There was no evidence of any such event happening to anyone else. The appellant remembered the incident, however, and on the night in question decided to take his swag and climb up into the back of the tip truck which was carried on one of the trailers. He used a torch to find his way. The tip truck was empty. It was found to be a completely safe place to sleep. As the learned Judge described it, it was "akin to a gigantic steel 'safe cot'. Nobody could possibly roll out of their swag while asleep in the back of the tip truck."

15 The appellant's only recollection was of commencing the climb up to his sleeping place. His next recollection was waking up in the Halls Creek Medical Centre.

16 Mr Grahame said that one reason for the appellant's decision to sleep on the load was because there was a noisy group further down the road who may have presented some threat during the night. He said that if he had been in the appellant's position, he would have slept on a trailer that night.

17 Mr Grahame's evidence was that the tip truck was a suitable place to spend the night. He did not consider that there was any risk of falling to the ground from the tip truck. He conceded that there was an element of risk in climbing up on the load on a semi-trailer at any time. He had "no problem" with the appellant sleeping in the tip truck. He went on to say:

"I felt it was the best defensive place for him to be in the light of the crowd down the road and he was happy with that position of sleep."

18 Mr Grahame also gave evidence that either he or people working with him on jobs had slept "many times" in the tray of a truck such as that which was loaded on the trailer in the present case. In order to assist the appellant to climb up on the load, Mr Grahame provided him with a torch.

19 Mr Grahame's next recollection was of shouting and screaming at least two hours later. This woke him up. He went outside and saw the appellant spread-eagled on the ground beside the trailer roughly below where the tip truck was located. The learned trial Judge was unable to make any finding how the appellant came to be on the ground. He was obviously severely injured. The learned Judge found that the appellant had actually gone to sleep in the back of the tip truck. His swag was found there unrolled. It appeared to have been slept in. His thongs were located nearby. In my opinion, the inference was clearly open that the appellant had got up in the night for some reason, such as to relieve himself, which would have involved him climbing on the load. The further inference is open that he accidentally fell to the ground. The learned Judge made the following comments and findings in pars [33] - [39] of his reasons:

"33. Given that it is impossible for the [appellant] to have rolled out of his swag and fallen from the tip truck whilst asleep, then the most likely possibilities seem to me to be as follows:

1. The [appellant] got out of his swag, walked in his sleep and stepped off the back of the tip truck falling to the ground or onto the trailer thence the ground;

2. The [appellant] had some need during the night to leave the tip truck and either;

(i) slipped and fell whilst climbing down or up, or

(ii) landed on the ground heavily having stepped out of or jumped off the tip truck forgetting where he was having just awoken.

34. The [appellant] was asked no questions about his sleeping habits or history. He said he had only had two cans of beer before going to sleep. He had only been asleep for about 2 hours.

35. As I have indicated it is not known how the [appellant] sustained his injury except that it is obvious the law of gravity played a major role. The [appellant] landed heavily on the trailer or the ground or both having descended rapidly from height.

36. The mechanism or dynamics of that descent may not be important. The [appellant] 'descended' from height because he made his bed at height. According to the evidence the primary reason for the [appellant] choosing to sleep at height above the ground in the back of the tip truck was because he feared being assaulted during the night. According to the [appellant] that was why sleeping on the road train trailer was not an option he seriously considered, putting aside the question of whether there was any sleeping space on any of the trailer trays. He said there was no space on the tray of the trailer upon which the tip truck was being carried. He did not speak about any available space on the other two trailers.

37. As I have mentioned there was no evidence Mr Grahame knew, when he was in Halls Creek refuelling, that the [appellant] intended to sleep in the back of the tip truck some 12-14 feet above the ground. Mr Grahame was cross-examined about the practicality of parking his road train in Halls Creek and obtaining an available bed for the [appellant] at the Halls Creek Roadhouse. There were beds available at that place on the night in question.

38. At T162 Mr Grahame said that it was common at the time for people to roll out their swag and sleep on the load being carried on the trailers. This obviously reduced the risk of unwelcome visits by local fauna.

39. Mr Grahame was unable to recall whether there was any clear space on any of the trailers or not."

20 There was a question raised whether it would have been prudent to book into the Halls Creek roadhouse and take rooms which were apparently available. In this context, Mr Grahame said that time was a critical factor. There was some urgency to get to the Balgo Mission. It was necessary to co-ordinate with others, including meeting aircraft bringing in other workers to be engaged on the project.

21 Mr Grahame indicated that there were cabins on prime movers that could sleep two. There was one previous occasion when someone who had been driving with him had been assaulted overnight when sleeping out about three months' previously. This was the occasion previously referred to when his brother-in-law, a Mr Ken Lindsay, had woken him up early in the morning at about 6 am outside the Halls Creek roadhouse. He had been sleeping under or on the truck and he woke in the morning to find himself bleeding from the scalp, dazed and semi-conscious. He had been hit on the head with a broken bottle and his wallet stolen. The appellant had been travelling with him on that particular occasion. This incident occurred two or three months prior to the incident, the subject of these proceedings.

22 In relation to the journey in question, Mr Grahame had arranged to meet some people at the Tanami turn-off. They were a concreting team and some of their equipment was included in Mr Grahame's load. They met at the turn-off at 10.00 or 10.30 pm in the evening. They then continued on into Halls Creek to refuel. They also got some food at the roadhouse.

23 It may be that the three of them could have stayed overnight at the roadhouse and left Halls Creek early enough to rendezvous with the other vehicles at the Tanami turn-off. So much was conceded, but I do not consider that the decision to adopt what was a prevalent and common practice of camping en route and sleeping on the load was self-evidently one which involved a failure of the duty to take reasonable care in the context of the appellant's employment.

24 The trial Judge approached the case on the basis that the appellant was employed by both MRN and Gaucho. It followed that a duty of care was owed by both of them whether the appellant was properly described as an employee or a subcontractor. The content of the duty to take reasonable care in each case was the same, both at common law or as a term implied in his contract of employment or service.

25 There was also an alternative claim based on an alleged breach of the duty of care under s 5(1) of the Occupiers' Liability Act 1985 (WA). In this context, it is of significance that there was no relevant defect in relation to the relevant premises, even including the tip truck as being part of the premises. The evidence was that the tip truck was an extremely safe place to sleep. There was no risk of falling out of the tray of the tip truck. The relevant risk was in climbing up, down or about on the load.

26 The inference which was open from the evidence was that the appellant woke up, got out of the tip truck and went out onto the load, possibly for some reason such as the need to relieve himself and accidentally fell from the load onto the ground.

27 In this context, I agree with Murray J that the learned trial Judge was correct in finding that the tip truck as such was a perfectly safe place to sleep. I also agree that the claim under s 5 of the Occupiers' Liability Act added nothing to the claim in negligence. The load itself did not constitute a danger.

