Pieter Hoekstra v Residual Assco Industries Pty Ltd & 2 Ors

Supreme Court of NSW|2004-03-17|Before: Dunford J

CITATION : Pieter Hoekstra v Residual Assco Industries Pty Ltd & 2 Ors [2004] NSWSC 564 revised - 31/01/2005 HEARING DATE(S) : 8 - 17 March 2004 JUDGMENT DATE : 25 June 2004

JUDGMENT OF : Dunford J DECISION : See para [138]

CATCHWORDS : NEGLIGENCE - employment injury - floor plate at foot of ladder on tug boat removed - plaintiff descends ladder and misses footing - falls below floor level into bilge - floor plate removed by servant or agent of third party - liability of third party - liability of employer - non-delegable duty - apportionment of responsibility between employer and third party - NEGLIGENCE - contibutory negligence - employee pre-occupied with his duties - whether guilty of contributory negligence - EMPLOYMENT LAW - relationship of employer and employee - number of companies in group - which the employer - indicia to identify employer - DAMAGES - assessment of. Law Reform (Miscellaneous Provisions) Act 1946 s 5 LEGISLATION CITED : Law Reform (Miscellaneous Provisions) Act 1965 s 9 Workers Compensation Act 1987 Workers Compensation Legislation Further Amendment Act 2001 Australian Insurance Employees v W P Insurance Services Pty Limited (1982) 1 IR 212 Brodie v Singleton Shire Council and Ghantous v Hawkesbury City Council [2001] HCA 29, 206 CLR 512 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 Bus v Sydney County Council (1989) 167 CLR 78 Dalgety Farmers Limited t/a Grazcos v Bruce (unrep - CA - 3 August 1995, BC 9505124) David Jones Ltd v Bates [2001] NSWCA 233 Felk Industries Pty Limited v Mallett & Anor (2004) NSWCA 175 Kondis v State Transport Authority (1984) 154 CLR 672 Lepore v State of New South Wales [2001] NSWCA 112, 52 NSWLR 420 Lipman Pty Limited v McGregor & ors [2004] NSWCA 6 McLean v Tedman (1984) 155 CLR 306 CASES CITED : Nagle v Rottnest Island Authority (1993) 177 CLR 423 New South Wales v Lepore [2003] HCA 4, 212 CLR 511 Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 Parsons v Randwick Municipal Council [2003] NSWCA 171 Polycarpou v Australian Wire Industries Pty Ltd (1995) 36 NSWLR 49 Rasic v Cruz [2000] NSWCA 66 Romeo v Conservation Commission (NT) (1998) 192 CLR 431 Scott v Davis [2000] HCA 52, 175 ALR 217 Teen Ranch Pty Ltd v Brown (1995) 11 NSWCCR 197 TNT Australia Pty Limited v Christie & ors [2003] NSWCA 47 Van Der Sluice v Display Craft Pty Ltd [2002] NSWCA 204 Visscher v BHP Petroleum Pty Ltd [2002] NSWSC 65 Waverley Municipal Council v Swain [2003] NSWCA 61 PARTIES : Pieter Hoekstra v Residual Assco Industries Pty Ltd (formerly known as Adelaide Steamship Pty Limited) & 2 Ors FILE NUMBER(S) : SC 20127/03 B J Gross QC/B D Dooley - Plaintiff COUNSEL : J N Gleeson QC/M A Kumar - First Defendant M B Williams SC/M T Vesper - Second Defendant P E Blacket SC/J Sleight - Third Defendant Carroll & O'Dea Solicitors - Plaintiff SOLICITORS : Moray & Agnew Solicitors - First Defendant Piper Alderman Solicitors - Second Defendant Ebsworth & Ebsworth Lawyers - Third Defendant

9 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20127/03 PIETER HOEKSTRA v RESIDUAL ASSCO INDUSTRIES PTY LIMITED AND ORS

JUDGMENT 1 HIS HONOUR: In these proceedings, the plaintiff Pieter Hoekstra sues the defendants for damages for personal injuries allegedly suffered by him on 7 August 1996. He was at the time carrying out his duties as a Marine Engineer employed by the first defendant (Residual Assco), or possibly by the third defendant (Waratah), on the tug boat "Careening Cove" which was undergoing maintenance and re-fitting at the Garden Island dockyard which was operated by the second defendant (ADI). 2 There is an issue between the parties as to who was the employer of the plaintiff at the relevant time, which I attempt to resolve later in this judgment, but for the purpose of determining liability for negligence, I shall in the meantime refer to them collectively and alternatively as "the employer". There are also two cross-claims.

FACTS 3 The plaintiff was born on 25 June 1955 and left school in 1973 having obtained his Higher School Certificate. The following year, he went to England where he studied marine engineering and qualified as a Marine Engineer. In 1978, he returned to Australia and commenced work with Patrick Stevedoring as a Fourth Engineer. From then until 1994, he worked on various ships as a Marine Engineer obtaining his Chief Engineer's certificate in 1985. 4 He was married in 1991 and in 1994/1995, he took a break from maritime life and was involved in supervising house constructions, but he returned to work as a Marine Engineer in November 1995, when he commenced work with the first or third defendant, as a casual Tug Engineer. His only previous significant injury was a back injury sustained whilst working with Sydney Ferries in about 1990, which caused him to be off work for about 5 weeks, and for which he was paid Worker's Compensation. 5 On about Monday 5 August 1996, he was assigned by his employer to work as Marine Engineer on a tug boat known as the "Careening Cove" (which has since been renamed the "Wolli") which on that date was towed from its regular base at Cooper Street Wharf in Balmain to Garden Island dockyard at Woolloomooloo for routine maintenance and inspection. That vessel was of full steel construction, about 94 feet long and about 30 feet wide. It had a single deck with a cabin area above deck containing steering deck, offices and accommodation. Below deck were the engine room, workshop and the Duckpeller room housing the shafts leading to the propellers. There were doors on each side of the deck leading into the cabin area, which gave access to the accommodation, and a set of steps from the gangway between these doors which led down into the engine room. 6 The floor of the engine room consisted of metal plates resting on and affixed to steel girders. Immediately behind the engine room was the workshop area, which had a similar floor surface. Access to the workshop was either through the engine room or by a fixed ladder down a hatch from the aft deck. The hatch was 770mm x 620mm wide and where it met the deck there was a coaming (that is a raised cover) extending to a height of 670mm above the deck. 7 The ladder was 320mm wide with steps 300mm apart, except the last one, which was 400mm above the workshop floor. From top to bottom, the ladder was 2.5 metres (see generally photos and sketch plans Exs AD 4 and W 5). 8 ADI, as the occupier and operator of the dockyard, was the body with overall responsibility for the maintenance and refitting operation and the person in charge of the operation on its behalf was Luke Simmonds, who directed the work force on board the vessel. 9 The plaintiff's responsibility, under his immediate superior, Neil Edwards, the Engineering Superintendent likewise employed by the first or third defendant, was to monitor the work, to see that it was being done in accordance with the contract, and it was his responsibility each day at about 4pm, after the ADI employees and sub-contractors had left for the day, to do a safety inspection and secure the vessel for the night, ensuring that tools were locked away so they would still be available the next morning and that there were no gas or fuel leaks, or electrical problems, torches left alight or anything else that could cause a fire or other hazard. 10 The contract documents between the employer and ADI were comprised in Ex M. They included the Safety Management Plan, the Specification and the ADI - Commercial Shipping - Terms of Contract. 11 The Safety Management Plan contained the following terms: 2.2 The Owners Representative The Owners Representative shall have overall responsibility for safety and security of the vessel and crew during the Refit Contract period. The owner is requested to provide advice on safety matters to the ADI Project Manager as required.

2.3 Project Manager The Project Manager shall have overall responsibility for the safety and security of the ADI refitting project human and physical resources at all times.

Control of Work The safe co-ordination and control of work rests with the ADI Project Manager. Professional advice will be sought when necessary from the Owners Representative or Manager Safety and Security (ADI). 12 The Specification contained the following provision: GS15 The Owner's Representative The contractor shall keep the Owner's Representative fully informed at all times on all matters relating to the progress of the work being performed.

