Paul v Ashcroft Supa IGA Orange Pty Ltd

Pleadings

1. The plaintiff proceeded on an Amended Statement of Claim filed in court on the first day of the trial. He alleged that he was working on a tray on top of a trolley in the meat room, linking sausages. The trolley rolled away from him and the sausages started to fall off the trolley. He stepped to follow the trolley and retrieve the sausages to stop them falling on the floor. He slipped and struck his back on the wall.
2. The defendant relied upon a Defence to the Amended Statement of Claim, which was filed in court on the second day of the hearing. That Defence pleaded that: 1. the defendant owed a duty of care to the plaintiff; 2. the defendant had not breached its duty of care; 3. if it had, the plaintiff was guilty of contributory negligence; 4. damages should be reduced by virtue of s 151Z(2) of the Workers Compensation Act 1987 (NSW) because of the negligence of the plaintiff's employer Skillset.
3. By an Amended Cross-Claim the defendant sued certain underwriters who issued an insurance policy to the defendant. The policy was titled Policy Wording Shopping Malls Combined Liability (the Policy). The defendant pleaded that Coverage Section A obliged the underwriters to indemnify the defendant against the claim brought by the plaintiff.
4. By an Amended Defence to the Amended Cross-Claim, the underwriters pleaded exclusion clause 16.5 in the Policy, which provided: "This Policy does not cover… 16.5 Employers' Liability liability for injury to any person under a contract of employment, service or apprenticeship with or for the provision of labour only services to the Insured where such injury arises out of the execution of such contract."
5. The cross-defendant pleaded that Skillset contracted with the defendant for the provision of labour only services to the defendant; that Skillset's provision of the plaintiff's labour only services was under the contract between Skillset and the cross-claimant; and that the plaintiff's injury arose out of the execution of that contract.

The plaintiff's evidence

1. The plaintiff gave evidence and was cross-examined. He impressed me as a very straightforward person who was careful and reliable in giving evidence and in answering questions.
2. The plaintiff was born in 1991 and grew up in country NSW. He finished school in 2009 with the Higher School Certificate. Before he finished school he had suffered some knee pain as a result of a motor cycle accident in 2005. He was diagnosed with Scheuerman's Disease in 2006. He suffered a knee injury in a horse accident in 2007. In 2008 he dislocated his right patella during school football training.
3. After finishing high school at the end of 2009, the plaintiff obtained an apprenticeship as a saddler, but that only lasted for six months as the work ran out. In the second half of 2010 he worked with a family friend on their farm.
4. The plaintiff did one semester of university in 2011 but did not continue with tertiary studies. He was treated by a psychologist in that year for depression relating to the death of his father in the first half of 2010. In the middle of 2011 he started doing fencing work, which he enjoyed. In December 2011 he fell from a mechanical bull and suffered pain in the lower left side of his back. That pain resolved.
5. On 18 February 2012 the plaintiff registered with Skillset, as he had seen an advertisement for the opportunity to become an apprentice butcher. The plaintiff said that his aim after leaving school was to get a trade, so that he could have a stable job for the future.
6. In mid-February 2012 the plaintiff was placed by Skillset with the defendant as an apprentice butcher. He started work at the Peisley Street IGA store, run by the defendant, on 27 February 2012. He worked in the meat room as an apprentice. He prepared meat, made sausages and cut up meat. His supervisor was Mr Mark McLennen.
7. On 10 October 2012 the plaintiff arrived at work at about 4.00am. He spoke to Mr McLennen and was directed to a job cutting up lamb meat. He did this work for about two hours, working at a fixed work bench. When he finished that job he took a 10 minute break and then Mr McLennen directed him to work linking sausages. The plaintiff said that he put on supplied white gumboots, which were worn on every occasion where sausage work was being done. The plaintiff said that Mr McLennen had operated a sausage-filling machine, which inserted sausage mince through a spout into pigs' intestines. This resulted in a five metre length or rope of sausage which was then given to the plaintiff so that he could link the sausages. This involved twisting the rope of sausage material, so as to form sausages of the kind seen for sale in butchers and supermarkets.
8. The plaintiff said that the fixed workbench was being used for other purposes, so he was directed to work upon a trolley which had wheels under each leg. There was no brake on these wheels. He said that there was a slight gradient in the floor, which was there so that the floor could be hosed out and cleaned from time to time. On top of the mobile trolley was a tray. The rope of sausages was in the tray and he had to manipulate the rope with his hands so as to link the sausages.
9. The plaintiff said that the trolley and the tray started to move away from him, and the sausages started to fall off the tray. He stepped to follow the tray and at the same time grabbed the sausages which were falling towards the floor. He put his right foot out and he slipped forward. This caused him to fall with his back against the wall. The plaintiff said that he felt lower back pain and right leg pain.
10. He saw squashed sausage mince on the floor near his foot and he saw squashed mince on the sole of his work boot. The patch of mince was about two inches by four inches.
11. I will not recite the plaintiff's evidence concerning his progress since the accident. The reason for that appears below under the hearing "Damages".
12. The plaintiff was cross-examined by counsel for the defendant. He was taken through documents which he had signed from time to time for Skillset. He recognised his signature on the documents and he confirmed that he understood the matters set out in those documents. I deal with these in more detail below.
13. As to the occurrence of the accident, the plaintiff said that he knew that there was sausage mince on the floor when he started work that morning and that he knew that sausage mince was slippery. He knew that he should pick it up if he saw it.
14. The plaintiff was cross-examined about certain particulars supplied by his former solicitors. Those particulars stated that the sausage mince had been on the floor since the start of the shift that morning, but one of the particulars stated that it was presumed that the sausage mince had been on the floor from the start of the shift. The plaintiff said that he never saw the sausage mince before he slipped on it as it was underneath the tray, and he only became exposed to the risk of stepping onto the mince and slipping on it, when the tray moved away from him and he stepped forward towards it to catch the falling sausages.
15. The plaintiff said that there was always spillage on the meat room floor from sausages. He said that he saw mince on the floor when he came in to start, but that it had been cleaned up by the time he finished his cutting job and moved onto tying sausages. He did not know who did the cleaning up. He said that clearly no-one cleaned up under the trolley. He agreed that he did not look under the trolley or clean under the trolley before he started working there. He said that he could not have seen the sausage mince under the trolley.
16. The plaintiff said that Mr McLennen put the trolley in the position it was, when he started working on it. He knew at the time it was fairly easy for the trolley to move. He said that the trolley actually started moving away from him when another worker put a tray onto one of the lower shelves of the trolley. He acknowledged that he could have moved the trolley to check underneath, before he started the task. He also said that he was the only apprentice in the meat room, and that he did not think that an apprentice should be expected to check the work of three qualified butchers.
17. The plaintiff was also cross-examined by senior counsel for the cross-defendant. He acknowledged that it was part of his job to clean up meat on the floor and part of his job to check the floor for sausage mince. He did not check. He knew that it was likely to be there but that to his observation it had been cleaned up. He said that his wage was paid by Skillset and that he was only an apprentice on the job.
18. In re-examination the plaintiff said that he did not put the trolley in position with the tray on top and he did not see who did that. He did not see who cleaned up the mince. In the first hours of his shift he had his back to everyone else in the meat room, when he was working on the fixed table cutting up lamb. The fixed table was in the opposite corner of the meat room.