28 There was also a claim based on breach of statutory duty under s 19(1) of the Occupational Safety and Health Act 1989 (WA) which provides that:

"(1) An employer shall, so far as is practicable, provide and maintain a working environment in which his employees are not exposed to hazards and in particular, but without limiting the generality of the foregoing, an employer shall -

(a) provide and maintain workplaces, plant, and systems of work such that, so far as is practicable, his employees are not exposed to hazards;

(b) provide such information, instruction, and training to, and supervision of, his employees as is necessary to enable them to perform their work in such a manner that they are not exposed to hazards;

(c) consult and co-operate with safety and health representatives, if any, and other employees at his workplace, regarding occupational safety and health at the workplace;

(d) where it is not practicable to avoid the presence of hazards at the workplace, provide his employees with, or otherwise provide for his employees to have, such adequate personal protective clothing and equipment as is practicable to protect them against those hazards, without any cost to the employees; and

(e) make arrangements for ensuring, so far as is practicable, that -

(i) the use, cleaning, maintenance, transportation and disposal of plant; and

(ii) the use, handling, processing, storage, transportation and disposal of substances,

at the workplace is carried out in a manner such that his employees are not exposed to hazards."

29 Section 19(4) of the Act defines "employer" to include a principal who employs a contractor to carry out work in terms which deem the contractor to be an employee of the principal. I agree with Murray J that this plea added nothing to the plea in negligence.

30 In my opinion, given the evidence of the appellant, it was not possible to make any finding other than that there was an inherent risk involved in climbing on, or moving about, on the load at night. The risk was one of losing one's footing and falling to the ground and suffering injury, notwithstanding the exercise by the appellant of reasonable care for his own safety.

31 There was no evidence that the appellant was a person who had a propensity to walk in his sleep or whose capacity was affected by alcohol or otherwise to such an extent that there was a significant risk of him falling off the load while climbing on it. The finding was that he had consumed two cans of beer before turning in.

32 There was no sleeping space available on the trailer on which the tip truck was carried. There was no evidence one way or another whether there was any sleeping space available on one or other of the remaining two trailers. It would be reasonable to expect that, if there was any suitable space available, Mr Grahame would have been aware of it.

33 This was a case in which the nature of the appellant's employment exposed him to the risk of injury because of the need to sleep either in a swag on the ground in respect of which there was a risk of attack by wildlife or other persons. Absent any other reasonably available accommodation, the only alternative was to sleep on a trailer or on part of the load as happened on this occasion.

34 In this context, it needs to be borne in mind that, at the time when the appellant was making his decision where to sleep, there was a burst of noise from a group further down the road which suggested that there were people about who were drunk. This reminded the appellant of the recent incident in Halls Creek when Mr Grahame's brother-in-law, a Mr Lindsay, had been attacked while sleeping in his swag on the ground adjacent to or under the truck. It was this event which prompted the appellant's decision to sleep on the load in the tray of the tip truck on the lead trailer.

35 In my view, the state of the evidence was such that, whether the appellant slept on the ground or on the load, there was a risk of injury. No attempt was made by Mr Grahame, as his immediate superior and supervisor, to persuade the appellant against sleeping on the load where the appellant chose, namely, in the tray of the tip truck. While it might well have been the case that the appellant appreciated the risk of falling from the load unless he exercised reasonable care for his safety, I do not consider that, on the evidence, the respondents discharged the onus of proof on them to establish that, the appellant, by climbing on the load to get to the tip truck where he went to sleep, voluntarily exposed himself to a reasonably foreseeable risk of harm, unless there was a failure by him to take reasonable care for his own safety. In the end, the circumstances were such that the only finding available was that he fell from the load when he got up during the night.

36 The circumstances in which he fell and injured himself were not such as to lead self-evidently to a conclusion that there was any room for the application of the doctrine of res ipsa loquitur. The circumstances did not speak for themselves so as to indicate any failure on the part of the appellant to take reasonable care for his own safety. There was simply no relevant evidence on this point. It was not suggested that the appellant's inability to recollect what had happened was other than genuine.

37 In these circumstances, there was an onus on the part of MRN and Gaucho to prove that the appellant voluntarily assumed the risk of injury in circumstances that he fully appreciated the risk involved, namely, that he might accidentally fall while climbing or moving about on the load. In my view, it was not a case in which the appellant could have been said to have freely consented to run the risk of falling off the load "... at his own expense so that he and not the party alleged to be negligent, should bear the loss in the event of injury": Smith v Baker [1891] UKHL 2; [1891] AC 325, and Kelly v Farrans Ltd [1954] NI 41. In other words, the defence of voluntary assumption of risk could not have applied unless the appellant, with full knowledge of the risk, had expressly or by implication agreed to waive his right to any remedy for any injury sustained. This involved the appellant assuming both the physical risk and also the legal risk of harm: cf Insurance Commissioner v Joyce [1948] HCA 17; (1948) 77 CLR 39; Roggenkamp v Bennett [1950] HCA 23; (1950) 80 CLR 292; Hewertson v Courtaulds (Australia) Ltd (1957) 57 SR (NSW) 398; Cianciarulo v HP Products Pty Ltd [1959] VicRp 25; [1959] VR 170; Jeffries v Fisher [1985] WAR 250 at 253 per Burt CJ; and 257 - 258 per Kennedy J.

38 Furthermore, on the evidence of the appellant in this case, which was accepted, he had no recollection of what happened from the time he got into the tray of the tip truck. There was no evidence at all, except for the fact that for some unknown reason, he had got up during the night, gone out onto the load and fallen to the ground. The circumstances were such that there was no evidence of any lack of reasonable care on the part of the appellant for his own safety. There was no evidence to suggest that the appellant was aware of any propensity on his part to walk in his sleep or that when he got up, he failed to take reasonable care for his own safety.

39 For these reasons, I am of the opinion that the appeal should be allowed, the decision of the learned trial Judge set aside and that in lieu thereof, there should be a judgment in favour of the appellant for the agreed amount of damages.

40 I agree that, as the learned trial Judge found, at all material times, the appellant was employed at least by Gaucho. In my opinion, as Murray J would hold, it was also open on the evidence to conclude that he was in fact employed by both MRN and Gaucho.

41 I agree with Murray J that the appeal by MMI should be dismissed and that, as a result, it is unnecessary to deal with the notice of contention filed by MRN and Gaucho, which are concerned with estoppel and the operation of s 54 of the Insurance Contracts Act 1984 (Cth).

42 I agree with Murray J that the appeal by MRN and Gaucho against the orders made in favour of Zurich did not succeed, by which their claim to be indemnified by Zurich should be dismissed for the reasons stated by his Honour.

