REDKEN LABORATORIES (AUST) PTY LIMITED v DOCKER & ANOR

REDKEN LABORATORIES (AUST) PTY LIMITED v DOCKER & ANOR - [2000] NSWCA 100 - NSWCA 2000 case summary — Zoe

[8]

Redken engaged Achievement to conduct activities for Redken's employees. Ms Docker, one of Redken's employees, was injured in the course of these activities. Ms Docker sued Redken and Achievement to recover damages for her injury. The trial Judge found in favour of Ms Docker and damages were apportioned between Redken and Achievement. In its appeal from this decision, Redken argued that excessive damages were awarded for economic loss as the trial Judge failed to make any or adequate allowance for the fact that Ms Docker chose to terminate her employment to pursue further studies and the fact that Ms Docker would have been incapacitated for work because of her melanoma (which was not related to the accident) even if she had not been injured in the accident. In the Court below, Redken also cross-claimed against Achievement for Achievement's breach of an implied term in its contract with Redken to carry out the activities with due care and skill so as to protect, so far as possible, Redken's employees from injury. Redken claimed that it was entitled by way of damages to a complete indemnity for any sum for which it might have been found liable to Ms Docker. The trial Judge was not satisfied that the term alleged by Redken should have been implied and the cross-claim was dismissed. Redken appealed also from this decision. In relation to the damages appeal This aspect of Redken's appeal was unsuccessful, with Sheller JA (with whom Davies AJA agreed) detecting no error in the trial Judge's approach and Fitzgerald JA not convinced sufficiently that the trial Judge was wrong. Held (by Sheller JA, Davies AJA agreeing):

The question was whether, notwithstanding the intervention of the subsequent decision, the defendant's wrongful act or omission was, as a matter of common sense and experience, properly to be seen as having caused the relevant damage. Ms Docker elected to pursue further studies because she found her work, for reasons resulting from the accident, intolerable. Her injury therefore, as a matter of common sense and experience, caused her to resign and, in consequence, lose her salary. Medlin v State Government Insurance Commission (1995) 182 CLR 1, applied.
Redken made no attempt to establish by way of evidence that Ms Docker's melanoma would of itself have reduced her earning capacity or been productive of financial loss and its appeal on this point accordingly failed. Held (by Fitzgerald JA):
If the melanoma would have reduced Ms Docker's earning capacity if she had not been injured, that had to be taken into account in determining the damages to which she was entitled for past economic loss. In relation to the implied contractual term and indemnity Held (by Sheller and Fitzgerald JJA, Davies AJA agreeing with Sheller JA): The implied term of reasonable care was an incident of contracts of professional services. The acts of negligence for which Redken was liable were a direct consequence of Achievement's negligence and its breach of the implied term. Accordingly, Achievement was liable to pay to Redken by way of damages the full amount payable by Redken to Ms Docker. Astley v Austrust Limited (1999) 73 ALJR 403, applied; Oxley County Council v MacDonald (unreported) 2 July 1999, NSWCA 126, referred to; Florida Hotels Pty Limited v Mayo (1965) 113 CLR 588, applied. Held further (by Fitzgerald JA): Redken was entitled to act as between it and Achievement on the basis that Achievement would perform the contract properly. If Achievement had performed its contract, Ms Docker would not have been injured and Redken would not have become liable to her despite its own breaches of its duty to her. Legislation: Law Reform (Miscellaneous Provisions) Act 1946 Supreme Court Act 1970 Workers Compensation Act 1987

[13]

1 On 18 August 1992 the first respondent, Natasha Docker, while employed by the appellant, Redken Laboratories (Australia) Pty Limited (Redken), as its National Education Manager, was injured taking part in an outdoor exercise called the Spider's Web, which the second respondent, Achievement Concepts Pty Limited (Achievement), was conducting for Redken in the Botanic Gardens, Sydney. Achievement was a company claiming to specialise in "Outdoor Based Experiential Training and Development". Redken had engaged Achievement to conduct activities or exercises for the purpose of improving and building teamwork amongst Redken's employees during its National Sales Conference in Sydney between 16 and 18 August 1992. 2 In proceedings begun in the Common Law Division, Ms Docker sued her employer, Redken, and Achievement to recover damages for her injury. Hidden J heard the proceedings in December 1996 and March 1997. In a judgment delivered on 14 August 1998, his Honour found both Redken and Achievement liable in negligence and apportioned the responsibility between them for the purposes of s5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 at 60 per cent to Achievement and 40 per cent to Redken. In the result, and taking account of the relevant provisions of the Workers Compensation Act 1987, this meant judgment for Ms Docker against Achievement in the sum of $702,163.80 and against Redken in the sum of $574,442. 3 Redken cross-claimed against Achievement for breach of Achievement's contract with Redken to design, set up and supervise the exercises during the course of which Ms Docker was injured. Hidden J heard the cross-claim in September 1998. Redken claimed that it was an implied term of the contract that the design, set up and supervision of the activities would be carried out with all due care and skill so as to protect, so far as possible, Redken's employees from injury. Redken claimed that Achievement was in breach of this implied term and that it was entitled by way of damages to a complete indemnity for any sum for which Redken might be found liable to Ms Docker. 4 In a separate judgment given on 29 March 1999, Hidden J said that he was not satisfied that the term alleged by Redken should be implied in its agreement with Achievement nor persuaded that, even if it were, its breach would entitle Redken to the indemnity it sought. In particular, his Honour relied upon Deane J's reasoning in Hawkins v Clayton (1988) 164 CLR 539 at 583-5. 5 Further, his Honour found that the breach by Achievement was not "the anterior and primary cause" of Redken's loss and for that reason, also, Redken's cross-claim failed.