Contract between plaintiff and Skillset

1. On 23 February 2012 the plaintiff and Skillset entered into a signed written agreement. The plaintiff became an employee of Skillset. The contract commenced: "This Contract This is a full-time employment contract that commences on 27 February 2012. It complements the Training Contract that legally binds you to Skillset (your legal employer) for the duration of your apprenticeship training. This contract sets out the additional benefits Skillset will provide for you, and makes explicit the requirements Skillset expects of you."
2. Under the heading "Your Field Officer and Reporting Arrangements", the contract provided: "You are employed by Skillset. Skillset is a 'Group Training Organisation', meaning we employ a large number (or group) of apprentices and trainees who we place with local businesses. You will commence your employment with Ashcroft's Supa IGA who is known as your host company. In this workplace you will report to Mark McLennen who is your supervisor on a day to day basis. We will allocate a Field Officer to support you through your apprenticeship. You should consider this person to be your employer. Your Field Officer will be Susanna Dowling-Fernau. Your Field Officer will conduct performance management sessions in conjunction with your host company. If you experience any problems with your employment arrangement you must contact your Field Officer."
3. The contract between the plaintiff and Skillset also dealt with the probationary period, remuneration, a job description, hours of work and Skillset's privacy policy. On 27 February 2012 the plaintiff completed a Skillset Work Health and Safety Induction Questionnaire. In his own handwriting, the plaintiff recorded that he should report safety risks if the host employer was ignoring a problem.
4. The Training Contract to which the employment agreement between the plaintiff and Skillset referred, was also put into evidence. It is a standard form document. The registered training organisation was nominated as "TAFE NSW - Western Institute". The Training Contract was signed on 23 February 2012 by the plaintiff and by Ms Dowling-Fernau on behalf of Skillset.
5. As the Field Officer allocated to the plaintiff, Ms Dowling-Fernau attended the defendant's premises from time to time. She spoke to Mr McLennen, the plaintiff's supervisor in the meat room. A mid-probation checklist was filled out on 24 April 2012 and signed by the plaintiff, Ms Dowling-Fernau and Mr McLennen.
6. The plaintiff enrolled to study at TAFE on 26 April 2012. An apprenticeship Training Plan was signed by the plaintiff on 1 May 2012 and by Ms Dowling-Fernau on 14 May 2012. That plan listed the various subjects which the plaintiff was going to study at TAFE, to progress towards a Meat Processing (Meat Retailing) Certificate III. In plain English, the plaintiff was training to be an apprentice butcher.
7. At the end of the probation period Ms Dowling-Fernau conducted an End of Probation Review on 23 May 2012.
8. Ms Dowling-Fernau later conducted a Full Performance Review.

Contract between the defendant and Skillset

1. The defendant and Skillset entered into a signed written agreement by letter dated 22 February 2012. The letter was written by Skillset to the defendant and thanked the defendant "for agreeing to host Mathew Paul during his Meat Processing (Meat Retailing) Certificate III Apprenticeship". The letter noted that the plaintiff was to commence "at your business on 27th February 2012". The letter set out the hourly rate which Skillset was to charge the defendant to supply the plaintiff to the defendant.
2. The letter said: "The terms and conditions document you have signed forms part of this agreement together with the 'host company policies' you agree to implement that can be found on our website. We agree to meet these Service Standards detailed at www.skillset.com.au. Initially Mathew will be supervised by Mark McLennen who is qualified as a Butcher."
3. A copy of the terms and conditions was attached to the letter. It stated that Skillset employed the apprentice for the duration of their Training Contract, and that TAFE would provide a training programme. The defendant, known as "the host company" agreed to provide the apprentice with work and relevant on-the-job experience so that he could complete his trade qualification. The terms and conditions said: "We will conduct a recruitment process for you, provide you with OHS advice, support and implement a supervision plan for the apprentice/trainee, provide a payroll service and organise the workers compensation arrangements. For this we will charge you a flat service fee of $50 per week."
4. The terms and conditions provided that the defendant had the flexibility to return the apprentice if work for him ran out, or if there were unresolved performance management issues.
5. Under the heading "Safe Work Environment", the terms and conditions provided: "You will provide a safe and supportive work environment for the apprentice or trainee and ensure they are supervised by a suitably qualified and experienced person."
6. Under the heading "Host Company requirements", the terms and conditions said: "You must maintain public liability insurance of $10 million."
7. The terms and conditions went on to deal with matters such as payment arrangements, time sheets, training arrangements and rotation, leave, workers compensation, the recruitment fee, returning the apprentice, and termination. The defendant had the right to terminate the agreement "by returning all apprentices or trainees to us covered by the agreement".
8. Also attached to the letter of agreement was an "Apprentice Quotation". It was also dated 22 February 2012 and was addressed to the defendant. The letter referred to the service fee of $50 per week. It said: "The Service Fee includes the following elements: Recruitment Ability to 'hand back' an apprentice if things don't work out Vocational Training Management including covering the cost of the TAFE enrolment fee (up to $424) OHS and Workers Compensation Payroll and Administration Services Support provided to your organisation and support of the apprentice What this means is that we interview and cull candidates on your behalf, complete the government paperwork, conduct an induction, perform regular performance management, resolve workplace issues if and when they may arise, pay the TAFE enrolment fee, monitor the TAFE training, pay the apprentice correctly, provide you with OHS assistance and respond to any queries you may have at any time."
9. The Apprentice Quotation went on to set out the cost of the service fee, statutory charges and the wages payable. Skillset was adding GST onto those wages, fees and charges.
10. The defendant also tendered a printed document which was entitled "WORKING TOGETHER Your guide to becoming a successful host". In that document, the defendant was described as a "Host Company". It stated that the Host Company was required to "provide a safe and supportive working environment". The Host Company was also required to "support structured training including providing every opportunity for the Apprentice or Trainee to learn the skills of their vocation". The Host Company was required to provide time off with pay to attend approved training. Further, the Host Company was required to "maintain the public liability insurance".

