Negligence - Employer's liability - Supervision of work - Extent of duty of care

Workers Compensation and Rehabilitation Act 1981, s 93(1)(b)

Second Respondent (Second Plaintiff) : Mr D R Clyne

First Respondent (First Plaintiff) : Trewin Norman & Co

Second Respondent (Second Plaintiff) : Crisp Civitella Smith

Australian Turf Industries Pty Ltd v Dalet Pty Ltd, unreported; FCt SCt of WA; Library No 980658; 12 November 1998

Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520

James Hardie & Co Pty Ltd v Seltsam [1998] HCA 78; (1998) 196 CLR 53

Mersey Docks v Coggins [1946] UKHL 1; [1947] AC 1

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

Ta v Lucky Import & Export Co Pty Ltd [2002] WASCA 65

Wyong Shire Council v Shirt [1980] HCA 12; (1979-1980) 146 CLR 40

1 MURRAY J: I have read in draft the reasons for decision to be published by McKechnie J. I agree with them. I have nothing to add to what his Honour has written in respect of the issues raised by the grounds of appeal, as amended, and the notice of contention with respect to liability, contributory negligence and the second respondent's entitlement to full indemnity in respect of payments of workers' compensation.

2 As to the last matter, however, I agree with McKechnie J that there appears to have been, as was found by the trial Judge, an overpayment of about $20,000 in workers' compensation and, that being the case, it seems to me necessarily to follow that the second respondent may not be taken to have had a liability to pay compensation to the extent of the amount overpaid so as to entitle the second respondent to be indemnified by the appellant under s 93(1)(b) of the Workers Compensation and Rehabilitation Act 1981 in respect of that overpayment.

3 Finally, I too would, also with some reluctance, uphold the eighth ground of appeal. The medical practitioners mentioned, Drs Lim, Robinson and Tye were, it seems, originally witnesses proposed to be called for the first respondent. In the end they were not called and the evidence of Dr Ker was alone relied upon. This body of evidence and the testimony of the absent witnesses was directed to the ongoing disabilities of the first respondent and the extent to which his earning capacity had been destroyed by the negligence of the appellant. These matters and the quantum of damages generally, liability on the part of the appellant having been found, were at trial and remain, very much in issue between the parties.

4 It is clear, as McKechnie J says, that it is apparent reading the judgment of the Commissioner, that he placed reliance upon evidence in documentary form emanating from the three medical practitioners mentioned when, in truth, that material was not before him. It may be that the learned Commissioner would have come to the same conclusions without the materials which he took into account, but which were not in fact in evidence. The primary facts of which their reports spoke may no doubt have been otherwise established, but their opinions were before the Court and were relied upon.

5 In those circumstances, it seems to me to be impossible to say that a miscarriage of justice may not have occurred in relation to the assessment of damages. As I say, it may be the case that the result would be the same if the learned Commissioner relied solely on the material which was properly admitted into evidence, but this Court cannot, I think, make that

judgment and without doing so it seems to me to be inevitable that upon this ground the appeal must be allowed.

6 In addition, it is, of course, fundamental that a litigant is entitled to a decision of the court which is based on the evidence and, absent any question of judicial notice, not on extraneous material. For that reason alone, without considering the potential impact of the material wrongfully considered upon the final outcome of the case, it seems to me that there has been a miscarriage of justice sufficient to require the appeal to be allowed.

7 I am generally in agreement with the orders proposed by McKechnie J. I would allow the appeal as against both respondents. I would enter judgment for the first respondent against the appellant for damages to be assessed. I would remit the action between the first respondent and the appellant to the learned Commissioner for the damages to be assessed. I would order the appellant to pay to the second respondent the amount truly representing an indemnity for workers' compensation payments. I would hear the parties on the question of costs, both of the trial and the appeal.

8 WHEELER J: I have had the advantage of reading, in draft, the reasons to be delivered by McKechnie J. I agree with those reasons and have nothing further to add.

9 This is an appeal from a decision of Commissioner Reynolds who found the appellant liable to pay the first respondent damages for negligence and to pay the second respondent an indemnity for workers compensation payments received.