43 I also agree that the appellant's appeal should be allowed and that the judgment of the learned trial Judge be set aside and in lieu thereof there be judgment against MRN and Gaucho for damages in the sum agreed. The appeal by MMI should be dismissed. The appeal by MRN and Gaucho against Zurich should be dismissed.

44 The third party claim against Zurich was dismissed by the learned trial Judge with costs. I agree that those orders should stand.

45 In the third party proceedings brought against MMI, I agree with Murray J that there should be orders that MRN and Gaucho be indemnified against the damages and costs incurred, pursuant to the relevant contract of insurance in each case. It follows that the order for costs of the third party proceedings made in favour of MRN and Gaucho should not be disturbed.

46 Mr Howells was a plumber, but he was not just a plumber. He had experience working in the building and construction industry in the north-west of WA. He had driven road trains.

47 I put to one side for the moment the controversy about Mr Howells' relationship to the first and second respondent. The first respondent, Murray River North Pty Ltd (MRN), is a company which was involved in construction work in the north-west. It had a contract at Balgo. It used a road train to transport goods and equipment required in the performance of the contract. The road train which figures in the incident in which Mr Howells was injured comprised a prime mover, with a single bunk bed, and three trailers, one of which was carrying an empty tip truck and a backhoe digging machine.

48 The road train was carting goods and equipment to Balgo from Cotton Creek, near Port Hedland. The driver was a Mr Grahame. Mr Howells was the co-driver, and Mr Grahame's general off-sider. The journey was over a distance of about 1400 kms. It was to take three days and two nights. The first leg of the journey was the trip from Cotton Creek via Port Hedland to Halls Creek. There was an arrangement that the road train would rendezvous with other vehicles at the Tanami turnoff, which was about 17-20 kms out of Halls Creek, a short distance only. The vehicles were to overnight there on 9 July 1992 and leave for Balgo at dawn on 10 July.

49 The vehicle did not reach Halls Creek until late at night. Mr Grahame had to radio ahead to the roadhouse at Halls Creek to ask them to remain open so that the prime mover could be refuelled. They drove past the turnoff to get to Halls Creek and, having refuelled, returned there, where they met up with the other drivers and vehicles. A campfire was established. Some of the men drank some beer before, at about 12.30 am on 10 July, they decided to bed down for the night.

50 It was the practice of such men to take swags with them so that they might sleep out when occasion required. Three men rolled out their swags by the campfire, to sleep on the ground. Mr Grahame had his 16-year-old son with him as a passenger. Those two slept head to toe in the single bunk bed of the prime mover. Mr Howells decided that he did not wish to sleep on the ground. He was concerned about snakes and scorpions and that he might be attacked and hurt by other people.

51 Not too far from the campsite they could hear some people who were noisy, but otherwise not troublesome. Nonetheless, Mr Howells recalled that on a previous trip when the road train had stopped overnight at Halls Creek, outside the roadhouse, Mr Grahame's brother-in-law, a Mr Lindsay, who had slept in his swag under or on the vehicle, had been assaulted by being struck on the head with a bottle. Mr Howells was concerned that something like that might happen to him.

52 He therefore decided to sleep in the tip truck. Mr Grahame provided a torch so that Mr Howells could light his way up into the rear of the tip truck in the dark. Everybody retired to bed.

53 A couple of hours later Mr Grahame was awakened by cries from Mr Howells. When he went out of the cab of the prime mover, he found Mr Howells lying on the ground below the tray of the tip truck. Mr Howells was unable to give evidence about what had happened, but he had been severely injured. His swag was unrolled in the tray of the tip truck. His thongs were nearby. He must have fallen, but in what circumstances was unknown. The trial Judge surmised that he may have been sleepwalking or he may have needed to get up from his bed during the night and climb down to the ground. He may have fallen while doing so or while climbing back to his bed. It matters not, I think, precisely how it happened.

54 At the trial in the District Court in May 2002, nearly 10 years after the event, the quantum of damages was agreed. The issues litigated concerned the liability of MRN and the second respondent, Gaucho Pty Ltd (Gaucho), together with the liability of the insurers, the second appellant, Manufacturers Mutual Insurance Ltd (MMI), and Zurich Australian Insurance Ltd (Zurich), each of whom had declined to indemnify the defendants and who were joined in the litigation by third party proceedings. Zurich was the public liability insurer and MMI was the employer's liability and workers' compensation and common law insurer. In the end, none of the issues raised in the third party proceedings strictly needed to be dealt with because the trial Judge held that Mr Howells' claim should be dismissed. However, the trial Judge also held that MRN and Gaucho would have been entitled to be indemnified against Mr Howells' claim by MMI. The claims of MRN and Gaucho to be indemnified by Zurich were dismissed.

55 Mr Howells appeals against the dismissal of his claim. The grounds are prolix and I will not set them out here. They attracted an equally prolix notice of contention on behalf of MRN and Gaucho. Again, I will not set out the terms of the document here. Mr Howells contends that the trial Judge erred by failing to find that MRN, or Gaucho, or both of them, were negligent by failing to ensure that Mr Howells was provided with overnight accommodation at the Halls Creek roadhouse, by failing to provide a prime mover with a double bunk so that Mr Howells, as well as Mr Grahame and his son, could sleep in the cab of the prime mover, by permitting Mr Howells to sleep on top of the load on the trailer, and by failing to warn him of the danger of so doing. As to the question of sleeping at the roadhouse, his Honour is asserted to have erred in concluding that it was not reasonably practicable for accommodation to be arranged there. It is unnecessary, I think, to consider the matters raised in the notice of contention upon this aspect of the claim. They are really devoted to joining issue upon the matters raised in Mr Howells' grounds of appeal.

56 MRN and Gaucho pleaded that Mr Howells' claim should be dismissed on the ground of his voluntary assumption of the risk involved in making his bed on the load. The trial Judge agreed that this plea was made out. His Honour described the practice of sleeping on the load as one attended by the obvious risk that the person might fall in some way from a height of 12-14 feet above the ground. His Honour concluded that there was a reasonably foreseeable risk of injury although not one "significant enough in a practical sense to require a reasonable employer to guard against it" [87]. However, if negligence was found, his Honour noted that even on Mr Howells' case, the practice of sleeping on the load was patently and obviously dangerous, and his Honour continued, at [93]:

"It seems to me that if the danger is so obvious then the plaintiff must have considered it and decided to take the risk. It seems to me that this is a case where it could be said that the plaintiff must have had full knowledge and understanding of 'the danger arising from sleeping on top of the load on the trailer'. He did not have to sleep on the load on the trailer. He decided to do so for the reasons that have been discussed."

57 Those reasons were, of course, that Mr Howells wished to eliminate the dangers attendant upon sleeping in his swag on the ground; snakes, scorpions, ants and the like, and the risk of assault by wandering drunks. Mr Howells asserts that this conclusion was in error, and for MRN and Gaucho it is asserted that if the trial Judge did not make a finding of voluntary assumption of risk in the passage quoted above, then his Honour ought to have done so.