Apprenticeship and Traineeship Act 2001

1. This Act has the purpose of providing for the regulation of apprenticeships and traineeships. Section 12 deals with "training contracts" which must be executed by the employer and the apprentice. Section 12A deals with training plans. Section 13 deals with "duties of employers under apprenticeships and traineeships". Section 14 deals with the duties of employers using "host employment arrangements". If an employer places an apprentice with "a host employer under a host employment arrangement", the employer remains liable to fulfil the obligations imposed on the employer by the Act, but is taken to have fulfilled those obligations if they have been fulfilled by the host employer.
2. It was not submitted that any part of the Act was relevant to the present proceedings, except as the statutory background to the contract between the plaintiff and Skillset, and the separate contract between the defendant and Skillset. While the term "host employer" is not defined in the Act, quite clearly the defendant was a host employer within the meaning of s 14. That section imposes obligations upon the employer (in this case Skillset) but does not impose statutory obligations upon the host employer. Those obligations could only arise under a contract, as in the present case.
3. I make the following findings of fact: 1. On 18 February 2012 the plaintiff registered with Skillset, in order to obtain a position as an apprentice butcher; 2. On 22 or 23 February 2012 the plaintiff and Skillset entered into a signed written contract by which the plaintiff became an employee of Skillset; 3. On 27 February 2012 Skillset conducted a work induction; 4. By a signed written agreement dated 27 February 2012 between the defendant and Skillset, the defendant agreed to "host" the plaintiff during his TAFE studies in meat retailing; 5. By that contract Skillset provided the plaintiff to the defendant to work in its meat room, under the supervision of Mr McLennen, a senior employee of the defendant. 6. By the contract the defendant was obliged to provide a safe and supportive work environment for the plaintiff as an apprentice butcher; 7. By the contract Skillset was providing not only the services of the plaintiff, but the services of recruitment, vocational training management, OHS and workers compensation, payroll and administration services and support to the defendant and the plaintiff as an apprentice; 8. By the contract the defendant was required to support structured training for the plaintiff as an apprentice and paid time off to attend approved training; 9. On 10 October 2012 the plaintiff arrived to work at the defendant's meat room at about 4.00am; 10. When he arrived for his shift there was sausage mince scattered on the floor of the meat room; 11. The defendant spent the first two hours of his shift working at a fixed work bench cutting up lamb, with his back to the meat room; 12. At some time in those two hours, a butcher employed by the defendant cleaned up the sausage mince on the floor of the meat room; 13. However, whoever did the cleaning failed to remove a piece of sausage mince which sat on the floor underneath the tray of a mobile work trolley; 14. After finishing his job cutting lamb, the plaintiff took a 10 minute break, and was then directed by Mr McLennen to link sausages; 15. The defendant stood next to a tray sitting on top of a mobile trolley; 16. The wheels at the foot of each leg had no braking or locking mechanism; 17. The defendant then commenced to link sausages which were in the tray on top of the mobile trolley; 18. After he commenced work, another employee in the meat room placed a tray of meat on a lower level of the trolley; 19. This caused the trolley to move away from the plaintiff, rolling down the gradual gradient of the meat room floor; 20. Sausages started to fall off the back of the trolley; 21. The plaintiff stepped forward towards the rolling trolley in order to catch it and catch the sausages; 22. In doing so he stepped onto a piece of sausage mince which had been underneath the trolley when it was in a stationary position; 23. The plaintiff slipped on that sausage mince, fell against the wall and injured his back.

Liability in negligence

1. The Civil Liability Act 2002 (NSW) (the Act) governs questions of breach of duty and causation, leaving the question of the identification and scope of the duty as matters to be determined according to common law principles - Mamo v Surace [2014] NSWCA 58 at [48].
2. The defendant did not dispute that it owed a duty of care to the plaintiff. I find that the defendant owed a duty to the plaintiff, to take reasonable care to avoid a foreseeable risk of injury to the plaintiff, if the plaintiff slipped and fell upon sausage mince left on the floor of the meat room of the defendant's premises. No written or oral submissions were made by the defendant or the cross-defendant to dispute the proposition that, through sausage mince being left on the floor underneath the trolley upon which the plaintiff was working, there was negligence on the part of the defendant. Rather, the submissions of both the defendant and the cross-defendant on liability, were focussed upon contributory negligence. I deal with that topic below under a separate heading.
3. For completeness, I find that the risk of slipping upon sausage mince left on the meat room floor was foreseeable - s 5B(1)(a) of the Act. I find that such risk was not insignificant - s 5B(1)(b) of the Act. I find that in the circumstances, a reasonable person in the defendant's position would have taken appropriate precautions - s 5B(1)(c).
4. In determining whether a reasonable person would have taken precautions against a risk of harm, and what those precautions should have been, the court must consider the factors set out in s 5B(2) of the Act. Again, no submissions were directed to those matters by the defendant or cross-defendant. For the sake of completeness I record the following: 1. That probability that harm would occur if care were not taken was a high probability - s 5B(2)(a) of the Act; 2. The harm likely to be suffered was serious harm - s 5B(2)(b) of the Act; 3. The burden of taking precautions to avoid the risk of harm was minimal, involving any worker in the meat room simply observing the mince and picking it up - s 5B(2)(c) of the Act; 4. The social utility of the activity that creates the risk of harm is not relevant, as the defendant was conducting a for profit operation in the meat room - s 5B(2)(d) of the Act.
5. The plaintiff pleaded the precautions which the defendant should have taken in paragraph 9 of the Amended Statement of Claim. It alleged that the defendant should have: 1. ensured that the trolley holding the tray of encased sausage meat was provided with a braking or locking mechanism; 2. ensured the floor was free of wet and slippery substances; 3. ensured that the floor was regularly inspected and cleaned; 4. ensured that the trolley holding the tray was not placed on a sloping area of floor; 5. provided a sufficiently high level of supervision in view of the plaintiff being a first year apprentice; 6. provided sufficient fixed work benches to ensure that no preparation work was undertaken using a wheeled trolley; 7. identified the hazards and risk of injury to which the plaintiff was exposed.
6. The defendant called evidence from Mr Sharp, who was a qualified butcher working in the meat room on the day of the plaintiff's accident. He gave evidence that in his experience, wheeled trolleys were regularly used in this and other meat rooms. He was not aware of any accident or problem previously involving a wheeled trolley. The trolleys which he had seen which were wheeled did not have a braking or locking mechanism on the wheels.
7. It is to be noted that while the floor was sloping, so that it could be hosed out from time to time, the wheeled trolley sat in a stationary position on the floor until it was disturbed by another employee placing a tray of meat on the lower part of the trolley. If the trolley had not moved, and if the plaintiff had remained in a position at the side of the trolley doing work linking the sausages, he would not have stepped forward onto the mince underneath the trolley.
8. While there was an expert report tendered by the plaintiff, that report did not identify any regulation, or practice in the industry, to the effect that trolleys with wheeled legs should have a braking or locking mechanism. The expert called by the plaintiff, Mr Cockbain, did have experience in auditing the safety of butchers shops and meat rooms, but he said nothing about practice in the industry concerning wheeled trolleys.
9. If the floor underneath the trolley had been free of contaminants, then even if the trolley moved away from the plaintiff, there would not have been a problem if he stepped forward on a clean floor to catch the trolley and the sausages upon it.
10. I have come to the view that the fact that the trolley could, and did, move is only a background fact and not something which demonstrates any lack of reasonable care on the part of the defendant. The same cannot be said for the presence of slippery sausage mince on the floor underneath the trolley.
11. The defendant obtained evidence from the plaintiff in cross-examination as recorded above. The plaintiff, even as a first year apprentice, knew that sausage mince on the floor was slippery, and knew that it should be cleaned up because to leave it on the floor was to create a hazard and expose workers in the meat room to the risk of significant injury.
12. As I have found above, there was sausage mince on the floor of the meat room when the plaintiff started his shift at about 4.00am. That mince was cleaned up some time between 4.00am and about 6.00am, when the plaintiff finished his cutting work. The plaintiff did not do the cleaning up and he did not know who did. After his ten minute break, the plaintiff moved to the side of the trolley, to link sausages, as directed by Mr McLennen. Clearly the sausage mince upon which the plaintiff slipped was sitting under the trolley and had not been cleaned up at any time between the 4.00am start and the plaintiff's accident. It was probably obscured from vision by the base of the trolley itself. Certainly the plaintiff did not see it when he was standing beside the trolley.
13. There was no expert evidence about the standard of cleaning of mince which should have taken place. The plaintiff's own evidence was that all mince on the floor should be cleaned up. It was a simple matter to move this trolley and check whether there was any mince underneath it. Since the trolley was freely mobile, there was a need to clean underneath the trolley as well as the rest of the meat room floor. The defendant through its employees failed to do that properly.
14. I find that particular 9(b) pleaded in the Amended Statement of Claim has been made out. A reasonable precaution, in fact a completely necessary precaution in the case of a meat room, was to ensure that the floor was free of wet and slippery substances, in particular, sausage mince.
15. No doubt there was an obligation to ensure that the floor was regularly inspected and cleaned as pleaded in particular 9(c). However, the evidence was that this floor was cleaned, but not well.
16. I find that the balance of the particulars in paragraph 9 apart from particular (g) are not made out. There is nothing wrong with having a sloping floor and placing a trolley upon it, since the trolley could and did stay in position until it was disturbed by another worker. These trolleys, on the evidence, are common in the industry. I find that there was adequate supervision of the plaintiff. I find that there was no need to provide additional fixed work benches, so that no work was undertaken using a wheeled trolley. There was no evidence that other meat rooms were configured differently, with all work benches being fixed rather than wheeled.
17. I find that particular (g) in paragraph 9 of the Amended Statement of Claim is made out. Whoever did the cleaning did not do a good job. They did not clean up the sausage mince which was underneath the tray of the trolley. It follows that they did not identify the presence of that mince as a hazard which posed a risk of injury to the plaintiff, and to everyone else in the meat room.
18. Put compendiously, there was a piece of sausage mince on the floor for three and a half hours which had not been removed, and it should have been removed. There was, as counsel for the defendant put it in his oral submissions, a common sense obligation on the part of the defendant to take proper steps to clean slippery things off the floor. I accept the submission by counsel for the defendant that "there was a casual act of negligence by someone within the defendant's camp in failing to do that".
19. For those reasons I find that there was a breach of the duty of care owed by the defendant to the plaintiff.
20. No submissions were made regarding the issue of causation. For the sake of completeness I find as follows: 1. The negligence of the defendant was a necessary condition of the occurrence of the harm (factual causation) - s 5D(1)(a) of the Act; and 2. It is appropriate for the scope of the defendant's liability to extend to the harm so caused (scope of liability) - s 5D(1)(b) of the Act.
21. There will be judgment for the plaintiff against the defendant, subject to the further matters set out below.