10 The facts are set out the judgment Melvan & Anor v Signet Engineering Pty Ltd [2002] WADC 205.

11 Grounds 1, 2, 6 and 7 challenge findings as to the relationship between the parties Signet and Abesque. They are as follows:

"1. Having correctly found [24] that the second respondent as employer had a non-delegable duty of care towards the

first respondent, and the evidence being that there was no contractual relationship between either of the respondents and the appellant, and that the appellant's role on the accident site was merely as agent for Gold Mines of Australia, the learned Commissioner erred in fact and in law in finding:

(a) [2] that there was an agreement between the appellant and the second respondent;

(b) [46] that the appellant owed a duty of care to the first respondent to identify and implement a safe system of work.

2. The learned Commissioner erred in fact and law in finding a 'clear understanding' to provide supervision [39] and a passing of 'de facto control' [46] and in not providing adequate reasons as to when and by what mechanism those processes occurred.

...

6. The learned Commissioner erred in fact by finding McManus was an employee of the appellant [45] when there was no such evidence.

7. The learned Commissioner erred in fact and in law by failing to give adequate reasons for the finding [60] that the second respondent [as employer] should make no contribution."

12 On 14 August 1994 the plaintiff injured his right shoulder when attempting to weld a piece of steel plate to the interior of a chute at the Youanmi mine site.

13 The Youanmi gold mine was owned by Gold Mines of Australia ("GMA"). GMA wished to refurbish existing machinery and plant on the site in order to take advantage of new technology. Adjacent to the site was going to be constructed an entirely new plant called a bioxidation plant or biox plant.

14 The appellant, Signet Engineering Pty Ltd ("Signet"), had entered into a contract with GMA. The site was owned by GMA. They had a mine manager present. Signet was in control of the construction and refurbishment work.

15 The contract provided for various matters. By 2.8 under the heading "Construction Management", the contract provided that Signet would:

"• Directly supervise the progress and quality of contractor's work. Provide input for progress reports.

• Inspect the work to ensure compliance with specifications, drawings and contract quality control requirements, and provide daily inspection reports to enable fair processing of progress claims and to avoid unwarranted claims.

• Ensure contractors personnel are thoroughly advised of safety regulations. Identify hazards, advise contractor and ensure corrective measures are taken."

16 The estimate of man-hour cost to complete the scope of work under the contract included 1,188 hours assigned to "site supervision".

17 Mr King gave evidence that he was the Managing Director of Abesque Pty Ltd ("Abesque"). The core business of that company was fabrication and erection of tankage and structural steel, particularly at gold mines. Mr Melvan was employed by Abesque. That company engaged Mr Melvan in 1993. Mr Melvan was a boilermaker/welder who had worked on mine sites with a number of different employers. A schedule of Mr Melvan's employment history is in the appeal papers.

18 The terms of the arrangements between Abesque, Signet and GMA were the subject of some issues in the appeal, although, in the end perhaps, little turns on them. There was a form of agreement prepared by Signet for execution by GMA and Abesque as to the supply of labour. The agreement which went into evidence does not appear to have been executed.

19 More relevant are a series of facsimiles. The first is dated 16 March 1994 from Mr van Duyn of Signet to Abesque for the "supply of labour/equipment". It stated:

"... This plant has been in 'mothball' status for approx 28 months and the equipment will need servicing and repair prior to preoperational testing and re-commissioning.

The full extent of such repair and service works is not known at this stage and it is considered that the best option is that work be carried out under the immediate supervision and responsibility of Signet's construction manager Henk van Duyn.

Please provide us with your best possible rates for labour and equipment to carry out work as required and directed by Signet by Friday 18 March 1994 - 12 noon. ..."

20 On 18 March 1994, Abesque responded by a fax setting out the rates. On 18 March 1994, Signet replied by fax:

"This fax is to advise that we intend to award a contract for hire of labour and equipment to re-establish the Youanmi process plant. C.I.L/Grinding circuits. All as per Signet fax dated 16 March '94 and Abesque fax dated 18 Mar '94. ..."

21 The original contract was for $20,000, but was varied on 16 June 1994 by $330,000 to make a revised contract value of $350,000.

22 One of the employees sent by Abesque was Mr H de Blanken who submitted a series of timesheets between 25 March 1994 to 27 May 1994. In those timesheets he allocated certain hours to "supervision". Mr King, whose evidence the Commissioner accepted, is the Managing Director of Abesque. His evidence was:

"... At one stage I had one of our gentlemen, Hans de Blanken, on site, who started acting like a supervisor. Hank [van Dien] (sic) rang me up and told me to get rid of him because he was the supervisor."