[14]

APPEAL 6 Redken appealed from both decisions. The appeal against the verdict in favour of Ms Docker was limited to damages which Redken said were excessive. At the hearing of the appeal, Redken challenged only the award for economic loss. 7 Understanding the way in which damages were assessed was made difficult because Hidden J did not, in his reasons for judgment, break up the global award of damages so as to show what he had allowed for past and future economic loss and how the amounts allowed were calculated. The trial Judge referred to wage schedules provided by counsel for Ms Docker calculating the salary she might have earned from the time of the accident to the trial and the monetary value of the provision of a motor vehicle through that period. His Honour apparently accepted these schedules though he reduced the estimated increase in salary to an annual increase of 5 per cent. He said that the resulting amount should be reduced by 10 per cent in recognition of Ms Docker's working capacity "to the present time." 8 Redken produced documents, some of which, we were told, had been relied upon at the trial to calculate damages. One appeared to be a schedule adjusted in accordance with what Hidden J said. From an examination of this document, it emerged immediately that the wage schedule upon which apparently, though this does not appear from the reasons for judgment, the total awarded for past economic loss was calculated involved a double counting for the period from 1 July 1992 to 30 June 1993. This had the effect of inflating the amounts awarded for past economic loss against Redken and Achievement by $43,431.96. Mr Webb QC, who appeared for Ms Docker, conceded this. The verdicts must be adjusted accordingly. Further examination of the schedule suggests other comparatively minor double counting or miscalculations for the periods 16 September to 18 September 1992 and 22 February to 30 June 1993. These miscalculations favour Ms Docker. Neither Redken nor Achievement made any point about them. No explanation was advanced for the failure by those advising the parties to the proceedings to discover the discrepancy of $43,431.96 and bring it to the attention of the Court that heard the proceedings. The amount of damages could have been adjusted without any need to come to this Court. 9 That point apart, Redken submitted that the trial Judge failed to make any or adequate allowance for: · the fact that after her injury, Ms Docker chose to terminate her secure employment with Redken in order further to pursue in the USA her interest in the study of psychotherapy and, in particular, the branch of psychotherapy known as Process Work; and · the fact that Ms Docker would, after she was diagnosed with a malignant melanoma in October 1995, have for that reason been incapacitated for work both physically and psychologically, even if she had not been injured in August 1992. 10 In neither the written nor oral submissions put on behalf of Redken was any indication given of how the trial Judge, in accordance with its submission, should have calculated damages for past economic loss so as to take account of the Process Work study or the effect of the melanoma. Redken was given leave to file and filed further written submissions. Ms Docker filed written submissions in answer. 11 Redken's other argument in relation to the award for future economic loss was directed to the method by which Hidden J brought into account Ms Docker's reduced life expectancy consequent upon the diagnosis of melanoma. Although not expressly abandoned, Mr Deakin QC, who appeared for Redken, conceded that this attack on methodology became unsustainable when it was pointed out that Hidden J, in the course of his reasons for judgment, had, speaking of the approaches that Ms Docker, Achievement and Redken had taken at the trial to the assessment of future earnings, said: "Counsel were agreed that neither approach was necessarily better than the other." The attempt now to impress upon the Court that one of those approaches was indeed better than the other must, in light of the concession before the trial Judge, fail. 12 Achievement did not appeal against Hidden J's decisions, but when the appeal was called on, Mr Fagan SC, who appeared for Achievement, applied by notice of motion to file out of time a notice of cross-appeal. This was directed to the award of damages and sought to do no more than rely upon Redken's submissions with the object of ensuring that any reduction that Redken obtained on appeal would flow through for the benefit of Achievement. The Court considered that, since Achievement's complaint was directed not against the appellant Redken but against the judgment in favour of the first respondent, Ms Docker, Achievement, if permitted to move out of time, should do so by appeal rather than cross-appeal. The Court granted leave to Achievement to file a notice of appeal out of time, despite Mr Webb's valid criticism of the evidence put on by Achievement in support of the application. This consisted of an affidavit sworn by Achievement's solicitor, Stanley William Drummond, of 17 March 2000. This affidavit was no more than a chronology of unexplained delays suggestive of the solicitor's disregard of the need, if Achievement was to appeal, to do so within time. Other than this, the affidavit provided no appropriate explanation for Achievement's failure to appeal within time. In my opinion, the solicitor should be allowed no costs for the preparation and filing of this affidavit. 13 The second part of Redken's appeal was directed to Hidden J's conclusion that Redken was not entitled to damages against Achievement for breach of contract. When judgment was given, the High Court had only recently on 4 March 1999 given its decision in Astley v Austrust Limited (1999) 73 ALJR 403. This Court had not yet given its decision in Oxley County Council v MacDonald (unreported) 2 July 1999, NSWCA 126. 14 In respect of this part of the appeal, Achievement applied for leave to file a notice of contention which, as amended, sought to affirm the judgment on the cross-claim on two grounds. The first was that the trial Judge ought to have held that, in the agreement between Redken and Achievement, there were terms implied either in law or in fact "(a) that Achievement would exercise reasonable [care] with respect to Redken's employees; and (b) that Redken would exercise reasonable care with respect to its own employees."

[16]