58 Again, on the basis that the trial Judge was wrong in holding that there was no negligence, his Honour turned his attention to the plea of contributory negligence. The plea was particularised by asserting that Mr Howells knew or ought to have known that to sleep on the trailer or its load involved a risk of falling, but he nonetheless chose that place to sleep and in doing so he failed to take any adequate precautions to ensure that he would not fall (presumably demonstrated by the fact that he did fall in some unexplained fashion and was seriously hurt).

59 The trial Judge concluded that were it necessary to make a finding, he would hold Mr Howells to be "at least" 50 per cent responsible for his injuries. His Honour grounds this assessment on what seems to me, with respect, to be the rather oddly expressed view, "that the plaintiff would have displayed considerable disregard for his own safety in making his bed at such a height above the ground." Mr Howells asserts that this conclusion, supported by the notice of contention, involved the Judge in error because it was a common practice to sleep on the load, Mr Grahame expressed the view that it was unobjectionable in the circumstances and Mr Howells acted reasonably in making his decision.

60 In my view, it is unnecessary at this stage to consider the precise nature of the relationship between Mr Howells, MRN and Gaucho. The trial judge dealt with the case on the basis that Mr Howells was employed by both companies and on that basis his Honour found that both owed Mr Howells a duty to take reasonable care and exercise reasonable precautions to preserve him from reasonably foreseeable harm. Whatever be the precise nature of Mr Howells' relationship with each of MRN and Gaucho, it is not argued for either that it was of such a character that no duty of care was owed, whether, in relation to either company, he was properly characterised as an employee or subcontractor, and whether the duty stemmed from the common law or an implied contractual term.

61 However, before discussing the question of the breach of a duty formulated in those terms, I should deal briefly with two alternative bases upon which Mr Howells' claim was formulated. An alternative head of claim was made under the Occupiers' Liability Act 1985 (WA), a claim therefore of breach of statutory duty, although the duty of care imposed by the statute upon an occupier of premises under s 5(1) is to take "such care as in all the circumstances of the case is reasonable to see that [the entrant] will not suffer injury or damage by reason of any such danger." The dangers adverted to are those "which are due to the state of the premises or to anything done or omitted to be done on the premises and for which the occupier is by law responsible". In those circumstances, it is not surprising that the particularisation of the alleged breach of this duty relied on the matters pleaded as particulars of negligence. The trial Judge having dismissed the claim, the appellant now alleges error in so doing but again pleads only, by way of a ground of appeal, reliance on the assertions of error in declining to find negligence.

62 However, it is as well to note the basis of this claim. By s 2 of the Act the term "premises" is defined to include any "moveable structure" including a vehicle, in this case the tip truck being carried piggy-back fashion on one of the trailers comprising the road train. It was argued that, as a place to sleep, the tip truck presented a danger due to the state of the premises because of its height off the ground and the failure to provide any safe means of climbing into or out of it. I note, however, that the particulars of negligence relied on as particulars of breach of this statutory duty do not focus attention upon any deficiency in the truck itself.

63 The trial Judge found that there was no danger due to the state of the tip truck. Even using it as a place to sleep it was perfectly safe. In my respectful opinion, that was a correct conclusion based upon a proper interpretation of the Act. But in addition, his Honour noted that the duty imposed by s 5(1) was imposed upon an occupier, defined by s 2 as a person "occupying or having control of ... premises". His Honour doubted that it was appropriate to describe either or both of MRN and Gaucho as being persons occupying or having control of the truck in the relevant sense. Again, I respectfully agree. The tip truck was merely an object being conveyed on the trailer drawn by the prime mover.

64 This claim of breach of statutory duty was, in my view, rather a red herring and an unnecessary distraction because, at best, it added nothing to Mr Howells' claim in negligence. That being so there is no need to deal expressly with the alternative defence raised by MRN and Gaucho in relation to this claim. That defence involved reliance on the provisions of s 5(2) of the Act to which the duty of care imposed by s 5(1) is subject. The subsection provides that the duty of care "does not apply in respect of risks willingly assumed by the person entering on the premises." It is apparent that the respondents to this appeal treat this provision as a statutory form of the common law plea of voluntary assumption of risk. In any event, it is not suggested that the subsection adds anything to that plea.

65 Finally, Mr Howells relied upon a breach of statutory duty allegedly committed by both MRN and Gaucho as employers of Mr Howells, established by the Occupational Safety and Health Act 1984 (WA), s 19(1), which relevantly provides:

"An employer shall, so far as is practicable, provide and maintain a working environment in which his employees are not exposed to hazards and in particular but without limiting the generality of the foregoing, an employer shall -

(a) provide and maintain workplaces, plant, and systems of work such that, so far as is practicable, his employees are not exposed to hazards;

(b) provide such information, instruction, and training to, and supervision of, his employees as is necessary to enable them to perform their work in such a manner that they are not exposed to hazards;"

66 By s 19(4), the term "employer" is widened to include a principal who employs a contractor to carry out work and such a person is deemed to be an employee of the principal.

67 The section is therefore constructed in such a way as to make it unnecessary, in this context also, to have regard to the precise nature of the relationship between Mr Howells, MRN, and Gaucho, but it is noteworthy that all that was pleaded here was a general failure to provide and maintain a workplace or systems of work which would not expose Mr Howells to hazards and a failure to provide him with proper instructions and training to that end. Reliance was otherwise placed on the particulars of negligence pleaded. In my view, it is unnecessary to consider whether s 19 does, as a matter of law, give rise to statutory duties, breach of which may sound in an award of damages and, if so, what is the precise ambit of such duties. The pleading makes it plain that the allegation adds nothing to the general plea of negligence.

68 I turn then to the question of the alleged breach of the duty of care. It is sufficient in that regard to return to the touchstone of the decision of the High Court in Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40 per Mason J at 47 - 8:

"In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position.

The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors."

69 In this case there appears, having regard to the terms of the notice of appeal and the notice of contention, to be no dispute as to the primary facts. The contest is over whether those facts compelled the drawing of an inference of negligence. In performing that task, the appellate court will give respect and weight to the conclusion of the trial Judge, but once having formed its own view as to the inference proper to be drawn, the appellate court will give effect to that conclusion: Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531.

70 As Hayne J observed in Woods v Multi-Sport Holdings Pty Ltd [2002] HCA 9; (2002) 208 CLR 460, at 502 - 3 [136] - [141], the finding that there has or has not been a failure to meet the standard of reasonable care requires the court to make a finding of fact, but one which involves striking a balance in respect of matters of the kind referred to by Mason J in Wyong Shire Council v Shirt. That being so, his Honour said, to draw such an inference presented some of the features of the exercise of a discretion in respect of which minds may differ without implying any failure to apply proper principles. While his Honour did not finally decide what was the proper approach of an appellate court to the review of that exercise, it is clear that a finding that the judgment of the court below was open to it on all the proved or admitted facts, ought to lead to that judgment being upheld.