Contributory negligence

1. Contributory negligence was the real issue on liability in the case. Section 5R of the Act provides as follows: "(1) The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm. (2) For that purpose: (a) the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and (b) the matter is to be determined on the basis of what that person knew or ought to have known at the time."
2. In the Defence to the Amended Statement of Claim, the defendant set out the following particulars of contributory negligence: 1. Failure to keep any or any proper lookout; 2. Failure to comply with reasonable directions from his immediate supervisors including Mark McLennen as to removal of meat on the floor; 3. Failure to remove meat from the floor that he had seen; 4. Failure to make a request of other persons in his immediate vicinity to remove meat from the floor.
3. Particulars (2), (3) and (4) fail on the evidence. There was no evidence of any direction from Mr McLennen, let alone any failure to comply with such direction. There was no evidence that the plaintiff had seen the meat on floor before he slipped. There was no evidence to suggest that, having seen the meat, the plaintiff's course of action should have been to request other persons to remove it.
4. That leaves particular (1). The defendant and the cross-defendant pointed out that the plaintiff said in cross-examination that he knew sausage mince was slippery, he knew that it could be on the floor of the meat room, and he did not look under the trolley to see if there was any there before he started his work linking the sausages. The plaintiff's explanation for not looking was as follows. He said at T52/50 - 53/3: "When I came into work I wasn't the first person to start. The meat room was already in operation. And I've come in and there's sausage mince on the floor. So it gets cleaned up, but if not all of it gets cleaned up how am I to know?"
5. It was put to the plaintiff at T53/10 that he could have looked on the floor to see whether all the mince that he had seen earlier in the day had been cleaned up. His answer was: "Yes, that could have happened, if I set the workplace up, which I didn't."
6. It was put to the plaintiff at T53/30 that he knew there was sausage mince on the floor for three and half hours in the area where he was working. He said: "No, it's not true. I wasn't working in that area for three and half hours. And I didn't set up the workplace up so I don't know whether it was cleaned or not. It looked clean when I started work there."
7. The plaintiff said that he could have got on the ground and had a look underneath the trolley and "made sure everything was sweet" - T54/20. He said that the area was cleaned up "as far as I could see" - T54/33.
8. Finally, there was at T58/11, the following question and answer: "Q. And you knew enough by 10 October 2012 to know that safety was something that was the responsibility of your employer, but also everyone in the meat room? A. Exactly, so I don't see why an apprentice would check on three qualified butchers, whether they're doing the right thing or not."
9. In cross-examination by senior counsel for the cross-defendant, the plaintiff acknowledged that it was part of everyone's job to clean up sausage meat on the floor - T58/25.
10. By s 5R(2)(a), the standard of care required of the plaintiff was "that of a reasonable person in the position of that person". The position of the plaintiff was that he was a first year apprentice, working in a meat room alongside qualified butchers. However, his position included his acquired knowledge that sausage mince was slippery, that such mince was often deposited on the meat room floor during the operation of making sausages, and that it was his and everyone else's job to clean up any mince on the floor. The plaintiff knew, at the time of his accident, all of these things - s 5R(2)(b) of the Act.
11. Looking for spilt sausage mince, and cleaning it up, was not a complex task. The plaintiff, as a first year apprentice, knew of the risk and knew how to take precautions for his own safety against the risk. That having been said, there is much force in the plaintiff's answer, to the effect that but for the sausage mince hidden underneath the tray of the trolley on which he was directed to work, the meat room floor looked to be clean, and he saw no reason to question whether qualified butchers had done a good job of cleaning or not.
12. I find that there was contributory negligence on the part of the plaintiff. Senior counsel for the cross-defendant submitted that he should be found 50% responsible for his injuries. Counsel for the defendant submitted that the appropriate figure was 25%. Counsel for the plaintiff submitted that, if there was contributory negligence, it was between 0% and 10%.
13. I find that the primary responsibility for the accident lies with the defendant. A qualified butcher had cleaned up the meat room (because everyone else in the meat room except the plaintiff was qualified), and had not done a thorough job by checking under the trolley and cleaning up anything under the trolley. Since the trolley was moveable, the floor underneath the trolley should have been checked by whoever it was who did the cleaning. Anyone working in the meat room might have needed that trolley to be moved, and once it was moved that person was going to be exposed to the risk of the sausage mince on the floor.
14. While it may seem the counsel of perfection, the plaintiff could have looked under the trolley before he started work, simply by moving the trolley. He did not need to get underneath the trolley to look for any contaminant on the floor. However, his assumption that the floor had been cleaned by a qualified butcher and was thus free of a contaminant is an understandable one.
15. I find that the plaintiff is guilty of contributory negligence to the extent of 10%. His damages against the defendant will be reduced by that amount.