"In terms of the supervision of Mr Melvan and the other people who were on site, what part did your company have to play in terms of the refurbishment plans?---None.

Why?---Well, Henk Van Duyn was adamant that he was representing Goldmines of Australia, he was supervising all the men, because - to the extent there was no-one besides Henk and probably Goldmines of Australia knew what was involved in the contract.

So without knowing what was involved in the contract, how would that affect your ability to supervise?---Well, we can't supervise when we don't know what's going to happen."

24 In cross-examination Mr King was asked whether he had signed a contract for the particular job for Abesque and he said he had not. He then said:

"... Because we didn't know the extent of the contract. We weren't supervising. We weren't asked for supervisors. We weren't asked for leading hands on the site. We had no control of the site so why would we sign a contract?"

25 Mr King denied that Mr de Blanken filled the role of supervisor on the contract. Mr de Blanken was paid an extra $2 per hour because he had been a valuable and long-time member of staff.

26 A director and founder of Signet, Mr Dardis, gave evidence that the project was one where Signet provided services to the owner but the owner contracted directly with sub-contractors to actually implement the project.

"... The actual way in which craftspeople or tradespeople do their job is first of all their business as qualified craftspeople. Second of all, their day-to-day direction comes out of their own organisation. We certainly allocate priorities and say, so-and-so task needs to be done or that needs to be done before that, but the actual minutiae of the task is not something which we would direct."

28 Mr Dardis was cross-examined about this statement and asked whether there would be an avoidance of the day-to-day minutiae of supervising and allocating tasks. His response was:

"... More than should. It is not what we do and in fact the people who are allocated to sites don't really have the skills said to do that.

29 Mr Dardis acknowledged Signet's role of construction and management included monitoring safety procedures and ensuring personnel on site are advised of safety regulations. Part of Signet's role was also identifying hazards and taking steps to ensure that corrective measures are taken when hazards are identified.

30 Mr Melvan gave evidence that he was told to go and work for Youanmi gold mine. When he arrived he was introduced to the foreman of the site and the manager of the site and ultimately their people in charge of the labour force who worked there. He was introduced to Danny (McManus) and Hank (van Duyn) and was told what to do by them. He described the jobs that he had to do. Mr McManus decided what would be used for each job and would allocate each job. Mr Melvan described that after he left the Plutonic site he was telephoned by Hank:

"... He has a wonderful Dutch accent, you can't miss him, ... and he said, 'Ivan can you please come over give us a hand?' ..."

31 As to the particular job on which he was injured, Mr Melvan gave evidence that Mr McManus asked him to close off the inside of the chute. They found a piece of metal and then Mr McManus said: "Well, we'll cut out of this and make it - and block it." At the conclusion of his evidence Mr Melvan was asked what he thought Signet ought to have done to make the job safer. Mr Melvan suggested that an assistant would have helped because: "I would have a person to keep holding of that plate from the outside ...". He said:

"Secondly, no person on construction job should work alone because wherever you go there's pit holes, person can injure themself."

32 He suggested they could have had a scaffold because: "It would be a platform for me to work - - -"

"... organising a job, supervisor's job is, I know it's very hard, you know, and demanding in every shape and form, but if the supervisor organised a job ..."

34 Mr Melvan thought that a crane with the appropriate help of a dogman would have made the job easier.

35 In cross-examination Mr Melvan was asked about Mr de Blanken. He denied that he was the Abesque leading hand. He was in charge, or second in charge because Abesque "... later on they got job to do on the site to install constructions bits and they working on different site". That was not a Signet job. In answer as to whether there were Abesque supervisors he said:

"... Maybe, but they never been my supervisors, sir. My supervisor was where Mr McManus and Henk, they are the guys who give us a job, who give us orders."

36 Mr Melvan agreed that he did not need supervision in the sense of people telling him how to do things all the time. If he needed assistance he would ask someone to help him. He said:

"I had nothing to do with the drum inside where the belt comes. That was out, top was off and I came in there when Daniel McManus gave me a job. He says, 'This is where we're going to block it.' I said, 'Okay. Where's the materials?' He says, 'Go for it.'"

37 Mr Melvan gave evidence: "I weld a lug to hold the plates (sic) when I was lowering down, sir, yes." In answer to a question whether he could have welded an ear onto it for a crane to carry it, he said:

"... If crane was allocated, if I had a crane, that would be the case, sir, yes."