71 Applying that approach to this case, however, with respect to the contrary view, has led me to the conclusion that MRN and Gaucho ought to have been held to be negligent. In the first place, it was clearly part of the system of work, the mode of operating these road trains in outback areas, that at night workers may be required to sleep in a variety of situations, in swags on the ground or otherwise, which exposed them to foreseeable risk of harm. To sleep on top of the load being carrying by the road train involves such a foreseeable risk of harm.

72 If one slept in a tip truck, no doubt the risk was much reduced, but it remained reasonably foreseeable, particularly having regard to the fact that the worker is required to climb up onto the semi-trailer, and up further into the tip truck, carrying a swag, at night, without the area being lit, or lighting it with a torch which also must be carried. There was clearly a foreseeable risk of harm of just the type which occurred to Mr Howells in this case. And the risk was by no means far-fetched or fanciful. It was of much greater magnitude than that. And it was reasonably foreseeable that serious injury of the kind suffered by Mr Howells would result from the practice, which was clearly commonplace and not discouraged by Mr Grahame or any other person representing MRN and Gaucho.

73 It was therefore incumbent on the defendants, acting reasonably, to consider what measures might reasonably be taken to alleviate the risk. Mr Howells suggested a number. There was controversy at trial about the idea of purchasing prime movers which contained double bunks. The trial Judge noted that beyond the evidence that such things were available, there was little evidence as to cost and the like. On the other hand, there was no evidence to suggest that this would not have been a practical measure which could be taken to alleviate the hazard of sleeping outside in the open.

74 If that is put to one side, then a very basic measure might be that which was taken after this accident. The workers could be instructed, as they were subsequently, not to climb into the load to sleep. The trial Judge doubted that such an instruction would have been followed by Mr Howells, but in my respectful opinion there was no direct evidence to support that view, which appears to have been based on the fact that Mr Howells chose his sleeping place on the load itself in preference to sleeping on the ground.

75 The fact that, as his Honour noted, the risks inherent in the choice Mr Howells made "were obvious" seems to me to provide no support for the view that the defendants were under no obligation to instruct Mr Howells not to sleep on the load or that he would have refused to obey such an instruction, particularly in light of the trial Judge's view, at [131], that:

" ... the plaintiff presented in the witness box as a very young 22-year-old, who appeared oblivious to many of the arrangements that had been made concerning the structure of his parents' business and who merely did what he was told in whatever fashion 'they' had organised."

76 The respondents, MRN and Gaucho, were no doubt required to evaluate the magnitude of the risk involved in the various sleeping arrangements which were practically open. In remote areas where accommodation was not available and given there was no room for Mr Howells to sleep in the cab of the prime mover, it was no doubt a choice between sleeping in a swag on the ground or in some elevated position on a trailer or on the load. The nature of the danger presented by that choice is clear. The evidence was less clear about the dangers which might be attendant upon sleeping in a swag on the ground. As his Honour put it, it was a thing that some people enjoyed more than others. Some witnesses expressed concern about snakes and scorpions, but there seems to have been no great precision in the evidence in that regard. One witness apparently said his only concern was being invaded by ants. Another said that he had once been awakened by a wild pig. To my mind, none of that evidence, shortly reviewed by the trial Judge, would suggest that it was impracticable or unreasonable to instruct workers to sleep on the ground rather than on the load.

77 Finally, however, and most importantly, is the fact that their rendezvous point at the Tanami Junction was a mere 17 kilometres from Halls Creek. The evidence established that an arrangement could be made for the men to be accommodated at the Halls Creek roadhouse. An arrangement was made, in fact, for the manager to remain on duty somewhat later than usual so that the prime mover might be refuelled. The roadhouse had accommodation available and ample parking for up to ten road trains. There was no persuasive evidence, in my opinion, that there were any real difficulties in this regard, and indeed such accommodation, his Honour found, was utilised when available on those infrequent occasions when "the need to stop and rest coincided with a settlement" [20].

78 In my view, that was what occurred on the occasion in question. They were to rendezvous with other vehicles at the Tanami turnoff and thence travel in convoy to Balgo, where they were to meet other workers who were to be flown in for the construction work for which they had contracted. The road train was carrying materials and equipment to be used in that work. Mr Grahame spoke of the need to keep on the move to Balgo as a particular reason for not spending the night at the Halls Creek roadhouse, but it was only 17 kms away from the rendezvous point.

79 No doubt those on the road train would have to rise early, but the distance was very short and the time taken to get to the turnoff would be relatively insignificant. The trial Judge noted that although Mr Grahame said time was a critical factor, he said no more than that "time was money" and he made it clear that his concern was not to keep people who had flown into Balgo waiting for the arrival of the equipment and materials carried on the road train in case that might have delayed their productive work. In the circumstances of the minor additional delay which might have been involved in staying overnight at the Halls Creek roadhouse, those do not seem to me to be weighty considerations.

80 In short, although the solution of accommodation at the roadhouse would not generally be available if the road train was forced to overnight in a more remote location, there was no impediment to utilising such accommodation on this occasion and it was abundantly clear that if that had been done, the danger to which Mr Howells was exposed and which caused him to suffer serious personal injury would have been entirely removed. In my opinion, it was negligent in those circumstances not to have caused Mr Howells and the others to use that accommodation.

81 I would not uphold the finding of 50 per cent contributory negligence made by his Honour the trial Judge for the brief reasons his Honour provided. In my respectful opinion, no finding of contributory negligence was warranted. It was pleaded that Mr Howells failed to take proper care for his own safety because he knew or ought to have known that his chosen sleeping place involved a risk of falling and because he "failed to take any, or any adequate, precautions to ensure he would not fall from the trailer or its load whilst sleeping."

82 That particular was not made out. Indeed, the trial Judge's finding was to the contrary, that once sleeping in his swag in the back of the tip truck, as apparently Mr Howells was for a period, there was no risk of injury. It is not, I think, known what became of the torch. It is evident that Mr Howells fell somehow from the tip truck or the tray of the trailer, but the circumstances in which he fell are simply unknown. There is nothing to suppose that he was being careless in any way or that he did not miss his footing, slip, or otherwise come to grief while exercising all the care of which he was capable. In other words, it may be that he fell because of the nature of the risk to which he was exposed and in those circumstances there is nothing to support a finding of contributory negligence.

83 I would enter judgment for Mr Howells for the full amount of the agreed damages unless the pleaded defence of the voluntary assumption of the risk was made out as the trial Judge thought.