DAMAGES APPEAL 17 At the time of the injury, Ms Docker was almost 35 years of age. She was right-handed. In the course of being lifted through the Spider's Web, an arrangement of ropes strung between two trees as part of the exercise taking place in the Botanic Gardens, Ms Docker fell when other employees of Redken let go of her before her feet had reached the ground. She fell backwards to her right. She threw out her right arm which took the brunt of the impact. Her right wrist was fractured. In the fall, her left shoulder struck the ground. 18 Ms Docker suffered soft tissue injury to her shoulder and cervical spine. Her orthopaedic surgeon described the injury to her wrist as "a severely comminuted intra-articular fracture of the distal right radius, together with a dense median nerve palsy". Treatment involved a number of surgical procedures which were summarised in the orthopaedic surgeon's report as follows: "On the 20th August 1992 I performed an open reduction and internal fixation of the radial fracture with bone graft. I decompressed the carpal tunnel endoscopically. Post operatively Miss Docker commenced a course of hand therapy to mobilise the wrist. Signs of a reflex sympathetic dystrophy began to occur, and a guanethidine sympathetic nerve block was administered on the 16th September 1992. Response to the block was good, and a further block was performed on the 30th September 1992. Following union of the fracture, wires were removed from the radius on the 4th November 1992, again with peri-operative guanethidine cover. On the 25th November 1992 I manipulated the right wrist again under guanethidine cover. This gave a range of approximately 50 degrees of dorsi flexion and 50 degrees volar flexion compared with 30 degrees dorsi flexion and 20 degrees volar flexion pre-operatively. By the 17th February 1993 range of movement had progressed to 45 degrees of dorsi flexion and 40 degrees of volar flexion of the wrist. There was localised tenderness over the ulnar styloid, which had been fractured in the initial injury, and had not united. On the 22nd February 1993 an arthroscopy of the right wrist was performed, revealing a full thickness tear of the triangular fibro-cartilage in the central portion. The remainder of the joint was healthy. The ulnar styloid was excised through a separate incision. On the 3rd March the wound was well healed and sutures were removed."

[17]

19 Between August 1992 and March 1993, Ms Docker had regular physiotherapy treatment at the Sydney Hand Therapy and Rehabilitation Centre. Hidden J said that there was some gradual improvement in her range of movement and function, "but it is clear that significant disability endured." A physiotherapist, who reviewed Ms Docker in 1994, reported that she did not anticipate that Ms Docker would be able to return to work as a full-time hairdresser due to ongoing pain and restriction of movement. "Similarly I feel she would have difficulty in any occupation involving heavy lifting or repetitive tasks, eg prolonged periods or [sic of] writing." Three orthopaedic surgeons were of opinion that she had suffered a 20 per cent permanent loss of the efficient use of her right arm at or below the elbow. There was a possibility, if not likelihood, of arthritis in her wrist in later years and there was evidence that there might be early arthritic changes in the left shoulder. One orthopaedic surgeon considered that there had been a 7.5 per cent permanent loss of efficient use of the left upper arm, and a 5 per cent impairment of cervical function. 20 Hidden J said: "In evidence, the plaintiff said that she continued to have difficulty with any repetitive activity over a period of time. Writing for more than a few minutes stiffened her fingers and caused her hand to ache and to sweat. The same results flowed from using a computer (and she said that she was, in any event, no more than a two-finger typist). Her right hand and arm continued to be in pain for much of the time, and on occasions she experienced 'pins and needles'. She was still experiencing pain in her neck and left shoulder and at night it could be very severe, radiating down the arm. I accept this evidence, which is consistent with the medical reports. At the time of the trial she had had no recent treatment, but dealt with the pain by massage, exercise and heat. For some years after the accident she took Panadeine Forte on prescription, but since late 1995 she had reduced her intake to Panadol every couple of weeks, because she considered the continuous use of pain killers to be undesirable."

[21]

Asked whether he meant that, in the 70 per cent that have a fatal ending, "those percentages that you have just given apply to that 70 per cent", he said: "Correct". 25 Hidden J noted Ms Docker's evidence that, notwithstanding her continuing physical symptoms, her depression had eased somewhat throughout 1996. Her continuing physical symptoms were a loss of energy and increased fatigue. Ms Docker's condition was described as "moderately severe". Hidden J accepted this evidence. 26 In the later part of 1992, Ms Docker returned to work at Redken. She could not manage the physical aspects of her job such as hairdressing or lifting and carrying and she could not go on tours as she used to. She described her writing at the time as "very poor". She was very emotional and would have "angry outbursts" directed at other staff members, including one who had been a close friend. She was hurt by the fact that the others involved in the Spider's Web exercise had not contacted her to apologise or to inquire as to her welfare and she acknowledged that this affected her working relationship with them. Her friend described her as very difficult to work with. She would "get very angry at things and cry" and was "mostly irrational all the time". Her behaviour was such that attempts were made to exclude her from staff meetings, in large part for her own good. 27 The general manager of Redken, James Hudson, who had before the accident regarded her work as excellent, said Ms Docker appeared unable to cope with the physical tasks of her position and observed her to be "agitated and very frustrated" as a result. Attempts were made to counsel her and provide greater physical support for her. Mr Hudson saw these measures as relatively short term, expecting that she would recover. She did not. In fact, as he saw it, the situation deteriorated. Hidden J said: "Clearly, she was unable to maintain her previous role in the company, given her physical disability and the loss of her capacity to deal harmoniously with others. Early in 1993 she decided the leave Redken and travel to Portland, Oregon, to pursue her study of Process Work. She acknowledged in evidence that that decision was influenced partly by her sense that her fellow employees in the Spider's Web exercise had betrayed her trust, and by their apparent indifference to her suffering, but I accept that it was mainly because she could not do her job. When she tendered her resignation on this occasion Mr Hudson accepted it. In evidence, he explained that she had been doing no more than disseminating information about products and training programmes. He said that he would have continued to employ her, perhaps in a more junior position, as she was 'such a valuable person', but there was no such position available. He was cross-examined about a reference he gave her upon her leaving, dated 17 March 1993, which stated that she had resigned to pursue full time study in the United States and which attested to her 'considerable skill and achievement' and her 'strong personal commitment to Redken'. He said that that was an assessment of 'her previous contribution', but acknowledged that it was not true of her performance at the time she left. If the reference lacked candour in certain respects it is not to be commended, but is understandable in the light of the plaintiff's years of productive service to the company and the high regard which Mr Hudson had for her."