38 Mr Melvan did not need permission to weld a lug or handle onto the steel plates. He decided which was the best way to move the plate. He agreed that he did not weld on shoulders or plate to hold it in position, saying that it was a question of doing the job in a timely manner. He denied that cutting the plate in two was an option.

39 Mr McManus gave evidence that he is a construction supervisor working as a consultant to Signet, a position he described as a "consultant". He said:

"The essence of the job is that the goldmine had been in a condition of - mothballed, stopped and the care and maintenance. A great deal had deteriorated and also as part of the new requirement for the plant many of the items had to be modified and changed - bits added to carry out the duties that they would be required for in the new scheme of the bioxidation plant."

"... I didn't need to tell people how to do their tasks I just needed to point them out to their task. If there was a problem and it needed some technical help or areas of expertise that they needed assistance with they would ask and I would help them with that but I was not directly supervising - to virtually point to something and say, 'Undo that bolt. Take that apart. Do that.' That wasn't my role.

... a guy by the name of Hans De Blanken who was their leading hand. Most of the communications and time sheets and the administration of their work was carried out by Hans. ..."

41 As to the chute, there were no plans. Mr McManus showed Melvan the job. They discussed the job. There were no constraints on the site for anyone who needed assistance to ask and receive it: "In fact, it was sort of encouraged. ..." Mr Melvan was at liberty to organise cranes if he wanted to. Abesque had a hydraulic boom crane and there was a GMA crane on site. Mr McManus said Mr Melvan was very creative and very meticulous and neat in his work. Mr McManus said that Mr de Blanken's tasks were to work with his people, find out what they required and consider all the requirements, their equipment requirements and follow them through with his headquarters to have them supplied and delivered to him to keep his work team equipped and also to make sure they were doing the tasks they were supposed to do. Mr McManus considered it was fairly standard practice to cut plates in two or to weld shoulders to carry the weight of a plate:

"... Really it's a choice of the person doing the job as to how they actually approach it. There's a variety of ways of taking the weight of a piece of plate so that you can work with it. It doesn't have to be its final location; it can be within a small distance of it and then you adjust it and you don't have the full weight to manoeuvre."

42 Contrary to Mr Melvan's evidence, Mr McManus said a block and tackle could have been used whilst Mr Melvan was in the chute.

43 In cross-examination Mr McManus gave evidence that Abesque was approached to provide labour, asked to source materials, find the best price, and send them up on a cost plus 10 per cent basis. By the time of the accident Mr de Blanken had gone from the refurbishment site and was working on the biox plant. From at least before 3 June there was no leading hand, but there was a manager from Abesque on site. In terms of the day-to-day work, it was Mr McManus or Mr van Duyn who directed what work was to be done.

44 Mr McManus discussed the use of the plate and not a thin plate. He did not make any arrangements about a crane:

"... I didn't make any arrangements about that."

... I gave him the job to do and it was up to him how he organised to get it done."

... you assumed, as I understand it, that Mr Melvan would make the necessary arrangements to get the plate lifted up?---Yes.

46 Mr McManus did not give any specific instructions on how to carry out the job, nor did he tell another Abesque employee about the job. He did not tell Mr Melvan to put in temporary supports because it is standard practice for a boilermaker.

"I find that on the day of the accident Mr McManus, who was employed by the defendant, was supervising the refurbishment of the old plant. Mr McManus directed the plaintiff to close off the opening in the chute."

48 The Commissioner was not using the word "employed" in any technical sense to found liability. In a general sense, Mr McManus was employed by Signet to supervise construction.

49 I think nothing in the end turns on the description used by the Commissioner that Mr McManus was employed by Signet.

"... Before the accident the second plaintiff agreed to hire the plaintiff to the defendant which acted as agent for GMA."

51 This may not be a strictly accurate summary. However, in [8] the Commissioner stated the position in a way I regard as correct:

"... The second plaintiff supplied a number of tradesmen including the plaintiff to the defendant as agent for GMA for the refurbishment."

52 At [24] the Commissioner noted that there may well be situations where the employment of one of its employees is delegated to another party or where de facto control of the employee has passed to another party.