84 As Kirby J reminded us in his dissenting judgment in Woods, at 499 [125]:

"To satisfy the test of voluntary assumption of risk, it must be shown that the claimant fully comprehended the extent of the risk and chose to accept or ignore it."

85 I think that is not established here. What happened was made clear by the evidence of Mr Howells and Mr Grahame. While in the process of making the decision where to sleep, a burst of noise was heard from the people further down the road, apparently suggesting drunkenness. Mr Howells was reminded of the earlier incident of the attack upon Mr Lindsay, Mr Grahame's brother-in-law, and instantly he said that his mind was made up. He would unroll his swag in the rear of the tip truck. It was certainly a deliberate choice, but one apparently made to avoid a particular danger rather than understanding the full extent of the risk which Mr Howells chose to accept. In my view much more cogent evidence than that presented at trial would be necessary to establish that Mr Howells voluntarily assumed the risk of injury, fully appreciating the risk: Jeffries v Fisher [1985] WAR 250, 253, 257 - 8.

86 But to my mind, the crucial point in relation to the alleged voluntary assumption of risk is the failure of the defendants, upon whom the burden lay, to prove that Mr Howells' appreciation of the risk was such that upon assuming it he must be taken to have effectively waived his right to recover damages for any injury he sustained. The point is made conveniently in Fleming, "The Law of Torts", 9th Ed (1998) at 333. Citing the well-known authority of Smith v Baker [1891] UKHL 2; [1891] AC 325, the learned author said:

"It was there laid down that voluntary assumption of risk cannot be imputed to a plaintiff merely because he encountered a known hazard and thereby consented to the risk of being hurt; in order to disqualify him from all redress he must be shown to have consented to run that risk at his own expense so that he, and not the negligent defendant, should bear the loss in the event of an accident. In other words, the defence was henceforth available only in those rare cases where it can be genuinely predicated that the injured person assumed not merely the physical but also the legal risk of injury. Even more important, this stricter test has been given teeth by progressively raising the standard of evidence required to support the conclusion that it has been met."

87 I would give judgment for Mr Howells against both MRN and Gaucho for the damages as agreed.

Was the Plaintiff an Employee or Subcontractor?

88 If that is right, it is necessary to address the issues raised in the third party proceedings and dealt with by the trial Judge when his Honour entered judgment for Zurich against MRN and Gaucho in those proceedings and gave judgment for MRN and Gaucho against MMI, declaring that those defendants would be entitled to be indemnified against Mr Howells' claim under an insurance policy held with MMI. MMI now appeals against that decision.

89 Both insurers have declined liability under the respective policies. MMI provided workers' compensation and associated common law cover to employees of MRN and Gaucho as a group. Zurich, on the other hand, is an insurer who provided public liability insurance to MRN and Gaucho. If Mr Howells was a subcontractor of one or other of MRN and Gaucho, rather than an employee, he would be treated as a member of the "public" and Zurich would respond to the claim pursuant to the policy held with it.

90 The primary factual material is clear and uncontested. According to the findings of the trial Judge, the business which was jointly operated by MRN and Gaucho appears to have started life as a partnership called Murray River Plumbing. It was then incorporated and became MRN. Its business interests appear to have been widespread, involving construction work, earthmoving and so forth, including in remote areas of the north-west and the Kimberley region.

91 It seems that the directors became concerned that the company, which is a private company, and its directors would benefit from a structure which they thought might protect them from potential claims by subcontractors and otherwise arising out of its activities. Gaucho was incorporated as a management and service company. It had no income other than the moneys provided to it by MRN in the form of a service fee to cover the costs of its activities. Using the money provided by MRN, it employed those who were permanent staff such as Mr Grahame, and engaged subcontract labour. It seems that the preference was to engage labour on subcontract terms, paying them simply for the time for which people were actually engaged to work on particular jobs and avoiding the ordinary accoutrements of permanent employment, such as annual and sick leave entitlements, superannuation, the deduction of PAYE tax and the like. These workers used the PPS system to make deductions from their remuneration for taxation purposes and the records of Gaucho, many of which were tendered in evidence, revealed that structure.

92 The operating directors of MRN were a Mr McLarty, a Mr Greenup and Mr Bryan Howells, Mr Sy Howells' father. They controlled the activities of the staff and the two companies were effectively run as one entity. The directors of Gaucho appear to have been nominal appointments only. One was Mrs McLarty and the other was young Mr Howells, who gave evidence that his appointment in this role was something which just happened and neither he nor Mrs McLarty appeared to have any duties to perform as directors. It is abundantly clear that Gaucho was the wholly owned financial services and management subsidiary of MRN, which was the operative arm of the businesses conducted in the persona of the two companies jointly. At the relevant time, Mr Howells was engaged by and working for both companies.

93 As to whether he was an employee or a subcontractor, the finding of the trial Judge at [130] was:

"In my view, the plaintiff was in reality an employee of, at least [Gaucho]. The nature of his relationship with [MRN and Gaucho] or both of them was that he was an employee, not a sub-contractor. The preponderance of the evidence points in that direction."

94 I have mentioned the evidence and the conclusions of the trial Judge in relation to the corporate structure which applied. The plaintiff was firstly employed as an apprentice by the firm Murray River Plumbing, operated by his father. That apprenticeship was transferred to MRN and then, from 1 July 1990, to Gaucho. When he completed his apprenticeship in 1991 he remained as an employee until, towards the end of that year, the form of engagement was changed to a subcontract labourer. That arrangement appears to have commenced at about the end of November 1991 and thereafter up to the point, on 10 July 1992, when the accident occurred, he worked in that capacity as and when required. However, while he was engaged in that work he continued to take his instructions from Mr Ian McLarty principally, and his immediate supervisor was Mr Grahame. He was paid a weekly wage. He did not negotiate a contract price and the remuneration he received was not sought by invoice or acknowledged by a receipt. Mr Howells did what he was told. He was hired to provide his labour and he did so. The way in which he was employed at no time changed. What changed was the paperwork.

95 The law applicable to the determination of the question whether Mr Howells was an employee or independent contractor is clear and in this case there is no controversy about it. The legal principles are conveniently collected in the decision of the High Court in Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21, where the authorities are reviewed. It is not the form of the relationship which is important, but its true substance in all its aspects, including those concerned with the control exercised over the worker or the capacity to exercise control over the worker's activities. The question may still be stated to be whether the contract was one of service or for services and in this case, in my view, it is abundantly clear that there was ample evidence to support the trial Judge's conclusion that at the relevant time Mr Howells was employed under a contract of service. The trial judge said that he was employed, at least by Gaucho, or by both MRN and Gaucho, and, again, with respect, I think the correct conclusion is that he was employed by both.