[27]

APPEAL AGAINST JUDGMENT ON CONTRACT 37 Hidden J found both Redken and Achievement liable for Ms Docker's injury. This conclusion was based on findings which his Honour set out. These included findings against Achievement that the set up of the web was unsafe and that Achievement's representatives ought to have known, that the advice Achievement gave about safety to those taking part was inadequate and that Achievement's supervision of the exercise both in terms of the proximity of Achievement personnel and generally was also inadequate. The basis of Redken's liability was twofold, vicarious liability for the negligence of its employees engaged in the exercise with Ms Docker and the failure of any senior person within Redken to attend and check the safety of the exercise. Hidden J said: "It was not reasonable for Redken simply to leave the matter to [Achievement], trusting in that company's expertise." However, his Honour said that he appreciated that it was intended that all Redken's staff, however senior, should participate in the activities and their purpose would have been lost if anyone knew in advance what they were and how they should be carried out. 38 In his judgment of 29 March 1999, Hidden J quoted and relied upon the reasoning of Deane J in Hawkins v Clayton. At 583 Deane J said: "To the extent that the content and incidents of the contractual duty of care correspond with those of the ordinary duty of care under the common law of negligence, the implication of a general contractual term is difficult to rationalize. If the implication of the term is based upon some perceived general principle of law, one is led to ask why the common law should imply a contractual term imposing a duty of care which the common law imposes in any event. If the implication of the term is based upon imputed intention of the parties, it is difficult to see how any of the ordinary tests for the implication of a term on that basis could properly be seen as satisfied. It could not be sensibly said that it is necessary for the business efficacy or the reasonable or effective operation of a contract to imply a contractual term imposing a general duty which corresponds with the general duty which already exists under the common law."

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39 In Astley v Austrust Limited at 414 the High Court agreed with the House of Lords in Henderson v Merrett Syndicates Limited [1995] 2 AC 145 at 193-4 in rejecting Deane J's reasoning. The High Court said at 414: "[47] History and legal principle combine to indicate that the conclusion of the House of Lords in Henderson is the correct view. The implied term of reasonable care in a contract of professional services arises by operation of law. It is one of those terms that the law attaches as an incident of contracts of that class. … It is part of the consideration that the promisor pays in return for the express or implied agreement of the promisee to pay for the services of the person giving the promise. Unlike the duty of care arising under the law of tort, the promisee in contract always gives consideration for the implied term. And it is a term that the parties can, and often do, bargain away or limit as they choose. Rather than ask why the law should imply such a term in a contract for professional services, it might be more appropriate to ask why should the law of negligence have any say at all in regulating the relationship of the parties to the contract? The contract defines the relationship of the parties. Statute, criminal law and public policy apart, there is no reason why the contract should not declare completely and exclusively what are the legal rights and obligations of the parties in relation to their contractual dealings. The proposition that, in the absence of express agreement, tort and not contract regulates the duty of care owed by a professional person to a person hiring the professional services is inconsistent with the historical evolution of professional duties of care which, until recently, could be the subject of action only in contract. Moreover, the conceptual and practical differences between the two causes of action remain of 'considerable importance'. Aluminium Products (Qld) Pty Ltd v Hill [1981] QdR 33 at 52. The two causes of action have different elements, different limitation periods, different tests for remoteness of damage and, as will appear, different apportionment rules. [48] The theoretical foundations for actions in tort and contract are quite separate. Long before the imperial march of modern negligence law began, contracts of service carried an implied term that they would be performed with reasonable care and skill. Persons who give consideration for the provision of services expect that those services will be provided with due care and skill. Reliance on an implied term giving effect to that expectation should not be defeated by the recognition of a parallel and concurrent obligation under the law of negligence. The evolution of the law of negligence has broadened the responsibility of professional persons and requires them to take reasonable care and skill even in situations where a contractual relationship cannot be established. But given the differing requirements and advantages of each cause of action, there is no justification in recognising the tortious duty to the exclusion of the contractual duty."

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42 In Florida Hotels Pty Limited v Mayo, a worker sued his employer, Florida, to recover damages for injuries suffered when building work on Florida's property collapsed. The worker sued for Florida's breach of its duty as an employer to take reasonable care for his safety and for breach of its statutory duty. These proceedings were compromised on the basis that a general verdict should be entered for the worker in an agreed sum. Florida began third party proceedings against Mayo, the architects. At trial, Florida obtained against Mayo a verdict for the full amount of its liability to the worker for breach of Mayo's contractual obligation to Florida as architects properly to supervise the performance of the work. The Full Supreme Court on appeal by a majority set aside the judgment and entered judgment for Mayo on the ground that there was no evidence upon which the trial Judge could have found that Mayo had failed to supervise the work according to their obligations under the contract. 43 The High Court allowed Florida's appeal and restored its judgment against Mayo. At 597, Barwick CJ said that Mayo submitted that no substantial damages could be awarded against them for breach of their obligation to supervise the work because, inter alia, even if there was any such evidence, the liability of Florida to the worker was not damage for which Mayo could be made responsible because of their breach of contract. At 598-9, Barwick CJ said: "But, in my opinion, the possibility of liability of the appellant to its workmen flowing from the consequences of lack of supervision of work of the kind in question must be taken to have been fairly within the contemplation of the parties. His Honour, the trial judge, found the lack of supervision to be the cause of the collapse of the slab and the removal of the formwork but the occasion for it; because of the inherent weakness for want of proper reinforcement, it would have fallen down whenever the formwork was removed; and with this conclusion I respectfully agree. Of course, vis-à-vis the plaintiff the premature removal of the formwork was negligent on the part of the appellant. But this would not prevent the appellant recovering from the respondents for their breach of contract simply because they are therefore joint tortfeasors with the appellant. It would be otherwise if the effect of the respondents' breach of their obligation to the appellant had become spent and no longer causally connected with the plaintiff's injury. But that is not this case. The intervention of the appellant's act in removing the timber, though it occasioned the injury to the plaintiff, will not avail the respondents. The respondents, in my opinion, are liable to the appellant for the amount which the appellant reasonably paid to the plaintiff in discharge of its liability to the plaintiff for the consequences of the collapse of the slab….. Accordingly, in my opinion, the amount payable by the appellant to the plaintiff was recoverable from the respondents as damages for their breach of their contractual obligation to supervise the work of construction of the swimming pool. The result that the respondents are liable to pay to the appellant by way of damages the full amount of the sum payable by the appellant to the plaintiff does not mean that the obligation of the respondents to the appellant as its architect was an obligation 'to protect' the appellant against the possibility of liability to its workmen or that the protection of the workmen was in any relevant sense a purpose of the contractual duty of supervision. It merely means that there can be included in the damages for breach of the obligation to supervise the amount the building owner is called upon to pay to its workmen injured by the consequences of faulty supervision." 44 Kitto, Taylor and Menzies JJ agreed with the Chief Justice's judgment. To adapt the language of Barwick CJ at 599 in the present case, the result that Achievement is liable to pay to Redken by way of damages the full amount of the sum payable by Redken to Ms Docker merely means that these can be included in the damages for breach of the obligation to design, set up and supervise the activities to be carried out with all due care and skill so as to protect so far as possible the employees of Redken from injury. 45 Hidden J found that the accident which caused Ms Docker's injury was caused by the unsafe set up of the rope web, which ought to have been known to Achievement, and by Achievement's inadequate advice about safety to the participants and its inadequate supervision of the exercise. While Redken was vicariously responsible for the negligence of other employees taking part in the exercise and was liable for the failure of senior personnel to attend when the exercise was taking place, Achievement had failed properly to advise the participants on safety and properly to supervise them. Hidden J accepted that the absence of senior personnel and their want of knowledge about the exercise and how it would be carried out was a feature of the activities planned. In no sense could it be said that Achievement's breach of its obligations to Redken had been spent or was no longer causally connected with Ms Docker's injury. The acts of negligence for which Redken was liable were a direct consequence of Achievement's negligence.