53 The Commissioner accepted the evidence of Mr King that the contract to construct the biox plant and the contract to provide labour and equipment for the refurbishment of the old plant were separate and distinct. He also accepted Mr King's evidence that Mr de Blanken was not employed in a supervisory role and that Mr van Duyn rang and told him to get rid of Mr de Blanken because he (Mr van Duyn) was the supervisor. He found on balance that Mr de Blanken was not on site after May 1994, rejecting the evidence of Mr McManus on this point. Having regard to the evidence overall, it was open for the Commissioner to reach these findings. He also found, in any event, that in the months leading up to the accident, and at the time of the accident, Mr McManus was supervising the refurbishment work on the old plant, together, on occasions, with Mr van Duyn. Again, having regard to the evidence, I consider such a finding is open. The Commissioner concluded that the clear understanding as between Signet and Abesque was that Abesque would provide labour and equipment and Signet would provide the necessary supervision.

54 This finding is also open. It is submitted that the Commissioner did not provide adequate reasons for this conclusion and the accompanying conclusion that there was a passing of "de facto control" from Abesque to Signet.

55 I am unable to accept the submission. The Commissioner accepted the evidence of Mr King that Abesque was not asked to supply supervisors and that it had no control of the site. The fax of 16 March 1994, and the passages of Mr King's evidence previously quoted are sufficient to justify a finding of a clear understanding.

56 The Commissioner, with respect, correctly analysed the legal principles. He noted that Abesque has a non-delegable duty of care to its employees while they are working in the course of the employer's employment. He noted that there are situations where de facto control of an employee has passed to another party.

57 The Commissioner observed that there may be situations where a principal owes a duty of care to an independent contractor and that the relationship is based on proximity. These principles he extracted from Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672; Bankstown Foundry Pty Ltd v Braistina [1986] HCA 20; (1986) 160 CLR 301; Fennell v Supervision and Engineering Services Holdings Ltd v Santos Ltd (1988) 47 SASR 6; Climaze Holdings Pty Ltd v Dyson (1995) 13 WAR 487; Forsayth Mining Services Pty Ltd v Jack, unreported; FCt SCt of WA; Library No 950300; 10 May 1995.

58 The Commissioner then analysed the relationship between GMA and Signet, and Signet and Abesque. He concluded that, in the light of the facts, even if Abesque had a non-delegable duty of care to provide a safe system of work and breached it, in light of the facts de facto control of Mr Melvan had passed to Signet it would be proper to exempt Abesque from liability for contribution.

59 For this conclusion, the Commissioner expressly relied on Fennell per King CJ at 7:

"As to the contribution proceedings, I think that it may well have been proper to hold the appellant's employer, the first defendant, liable to the appellant for breach of a non-delegable duty to provide a safe system of work. It is unnecessary, however, to decide this point. De facto control of the appellant had passed to Santos Ltd and the fault which caused the appellant's injury was that of Santos Ltd. Whatever may have been the position between the appellant and his employer, as between the employer and Santos Ltd the responsibility for the safety of the appellant lay with Santos Ltd. If, therefore, the employer were held liable to the appellant, it would have been entitled to recover contribution to the extent of full indemnity from Santos Ltd. It would therefore be proper to exempt the first defendant from liability for contribution. The claim for contribution was rightly dismissed."

60 There has been an adequate elucidation of the Commissioner's reasoning and I consider the findings of clear understanding and the passing of de facto control are both in accordance with the evidence.

61 The Commissioner found that Signet owed a duty of care to the first respondent to identify and implement a safe system of work for the first respondent to close the opening of the chute and that it breached that duty. He reached that conclusion because, as he found, Abesque provided labour and equipment only to Signet. Signet had made it clear to Abesque that it would supervise the refurbishment and was in fact supervising the refurbishment. The supervisor employed by Signet directed Mr Melvan to carry out the work in question. While Signet did not direct Mr Melvan on how to actually weld, it had complete control on what tasks were allocated to him during the refurbishment of the plant [46].

62 In the circumstances, I consider each of these findings is open. Moreover, I consider that in [46] the Commissioner explained sufficiently in his reasons why Signet was exercising de facto control over Melvan such as to give rise to liability for negligence. I would not uphold grounds 1, 2, 6 and 7.

"3. The evidence being that the weight of the plate was being taken by a V-shaped structure and that the plaintiff was holding it merely to stop it slipping to the left or right, the learned Commissioner erred in fact and in law in:

(a) relying [22] on 'safer' alternative methods which merely had the effect of taking the weight of the plate;

(b) failing to give reasons analysing the mechanism of injury and explaining how alternative methods would obviate the risk of injury;

(c) finding that the structure took 'some of the weight' [22] and that the first respondent had to be careful the plate did not fall toward or away from him [52].