This includes all matters technical, administrative and of an industrial nature that will or may have a bearing on the progress or outcome of all or any part of the project. 13 The plaintiff said that on 7 August, he was working on the vessel earlier in the day and left to do other work at the dockside between about 12 and 1pm. At that time, he was aware that the steel plate decking in the engine room had been lifted to enable work to be done in relation to the removal of the Duckpeller propulsion units from the rear or stern of the vessel. He had actually seen these plates being lifted by employees of the second defendant, following directions by Mr Simmonds. 14 Because the steel plate flooring of the engine room had been removed, the plaintiff had locked the two access doors on each side of the cabin leading to the engine room, and placed a rope across the top of the gangway to prevent persons gaining access to the engine room or workshop area by that means, leaving the ladder down the hatch directly to the workshop as the only means of access to that area. 15 At the time the plaintiff was present on board during the morning, the steel plates in the workshop were all in position and he received no information from anyone that any of them were to be lifted in that area. 16 Shortly before 4pm that day, the ADI employees and sub-contractors having left for the day, the plaintiff commenced his inspection. He went around the deck, checking as necessary, and then proceeded to descend via the hatchway to the workshop and engine room to ensure that the area was safe and secure. This hatchway was quite narrow, and there were running through it at the time, a large number of 240 volt power leads, oxyacetylene hoses, welding leads, and a 4 to 6 inch flexible air ventilation hose, all of which he had to push aside to enter the hatchway.

17 He stepped onto the ladder whilst trying to clear the hoses out of the way and then slowly descended one hand holding the hoses and leads to the side and picking the leads out of the way as he descended. As he came below the coaming at the top of the hatch, there was a large deck beam about 15 inches deep in front of his face and, looking to the sides, it appeared that the decking of the workshop was in place. He continued to descend but when he took the last step down from the last rung of the ladder, he slipped below the level of the decking and struck his left lower leg on piping running below the deck level of the workshop. He also grazed his right hip and broke a finger. He found the pain excruciating and he was standing on the inside of the ship's hull approximately waist height to the deck of the workshop. He then realised that the steel plate immediately below the ladder had been removed. 18 He said (T 25) that he was not in a position to see that the plate at the base of the ladder was missing because he was concentrating on getting the leads, lines and hoses out of the way, and because of the constricted trunking, he tended to be looking straight ahead, as one cannot in that position lean back and look down. 19 He agreed (T 110) that in the days prior to the accident, the floor plates in the engine room had been lifted for the purposes of bilge work, but said there had been no discussion about such plates being lifted in the workshop area as well. He went on to say (T 110-11) that he could not remember all the plates ever being lifted in the workshop area and that in discussion, he had expressed his disapproval of the plates being lifted in that area whilst all the plates were up in the engine room. He agreed (T 115) that when he left the vessel between 12 and 1pm, there were four men in the engine room doing bilge work. He believed there would be work done, or at least an inspection of the bilge, under the workshop area, but (T 122) he was not told, and did not expect that any plates would be lifted in the workshop without him being told, and in particular, he never expected that anyone would lift a plate at the bottom of a ladder (T 122). 20 During the course of the hearing (T 184), Senior Counsel for ADI made the admission that the steel plate had been removed by a servant or agent of that company, for whose actions that company was responsible. 21 Luke Simmonds, who was the Superintendent for ADI at Garden Island at the time of the laying up of the Careening Cove, said that he did not recall any discussion where the plaintiff expressed disapproval of plates being lifted in the workshop.

22 He further said that a missing plate at the foot of the ladder was an obvious hazard (T 248) and that if a single plate was missing at the end of the day, he would expect one of the ADI's employees to put it back (T 254), a task which would only take a very short time (T 240, 248). He regarded it was ADI's duty to make the vessel reasonably safe at the end of the day's work (T 264) and knew that at the end of each day's work, an inspection would be carried out by the plaintiff (T 245). 23 In his report (Ex AD 4) Peter Burge, a Marine Engineer, retained as an expert by ADI, expressed the view that the plaintiff did not exercise proper caution when descending the ladder and (para 63) should have paused on the ladder when he had entered the store, taken time to orient himself, used his torch if the light was too dim, looked around the compartment and established its state before he descended the full extent of the ladder and followed the "three point contact" rule at all times during his descent. 24 It became apparent, however, in cross-examination that Mr Burge tended to focus on the conduct of the plaintiff rather than on that of ADI, its servants and agents. Ultimately, he agreed that he would not regard it as safe for a single plate to be left missing at the base of the ladder at the end of the working day (T 311-2), and agreed that (T 313), ADI could be criticised for causing the plate to be lifted and left lifted at the end of the working day. 25 Although there is a reference in some of the medical reports to more than one plate being removed, I am satisfied that in fact only one plate, the one immediately at the bottom of the ladder, had been removed. This was the clear evidence of the plaintiff and is corroborated by the various contemporary documents: Exhibits J (diary), G (ADI report of injury), W 3 (Compensation Claim dated 12 August 1996) and EW 8 (WorkCover Accident Report dated 23 September 1996).