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APPLICATION TO FILE NOTICE OF CONTENTION 46 At the time the Court refused Achievement's application to file a notice of contention, we referred to the failure by Achievement to raise the contractual claim it now sought to make against Redken either in the pleading or during the trial. I have already referred to the grounds of the amended form of notice of contention. 47 Achievement relied both on implication in law and implication in fact to establish a term or terms in the agreement which Redken had pleaded and relied on. Mr Fagan said that at the trial Achievement had not relied upon the existence of such terms in the contract because of what was then thought to be the state of the law. Redken pleaded the contract. Achievement decided not to rely on what it said were the terms of the contract. As was pointed out if Achievement had done so and succeeded the remedy would have been an award of damages in favour of Achievement against Redken. Accordingly, a notice of contention seeking to affirm the judgment below on other grounds was not appropriate. But in any event at least in part it would have involved this Court making findings of fact which may or may not have been fully dealt with in the evidence. Furthermore, the fact that the term relied on was one alleged to be ordinarily an incident of the contract in question does not mean that a party cannot call evidence to show to the contrary in the particular case or to show that any term was different from that relied upon by the claimant. 48 As was pointed out by the High Court in Astley v Austrust Limited at 414, the implied term of reasonable care in a contract of professional services which the law attaches as an incident of contracts of that class is part of the consideration that the promisor pays in return for the express or implied agreement of the promisee to pay for the services of the person giving the promise. Their Honours said: "Unlike the duty of care arising under the law of tort, the promisee in contract always gives consideration for the implied term. And it is a term that the parties can, and often do, bargain away or limit as they choose." Against the objection of Redken, this Court could not permit Achievement to seek to rely upon the existence of these additional terms of the contract at this point in the proceedings.

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CONCLUSION 49 It follows in my opinion that, except to the extent necessary to adjust the verdicts to take account of the double counting to which I have referred, Redken's appeal against the damages awarded to Ms Docker fails and Redken should pay her costs. There may be some argument as to whether anything more should be done about Achievement's contribution to the costs of Ms Docker than ordering that its appeal against her be dismissed with costs. 50 Redken's appeal against Achievement should be upheld, Hidden J's order dismissing Redken's cross-claim should be set aside and in lieu thereof there should be a verdict for Redken against Achievement. There seems no reason why Achievement should not pay Redken's costs of the cross-claim and of the appeal against it. The amount of the adjusted verdicts in favour of Ms Docker and the amount of the verdict on the cross-claim may require some calculation to take account of the effect of the Workers Compensation Act. 51 In principle, the verdict against Achievement in favour of Redken should provide an indemnity for all damages and costs that Redken has to pay Ms Docker in the proceedings both at trial and on appeal. However, the parties may wish to put further argument having read these reasons about the amount of the verdict and about costs. Accordingly, I propose that the appeals be stood over for mention before the Registrar on 19 June 2000 to be re-listed before the Court for argument on the form of the orders, the amount of damages and costs, unless orders on the appeals are made by consent. 52 FITZGERALD JA: The circumstances giving rise to these appeals are set out in the reasons for judgment of Sheller JA. 53 Ms Docker, who was employed by Redken Laboratories (Australia) Pty Ltd ("Redken"), was injured in the course of an exercise for Redken employees which Achievement Concepts Pty Ltd ("Achievement") organised and conducted under a contract with Redken. 54 In this Court, it was common ground that Redken and Achievement each owed a duty of care to Ms Docker which it breached making it liable to her for damages for negligence. 55 According to the trial judge's unchallenged findings, Achievement required Ms Docker to use equipment which it ought to have known was unsafe, failed to give Ms Docker and other employees of Redken proper advice, and failed to adequately supervise the exercise which it conducted. Redken failed to satisfy itself that its employees could safely participate in the exercise and other of its employees, for whose negligence it is vicariously liable, failed to adequately support Ms Docker during the exercise. 56 The trial judge gave judgments for Ms Docker against Achievement in the sum of $702,163.80 and against Redken in the sum of $574,442.00, and ordered Achievement and Redken to pay Ms Docker's costs. Achievement and Redken both appealed against the damages awarded to Ms Docker. 57 The different judgments in favour of Ms Docker against Redken and Achievement resulted from the trial judge's application of Pt 5 Div. 5 of the Workers Compensation Act 1987, as explained in Leonard v Smith,[1] to Redken's cross-claim against Achievement for contribution under Pt. 3 of the Law Reform (Miscellaneous Provisions) Act 1946 (the "Contribution Act"). Correctly or otherwise [2], the parties accepted his Honour's approach. In particular, although Redken and Achievement are liable to Ms Docker for different amounts by reason of Pt. 5 Div 5 of the Workers Compensation Act, it was not disputed that both are "liable in respect of the same damage" within the meaning of subs 5(1)(c) of the Contribution Act, namely, the damage suffered by Ms Docker. [3]