96 At the relevant time, as from March 1992, MRN and Gaucho were the insured persons under an employers' indemnity policy with MMI by which it was agreed, provided the employer was not otherwise indemnified, that:

"the Insurer will indemnify the Employer against legal liability to pay damages and in addition will pay all reasonable costs and expenses incurred with the written consent of the Insurer ... at Common Law for personal injury sustained by any person employed by the Employer under a contract of service or apprenticeship if such injury is an injury in respect of which such person is entitled to recover from the Employer both compensation under the Act and (subject to section 92 of the Act) damages independently thereof ... ."

97 The Act referred to is the Workers' Compensation and Rehabilitation Act 1981 (WA).

98 I consider that the decision of the trial Judge that Zurich was under no liability to indemnify MRN and Gaucho in respect of the damages payable to Mr Howells under its public liability policy was correct. The first exclusion clause contained in that policy provides that Zurich, "shall not be liable for claims in respect of personal injury to any person: (a) arising out of or in the course of the employment of such person in the service of the insured". In my opinion, there is no merit in the proposition behind MMI's first ground of appeal that, if the true character of the employment relationship was pro hac vice (for the one occasion only) that would not entitle MRN and Gaucho to indemnity under the policy with MMI. In my opinion it would do so because the contractual relationship, oral though it was, would remain one of a contract of service as between employer and employee, to which the Zurich exclusion clause would apply and which would be covered by the policy with MMI.

99 It is next necessary to consider MMI's second ground of appeal which complains that the trial Judge failed to address an issue raised in its defence to the third party claim by MRN and Gaucho. That is strictly correct, although, of course, in view of the fact that the trial Judge gave judgment against Mr Howells in the principal action and despite the declaration his Honour made against MMI, it was unnecessary for him to deal with questions arising in respect of the liability of MMI under the policy of insurance to indemnify MRN and Gaucho.

100 However, it is necessary that I should attend to the point which is that because Mr Howells was appointed a director of Gaucho on 20 June 1990 and because he remained so, although undeclared to MMI, at the date of the accident, 10 July 1992, he was deemed not to be a worker within the meaning of the Workers' Compensation and Rehabilitation Act 1981. Therefore, it is argued, the employers' indemnity policy created no obligation to indemnify MRN and Gaucho because it only did so under the operative clause of the policy to which I have referred, where the injured person was entitled to recover from the employer both workers' compensation and damages at common law, subject only to the operation of s 92 of the Act and the proscription contained therein against receiving both workers' compensation and damages.

101 Section 10A of the Act, as it was when the accident occurred on 10 July 1992, provided:

"(1) Notwithstanding anything in section 5 a person is deemed not to be a worker within the meaning of this Act while he is:

(a) a director of a company; and

(b) engaged or employed by or working for that company,

if the employer company has not complied with the requirements of section 160 with respect to that person.

(2) Subsection (1) does not affect the employer's obligation to comply with the requirements of section 160 with respect to a person referred to in that subsection."

102 The relevant time to consider MMI's liability under the policy is the time when the person to whom the employer is liable becomes entitled to recover compensation and damages. In this case that was 10 July 1992 when the tort was committed and the loss and damage was caused. Alternatively, under s 18 of the Act, the relevant time was on the same date, when the disability of the worker occurred, in this case the disability being Mr Howells' personal injury by accident arising out of or in the course of the employment. At that time he was a director of Gaucho and was properly held to be employed by that company or, as I would hold, by that company and MRN.

103 It may be that the fact that Mr Howells was employed by both companies acting jointly may prevent the operation of s 10A in this case, but no argument to that effect was put to us. I would merely observe that s 10A appears to be directed to the situation where one company employs one of its directors who is injured and there appears to be no need to interpret it as applying to a case where the appropriate conclusion may be, as in this case, that the worker is jointly employed by the company of which he is a director and another company.

104 In any event, the application of s 10A depends on non-compliance with s 160. As it was at the time in question, that section relevantly provided:

"(1) Subject to this Act, every employer shall obtain from an approved insurance office and shall keep current a policy of insurance for the full amount of his liability to pay compensation under this Act to any worker employed by him including any increase in amount occurring during currency of the policy.

(2) An employer obliged by this section to effect or renew a policy of insurance shall, on applying to an approved insurance office, for that purpose, furnish to that office an estimate, made to the best of that employer's knowledge, information and belief, of the aggregate amount of wages, salaries, or other remuneration to be paid to the employer's workers not including any amounts paid to workers employed under an agreement to perform -

(a) a specified quantity of work for a specified sum;

(b) work on piece rates; or

(c) work on a bonus or commission system for payment by results;

over the period for which the policy is to be effected or renewed; and shall forthwith after the termination of that period furnish a statement of the aggregate amount of those wages paid in fact and shall include in that statement every sum paid during that period to an employee in respect of overtime worked by the employee.

(2a) Where an employer applying to an incorporated insurance office under subsection (2) is a company, that employer shall, in relation to each of its workers who is:

(a) a director of the company; and

(b) engaged or employed by or working for the company,

furnish to that office, in addition to the information required to be furnished by that employer to that office under subsection (2):

(c) the name of the worker; and

(d) in relation to that worker in particular, the information verified as required under subsection (2), that the employer is required under that subsection to furnish in relation to the employer's workers."

105 The facts are that a proposal was made to MMI by MRN and Gaucho together as the employer for employer's indemnity insurance. Section 160(2) was generally complied with. An estimate was made of the aggregate amount of wages, salaries and other remuneration to be paid to their workers over the period for which the policy was to be effected. There was, I think, by oversight of Mrs Howells, then no express declaration of the relevant particulars in relation to any working director of either company under s 160(2a). That was remedied shortly thereafter by the disclosure as working directors of the relevant particulars for Mr Howells senior, Mr Greenup and Mr McLarty, the directors of MRN, but again there was no disclosure of the relevant particulars for Mr Sy Howells or Mrs McLarty, the directors of Gaucho.

106 But that did not involve non-compliance with s 160 because under subs (2a) the disclosure is to be made, on applying for insurance, of the relevant particulars of each director of the company who is engaged or employed by or working for the company at that time. So far as Mr Sy Howells was concerned that was not then the case and he did not commence working for MRN and Gaucho until later, indeed just before his accident on 10 July 1992.

107 When the application was made by MRN and Gaucho through its broker to renew the policy from the end of October 1992, Mr Sy Howells was shown as a working director, having been paid $8714 gross in the previous period. Naturally, there was no estimate of what he might be paid for the future period. That information, if it was necessary to provide it, was required, in my opinion, not strictly by s 160(2a), but by the application of that subsection to the requirements of s 160(2). In particular, subs (2) requires that after the termination of the period, a statement is to be furnished showing the aggregate amount of wages paid in fact over the period just expired.