LIABILITY 26 It is convenient to first deal with the position of ADI. That company had the overall management and control of the refitting operation, which was being carried out by its servants and sub-contractors on its premises. It specifically had overall responsibility for the safety of the "ADI refitting project human and physical resources" (Cl 2.3 of the Safety Management Plan). ADI knew that it was the practice of the plaintiff, as owner's representative, to carry out a security and safety inspection of the vessel each day after the cessation of work and it was accordingly foreseeable and not far fetched or fanciful, that the plaintiff could suffer physical injury if the vessel was left in an unsafe condition. 27 Through its workers, who had been denied access to below decks through the side doors, gangway and steps to and through the engine room, ADI knew that the only means of access to below deck was via the hatchway and ladder to the workshop. 28 In these circumstances, I am satisfied that ADI owed a duty of care to the plaintiff, and that by its servants and/or sub-contractors removing the floor plate at the foot of the ladder, and not replacing it at the end of the day's work, ADI was in breach of such duty of care, and accordingly, negligent. 29 Breach of duty could, alternatively, have been avoided by notifying the plaintiff (or his superior on site, Mr Edwards) that the plate had been removed or placing a warning sign at the top of the hatch, but the most obvious means of avoiding injury to the plaintiff was the simple act of replacing the plate, which I am satisfied would have been an easy matter, requiring minimal effort and minimal time. 30 It was the responsibility of ADI to determine which deck plates were to be removed so that the work could be performed, but this included attending to all safety requirements arising out of the performance of the work. It was the occupier, and in charge of the work, with the power to give directions and instructions about the manner and performance of the work. The ladder had been constantly used by the various employees and sub-contractors of ADI, and by the plaintiff himself when he last left the vessel between 12 and 1pm that day. He had no reason to believe that the ladder would not be as safe when he returned shortly before 4pm than it had been earlier. Moreover, clause GS15 of the Specification required ADI to keep Waratah informed at all times of the progress of the work. 31 Mr Williams SC, on behalf of ADI, has however submitted that his client owed no duty of care to the plaintiff, because the plaintiff was not acting with reasonable care for his own safety. He submitted that, at least in the case of a defendant who is not an employer, a duty of care arises only to those persons who are at the time exercising reasonable care for their own safety. 32 For this proposition, which I found novel and surprising, he referred me to the judgment of Sheller JA (with whom Ipp JA agreed) in Parsons v Randwick Municipal Council [2003] NSWCA 171 at [19]-[27] and the extensive quotations therein to the judgments of the High Court in Brodie v Singleton Shire Council and Ghantous v Hawkesbury City Council [2001] HCA 29, 206 CLR 512, where reference is made to a duty of care being owed to "persons exercising reasonable care for their own safety". He also referred me to other cases, including Waverley Municipal Council v Swain [2003] NSWCA 61, David Jones Ltd v Bates [2001] NSWCA 233, Van Der Sluice v Display Craft Pty Ltd [2002] NSWCA 204. 33 However Parsons, Brodie and Ghantous were all highway cases whilst Swain was another action against a public authority, and as I understand them, they were all "warning" cases, the principle being that there is no duty to give a warning about obvious dangers to persons who are not looking where they are going or, in the case of Parsons, are incapable of so doing. A number of the cases allow for the duty of care to exist notwithstanding inadvertence or thoughtlessness: Ghantous at [160], and the possibility that one or more of the persons to whom the duty is owed might fail to take proper care for his or her own safety: Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 431, McLean v Tedman (1984) 155 CLR 306 at 311, Romeo v Conservation Commission (NT) (1998) 192 CLR 431 at 445, 478. 34 In David Jones Ltd v Bates which concerned the floor surface in a retail store, Davies AJA at [15] et seq drew a distinction between the duties of highway authorities where the duty was to take reasonable care for the safety of persons who are taking reasonable care for their own safety (for which he cited Ghantous as an example) with the duty of care in the context of industrial accidents and injuries occurring in schools, hospitals and the driving of motor vehicles where the duty of care is very high. His Honour quoted what Fitzgerald JA said in Rasic v Cruz [2000] NSWCA 66 at [42]: "A shopkeeper owes a duty of care even to careless customers. However a duty of care is not a general duty to protect careless people from the consequences of their own carelessness". 35 Whatever limitations on the duty to take care there may be in the case of public authorities or highway authorities or in warning cases, by reference to persons exercising reasonable care for their own safety, I am satisfied that any such limitation is not of general application, and that a duty of care may be owed notwithstanding a failure of the other person to take reasonable care for his or her own safety. This is particularly so in an industrial situation such as this was; Bus v Sydney County Council (1989) 167 CLR 78 at 90, even though ADI and the plaintiff were not in a relationship of employer and employee. 36 To hold otherwise, i.e. that there is no duty of care owed to those who fail to take reasonable care for their own safety, would have the effect of making contributory negligence an absolute defence to actions of negligence, and negate the provisions of the apportionment legislation, i.e. the Law Reform (Miscellaneous Provisions) Act 1965 s 9. 37 The case against "the employer", whichever defendant that may turn out to be, is founded on the proposition that it had a non-delegable duty to the plaintiff to take reasonable care for his safety, including taking reasonable care to provide a safe place for him to work, and safe means of access to any place where he was required to work; and that it is therefore liable for the negligence of ADI which resulted in the plaintiff's injury. 38 In considering the non-delegable nature of the duty, it is convenient to begin with Kondis v State Transport Authority (1984) 154 CLR 672 where the employer was held liable, in part because an independent contractor, who was managing and directing the operation in which the employer's employee was engaged, had failed to adopt a safe system of work; such failure was held to constitute a failure by the employer to satisfy the non-delegable duty to provide a safe system. Mason J at 687-8 said: "The employer has the exclusive responsibility for the safety of the appliances, the premises and the system of work to which he subjects his employee and the employee has no choice but to accept and rely on the employer's provision and judgment in relation to these matters. The consequence is that in these relevant respects the employee's safety is in the hands of the employer; it is his responsibility. The employee can reasonably expect therefore that reasonable care and skill will be taken. In the case of the employer there is no unfairness in imposing on him a non-delegable duty; it is reasonable that he should bear liability for the negligence of his independent contractors in devising a safe system of work. If he requires his employee to work according to an unsafe system he should bear the consequences". 39 In TNT Australia Pty Limited v Christie & ors [2003] NSWCA 47, the plaintiff was employed by an employment agency who assigned him to work for the appellant (TNT) at its brewery, and he was injured when a walk-behind pallet jack he was using to pick up beer orders malfunctioned and moved backwards across his foot. This pallet jack was owned and serviced by Crown Equipment Pty Limited (Crown) and leased to TNT. It was held (i) that the employer owed a non-delegable duty to take reasonable care for the safety of the plaintiff and did not abdicate its non-delegable duties simply because the plaintiff was sent to work for TNT, (ii) that TNT and the plaintiff were in a position analogous to that of employer and employee and accordingly, TNT owed to the plaintiff a non-delegable duty to take reasonable care for the safety of the plaintiff, (iii) that the employer and TNT had both breached their respective non-delegable duties of care by virtue of Crown's negligence in failing to detect and/or repair the cause of the problem with the pallet jack, which had been reported two weeks before the accident. 40 Mason P at [46] repeated what he had said in Lepore v State of New South Wales [2001] NSWCA 112, 52 NSWLR 420 at [28]-[32] as follows: "The concept of a non-delegable duty of care has been discussed in a number of High Court decisions (see Kondis v State Transport Authority (1984) 154 CLR 672, Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520, Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 and Scott v Davis [2000] HCA 52, 175 ALR 217at [245]-[249], [307]-[308], [353]. Employers, hospitals and school authorities are the clearest categories of relationships giving rise to such a duty. The expression "non-delegable duty" is somewhat misleading. It implies that a person cannot delegate a duty, but the truth is that the person cannot avoid liability by relying on the delegation, even to a competent delegate. A non-delegable duty is said to be personal or direct, rather than vicarious, but even this difference is more semantic than substantial… Where the non-delegable duty is one of care (and most reported cases deal with this situation) the duty is expressed as requiring the defendant to ensure that reasonable care is taken ( Kondis at 686, Burnie Port Authority at 550). The result is, as Gummow J expressed it in Scott (at [248]) that: "…the characterisation of a duty as non-delegable involves, in effect, the imposition of strict liability upon the defendant who owes that duty". 41 His Honour said he did not understand that reasoning be affected by the allowance of the High Court appeal in Lepore, i.e. New South Wales v Lepore [2003] HCA 4, 212 CLR 511, and went on at [47]: "The authorities cited in par [32] of this extract demonstrate that, in the realm of negligence, (a) a non-delegable duty of care will (like a duty based on vicarious liability) be imposed on categories of persons regardless of personal fault on their part in the circumstances giving rise to the plaintiff's injury; but (b) the plaintiff must prove that damage was caused by lack of reasonable care on the part of someone (not necessarily the defendant) within the scope of the relevant duty of care". 42 In Lepore's case, the issue was whether the State of New South Wales was liable for acts of physical harm to, and/or sexual abuse of, pupils in a State school by a teacher employed therein in the absence of any lack of care on the part of the school authority. The High Court held that the school authority's non-delegable duty to take care for the safety of its students did not extend to liability for intentional criminal acts, and its liability for such acts was to be determined on the basis of its vicarious liability for the acts of its employees and whether they were at the relevant time acting within the scope of their employment. 43 The majority pointed out that the non-delegable duty is a duty to take care, not a duty to ensure safety from all harm. For example, Gleeson CJ at [22] said: "In the context of employment, for example, a duty to take reasonable care for the safety of workers cannot be discharged by delegation; but delegation does not transform it into a duty to keep workers free from all harm. A duty to see that reasonable care is taken for the safety of workers is different to a duty to preserve them from harm". 44 See also Gummow and Hayne JJ at [261], Kirby J at [291]. 45 What emerges from the cases is that the employer's duty to take reasonable care for the safety of its employee (including providing a safe place of work) is non-delegable in the sense that the employer cannot avoid responsibility by placing the employee in a situation where the control of the system or place of work is in the hands of an independent contractor, but, notwithstanding the absence of direct fault on the part of the employer, it will still be liable if the employee is injured as a result of a failure to take reasonable care on the part of the independent contractor or some person (such as one or more of its employees) for whom the independent contractor is liable. There must be a failure to take reasonable care on the part of someone within the scope of the relevant duty of care. 46 Senior Counsel for Residual Assco drew my attention to a more recent decision of the Court of Appeal, Lipman Pty Limited v McGregor & ors [2004] NSWCA 6 where the employer was exonerated and the independent contractor held wholly responsible on the ground that the plaintiff's injury was wholly due to the negligence of the independent contract. TNT Australia Pty Ltd v Christie was distinguished on its facts, but there was no discussion of principle and, in particular, it was not explained why the principle expressed in TNT Australia Pty Ltd v Christie by Mason P at [47] was not applied, namely that the employer was liable provided there was some failure to take care on the part of the independent contractor or those for whose acts it was responsible. With respect, I consider the principle is correctly stated in TNT Australia v Christie and should be applied accordingly. 47 It follows that in the present case, the employer is liable for breach of its non-delegable duty to the plaintiff to take reasonable care for the safety of the latter by reason of the negligence of ADI or persons for whom it is responsible in rendering the access to the lower level of the vessel unsafe by removing and not replacing the floor plate at the foot of the ladder. 48 It was submitted that there was nothing the employer could have done because the plaintiff was the person coming around to check that everything was safe. He was working under Mr Edwards, his immediate supervisor, and there was nothing Mr Edwards could have done to protect the plaintiff other than carry out the safety inspection himself. However, this is the point of the "non-delegable" duty. The employer is held liable, not because of any failure on its part, but because of the failure of someone else for whose failure it cannot avoid liability.