Section 151Z(2) of the Workers Compensation Act 1987 (NSW)

1. The defendant pleaded that the plaintiff's damages should be reduced by virtue of s 151Z(2) of the Workers Compensation Act 1987 (NSW) because of the negligence of his employer Skillset.
2. Section 151Z(2) provides as follows: "(2) If, in respect of an injury to a worker for which compensation is payable under this Act: (a) the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker's employer, and (b) the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer, the following provisions have effect: (c) the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable, (d) the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages, (e) if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that: (i) if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise - the indemnity referred to in subsection (1) (d) is for the amount of the excess only, and (ii) if the compensation paid by that employer does not exceed the amount of that contribution - subsection (1) (d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution."
3. In submissions I was referred to the decision of Justice McColl in Pollard v Baulderstone Hornibrook Engineering Pty Ltd [2008] NSWCA 99. From paragraph 33 onwards, her Honour set out the following principles. I will summarise the principles, without citation of the authorities, which can be found in her Honour's judgment. The principles are: 1. An employer owes an employee a non-delegable duty of care; 2. The non-delegable duty rests on the employer whether or not the employer takes any share in the conduct of the operations; 3. A person subject to a non-delegable duty cannot escape liability if the duty has been delegated and then not properly performed; 4. An employer's non-delegable duty is one of a special and more stringent kind; 5. In deciding whether an employer has discharged its obligation to establish, maintain and enforce a safe system of work, the court must take into account the power of the employer to prescribe, warn, command and enforce obedience to its commands; 6. The employer's duty of care is not modified because its employees are sent to work for a client - in such circumstances the employer may be required to adopt additional measures by way of warning or training in order to discharge its continuing duty of care to its employees; 7. Whether the employer's non-delegable duty is discharged where an employee is working at a third party's premises depends upon such matters as "the employer's opportunity to inspect the premises, the length of time the employer has put his employees to work on the premises, the awareness in the employer of the danger, his capacity to shield his employees from the danger and various other factors" - Bourke v Victorian WorkCover Authority [1998] VSCA 24; [1999] 1 VR 189; 8. The fact that the plaintiff was injured at premises not controlled by the employer is an important factor in favour of the employer.
4. Counsel for the defendant submitted that the reduction in the plaintiff's damages pursuant to s 151Z(2) should be 25%. Counsel for the plaintiff submitted that the deduction should be minimal, if any. Senior counsel for the cross-defendant submitted that the combined deduction for contributory negligence and s 151Z(2) should be 50%.
5. Since there was a non-delegable duty of care upon Skillset, I find that it is appropriate to make a deduction under s 151Z(2). Having regard to the principles identified by Justice McColl, summarised above, I take into account that: 1. this was a casual act of negligence by the defendant; 2. it resulted in a hidden danger to the plaintiff, in that there was sausage mince underneath the tray of the mobile trolley on which he was directed to work; 3. the meat room was entirely within the control of the defendant, through its supervisor and its qualified tradesman employees; 4. the danger was one created early in the morning and, on the evidence, on one occasion only; 5. there was no evidence that on the periodic visits by Skillset's Field Officer, to the defendant's meat room, there was ever a dangerous floor of the type upon which the plaintiff slipped on the morning of his accident.
6. Once again, it could be said that it is the counsel of perfection to impose an obligation upon Skillset against that background, but I find that the law requires me to recognise the non-delegable character of the employer's duty of care and make a deduction.
7. I find that the appropriate deduction from the plaintiff's damages under s 151Z is a deduction of 10%. I will not set out the complicated way in which s 151Z(2) operates, as all counsel agreed that my task could be simplified to finding whether or not there was a notional breach of duty of care by the employer, and if there was, apportioning responsibility between Skillset and the defendant. That is the approach I have taken in coming to the figure of 10% as the appropriate deduction.

Damages

1. On the second day of the trial counsel for the plaintiff handed up an Amended Schedule of Damages (MFI 5). That schedule set out the heads of damage as follows: (a) Non-economic loss $238,250 (b) Past special damages $104,430 (c) Future special damages $20,000 (d) Past economic loss $136,713 (e) Future economic loss including superannuation $200,000 (f) Past superannuation $15,038 TOTAL $714,431

1. Extensive medical evidence was tendered by the plaintiff (PX 1). The defendant tendered a report from Professor Ryan, an orthopaedic surgeon, which was supportive of the plaintiff's case. The issue of damages was the subject of discussion between counsel for the defendant and counsel for the plaintiff during the course of the trial. During final submissions, counsel for the defendant said at T118/32: "I accept that every figure that my friend has put up is justifiable and available on the evidence. And whilst I'm [not] in a position formally to say that damages are agreed, every calculation he's put up in his schedule, in my submission, is supported by the evidence in the case. And further that the damages that he's put up in a number of respects are reasonable and more reasonable and are less than, at least by way of submission, might have been open to the plaintiff."
2. Counsel for the defendant was acting for a prudent uninsured (given the issues on the cross-claim) and was acting for the proprietors of the defendant's supermarket, rather than for an institutional client. It is understandable that he could not get formal instructions to agree on quantum. However, counsel is to be commended for his frankness, and for observing the requirements of the Civil Procedure Act 2005 (NSW).
3. I have carefully read the medical evidence tendered by both parties. While I have not recited the plaintiff's evidence about his medical issues, I accept it completely, as did the defendant by way of submission. Senior counsel for the cross-defendant made no submission on the issue.
4. I too have come to the view that all of the figures put forward for the various heads of damage by counsel for the plaintiff in MFI 5 are the appropriate figures on the evidence.
5. The plaintiff's damages on "full value" are $714,431.
6. I have found that there should be a deduction from damages of 10% for contributory negligence. I have also found that there should be a 10% deduction pursuant to s 151Z(2) of the Workers Compensation Act 1987 (NSW). No submission was made as to whether it was appropriate to take off a 10% deduction (leaving a residue of 90%), and then take a further 10% deduction from that residual figure. The alternative course would be to accumulate the two amounts of 10% and deduct 20% from damages.
7. I propose to follow the approach of Justice Hislop of the Supreme Court, who decided the case of Pollard v Baulderstone Hornibrook Engineering Pty Ltd at first instance - [2007] NSWSC 15. His Honour assessed "full value" damages at $318,264. He found contributory negligence of 10%, and deducted $31,826.40, leaving a sub-total of $286,437.60. His Honour found that it was appropriate to make a 20% deduction for the employer's liability. He took this 20% from the sub-total figure. In other words, his Honour deducted for contributory negligence from "full value", and then deducted under s 151Z(2), from the damages which had already been reduced by contributory negligence.
8. While his Honour's decision went to the Court of Appeal, it did not go there on this point. The Court of Appeal made no comment that such approach was wrong, although as I have said, this was not an issue for decision on appeal.
9. It does seem to me to be appropriate to deduct 10% for the plaintiff's own contributory negligence, and then give the defendant the benefit of a further reduction from the damages which the defendant would otherwise pay. To do otherwise would, mathematically, give the defendant a greater deduction than the 10% I have found, as the appropriate reduction for the employer's negligence.
10. Thus I will not accumulate the 10% reduction for contributory negligence and the 10% reduction for s 151Z(2). I will deduct for contributory negligence and then deduct from that reduced figure for the employer's negligence. The calculation is set out in the following table: "Full value" damages $714,431.00 Less 10% for contributory negligence -$71,443.10 Sub-Total $642,987.90 Less 10% for employer's negligence -$64,298.79 TOTAL $578,689.11