4. The learned Commissioner erred in fact and law in finding [13] that the first respondent 'may have' had an assistant in the relevant task but then relying on a finding that the appellant's subcontractor did not organise an assistant [45]."

63 The Commissioner summarised Mr McManus' evidence about the task that Mr Melvan was to undertake. It is not necessary to reproduce the Commissioner's reasons. In brief terms, Mr McManus required a chute to be closed off with a metal plate and instructed Mr Melvan to carry out the task. Together they selected a suitable steel plate which Mr Melvan then cut to size. The Commissioner found that the plate weighed about 32 kilograms. Mr Melvan had to climb into the chute which was a confined space of about 1.5 metres by 1 metre. Mr Melvan had previously welded a lug onto the plate to keep the plate in position. As Mr Melvan was reaching over with his left hand to get his welding hand-piece, he felt a sharp pain in his right shoulder which caused him to drop the plate.

"I put my foot, my right foot, on that V section right in the middle of the chute and my left leg was supported by the part of the chute at the back on the plate. So then I sort of come to this sort of - you know, I said, 'Okay, I can proceed with the job'. So at that time - pulled the plate towards me and slide it sort of rather than go down, so measure up on - against the job where I supposed to clock off. ...

... I hold that plate with that [lug] ... and I was actually not in the stand-up position. I was in a squatting position because the plate heavy and I tried to get a way as comfortable as possible to get the job done. So in that time when I had placed the plate on the job and I was holding with my right hand and the same time ... I was sort of feeling with the welding handle.

... So as I was reaching it, trying to get it, at that time I felt sharp pain in my [right] shoulder."

65 Mr Melvan was cross-examined about the position of the plate, in the course of which he said the plate could not fall straight down. He said:

"... If I don't hold it where I described it it will go towards me or it may slip because there's not a great deal on top of this V and if I don't hold it it will slip far or it will go towards my side. I have no other way of controlling it and I have to take the weight off."

66 Mr Melvan said that he was holding and keeping the plate in position.

67 In my opinion ground 3 misconceives the whole of the evidence. The steel plate was a significant weight - 32 kilograms by estimation. In the confined space of the chute it was necessary for Mr Melvan to hold some of the weight of the plate. He said clearly that is what he was doing. The finding of the Commissioner that "The plaintiff sustained his shoulder injury as a consequence of trying to support the weight of the plate preparatory to and immediately prior to welding it in place" is consistent with the evidence. The finding:

"21 While the inverted 'V' shaped bar took some of the weight of the plate when the plaintiff held the lug on the plate with his right hand and reached for his welding handpiece with his left hand, I accept his evidence that in this position the plate was heavy. He was holding the plate while he was in a very confined space and in a very awkward position. The centre of gravity of the plate was away from his body and further away from the welding handpiece that he was reaching for."

is also consistent with the evidence, to which I have referred, together with the photographs which were tendered before the Commissioner. The best illustration is what happened when Mr Melvan let go of the plate when he felt the pain in his shoulder. The plate fell to the floor. The Commissioner's conclusion was:

"20 ... the system of work by which the plaintiff prepared to weld the piece of steel plate into position to close the opening in the chute and which led to his injury was both unsafe and difficult. It exposed him to a reasonably foreseeable risk of injury of the sort he actually suffered."

68 This conclusion is clearly available. Moreover, I consider the Commissioner has adequately set out his reasons for reaching that conclusion. I would dismiss ground 3.

69 Ground 4 misconstrues what the Commissioner actually said which appears at [13] as follows:

"... He lowered the piece of plate into the chute and made himself as comfortable as he could in a squatting position. Someone may have assisted him to lower the piece of plate. Nothing turns on that. He then manoeuvred the piece of plate into place.

70 This was not a finding that there was somebody available to help, and in any event even if Mr Melvan was assisted by someone lowering the plate down for him, a person at the top could not have assisted in holding the plate in position where Mr Melvan was. It is said that the finding just set out is inconsistent with the finding at [45]:

"... Before the accident Mr McManus knew or should have known that the piece of steel plate required to close off the opening would be heavy. He also knew or should have known that welding the plate inside the chute would be a difficult physical task that required a heavy piece of steel plate to be manoeuvred and held in a confined space. He did not organise any labour, machinery such as a crane which was available on site or block and tackle to assist the plaintiff in carrying out the work. He also did not turn his mind to any other system of work which would have made the plaintiff's task safe such as welding shoulders to the inside of the chute to hold the weight of the plate."