WHO WAS THE EMPLOYER 49 Each of the first and third defendants (Residual Assco and Waratah) admitted on the pleadings that it was the employer of the plaintiff at the relevant time. That fact of itself would justify entering judgment against each of them for so much of the plaintiff's damages as are payable by the employer; but this would lead to inconsistent judgments, which should be avoided if possible. 50 Moreover, Mr Gleeson QC and Ms Kumar who appear for Residual Assco also appear instructed by the same solicitors, for QBE Workers Compensation (NSW) Ltd (QBE), who is a defendant to the Second Cross-claim brought by Waratah, claiming indemnity under its Workers Compensation policy, for which liability is denied on the grounds that, although QBE has agreed to indemnify Waratah, the true employer of the plaintiff for the purposes of the Workers Compensation Act 1987 (the Act) was Residual Assco, and therefore QBE is not liable under the policy. They further submit that although Residual Assco was the employer for the purposes of the Act, Waratah was the employer at common law, and therefore Residual Assco owed no duty of care to the plaintiff. It therefore becomes critical to determine who was the plaintiff's employer at the relevant time.

51 Mr Mercer, who is now the Port Manager, Sydney for the Adstream Marine Group of companies gave evidence that in 1996, he was the Manager for Waratah but he received his wages from the Adelaide Steamship Industries Pty Limited, which was the managing agent for Waratah, who in turn debited Waratah for all costs. He said that the payment of wages by Adelaide Steamship Industries and the reimbursement of it by Waratah were all handled by Head Office in Adelaide, and he was not directly involved in that process. In cross-examination, he explained that Adelaide Steamship Industries Limited was a wholly owned subsidiary of the Adelaide Steamship Co Limited, that formerly Waratah was owned jointly by the Adelaide Steamship Co Limited and Howard Smith Industries, and that in 1996 it had no employees, but that all its marine and administrative staff were employed by Adelaide Steamship Industries Pty Limited. 52 He said that Adelaide Steamship Co Limited (the parent company) underwent a process of reconstruction, and in about March 1997, the employees working for Waratah were transferred to that company and that Exhibit D related to such transfer. Exhibit D is a letter written by Waratah, signed by Mr Mercer dated 20 March 1997 to the plaintiff referring to a proposed transfer of marine assets out of the Adelaide Steamship Co Limited and its associated companies and goes on to advise that this means that he "will no longer be employed by Adelaide Steamship Industries Pty Limited (ASI) and instead…will be employed by Waratah Towage Pty Limited". In the reconstruction, after the transfer of employees and other assets, Adelaide Steamship Industries Pty Limited was renamed Residual Assco Pty Limited (the first defendant). 53 He was asked about a number of other employees and he said that Craig Allan Perkins worked for him and looked after general administration including worker's compensation, and was authorised to complete employer's reports of accidents, whilst Kim Kilroy was the Financial Controller for Waratah, Adelaide Steamship Industries and for all the marine companies in the group, and that Neil Edwards was, at the time, Fleet Superintendent of Waratah, and it was his duty to liaise with the contractors for the lay up to set up the work program with ADI. 54 Exhibit R 1 consisted of Group Certificates for the plaintiff for the years ended 30 June 1996 and 1997. They showed him as employed for "various periods" and the employer as Adelaide Steamship Industries Pty Limited. On the other hand, the correspondence shows a somewhat different picture. 55 On 29 August 1995, the plaintiff wrote to Waratah seeking employment and received a reply dated 28 December 1995 signed by "N. Edwards, Superintendent Engineer" on the letterhead of Adelaide Steamship Industries Pty Limited (in small type) "as Managing Agents" Waratah Towage Pty Limited (in heavy type). The letterhead also featured a logo of a ship's funnel with a "W" on it (presumably a logo for Waratah, rather than for Adelaide Steamship Industries) and the ACN number for Waratah. That letter offered employment on a casual basis within the companies (sic) relief crew commencing 28 December 1995 (See Ex W 1). 56 On 31 May 1996, Mr Edwards again wrote to the plaintiff (and it was agreed that this and the next 2 letters were probably written on the same letterhead) advising that, as the roster currently in operation was on an interim basis, the plaintiff's "employment status with Waratah" remained as originally offered and would be reviewed when agreement was reached on a permanent roster. A further letter in the same terms was written on 5 June, again signed by Mr Edwards. Then on 3 July 1996, a further letter was written, signed by Mr Mercer, offering permanent employment and requesting his advice by return mail, which he provided the following day in a letter addressed to "The Manager, Mr Warren Mercer, Waratah Towage Pty Ltd" (Ex W 6). 57 After the accident, a number of reports were completed, all of which showed Waratah as the employer. These were signed not only by the plaintiff (Exs W 2, W 3) but also by Mr Perkins, the Traffic Officer, whom Mr Mercer said was authorised to sign such reports on behalf of "the company" (Exs W 3, W 7) and also by John Mathieson, also described as a Traffic Officer (Ex W 8). The contract for the laying up of the vessel was made with ADI by Waratah (Ex M). 58 Reference should also be made to Exhibit W 13, being documents produced by QBE. Not only are all the references to the employer in the name of Waratah, but it contains a number of Declarations relating to wages paid to workers made by, or on behalf of, the Employer. These are all signed by Kim Kilroy, who describes himself as Company Secretary of Waratah (in the space provided for the employer's name), and certifies the attached declaration of wages paid to workers "employed by the employer" for the relevant year. 59 In Dalgety Farmers Limited t/a Grazcos v Bruce (unrep - CA - 3 August 1995, BC 9505124), a case concerning which of two entities was the employer of the worker, Kirby P said (BC 9505124 at 12): "In disputes concerning the existence of employment type relationships and the characterisation of those relationships, the proof of paper documentation, although relevant, will not necessarily be determinative… In determining whether a contract of service has been entered into, and if so with whom, it is necessary to look at the circumstances of the engagement and to ascertain who it was that offered employment, and whether the worker accepted that offer. To determine whether what ensued was indeed employment (in the sense of a contract of service) it is necessary to look at the whole of the relationship". 60 In that case, his Honour had regard to the paper arrangements, who paid the wages, who exercised control over the worker and who paid the insurance premiums, all of which pointed in the one direction. Clarke and Cole JJA agreed, although Clarke JA expressed the view that where the only question is whether a worker is employed by A or B, there is much to be said for the view that the question should be answered by reference to the "control" test. 61 In Visscher v BHP Petroleum Pty Ltd [2002] NSWSC 65, one of the issues was whether the plaintiff was employed by BHP Petroleum Pty Limited (Petroleum) or BHP Transport Pty Limited (Transport). The plaintiff's engagement arose out of correspondence between him and Petroleum, although a Group Certificate was issued in the name of "The Broken Hill Proprietary Co Ltd-Sea Going" although there was no company by that name, but it included the company number of Transport, and the employment declaration form of the plaintiff disclosed the employer's name as Transport. There was evidence that Transport provided various support services, including payroll services, for companies in the BHP group, including Petroleum. It was held that although administrative processes were carried out by Transport, the wages were in fact paid by Petroleum and it was that latter company which was the plaintiff's employer. 62 Another case where the name shown on the Group Certificates was disregarded in the light of the other evidence as to engagement is Australian Insurance Employees v W P Insurance Services Pty Limited (1982) 1 IR 212. 63 In the present case, although the evidence of Mr Mercer, the Group Certificates and the letter Exhibit D tend to suggest that the first defendant (then called Adelaide Steamship Industries Pty Limited) was the employer, this is by no means overwhelming nor decisive. The payment of wages by the first defendant for which it was reimbursed by Waratah is consistent with either the first defendant being the employer and lending the employees to Waratah in return for the reimbursement, or the first defendant acting as agent for Waratah to employ the workers and/or acting as agent to perform payroll services. 64 On the other hand, the plaintiff sought employment from Waratah, was offered employment by Adelaide Steamship Industries Pty Limited as agent for Waratah (a named principal) and accepted such employment by writing to Waratah - his letter of 4 July 1996 (part Ex W 6). This correspondence in itself strongly points to a contract of service between the plaintiff and Waratah. Thereafter Waratah, which was the operating company with the tugs, exercised control over his work and the manner of his doing it. 65 Not only that, but Waratah and Residual Assco both regarded the plaintiff as employed by Waratah, in that in the Employer's Reports of Injury and the WorkCover Accident Report (Exs W 3, W 7 and W 8) signed by persons authorised to do so on behalf of "the employer", such employer is shown as Waratah. Finally, Waratah took out and maintained workers compensation insurance in the years leading up to the time of the plaintiff's accident (Ex W 13) and for that purpose, provided annual wages, declarations certifying the number of its marine employees and wages paid by it as employer, notwithstanding Mr Mercer's evidence that at the relevant time, Waratah had no employees. 66 It was submitted on behalf of Residual Assco and QBE that the correspondence to which I have referred (Ex W 6) and the subsequent events could not constitute a contract of service between the plaintiff and Waratah because there was no consideration for the contract, and in any event, the wages were paid by Residual Assco and not by Waratah. In this regard, I was referred to Teen Ranch Pty Ltd v Brown (1995) 11 NSWCCR 197, but that case related to a volunteer with a non-profit Christian organisation which provided camps for teenagers where the provision of accommodation and board and use of the camp facilities, but no wages, was held not to be in any sense consideration for a bargain under which the volunteer agreed to provide his services, and in any event, the arrangements between the parties did not evince a clear positive indication that legal relations were contemplated. 67 I accept the proposition that there cannot be a contract of service or any other form of contract without consideration, but in my view, it was clearly an implied term of the contract evidenced by the correspondence referred to that in consideration of performing the work, the plaintiff would be paid a reasonable wage.