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Redken's appeal against the dismissal of its cross-claim to an indemnity from Achievement 58 However, Redken appealed against the trial judge's dismissal of its primary cross-claim for a "complete indemnity from … such amount … as [Redken] may be held liable to Ms Docker." The pleaded foundation for the indemnity claim was an allegation that Achievement's negligence towards Ms Docker breached its contract with Redken. Although its cross-claim did not state why that breach of contract entitled it to a "complete indemnity" from Achievement, Redken argued that Achievement's breach of contract entitled Redken to damages equivalent to its liability to Ms Docker. 59 Achievement did not cross-claim against Redken or allege that its negligence toward Ms Docker breached the contract between Redken and Achievement. [4] As explained by Sheller JA in his reasons for judgment, the Court refused to permit Achievement to raise this issue by a late notice of contention when it attempted to do so at the hearing. In my opinion, the argument which Achievement wished to advance would have failed. 60 In this Court, Achievement accepted that its contract with Redken required Achievement to set up the equipment and conduct and supervise the exercise in which Ms Docker was injured. I agree with Sheller JA, for the reasons which his Honour has given, that it was a term of that contract, implied by law, that Achievement would perform those functions with reasonable care and skill. [5] In my opinion another argument, which Achievement was not permitted to raise by its late notice of contention, to the effect that the term to be implied limited Achievement's liability to Redken for damages for breach of contract to the amount which is just and equitable having regard to Redken's and Achievement's respective responsibilities for Ms Docker's damages would also have failed. 61 I further agree with Sheller JA that Achievement's negligent acts and omissions which breached its duty of care to Ms Docker also constituted a breach of that implied term of its contract with Redken, which did not argue that any other act or omission by Achievement constituted a breach of their contract. That is to say, Achievement's requirement that Ms Docker use equipment which it ought to have known was unsafe and its failures to give Ms Docker and Redken's other employees proper advice or to adequately supervise the activities which it conducted breached both Achievement's duty of care to Ms Docker and its contractual obligation to Redken. 62 The trial judge erroneously held that Achievement's negligence toward Ms Docker was not a breach of its contract with Redken. That error mistakenly removed the foundation for Redken's claim for an indemnity from Achievement in respect of Redken's liability to Ms Docker. 63 The trial judge also held that his conclusion that Achievement had not breached its contract with Redken did not affect his apportionment of liability for Ms Docker's damage on Redken's claim for contribution from Achievement under Pt. 3 of the Contribution Act. His Honour decided that it is "just and equitable" within the meaning of subs 5(2) of that Act that Redken be held liable for 40% and Achievement be held liable for 60% of the damage suffered by Ms Docker having regard to their respective responsibilities for that damage, even if, contrary to his opinion, Achievement's negligence toward Ms Docker breached its contract with Redken. That conclusion was not challenged in this Court. 64 There might appear to be a tension between Redken's acceptance that it is "just and equitable" that it contribute 40% and Achievement contribute only 60% of Ms Docker's damage and Redken's claim to a "complete indemnity" in respect of its liability to Ms Docker from Achievement. Part 3 of the Contribution Act applies to joint and several tortfeasors even if they are parties to a contract. Further, the range of matters available for consideration in determining what is a "just and equitable" apportionment of liability for a plaintiff's damage between joint and several tortfeasors under subs 5(2) of the Contribution Act is very wide. [6] In an appropriate case, the circumstance that the tort of one of the tortfeasors breached its contract with another of the tortfeasors can be material. [7] In some circumstances, contribution equivalent to a "complete indemnity" might be "just and equitable". [8] 65 However, Redken's claim to a "complete indemnity" from Achievement is not based upon subs 5(2) of the Contribution Act. Nor did Redken assert that it has a right to an indemnity from Achievement under the general law, or that, by their contract, Achievement promised to indemnify Redken. [9] Redken's "indemnity" claim to damages for breach of contract in an amount equivalent to Redken's liability to Ms Docker was brought under subs 78(1) of the Supreme Court Act 1970. 66 The right of a tortfeasor to recover damages for breach of contract from another tortfeasor in the full amount of the former's liability to a plaintiff notwithstanding that it is "just and equitable" that each should contribute having regard to their respective responsibilities for the plaintiff's damage has been accepted as an "entitlement [by the former tortfeasor] to be indemnified .. in respect of" its tortious liability to the plaintiff for the purpose of the proviso to subs 5(1)(c) of the Contribution Act. [10] Parliament has also proceeded on that footing. [11] It is pointless for this Court to consider whether the approach which has been adopted accords with the original purpose of Pt. 3 of the Contribution Act. It is more than 35 years since the decision of the High Court in Florida Hotels Pty Ltd v Mayo, [12] in which Pt. 3 of the Contribution Act was not discussed in connection with a successful claim for damages for breach of contract brought by one tortfeasor against another, and 45 years since the High Court first criticised the drafting of subs 5(1)(c) of the Contribution Act, which remains unchanged. [13] 67 The remaining question is whether Achievement's breach of their contract entitles Redken to damages equivalent to its liability to Ms Docker. The answer to that question depends upon the applicable principles concerning causation [14] and remoteness of damage. [15] 68 Those issues arise in the present case in a particular context, in which the question can be broadly stated in the terms used by Lord Diplock in Lexmead (Basingstoke) Ltd v Lewis,[16] namely: " In what circumstances can a party['A'] to a contract who has been found liable for breach of a duty of care owed by him to a stranger ['X'] to the contract, recover from the other party ['B'] to the contract as damages for breach of warranty the amount of the damages for negligence which 'A' himself has been ordered to pay to 'X'?"