108 Section 160(2a) may be properly interpreted as requiring, in addition to the information required to be furnished by the employer to the insurer under subs (2), the particulars specified for a working director, including the name of that person and, in relation to that worker in particular, the aggregate amount of wages paid in fact to that person. In short, in my opinion, s 160 was complied with in relation to Mr Howells and s 10A did not operate so as to deem the person not to be a worker within the meaning of the Act. It follows that MMI was not entitled to avoid liability under its policy on this ground.

109 I note in passing that the policy is itself written in terms consistent with my interpretation of s 160 of the Act. Conditions 9, 10 and 11 provide the obligation to record payments made to all workers engaged during the period of indemnity and the value of contracts and subcontracts. There is a specific provision as to the keeping of wages records, a power of inspection of those records and the capacity, at the end of the indemnity period, to make an adjustment of premium to accommodate differences between the payments actually made and those estimated payments upon which the premium was originally calculated.

110 The appeal by MMI should, in my opinion, be dismissed. It follows from what I have written in respect of this appeal, that in my view it is unnecessary to address the arguments presented in the notice of contention filed in this appeal by MRN and Gaucho, which are concerned with an alleged estoppel and with the operation of the Insurance Contracts Act 1984 (Cth), s 54.

111 Finally I note that no issue was raised in the appeals dealt with thus far, of the question of contribution to the judgment which I would hold should be obtained by Mr Howells, as between MRN and Gaucho. Indeed, no such issue arose at trial as between MRN and Gaucho, who were represented by the same solicitors and counsel. There were no formal contribution proceedings, but at trial it appears that counsel for MMI told the Judge that MRN, Gaucho, MMI and Zurich were agreed that if both defendants were found to be liable, there should be an apportionment "to save further proceedings".

112 Although it was unnecessary, the trial Judge did express a view about this question, a view which is immaterial for present purposes, that, "In the event of a finding against both [MRN and Gaucho], there should be no liability upon [Gaucho] to contribute to the damages awarded." That would lead to the extraordinary result that Gaucho would be found to be liable in tort to Mr Howells but obliged to pay nothing towards the damages to be recovered. His Honour came to that view because, as he had found, MRN was the operating company and Gaucho, its wholly owned subsidiary, was simply the "paymaster", as his Honour termed it.

113 In my view, no question of apportionment arises. I would hold MRN and Gaucho to be joint tortfeasors. Their liability under the judgment which I would propose in favour of Mr Howells would be joint and several. They are jointly and severally the insured employer under the terms of the policy with MMI, under which I would hold them to be entitled to an indemnity. No claim for a contribution was made by either MRN or Gaucho under the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA), s 7(1)(c) and this Court is not required to embark upon the question of apportionment.

114 There is an appeal by MRN and Gaucho against the orders made in favour of Zurich whereby their claim to be indemnified by Zurich was dismissed. I have dealt with the issues raised in the grounds of appeal and

it follows from what I have written above that this appeal should be dismissed.

115 In the final analysis then, I would allow Mr Howells' appeal and give judgment for him against MRN and Gaucho for damages in the amount agreed. I would dismiss the appeal by MMI and I would dismiss the appeal by MRN and Gaucho against Zurich. The third party claims against Zurich were dismissed by the trial Judge, with costs. Those orders would remain in force. In the third party proceedings brought against MMI there should be orders that MRN and Gaucho be indemnified against the damages and costs incurred, pursuant to the relevant contract of insurance. The trial judge awarded MRN and Gaucho the costs of those third party proceedings and that order would, of course, remain.

116 In proceedings in the District Court, Mr Howells sued Murray River North and Gaucho Pty Ltd, alleging against them negligence, either as employer or alternatively as occupier of premises, breach of statutory duty and breach of contract of employment. They in turn issued third party proceedings against Manufacturers Mutual Insurance Ltd ("MMI") and Zurich Australian Insurance Ltd, each of which had declined to indemnify them against the plaintiff's claim.

117 Mr Howells' action was one for damages for personal injuries sustained as a result of a "rapid descent" from a height of about 4 - 41/2 metres. He had apparently being sleeping on a load on top of a tip truck which had been carried on the trailer of a road train, and was found on the ground at night, having sustained injury. It is not known how he came to be on the ground. The quantum of damages was agreed and the District Court had to deal only with issues of liability.

118 The issues before the trial Judge in the District Court included: what was the relationship between Mr Howells and either Murray River North or Gaucho Pty Ltd (that is, was he an employee of either, or a subcontractor); and whether there had been any negligence or breach of statutory duty on the part of either of the defendants. Zurich Australian Insurance Ltd was the public liability insurer, while MMI provided workers compensation and common law cover and a question arose as to which, if either, was liable to indemnify either defendant.

119 His Honour dealt first with the question of whether either of the defendants, assuming either of them to have been an employer of Mr Howells, would be liable in negligence. He found that that was not the case. The first ground of appeal is that his Honour erred in finding that the defendants had not breached their duty of care to Mr Howells by failing either to arrange accommodation at a roadhouse, or by failing to provide a prime mover with a double bunk, and in finding that they had not breached any duty of care to him by failing to warn him not to sleep on the load on the night in question.

120 I have formed the view that this ground of appeal should fail, although my reasons for reaching that view are a little different from those urged upon this Court by the first and second respondents, the defendants at trial. Although the argument at trial was wider, their submissions on appeal, in effect, were that the learned trial Judge's decision should be supported on the basis that, although it was reasonably foreseeable that by sleeping at height Mr Howells might fall and suffer injury, the risks of doing so were obvious and were risks which he had willingly assumed.

121 The argument that the plaintiff had voluntarily assumed the risk involved was one which his Honour had accepted, but it was in the alternative to his Honour's primary finding. His Honour's principal finding was that it was foreseeable that if a person were to sleep at a height, as Mr Howells had, he might fall and suffer injury, and that the risk was obvious. As part of that primary finding his Honour also held that in the circumstances the risk of injury was "not significant enough in a practical sense to require a reasonable employer to guard against it". My reading of his Honour's reasons suggests that, when one follows through the various factual alternatives which his Honour discusses, the finding is not simply that the risk is so remote that there is no duty to guard against it but, rather, that the risk is a very remote one and that the various alternatives which were put forward as a means of guarding against the risk either themselves carried an inherent risk or that were not, in all the circumstances, practicable. In effect, it seems to have been a finding that there was a risk, but that the risk was relatively slight and that there was no "safe system" which could have eliminated that slight risk. Understood in that way, it is my view that his Honour's conclusions should be accepted.

Manufacturers Mutual Insurance Ltd v Murray River North Pty Ltd & Anor [2004] WASCA 276

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Judgment (288 paragraphs)

Manufacturers Mutual Insurance Ltd v Murray River North Pty Ltd & Anor [2004] WASCA 276 (26 November 2004)

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Legislation Cited (5)

Cases Cited (26)