68 In these circumstances, I am satisfied that both at common law and for the purposes of the Workers Compensation Act 1987, a contract of service existed at the date of the plaintiff's accident between the plaintiff as worker, and Waratah as employer, and that Residual Assco's payment of wages was as agent for Waratah.

CONTRIBUTORY NEGLIGENCE 69 All defendants have pleaded that the plaintiff was guilty of contributory negligence alleging that he failed to keep a proper look out, particularly when entering the hatchway and descending the ladder, failing to use the torch he was carrying at the time he entered the hatchway, and failing to maintain "three point contact" with the ladder at all times whilst making his descent. It was also submitted that he should have anticipated that the floor plates would be lifted in the workshop in order to gain access to the bilge, and that this would follow the lifting of the plates in the engine room. 70 In my opinion, the plaintiff was not guilty of contributory negligence. He had no reason to believe that the floor plates in the workshop and in particular, a single floor plate at the foot of the ladder, would be lifted on that day and not replaced, or on any other day without him being notified. He, along with Mr Edwards, was acting as owner's representative, and the contract documents provided for the owner's representatives to be kept informed as to the progress of the work. He knew the floor plates in the engine room had been lifted, and had taken precautions, by locking doors, etc, on account of that to deny access to the engine room and workshop except by means of the hatchway and ladder. 71 I reject the claim that he failed to keep a proper look out or use his torch. The hatchway was of limited circumference, he was confronted with the large (15 inch) deck beam at the top of the hatch, and the hoses and other leads were intruding into it. The space available for him to look whilst on the ladder was very limited, and I have difficulty in comprehending how he would be able to see the missing plate simply by looking down, as his view would be obstructed by his own body. With all the other engine room plates in place, he would have no reason to expect that the one immediately under him on the ladder would be missing. 72 In any event, the plaintiff was a workman engaged in, and concentrating on, the duties he was required to perform, pre-occupied with the matters in hand, and in those circumstances, the courts will not readily attribute contributory negligence: McLean v Tedman (1984) 155 CLR 306 at 315, Polycarpou v Australian Wire Industries Pty Ltd (1995) 36 NSWLR 49 at 68-9. 73 It was submitted, particularly on behalf of ADI, that the plaintiff failed to take reasonable care for his own safety in not maintaining "three point contact" with the ladder at all times. The practice of maintaining "three point contact" with the ladder is well established, and was referred to by Mr Burge in his evidence. However, as I understand it, it is a guide for ascending or descending a ladder and can hardly have application to stepping off the ladder at the end of the descent. It seems to me that when the plaintiff stepped off the last rung of the ladder and put his weight on his descending leg, expecting it to be met by the floor plate, there was no floor plate there and he consequently overbalanced into the hull area. He may have had "three point contact" (two hands and the other leg) with the ladder at the time, but even if he did not, he at least had two point contact (one hand and the other leg). It was not the failure of the plaintiff to maintain "three point contact" which led, or contributed, to his accident, but the removal and non-replacement of the single floor plate by ADI.

APPORTIONMENT OF LIABILITY 74 As I have already indicated, the cause of the plaintiff's injuries was the negligence of the employees or sub-contractors of ADI in removing the single floor plate at the foot of the ladder, and not replacing it before the end of the shift or notifying the plaintiff or Mr Edwards that it was missing. ADI must accordingly, bear the major responsibility for the plaintiff's injuries. 75 Waratah, on the other hand, owed the plaintiff a non-delegable duty of care. It is liable because of that duty and the failure to take care by the employees and sub-contractors of the second defendant. The standard of care owed by an employer to an employee is a high one and accordingly, notwithstanding any particular lack of care on the part of Waratah or its employees, that company must bear a significant responsibility. Balancing these considerations, I assess the responsibility of ADI at 85 percent, and the responsibility of Waratah at 15 percent.

THE CROSS-CLAIMS 76 The First Cross-claim is by Waratah against QBE for indemnity under a policy of workers compensation insurance, which QBE denies. Exhibit W 13, which is a collection of documents produced by QBE, contains constant references to policy no SF 0009908, including Wages Returns, Premium Notices and other correspondence, all in the name of Waratah as the insured, together with a copy of the policy, which I am satisfied complied with the requirements of s 155 of the Act. It provides for indemnity in respect not only of compensation under the Act, but also to any other amounts which the employer becomes liable to pay independently of the Act, i.e. common law damages. 77 The policy was in force at the time of the plaintiff's injury and I have already held that Waratah was the employer of the plaintiff within the meaning of the Act. It is not without significance that QBE originally admitted liability for the claim (Exs W 3 and W 9) although liability was subsequently denied, apparently on the basis that Residual Assco was the plaintiff's employer for relevant purposes and the policy was in the name of Waratah. It follows that Waratah is entitled to indemnity under the policy and to judgment in its favour on the first cross-claim. 78 The Second Cross-claim by Waratah names as Cross Defendants Residual Assco and ADI but in the light of my finding that Residual Assco was not the plaintiff's employer, Waratah does not press the cross-claim against it. The cross-claim against ADI is for contribution or indemnity as a joint tort feasor pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 and/or for indemnity pursuant to the contract between them. There is also a claim for damages for negligence, but I cannot see how such claim adds anything to the other claims, and it may accordingly be disregarded. 79 It is convenient to deal with the contractual claim first. Waratah relies in this regard on clause PR 13 of the Specification forming part of Ex M. The clause is to be found in Waratah's Specification for Docking of the "Careening Cove" forwarded to the Tender Manager of ADI under cover of letter of 23 July 1996 inviting ADI to tender for the work. The tender by ADI was submitted under cover of letter of 2 August 1996, which specified that the terms and conditions were to be in accordance with ADI's Terms of Contract, a copy of which was attached. ADI's tender was apparently successful and so Waratah's Specification and ADI's Terms of Contract both form part of the contract between the parties (See Ex M). 80 In the context of the Specification, the term "owner" refers to Waratah and "contractor" refers to ADI - see clause PR 1. Clause PR 13 headed "Contractor's Responsibilities" is as follows: "Contractors will observe the statutory and common law obligations as provided by the law of the Contractor's State and the contractor shall indemnify owner from any breach thereof. Contractors shall also indemnify owner in respect of any claim which may be made upon the owner by the sub-contractor or contractor's workmen for injuries which may be sustained from any causes whatsoever". 81 Clause 10.1 of the ADI Terms of Contract, so far as material, is as follows: "The owner indemnifies and holds harmless ADI in respect of all actions, suits, proceedings, claims, demands, loses, cause, charges and expenses arising out of or incurred by reason of… (ii) Any loss or damage to property or injury or death to persons caused or contributed to directly or indirectly by the use of the vessel or the performance of the work and except where such loss, damage, injury or death was caused by the negligence of ADI, its servants, agents or contractors in carrying out the work (my italics)". 82 It was submitted on behalf of ADI that the first paragraph of clause PR 13 should be read down in the context of the second paragraph where there is specific indemnity in respect of injury to ADI's own employee so that, as I understand it, the indemnity would only apply if any of ADI's sub-contractors or employees were to sue Waratah. I can see no basis for such reading down of the clear words of the first paragraph. The first paragraph requires ADI to observe statutory and common law obligations provided by the law of State, that is New South Wales, and provides that ADI will indemnify the owner for any breach thereof. One of the common law obligations of ADI was to take reasonable care for the safety of other persons working on the vessel, including the plaintiff. It was in breach of that obligation and accordingly is required by the clear wording of the clause to indemnify Waratah for any liability the latter might have in that respect. 83 The second paragraph of the clause deals with a different matter namely, any claim made by a contractor or employee of ADI for injuries sustained in which case, if such person recovers judgment against Waratah, ADI is required to indemnify Waratah. There is no conflict between the two clauses, and I can see no reason why the first paragraph of clause PR 13 should not be given its ordinary meaning.