[34]

69 However, when stated in those general terms, that question can apply to a variety of situations which are different from the present. [17] Here, A (Redken) was an employer, X (Ms Docker) was its employee to whom it owed a non-delegable duty of care, [18] and the contract between A (Redken) and B (Achievement) required Achievement to conduct activities in which Ms Docker participated and during which she was injured in the course of her employment. 70 At first glance, a number of factors seem to be opposed to Redken's claim. Redken's duty to Ms Docker required it not only to take reasonable care but to ensure that Achievement used reasonable care. Redken and Achievement were separately negligent. Achievement's negligence did not cause Redken's negligence. Redken's liability to Ms Docker is not vicarious liability for Achievement's negligence. Redken is liable to Ms Docker because it was itself negligent and caused her damage.[19] 71 However, at least in relation to material aspects of its duty to Ms Docker, [20] Redken was entitled to act as between it and Achievement on the basis that Achievement would perform their contract properly [21] and accepted responsibility for the consequences of its failure to do so. The matters for which Redken was entitled to rely on Achievement included the matters in respect of which Redken breached its duty to Ms Docker. If Achievement had performed its contract (i.e., in broad terms, ensured the safety of the exercise in which Ms Docker was injured, including proper instruction to Ms Docker and Redken's other employees and proper supervision of the exercise) Ms Docker would not have been injured and Redken would not have become liable to her despite its own breaches of its duty to her. Redken's failure to satisfy itself that its employees could safely participate in the exercise would not have mattered if Achievement had performed its contract and Redken's employees would not have failed to adequately support Ms Docker in the exercise if they had been properly advised and their activities during the exercise had been properly supervised by Achievement. 72 Although there are some differences of opinion concerning the precise principle involved, [22] the decisions of the High Court in Florida Hotels Pty Ltd v Mayo, [23] this Court in Buckley v Pre-Stressed Concrete (Australia) Pty Ltd [24] and Oxley County Council v MacDonald, [25] and the English Court of Appeal in Mowbray v Merryweather [26] and Sims v Foster Wheeler Ltd [27] all support Redken's claim. Redken's liability to Ms Docker was caused by its reliance on Achievement in conjunction with Achievement's negligence toward Ms Docker in breach of its contract with Redken. 73 Accordingly, I agree with the other members of the Court that Redken's appeal against the dismissal of its cross-claim for an "indemnity" from Achievement should be allowed.

[35]

Redken and Achievement's appeals against the damages to which Ms Docker is entitled. 74 As explained in Sheller JA's reasons for judgment, the issue in relation to damages to be considered by this Court concerns the amount awarded to Ms Docker by the trial judge for past economic loss. I agree with the other members of the Court that the attempt to challenge the trial judge's methodology in his Honour's assessment of future economic loss is not open because of the course adopted at trial. 75 It is common ground that the amount awarded for past economic loss involved a mechanical error and must be reduced accordingly. Redken and Achievement argued that the award must be further reduced because of other errors they attribute to the trial judge. 76 As a result of the negligence of Redken and Achievement on 18 August 1992, Ms Docker sustained a fractured right wrist and a soft tissue injury to her left shoulder and cervical spine. In consequence of her physical injuries and associated pain and other effects, she developed a chronic depressive state with phobic anxiety symptoms. She returned to work at Redken in the latter part of 1992, but had physical and emotional difficulties with her tasks and her relationship with work colleagues ceased to be harmonious. She resigned from Redken early in 1993. The trial judge found that her resignation ".. was mainly because she could not do her job." Obviously, that is not a finding that Ms Docker could not do any job, at Redken or elsewhere. 77 Ms Docker did not work again prior to the conclusion of the trial on 18 March 1997 or, it seems, prior to the final orders made by the trial judge on 9 September 1998. His Honour awarded her past economic loss on the basis that she was entitled to the full amount which she would have earned had she continued to be employed by Redken reduced by 10 per cent because of her residual work capacity. 78 In March 1993, shortly after terminating her employment at Redken, Ms Docker enrolled in a five year course of study. She was still engaged in that course when she was diagnosed with a malignant melanoma in late 1995. According to Redken and Achievement, the trial judge failed to make any adequate allowance for either Ms Docker's decision "to terminate her secure employment with [Redken] in order to ..pursue her…study ..", or the fact that she "would in any event have been incapacitated for work both physically and psychologically by reason of her malignant melanoma" even if she had not been injured by the negligence of Redken and Achievement. 79 The two matters upon which the submissions for Redken and Achievement are based raise different considerations. 80 The first of the two matters, namely Ms Docker's termination of her "secure employment" with Redken, is a basis for questioning the trial judge's conclusion that she had a residual earning capacity of only 10 per cent. Even if Ms Docker could no longer continue to perform a particular job at Redken, the conclusion that she had a residual earning capacity of only 10 per cent seems extremely favourable to her. 81 Whatever Ms Docker's earning capacity when she developed the malignant melanoma, that condition raised further questions concerning the effect which it would have had on her even if she had not been injured through the negligence of Redken and Achievement. If the melanoma would have reduced her earning capacity even if she had not been injured, that had to be taken into account in determining the damages to which she is entitled for past economic loss. 82 The other members of the Court are satisfied with the trial judge's assessment of Ms Docker's residual earning capacity between her injury and trial at only 10 per cent and consider that "[t]here was no evidence that, during the period between its diagnosis in 1995 and the trial.., the melanoma would of itself have reduced Ms Docker's earning capacity or been productive of financial loss." While I have reservations about the trial judge's consideration of these issues, I am not sufficiently convinced that his Honour was wrong to warrant my disagreement.