1. There will be judgment for the plaintiff against the defendant for $578,689.11.

The cross-claim

1. The background to the Amended Cross-Claim is set out in paragraphs 5, 6 and 7 above.
2. The following general principles of construction can be found in the chapter "Insurance" in The Laws of Australia, Thomson Reuters, at 22.1.2440-22.1.2510: 1. The question of construction of a policy of insurance is one of law; 2. Normal rules applicable to the construction of contracts generally apply to contracts of insurance; 3. It is the intention of the parties, as discovered objectively from the whole of the policy including any documents such as the proposal incorporated therein, that prevails; 4. The test is that of the objective bystander and is determined by the contractual terms to which the parties agreed, not those to which they simply thought they had agreed; 5. The words in an insurance policy are to be given their natural and ordinary meaning; 6. Technical words will be given a technical meaning; 7. The ordinary meaning of a word may not be adopted where the context indicates that the meaning is otherwise; 8. The nature of a policy and its commercial object or purpose affects the construction of individual words, phrases or clauses in that policy; 9. As an insurance policy as a commercial document, it should be construed in accordance with sound commercial principles to give it business efficacy; 10. If there is any ambiguity in the language used in a policy, it is to be construed against the party responsible for drafting the policy. This is the contra proferentem rule which results in the adoption of the construction most favourable to the insured to resolve any ambiguity.
3. Both parties referred me to the decision of the Court of Appeal in Zhang v ROC Services (NSW) Pty Ltd [2016] NSWCA 370. At [53] Justice Leeming said that where the issue is the construction of a complex contractual provision, the necessary steps are: 1. Determine the literal or grammatical meaning or meanings of the clause; 2. Determine the legal meaning of the clause; 3. Apply that legal meaning to the facts as found by the court.
4. At the start of the hearing when senior counsel for the cross-defendant addressed the court to outline the issues, I said at T9/48 "It's not an easy clause to understand as a matter of English". At the conclusion of the hearing I received a written outline of submissions by both parties to the cross-claim and had the benefit of oral submissions from experienced counsel on both sides.
5. The cross-claimant's written submissions (MFI 7) proposed a most likely construction of clause 16.5 (at paras 48-56), an alternative construction (at paras 57-63), and a further alternative construction (at paras 64-65). The written submissions for the cross-defendant (MFI 6) set out the preferred construction of the exclusion clause (at paras 19-31). It also proposed two alternative interpretations (at paras 33-36 and paras 37-39).
6. The problem with both sets of submissions is that they focus on the meaning of some words or a phrase within clause 16.5, but do not go on to analyse the clause as a whole.
7. Understandably, the cross-claimant also submitted that given the possible competing interpretations of the clause, the contra proferentem rule should apply in its favour.

The policy

1. The Policy was a "Shopping Malls Combined Liability" policy.
2. The cross-claimant sought indemnity under Coverage Section A of the policy which was in the following terms: "8. COVERAGE SECTION A - INDEMNITY The Insured is indemnified by this Coverage Section in accordance with the Operative Clause against the insured's liability to pay damages, including claimants' costs, fees and expenses, in accordance with the law of any country for and/or arising out of injury and/or Damage but not against liability arising directly or indirectly out of 8.1 Pollution or 8.2 In connection with any Product. (See also provisions applicable to Coverage Sections A, B and C further on)."
3. Under the Operative Clause, the underwriters, in consideration of payment of the premium, agreed to indemnify the insured "as is set out in each insured Coverage Section of this Policy in respect of the Insured's Business as stated in Item 3 of the Schedule".
4. There was no dispute that, but for the possible operation of clause 16.5, the cross-claimant would have been entitled to indemnity from the cross-defendant.
5. Clause 16 of the policy was headed "EXCLUSIONS - APPLICABLE TO COVERAGE SECTIONS A, B AND C". Clause 16.5 provided as follows: "This Policy does not cover… 16.5 Employers' Liability liability for injury to any person under a contract of employment, service or apprenticeship with or for the provision of labour only services to the Insured where such injury arises out of the execution of such contract."