84 Finally, I see no conflict between clause PR 13 and clause 10.1.(ii) of ADI's Terms of Contract as the words quoted in italics above expressly except from the indemnity in favour of ADI the case where the injury or death is caused by the negligence of ADI, its servants, agents or contractors. 85 For these reasons, I am satisfied that Waratah is entitled to a full indemnity from ADI for all amounts which Waratah is required to pay by reason of the judgment against it. 86 In addition, ADI as a joint tort-feasor is liable to make indemnity or pay contribution to Waratah. At common law, where both defendants would be primarily liable to the plaintiff for the whole of the damages, Waratah would be entitled to contribution to the extent of 85 percent of such damages; but regard must be had to the provisions of s 151Z (2) of the Act. DAMAGES 87 As a result of the accident, the plaintiff suffered injuries to his left lower leg, left knee, bruising to the right thigh and an undisplaced fracture of his left ring finger. He left work shortly after the accident and attended a funeral. During the night, his left lower leg became sore and swollen but he returned to work the following day (8 August) when he reported the accident to his immediate supervisor, Mr Edwards. 88 On Saturday 10 August, he saw Dr Artinian at the Warringah Mall 24 hour Medical Centre but continued working until 14 August when he attended Sydney Hospital after work and was prescribed antibiotics. At this stage, his leg was swollen and sore, and it turned black with the bruising. He was also feeling dizzy, run down, nauseous and a bit spaced out. 89 He next saw Dr Wynter, a partner of his usual general practitioner Dr Armstrong, at Dee Why on 5 August, and Dr Wynter lifted a scab on the left shin disclosing an ulcer and put him on antibiotics. He told him to take a week off work. It would seem that the condition of his lower left leg was diagnosed as cellulitis at about this time. The plaintiff returned to see Dr Wynter on 11 September, when the latter debrided and cleaned the wound, and the plaintiff remained off work until 18 November 1996. Dr Wynter referred him to Dr Michael Morris, who noted there had been several episodes of cellulitis and initiated the use of a Tubigrip stocking. After this time, he also appears to have come under the general care of Dr Armstrong.

90 During 1997, the plaintiff developed increasing pain and weakness in his left knee particularly when he got back to work and was ascending and descending stairs until about 1 September 1997, when his knee gave way on the stairs of the tug "Woona". He went off work and was seen by Dr Chesterfield-Evans who referred him to Dr Daniel Biggs, Orthopaedic Surgeon, who diagnosed patello-femoral pain and referred him for physiotherapy to rehabilitate the thigh muscleture, and over this period he had a number of odd days off on account of his knee. He was also during this time, continuing to feel fatigued and nauseous.