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Conclusion 83 I agree with the proposal by Sheller JA. 84 DAVIES AJA: I agree with Sheller JA. ***** END NOTES 1 (1992) 27 NSWLR 5. 2 See Grljak v Trivan (1994) 35 NSWLR 82; Grljak v Trivan (No. 2) NSWCA, unreported, 19 April 1996; Oxley County Council v MacDonald [1999] NSWCA 196; Hampic Pty Ltd v Adams [1999] NSWCA 455; Leighton Contractors Pty Ltd v Smith [2000] NSWCA 55, per Meagher JA at [28] and [29]. 3 Cf Unsworth v Commonwealth for Railways (1958) 101 CLR 73; XL Petroleum (NSW) Pty Ltd v Caltex Oil Australia Pty Ltd (1985) 155 CLR 448.Dairy Containers Ltd v NZI Bank Ltd (1995) 2 NZLR 30, 119. 4 Contrast Oxley County Council v MacDonald [1999] NSWCA 126, paras [8] and [69]-[71]. 5 Astley v Austrust Ltd (1999) 161 ALR 155, [44] - [48]. 6 Wynberger v Hoyts Corporation Pty Ltd (1997) 149 ALR 25, 28-29; Oxley County Council v MacDonald [1999] NSWCA 126. 7 Roads & Traffic Authority v Scroop [1998] NSWCA 693. 8 See, for example, Lister v Romford Ice and Cold Storage Co Ltd (1957) AC 555, 579-580 per Viscount Simonds, and 585 per Lord Morton of Henryton; Sinclair v William Arnott Pty Ltd [Kell & Rigby Pty Ltd, 3rd Party] (1963) NSWR 494,497; Voli v Inglewood Shire Council (1963) 110 CLR 74, 100; McGrath v Fairfield Municipal Council (1985) 156 CLR 672. 9 See, for example, Harvey v RG O'Dell Ltd [Galway, 3rd Party] (1958) 2 QB 78, 106; Treitel, The Law of Contract, 9th Ed. (1995), pp192,663-664. 10 See, for example: McGrath v Fairfield Municipal Council (1985) 156 CLR 672; Dredge "WH Goomi" v Australian Oil Refining Pty Ltd (1989) 94 FLR 298; Australian Iron & Steel Pty Ltd v Jumbo Scheepvaart Maatschappij (Curacao) (1988) 14 NSWLR 507; Sunbeam Corporation Ltd v M T I Qualos Pty Ltd, No 50037 of 1994, unreported 14 December 1995; HIH Casualty and General Insurance Ltd v Meadows Indemnity Co Ltd (1988) 47 NSWLR 85. Cf Oxley County Council v MacDonald [1999] NSW 126, paras. [62]-[68]. 11 Employees' Liability (Indemnification of Employer) Act 1982. See McGrath v Fairfield Municipal Council (1985) 156 CLR 672. 12 113 CLR 588. 13 Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1955) 92 CLR 200, (1958) 101 CLR 73, 88. 14 See, generally, Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 73 ALJR 901; Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310. Cf Platform Home Loans Ltd v Oyster Shipways Ltd (1999) 2 WLR 518 (H.L.). 15 See, generally, Burns v MAN Automotive (Australia) Pty Ltd (1986) 161 CLR 653; Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310. 16 (1982) AC 225, at p 275. 17 See, for example, Lister v Romford Ice & Cold Storage Co Ltd (1957) AC 555 and Dredge "WH Goomai v Australian Oil Refining Pty Ltd (1989) 94 FLR 298. Cf Rowell v Alexander Machine College of Advanced Education (1988) ATR 80-183; Honeywill and Stein Ltd v Larkin Brothers London's Commercial Photographers, Ltd (1934) 1 KB 191. See also Ocean Crest Shipping Company v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626, 657, per Brennan J. 18 Kondis v State Transport Authority (1984) 154 CLR 672, 685-687; Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520. 19 Cf Drinkwater v Kimber (1952) 2 QB 281, 292-293. See also Jones v Manchester Corporation (1952) 2 QB 852, 865, 868, 869, 870. 20 Lexmead (Basingstoke) Ltd v Lewis (1982) AC 225, 275-276. 21 Mowbray v Merryweather (1895) 2 QB 640; Compania Naviera Maropan SA v Bowaters Lloyd Pulp & Paper Mills Ltd (1955) 2 QB 68,77; Reardon Smith Line Ltd v Australian Wheat Board (1956) AC 266, 282. 22 Contrast the opinions of Glass JA, with whom Moffitt P and Reynolds JA agreed, in Buckley v Pre-Stressed Concrete (Australia) Pty Ltd (NSWCA No. 235 of 1976, unreported 20 September 1977) and Lord Diplock, with whom Lord Elwyn-Jones, Lord Fraser of Tullybelton, Lord Scarman and Lord Bridge of Harwich agreed, in Lexmead (Basingstoke) Ltd v Lewis (1982) AC 225, 275-276 on the question whether the limitation expressed by Winn LJ in Hadley v Droitwich Construction Co Ltd (1968) 1 WLR 37-43 applies to the principle established by Mowbray v Merryweather (1895) 2 QB 640. See also Marr (Contracting) Pty Ltd v White Constructions (ACT) Pty Ltd (1991) 104 ALR 181, 189-190, 191; Barclays Bank PLC v Fairclough Building Ltd (1995) QB 214, 229-230. 23 (1965) 113 CLR 588. 24 (NSWCA No. 235 of 1976, unreported 20 September 1977) 25 [1999] NSWCA 126, paras. [2], [8], [60] and [61]. 26 (1895) 2 QB 640. 27 (1966) 1 WLR 769.

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Cases Cited (28)