Grammatical analysis

1. A first reading of clause 16.5 does not yield an easily discernible grammatical construction. The difficulty is caused by the insertion of the words "with or for" in the middle of the sentence. Further consideration leads me to the conclusion that as a matter of grammar, they relate to the types of contract referred to in the first line. Thus the exclusion contemplates there being either a contract of employment, service or apprenticeship with the insured or a contract for the provision of labour only services to the insured. Here the conjunction "or" is used to link two coordinated clauses - Cambridge Grammar of English, Cambridge University Press, 2006, section 307, p 556. The preposition "with" has a "basic spatial meaning" of "being alongside" - Cambridge, section 79, p 156. Clearly the preposition "with" relates the first contract (of employment, services or apprenticeship) to the contracting party, being "the Insured". The word "for" is "commonly used to express the recipient of an action or a thing" - Cambridge, section 43, p 91. In the context of this exclusion clause, it is used to indicate the purpose of the second of the contracts referred to in the clause i.e. a contract for the provision of labour only services. Finally, the preposition "to" expresses "a relation in time between two events or a relation in space between two or more things or people" - Cambridge, section 164, p 313. In this case the preposition "to" indicates the relation between the provision of labour only services, and the person to whom they are provided, being the insured.
2. It is common ground in the present case that the plaintiff was under a contract of apprenticeship with Skillset, but not with the defendant. Further, it is common ground in the present case that Skillset had a contract with the defendant for the provision of certain services, although there is dispute between the parties as to whether Skillset was providing "labour only services" to the defendant.
3. There are further segments of paragraph 16.5 which require grammatical analysis. The first is to discern the meaning of the word "under" in the phrase "liability for injury to any person under a contract of employment". The word "under" usually means below or beneath, but it has an additional meaning of "subject to" - Macquarie Dictionary, meaning 5. This is a meaning commonly used in the law e.g. "under contract", "under statute", "under the rule of law", and even "under the influence". The word "under" in the first line of clause 16.5 can only be used in the sense of "subject to", as it could not be said that any person or any thing is beneath or below a contract. That is a meaningless use of the word.
4. That raises a further question about just who or what is subject to (under) a contract with the insured. Is it the person who is injured, or is it the liability for injury? Since the words "under a contract" occur immediately after the word "person", the normal grammatical meaning is that the phrase is concerned with a person who is subject to a contract with the insured. To be subject to contract is to be bound by a contract, as a party.
5. In this case the plaintiff was a party to, and was subject to, and was under a contract with Skillset. He was not under a contract with the insured.
6. There also needs to be grammatical analysis of the phrase "where such injury arises out of the execution of such contract". The word "execution", in relation to a contract, connotes performance of obligations under the contract. There can be no other sensible meaning of the word in clause 16.5 and none was put forward.
7. As previously recited, para 12 of the Defence to Amended Cross-Claim particularised the facts upon which the cross-defendant relies as follows: "(a) Skillset Ltd contracted with the cross-claimant for the provision of labour only services to the cross-claimant (the Contract); (b) Skillset's provision of the Plaintiff's labour only services was under the Contract; and (c) The Plaintiff's injury arose out of the execution of the Contract."
8. It is necessary to then analyse clause 16.5 against the background of those factual particulars. By its Defence, the cross-defendant has made it plain that when clause 16.5 refers to a "contract", it is referring to the contract between Skillset and the defendant. It was by this contract that Skillset provided the services of the plaintiff as an apprentice butcher to the defendant. How does that contract fit into clause 16.5?
9. The contract between Skillset and the defendant was not "a contract of employment, service or apprenticeship" with the insured (the defendant). Can it be said that the contract between Skillset and the defendant was "a contract … for the provision of labour only services" to the insured?
10. Counsel for the defendant made the submission that what was provided by Skillset to the defendant was more than labour only services. The terms of the contract between Skillset and the defendant are set out above at paras 34-43. In particular, for a fee of $50 per week, Skillset was providing to the defendant the services and benefits listed in paragraph 41 above.
11. However, at a practical level, the plaintiff attended each day at the premises of the defendant and performed the work of an apprentice butcher in the meat room. He brought no tools of trade with him and, at least at the start, he brought no knowledge or understanding of what an apprentice butcher had to do. He learnt on-the-job from the defendant's qualified tradesmen.
12. I find that the contract between Skillset and the defendant was a contract for the provision of labour only services. It would usually be the case that, in any such contract, the supplier of the worker will be providing a service over and above just sending the worker along to the host employer's place of business. Such arrangements often include screening and interviewing candidates, and ascertaining whether people are qualified and/or suited to a particular position. Further, the host employer gets the benefit of a person working for them, without having to bear themselves the impost of workers compensation insurance. That is usually paid by the supplier of the services, as it was in this case.
13. Counsel for the defendant also pointed out that this was in effect a three-way arrangement. Skillset was providing training and support to the plaintiff, as well as finding him a position as an apprentice. The defendant was taking on the plaintiff as an unskilled worker, and not only gave him a job, but agreed to supervise and train him appropriately, and pay him for his time off to go to TAFE. The defendant did not have to provide the plaintiff with any security of tenure, and could "return" him to Skillset at any time.
14. My conclusion at this point in the analysis of clause 16.5 is that there was a contract between Skillset and the defendant for the provision by Skillset of labour only services to the defendant. That is not the end of the matter.
15. The segment of clause 16.5 which has caused me the most difficulty, is to discern the connection between the phrase "liability for injury to any person under" and the phrase "a contract for the provision of labour only services to the insured". The particulars supplied in the Defence to the Amended Cross-Claim do not particularise just who is the "person" spoken of at the commencement of the clause.
16. I have already found as a matter of grammatical construction, that the "person" means a person under (meaning a party to, and subject to obligations under) a contract of employment, service or apprenticeship with the insured, or under a contract for the provision of labour only services to the insured.
17. As previously recited, and as is common ground, the plaintiff was not under a contract of employment, service or apprenticeship to the insured. Nor however was he a person under a contract for the provision of labour only services to the insured. The plaintiff had no contract to provide labour only services to the defendant.
18. While as a matter of grammatical construction, it can be discerned that clause 16.5 applies to a contract of employment, service or apprenticeship with the insured, or a contract for the provision of labour only services to the insured, both types of contracts have to be tied back to identify a person who is under a contract of employment, services or apprenticeship with the insured, or who is under a contract for the provision of labour only services to the insured.
19. Further, the search for identification of the "person under a contract" referred to in clause 16.5, is assisted by considering the opening words which speak of "liability for injury to any person" under such contract. It is nonsensical to speak of any injury to Skillset as a contracting party. The injury in this case was suffered by the plaintiff. If clause 16.5 is to operate to exclude liability under the policy, what it excludes is liability for injury to the plaintiff, and further, that it is the plaintiff who is under (meaning subject to) one of the two kinds of contract identified in the clause.