91 He had another bad attack of cellulitis in July 1999. For a period of 1-2 weeks, he was not feeling well with symptoms of being nauseous and at times feeling dizzy. Then on 27 July, he woke to find he was aching all over including his back and legs. On his way to work he started shivering, his left leg was swollen, red, hot and itchy and he had raised red lines up the inner thigh to his groin. He was seen by Dr Armstrong and was off work until 8 August. 92 Then in late 1999, he developed an ulcer on the plantar region of the left foot for which Dr Armstrong referred him to Dr Ackroyd, Vascular Surgeon, who described it as another bout of cellulitis. On December 1999, he injured his left shoulder in the course of his work. He had some chiropractic treatment and later physiotherapy but took no time off work. During this time, he was continuing to experience the intermittent symptoms of fatigue, dizziness and nausea, his leg ached if he stood on it for long periods, and at times it would get itchy with a burning sensation on the outside. He continued to see Dr Armstrong, who prescribed antibiotics and if the symptoms flared up, rest and elevation. 93 He had a further bad attack of cellulitis at the end of July 2000, which resulted in his admission to Manly Hospital from 28 July to 1 August 2000, and he was off work from 27 July to 21 August 2000, after which he continued feeling fatigued, ill and dizzy, and had the odd day off. Up until this time, he felt his employer was unsympathic to his position and in November 2000 and again early 2001, he was told by Warren Lloyd, the Environmental Health and Safety Manager of Waratah, that the company was considering dismissing him on account of the amount of time he had off, although there was talk also of retraining. 94 On 10 March 2001, he injured his left shoulder whilst working overhead. He was put on light duties in the office and came under the care of Dr Graeme Macdougall, Orthopaedic Surgeon. Dr Macdougall diagnosed a symptomatic partial rotator cuff tear with impingement. He underwent surgery on 17 August 2001 and resumed work on light duties on 28 September. At review on 1 May 2002, Dr Macdougall considered that he was still not fit to return to normal duties as a Marine Engineer, and would be likely to require work which did not involve much heavy lifting overhead; but at final review on 21 August 2002, certified him fit to resume normal pre-injury duties so far as his shoulder was concerned. 95 He continued meanwhile to have ulcers in his left leg and continued on antibiotic treatment. He first saw Professor Boughton, Infectious Diseases Consultant on 27 February 2001. He was depressed about the continuing cellulitis and his employer's attitude, and in November 2001, Dr Armstrong referred him to a psychiatrist, Dr Anderson for treatment. 96 On 7 December 2001, he was seen by Dr Light for the purpose of renewing his Australian Maritime Safety Authority Certificate of Fitness for work at sea, but Dr Light refused the certification on account of his ongoing cellulitis, and did so again on 23 April 2003. 97 On 28 April 2002, Waratah terminated his employment on account of the condition of his left leg and his failure to obtain the Certificate of Fitness for work at sea. This left him very confused and depressed. 98 The plaintiff said that since the termination of his employment, his leg has continued to flare up from time to time, but not as often as previously, and when it starts to get itchy and hot, he takes it easy for a few days and elevates his leg, and it tends to settle down. On the other hand, if he knocks it, he can become ill within 10 to 15 minutes and be out of action for 3 to 5 days. These flare ups come every 3-5 months. 99 He is still unable to walk long distances without his leg getting sore and cramping up. In addition, his stamina to do things is low and he is easily fatigued. The family were in the habit of going to the beach a fair bit, but for a number of years he did not join them, although he has now returned to attending the local Nippers Club with his children, and has joined a winter swimming club. He has also returned to snorkelling. He used to be active around the house and garden but no longer mows the lawn or does landscaping because such work aggravates the condition of his leg. He has had to employ others to lop trees and complete building a deck on their house, and because of his reduced activity, he has put on weight. 100 After his dismissal, he enrolled in a Real Estate course at the local TAFE in July 2002, and subsequently a Real Estate Diploma course which he completed in June 2003. On 21 October 2003, he commenced work as a Property Officer with Australian Real Estate at Balgowlah, working 22 hours a week, and is now earning $258 per week before tax plus a car allowance of $130 per week. He continues to be under the care of Dr Armstrong and is taking the anti-depressant Zoloft daily. 101 Reference was made in cross-examination and in some medical reports to the fact that when younger, the plaintiff suffered from migraines, that he had a back injury with 5 weeks off work in 1990, and nasal surgery in 1992 and sleep problems in 1994; but I am satisfied that none of these were disabling him in 1996 to any significant degree, and that all his disabilities and restrictions since the accident (except the left shoulder injury from which has now recovered) are due to his accident on the "Careening Cove" on 7 August 1996. 102 His wife confirmed his reduced activity in the house, garden and at the beach since the accident, and how he seems always tired and described changes to his personality, that he has become moody, less tolerant of noise and of the children, angry and at one stage things got so bad between them that she arranged for him to go and see a marriage guidance counsellor, but then he told her he had already been to see a psychiatrist. Since then, his condition has improved since he has been taking the Zoloft. She said that since he started working in Real Estate and the daily doze of Zoloft was increased from 100 to 150 milligrams, he has become more easy going, but less organised. 103 His continuing physical problems are his left knee and the recurring cellulitis in his left lower leg. Professor Boughton described cellulitis as inflammation of the skin due to bacterial infection mainly of the deeper layers of the skin, the fat and muscle underneath, most commonly caused by haemolytic streptococci which in turn is a very active pathogen, which can produce lots of toxins and has the ability to spread widely if a lesion on the leg becomes infected (T 158). 104 It was his opinion, which was not challenged by any comparable medical evidence, that the plaintiff's tendency to recurrent cellulitis developed as a result of the trauma to his left leg in August 1996, and the onset of recurrences of the condition and their severity is unpredictable. He said recurrences can be triggered by things such as prolonged standing, any trauma or knock to the area, any ulcers or blisters on his leg or foot. Feelings of fatigue, nausea and general malaise are characteristic of ongoing cellulitis. 105 In his opinion, the plaintiff was permanently unfit for work in a marine engineering environment because of the need to avoid any knocks or trauma to his left lower leg, a difficulty aggravated by his weak left knee particularly going up and down stairs, and even standing for any length of time could predispose to a recurrence of the infection. In addition, the work environment on a vessel is often affected by fuel oils, grease, grime, solvents, etc which could irritate the tissues and carry infection. He considered the risk of cellulitic reactivation remains indefinitely, and whatever employment the plaintiff undertakes, he will be disabled from time to time. He also needs to continue wearing protective stockings. Dr Adler considered there was a possibility of osteoarthritis developing in the future in his left knee. 106 The plaintiff has also been under the care of Dr Peter Anderson, psychiatrist since November 2001. Dr Anderson diagnosed him as suffering clinical depression of a severe degree reactive to his disability and its implications. Dr Anderson initiated psychotropic medication (Zoloft) and counselling sessions. 107 In his last report (2 February 2004), he noted that he had been seeing the plaintiff about once a month and he had recently increased the daily dose of Zoloft from 100 to 150mg daily. He said the plaintiff has continued to be symptomatic and is left with continuing symptoms of a depressive illness with impairments in the areas of motivation, stamina, mood concentration, memory and ability to handle stress. He recommended continuing consultations every two months for approximately 2 years and continuing anti-depressant drug therapy on an indefinite basis. 108 Dr Robertson, another psychiatrist who saw him in 2002, also diagnosed a Major Depression, probably with melancholic features. He considered the plaintiff was likely to make a full recovery from his depression, but as Dr Anderson has been more involved in his treatment and has seen him more recently, I prefer Dr Anderson's opinion. Dr Shand, psychiatrist consulted on behalf of the third defendant, diagnosed an Adjustment Disorder with Depression and anxiety, secondary to his medical condition. He described the prognosis as "fairly good in the absence of further stressors". 109 The plaintiff was born on 25 June 1955 and is now almost 49 years old. I note that the damages against the second defendant (ADI) are to be assessed on common law principles and those against the third defendant (Waratah) in accordance with Part 5, Division 3 of the Act. The proceedings were commenced on 31 August 2001, i.e. prior to the commencement of the Workers Compensation Legislation Further Amendment Act 2001 (27 November 2001). As at the date of the injury, the amount prescribed under s 151G(3) was $220,100 and under s 151H (2A) was $51,800. I am satisfied that the plaintiff's injury was a serious injury as defined in s 151H, and I assess his damages for non-economic loss at 30 percent of a most extreme case, namely $66,030. I assess his general damages at common law at $90,000 of which I attribute $45,000 to the past; and I allow interest on this amount for 7.8 years at 2 percent p.a., namely $7,020. 110 As to loss of earnings to date, there was no loss until he was dismissed by Waratah on 28 April 2002. As I understand the position between the parties, there is no dispute that the plaintiff's wage loss to date should be calculated in accordance with the schedule provided with the plaintiff's written submission based on the comparable earnings of Mr MacDonald (Ex O) which includes workers compensation payments made (including tax thereon) and allows for his earnings since he commenced employment with Australian Real Estate. These amounts come to $130,815 inclusive of workers compensation or $114,395 without that component. Adding a further 13 weeks at $1,070 ($1,300-$230), namely $13,910, one arrives at $144,725 inclusive of compensation and $128,305 without. 111 I allow interest on this latter amount at common law only that is $128,305 at 4.5% p.a. for 2.3 years, namely $13,280. I also allow past loss of superannuation on $128,305 at 8% for 2.3 years, $23,608 and at common law only, interest on this amount at 4.5% for 2.3 years, namely $2,443. 112 As regards loss of future earning capacity, the plaintiff seeks to rely on the earnings of Mr MacDonald as disclosed by Ex O as a comparable employee. He currently earns approximately $1,300 net per week as a Marine Engineer with Waratah. He is older than the plaintiff and with more seniority in the company, but he said that entitled him to no additional money, but only to choice of the vessels. I accept him as a comparable employee. 113 The plaintiff is presently earning approximately $230 net per week for 22 hours' work. Subject to the vicissitudes of the rental market and as he acquires more experience, those hours will probably increase, but it would be pure speculation to infer that he would in time achieve a promotion to Property Manager or such like. Moreover, according to Professor Boughton, he is likely to have recurrent attacks of cellulitis necessitating time off work, and so long as he is employed (as at present) as a casual, he would not be entitled to sick pay. Balancing these considerations, I assess his residual earning capacity at $300 net per week and his consequent loss as $1,000 per week. He is now 49 years old and I allow this amount capitalised over 16 years at 5 percent under the Act discounted by 15 percent for vicissitudes namely $492,575, and at 3 percent at common law, similarly discounted, $566,525. 114 Mr Crossle gave evidence of other occupations that he said would be suitable for the plaintiff, but admitted he had never placed a disabled worker in a job with a new employer. I found his evidence unhelpful; in particular he did not have sufficient regard to the plaintiff's continuing disabilities or the reluctance of employers to take on injured workers as fresh employees. I am not satisfied that the plaintiff has a greater earning capacity than he is now utilising. Various occupations suggested to him in cross-examination involved extensive standing, walking, climbing on ladders or steps, and he would not be suitable for working on an inner harbour ferry because of the risk of infection from fumes, grime and other germs. Any such job would also involve him being almost continuously on his feet and climbing ladders, etc. 115 As set out in the plaintiff's schedule and, as I understand it, not really in dispute, I allow loss of future superannuation at $73,783 under the Act and $85,350 at common law and also future out of pocket expenses, $35,776 under the Act and $44,820 at common law. 116 Finally, there is a claim for nursing and domestic assistance currently performed by his wife. Apart from the fact that he is no longer able to mow the lawn or landscape the garden, and tradesmen were needed to finish some renovations, there is very little evidence to support the claim. A report (part Ex N) was prepared by Lois Rothwell, Occupational Therapist detailing what she saw as his needs as to personal care, but this was not supported by evidence from his wife who has apparently provided such care. 117 The only evidence from the plaintiff on this issue was (T 56) that he was visited and interviewed in his home by Ms Rothwell, and he cooperated with her in relation to the assessment of his needs. Ms Rothwell prepared a very lengthy report, no doubt at great cost, which said very little that was not otherwise in the plaintiff's evidence or the medical reports. All she said in relation to any need for personal care was (para 3.3) that generally, he is independent in his personal care but that when he has episodes of infection, he has required assistance from his wife with some personal care including showering and dressing, and the preparation of all meals, without indicating whether that was always during episodes of infection or how she converted that into 2 hours a day (paras 4.1.1 and 4.2.1). As I say, there was no evidence from the plaintiff or his wife as to precisely what she did for him, how often, or how long it took. 118 The effect of his wife's evidence was that he no longer does the gardening or helps with the vacuuming or puts the garbage out. She gave no evidence of assisting him in his personal care when the cellulitis flares up, although it may be assumed he would need some assistance at such times, but it would be rather minimal as the treatment is mainly rest and antibiotics. In respect of the past, I allow 1 hour a week for attending to the lawn and garden for 410 weeks, 3 hours a week during the periods of his major cellulitis' attacks as noted in the plaintiff's schedule (i.e. 15 weeks) and $800 for the tradesmen to complete the renovation work. The rate under the Act is $17.00 per hour and at common law $25.00 per hour. 119 The calculations are: Under the Act 455 weeks at $17.00 per hour = $7,735 plus $800 = $8,535 At common law 455 weeks at $25.00 per hour = $11,375 plus $800 = $12,175 together with interest thereon at 5% for 7.5 years = $4,566