The legal meaning of the exclusion clause

1. As Justice Leeming pointed out in Zhang at [82], the legal meaning is not inevitably the most natural literal or grammatical meaning. That is why it is essential to have regard to context and purpose. As his Honour said at [86]: "Where there is more than one available legal meaning, a court looks at the text, context and purpose, with a view to determining which potential meaning best accords with those considerations."
2. The contract is to be read as a whole. It is not only permissible but mandatory to have regard to how the potential legal meanings fit with the other provisions of the contract - Zhang at [89], citing Wilkie v Gordian Runoff Limited [2005] 8 CA 17 at [16]; (2005) 221 CLR 522.
3. Regard may be had to the legislative context in which the policy was written - Zhang at [93].
4. The contract is to be construed as a whole, so that the scope of the exclusion clause falls to be considered in the light of other provisions and exclusions - Zhang at [94]. In Wilkie, the High Court said at [15]: "As a commercial contract, a policy of insurance, should be given a business-like interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure."
5. The insuring clause of this policy is cast in the widest possible terms, as is usual in the case of public liability policies. A series of Endorsements to the policy extends the already wide coverage. Clause 18 provides for extended defence costs. Clause 19 gives a wider definition to the term "injury". It even extends the meaning of "injury" to a wrongful dismissal from employment.
6. The Endorsements section of the policy contains a number of exclusions including sexual harassment, war and civil war, radioactive contamination, nuclear explosion, asbestos, mould, and terrorism.
7. Clause 14 widens the coverage given by the policy under the heading "INDEMNITY TO OTHERS". Normally the indemnity given by an insurer operates as an indemnity only in favour of the insured party to the contract of insurance. However clause 14 extends the indemnity to cover others, who are not a party to the contract.
8. Clause 14.3 is an indemnity to other persons, and the existence of that clause in the contract, and its meaning, can be taken into account in reaching a conclusion about the meaning of clause 16.5. Clause 14.3 reads: "The indemnity granted extends to: 14.1 … 14.2 … 14.3 at the request of the Insured, any person or firm for their liability arising out of the performance of a contract to provide labour only services to the Insured."
9. Counsel for the defendant pointed out that clause 14.3 is the only other place in the policy that the phrase "labour only services" occurs, besides clause 16.5. The phrase is not defined. The plain meaning of clause 14.3, is that the indemnity granted to the insured will extend to a firm such as Skillset, which had a contract to provide labour only services to the insured, as I have found above. Thus under clause 14.3, the insurer would have to indemnify Skillset for "their liability" arising out of the performance of the contract between Skillset and the defendant, by which Skillset provided the labour of the plaintiff to the defendant.
10. It would be a curious result if Skillset was entitled to indemnity under clause 14.3 of the policy, but the defendant was not entitled to indemnity for liability for injury to the plaintiff, who was sent to work at the defendant's premises, by reason of a contract between Skillset and the defendant. The existence of clause 14.3 in the contract is one indicator that clause 16.5 should be read in a fashion which affords the defendant indemnity for the person who actually suffers injury when working under a contract (between Skillset and the defendant) for the provision of labour only services to the defendant.
11. The heading to a clause in an insurance policy can be taken into account in construing the term itself. The heading here is "Employers' Liability". A reading of the other exclusion clauses leads me to conclude that these headings are only broad indications of the contents of the exclusion clauses themselves. For example, clause 16.1 is headed "Motor Vehicles", and yet the clause applies also to trailers. Clause 16.2 is headed "Aircraft & Watercraft", but the clause extends to spacecraft.
12. Thus the heading "Employers' Liability", cannot be used to limit the meaning of exclusion clause 16.5. However, the first kind of contract spoken of in the clause, being a "contract of employment, service or apprenticeship" with the insured is a contract which would fairly and squarely lead to the liability of the insured as an employer.
13. A contract for the provision of labour only services to the insured does not create an employment relationship. However, it does impose on the insured duties akin to those of an employer. The heading to clause 16.5 is an indication that a contract for the provision of labour only services to the insured is seen as analogous to a contract of employment. It is one indication that the purpose of the clause is to provide indemnity to the insured for injury to any person who is under a contract of employment, or who is under a contract for the provision of labour only services to the insured.
14. Against the background of compulsory statutory workers compensation insurance, the business purpose of the exclusion clause can be assessed. An employer in New South Wales must have workers compensation insurance for an employee. Such a policy covers not only payments of compensation, but also covers common law damages, as modified by Pt 5 of the Workers Compensation Act 1987. Thus there is commercial common sense in the exclusion of indemnity for injury to a person who is under a contract of employment with the insured, as such a loss is already covered by compulsory statutory workers compensation insurance.
15. There is no compulsory statutory insurance to cover a person who is under a contract for the provision of labour only services to the insured. Such people who provide their services on a contract basis to an organisation are sole traders, and have the ability to take out insurance for their own protection. This is done at their own cost. Thus there is commercial common sense in excluding indemnity for injuries suffered by people who have contracted with an insured to provide their labour services to the insured. Further, it is the entity who engages a person to supply labour only services (in this case - the defendant), who is best placed to safeguard their own interests by taking out workers compensation insurance where there is a contract of employment, or some other appropriate cover where they contract with a person for the provision of the labour of that person.
16. There is a further reason for the exclusion of indemnity for injuries to such persons. Arguably, a person who is not an employee but who contracts to provide only their labour, could be a "deemed employee", or an employee pro hac vice. Section 5 and Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) deals with deemed employment of workers. It is not relevant to examine those provisions in this judgment, as there is no suggestion that the plaintiff was a deemed worker. However, the existence of such statutory provisions provide a commercial context, and a reason, for construing exclusion clause 16 to apply where injury is suffered by a worker who is not at common law an employee.
17. My consideration of the text, context and purpose of the policy and the exclusion clause leads me to no different view, than the view I reached by a grammatical analysis of the clause.
18. I find that exclusion clause 16.5 means that the insurer does not provide indemnity for: 1. liability for injury to any person under a contract of employment, service or apprenticeship with the insured, where such injury arises out of the execution of such contract; or 2. liability for injury to any person under a contract for the provision of labour only services to the insured, where such injury arises out of the execution of such contract.

Ambiguity and contra proferentem

1. In Darlington Futures Limited v Delco Australia Pty Limited (1986) 161 CLR 500 at 510, the High Court said: "The interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity."
2. As Justice Leeming pointed out in Zhang at [140]: "If after ascertaining the literal or grammatical meanings and evaluating them against the text, context and purpose of the contract, there is still real doubt, then a clause is to be construed against the person who drafted it."
3. On the conclusion I have reached above concerning the meaning of the clause, it is not necessary for me to rely upon the maxim of contra proferentem. However, I acknowledge that six other interpretations of the clause were put forward in submissions, three by the defendant and three by the cross-defendant. My interpretation is, in effect, a seventh interpretation. While I have not adopted any of the six interpretations put forward by the parties, I acknowledge that each of the alternative interpretations is arguable, although I have rejected such arguments.
4. If I am wrong about my conclusion concerning the meaning of the exclusion clause, then the fact that there are six alternative interpretations, all of them arguable, suggests that there is genuine ambiguity about the meaning of the clause. In that case it should be construed contra proferentem, against the insurer who drafted it and put it forward as part of the policy. In that case, the exclusion clause does not apply to preclude the defendant from obtaining indemnity from the cross-defendant.

Application of the legal meaning to the facts as found

1. This step in the analysis is the only easy step. The plaintiff was not a person under a contract to provide labour only services to the defendant. In those circumstances the exclusion clause does not apply. On my interpretation of the clause, it would only have applied if the plaintiff himself had contracted with the defendant for the supply of his labour to it. On the facts, that did not occur.
2. For the above reasons, I find that the cross-claimant is entitled to judgment against the cross-defendant.
3. The relief sought on the cross-claim was: "(a) indemnity under the Policy in respect of the Plaintiff's claim including any liability to pay the Plaintiff's costs; (b) indemnity in respect of any costs the Cross-Claimant incurs in defending the Plaintiff's claim; (c) costs of this cross-claim on an indemnity basis; (d) interest, including interest on costs."
4. Since the policy was one of indemnity, there can be no doubt that the cross-claimant is entitled to orders in accordance with (a) and (b) above. Further, the cross-claimant should have the costs of the cross-claim. My view is that such costs should be on an indemnity basis, as the cross-claimant would not have had to spend a cent on legal costs, if the insurer had indemnified it, as I have found it was obliged to. The claim for costs arises out of the refusal of the cross-defendant to provide indemnity under the policy. Thus it is a claim for damages for breach of contract. Those damages are whatever the cross-claimant had to expend on legal costs to bring the cross-claim. There were no submissions on this issue, and so I will grant leave to further argue the basis for the costs order.
5. So far as interest is concerned, there was no evidence presented to me as to the amounts, if any, that have been paid out by the cross-claimant. I propose to grant leave for this issue to be determined at a further short hearing, if the parties cannot agree on the appropriate order for interest.

Orders

1. My orders on the plaintiff's claim are: 1. Judgment for the plaintiff against the defendant for $578,689.11. 2. Order the defendant to pay the plaintiff's costs. 3. Grant leave to approach my Associate within 7 days if either party seeks a different costs order.
2. My orders on the cross-claim are: 1. Judgment for the cross-claimant against the cross-defendant for $578,689.11. 2. Judgment for the cross-claimant against the cross-defendant for the costs which the defendant has been ordered to pay to the plaintiff, such costs to be as agreed or assessed between the plaintiff and the defendant. 3. Order the cross-defendant to pay the cross-claimant's costs of the cross-claim on an indemnity basis. 4. Grant leave to approach my associate within 7 days if either party seeks a different costs order, or to argue the question of interest.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 April 2019