As to the future, I allow the lawn mowing, one hour per week i.e. 52 weeks per year for 31 years (future life expectancy) capitalized at the appropriate rate. I also consider it appropriate to make some small allowance for personal care on those occasions when he is disabled by flare ups in the cellulitis, but as the timing, frequency, length and severity of such flare ups cannot be predicted, it is impossible to calculate this factor on a weekly or annual basis; and I therefore allow $6,400 under the Act and $10,000 at common law. By way of explanation, I note that $6,478 bears the same ratio to $10,000 as $19.24 bears to $29.70 (the current rates). 120 The total amounts allowed under this head are therefore:

Under the Act $19.24 p/w at 5% for 31 years = $16,042 plus $6,478 = $22,520 At common law $29.70 p/w at 3% for 31 years = $31,458 plus $10,000 = $41,458 121 There is no need to consider tax paid on workers compensation (Fox v Wood) as that has been brought into account in assessing the loss of wages to date. The agreed Workers Compensation payments to be deducted were agreed at the time of hearing at $40,006, including past medical expenses of $21,915. 122 The various heads of damages may therefore tabulated as follows: WC ACT COMMON LAW General damages/non economic loss 66,030 90,000 Interest on past general damages Nil 7,020 Loss of income to date 128,305 144,725 Interest on loss of income to date Nil 13,280 Loss of future earning capacity 492,575 566,525 Future out-of-pocket expenses 35,776 44,820 Past Griffiths v Kerkemeyer claim 8,535 12,175 Interest thereon Nil 4,566 Future Griffiths v Kerkemeyer claim 22,520 41,458 Past out-of-pocket expenses 21,915 21,915 Past loss of superannuation 23,608 23,608 Interest on past loss of superannuation Nil 2,443 Future loss of superannuation 73,783 85,350 Total 873,047 1,057,885 Less Workers' Compensation payments 40,006 Nil Net 833,041 1,057,885 Share of responsibility 15% 85% Provisional Verdicts 124,956 899,202

123 At this stage, I intend to stand the matter over to another date so that if necessary, the amount of some of the payments made can be brought up to date, to enable the parties to check the calculations, and to make further submissions on the application of s 151Z of the Act, the disposal of the cross-claims, and relating to costs.

FRIDAY, 25 June 2004 124 On 11 June I delivered judgment in this matter determining the issues of liability and apportionment between the relevant defendants, and assessing the plaintiff's damages under Part 5 of the Workers Compensation Act 1987 and at Common Law.

125 I then stood the matter over so that any relevant payments could be brought up to date, to enable the parties to check the calculations, and to make further submissions on the application of s 151Z of the Act, the disposal of the cross-claims and relating to costs.

126 I am now informed that there have been no further payments made to or on behalf of the plaintiff pursuant to the Act; but my attention has been directed to an error in the Table at para [122] of my judgment relating to the loss of income to date which should be $144,725 both under the Act and at Common Law. The amount of $128,305 is the amount of loss of income to date less compensation payments, on which interest on this item is calculated at Common Law (see para [111] of my earlier judgment).

127 The error referred to results and an error in the total damages under the Act which should be $889,467 in lieu of $873,047. Moreover, the legislation no longer requires the amount of workers compensation to be deducted from the amount of any judgment against the employer, although the employee is liable to repay out of those damages the amount of compensation received: s 151Z(1)(b).

128 Having regard to s 151Z, the damages payable by ADI (the non employer defendant) must be reduced by the difference between 15 percent of $1,057,885 ($158,683) and 15 percent of $889,467 ($133,420) namely $25,263, giving a net figure of $1,032,622. A recent judgment of the Court of Appeal: Felk Industries Pty Limited v Mallett & Anor (2004) NSWCA 175 that the formal judgment entered against the employer should be for the full amount of damages assessed under the Act without any apportionment.

129 The table set out in para [122] of my earlier judgment should therefore be amended to read as follows: WC ACT COMMON LAW General damages/non-economic loss $66,030 $90,000 Interest on past general damages Nil 7,020 Loss of income to date 144,725 144,725 Interest on loss of income to date ($128,305) Nil 13,280 Loss of future earning capacity 492,575 566,525 Future out-of-pocket expenses 35,776 44,820 Past Griffiths v Kerkemeyer claim 8,535 12,175 Interest thereon Nil 4,566 Future Griffiths v Kerkemeyer claim 22,520 41,458 Past out-of-pocket expenses 21,915 21,915 Past loss of superannuation 23,608 23,608 Interest on past loss of superannuation Nil 2,443 Future loss of superannuation 73,783 85,350 Total 889,467 1,057,885 Share of responsibility 15% 85% Less adjustments under s 151Z Nil 26,263 Judgment $889,467 $1,032,622

130 The various cross-claims were dealt with in my earlier judgment at paras [76] to [86]. 131 As to costs, the second and third defendants should pay the plaintiff's costs in the proportion that I have held them responsible for the plaintiff's injuries.

132 As has been pointed out on behalf of the second defendant, the best part of a day was taken up with issues relating to who was the employer of the plaintiff at the relevant time and the liability of the defendant to the first cross-claim, a matter of no concern to the second defendant. For this reason, the plaintiff's costs payable by the second defendant should be on the basis of a seven-day hearing, not an eight-day hearing.

133 As to the first defendant, it was in the same interest and represented by the same counsel and solicitors as QBE, the defendant to the first cross-claim, whom I have held liable to indemnify the third defendant. For this reason there should be no order for costs in favour of the first defendant, but QBE should pay the costs of the third defendant's cross-claim against it.

134 As to the costs of the second cross-claim, there should be no order for the costs of Residual Assco, the first defendant to the second cross-claim, and, as Waratah has succeeded on its cross-claim against ADI, it should have its costs of the cross-claim.

135 I note that the claim for contractual indemnity, as opposed to the claim for contribution as a joint tort feasor, was only made by amendment on the first day of the trial. The claim for contribution would have succeeded in any event to the extent of 85 percent and, apart from drafting and filing of pleadings, the additional costs of the cross-claim against ADI would be minimal in any event.

136 In relation to the removal of the proceedings into this Court, an order was made at the time they were removed which, in effect, amounted to the costs for the summons for removal being the plaintiff's costs in the cause.

137 As to the costs occasioned by the vacation of the special fixture in the District Court which became necessary when the proceedings were removed into this Court, I consider that the plaintiff left the application for removal rather late and the other parties should have the costs occasioned by the vacation of the District Court hearing date, but on the basis of a one day hearing, not the costs of a five day hearing.

138 I therefore make the following orders: On the plaintiff's statement of claim, 1. I direct the entry of judgment for the first defendant and make no order as to costs. 2. I direct the entry of judgment for the plaintiff against the second defendant for $1,032,622 and order the second defendant to pay 85 percent of the plaintiff's costs assessed on the basis that the hearing occupied seven days and not eight days. 3. I direct the entry of judgment for the plaintiff against the third defendant for $889,467 and order the third defendant to pay 15 percent of the plaintiff's costs. On the first cross-claim (that is, by Waratah against QBE), 4. I direct the entry of judgment for the cross-claimant for $889,467 plus the third defendant's costs of defending the plaintiff's claim on an indemnity basis, and I order the cross-defendant to pay the cross-claimant's costs of the cross-claim. On the second cross-claim, 5. I direct the entry of judgment for the first cross-defendant against the cross-claimant and make no order as to costs as between those parties. 6. I direct the entry of judgment for the cross-claimant against the second cross-defendant for $889,467 plus 15 percent of the plaintiff's costs of the proceedings and order the second defendant to pay the cross-claimant's costs of the cross-claim. As to the costs reserved by his Honour Judge Garling in the District Court in respect of the vacation of the special fixture in that Court, 7. I order the plaintiff to pay the defendants' costs occasioned by the vacation of that hearing fixture, but on the basis of a one-day hearing only.

Last Modified: 07/16/2007 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.

(1995) 11 NSWCCR 197

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