71 It is argued that this shows that labour was available. However, the finding, as I have explained, does not go so far and the reference to labour has to be read with the reference to the machinery such as a crane or a block and tackle. There is no substance in this ground.

72 The following grounds relate to contributory negligence:

"5. Given the general acceptance by the learned Commissioner of the first respondent's evidence on liability matters, and the fact that the first respondent had more boilermaking experience than the appellant's subcontractor McManus, it was perverse, inconsistent and an error of fact for the learned Commissioner:

(a) to find that the first respondent would not have been aware of any risk of injury but that McManus should have been [45, 53, 54] and to make no deduction for contributory negligence;

(b) to rely on alternative methods in [22] when the first respondent's evidence was that those methods were not possible for him to adopt.

7. The learned Commissioner erred in fact and in law by failing to give adequate reasons for the finding [60] that the second respondent (as employer) should make no contribution."

73 It is difficult to understand the first assertion in ground 5 given that Mr McManus gave evidence in re-examination as follows:

"Mr McManus, you spoke about what standard practice was for a boilermaker. What experience do you have that enables you to talk about standard practice for a boilermaker?---I have worked as a boilermaker for many years when I first came to Australia."

74 The Commissioner gave careful reasons as to why he differentiated between the negligence of Signet through McManus, on the one hand, and the action of Mr Melvan, on the other. Part of Signet's role involved safety issues and as the Commissioner found, correctly, Mr McManus was directly supervising the work to such an extent that de facto control had passed from Abesque.

75 He found that Mr McManus "knew, or should have known ... that welding the plate inside the chute would be a difficult physical task that required a heavy piece of steel plate to be maneuvered and held in a confined space." That would seem to be obvious. The duty of care therefore arose.

76 The Commissioner accepted that Mr Melvan knew these matters as well and found:

"53 Clearly the plaintiff thought that he could do the job without any assistance notwithstanding the heavy weight of the plate and the confined space in the chute in which he had to work. Although the plaintiff was not asked and so gave no express evidence on the point I consider it likely that he thought that he could manage with the heavy weight of the plate partly at least because of the assistance of the lug he had welded on the plate and by initially positioning the plate on the inverted 'V' bar and later on the bottom edge of the opening in the chute. He misjudged the situation.

54 Although the plaintiff knew that the piece of steel plate was heavy there is no evidence that he was aware that he risked an injury to his shoulder if he attempted to do the work by himself and/or without any mechanical assistance other than the lug that he had welded onto the plate."

77 The Commissioner correctly addressed himself to the question of contributory negligence, referring particularly to Podrebersek v Australian Iron and Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492, Commissioner of Railways (Qld) v Ruprecht [1979] HCA 37; (1979) 142 CLR 563, McLean v Tedman & Anor [1984] HCA 60; (1984) 155 CLR 306, Bankstown Foundry Pty Ltd v Braistina (supra) and Commissioner for Railways v Halley (1978) 20 ALR 409. After applying those principles to the facts he found:

"59 I am not satisfied that the plaintiff was contributorily negligent. I am not satisfied that the plaintiff did anything other than misjudge how he went about the work. Further, I am of the view that the plaintiff's misjudgement should be weighed against a background made up of Mr McManus telling the plaintiff to 'go for it' and other tradesmen being elsewhere on site doing their own work."

78 Signet points to the fact that Mr Melvan thought he could not use a tractor crane because of the height.

79 However, the Commissioner found that Mr Melvan was honestly mistaken about that and accepted the evidence of Mr McManus that the tractor crane could have been used to at least suspend the plate in the chute.

80 Mr McManus' evidence was supported by the evidence of an expert witness, Mr Wright, called on behalf of Signet, who gave evidence of a number of different ways in which the job could have been completed more safely, including the use of a crane.

81 In the circumstances, I would decline to interfere with the judgment of the Commissioner that Mr Melvan had not been guilty of any contributory negligence. Further, I am quite satisfied that the Commissioner adequately set out his reasons for reaching that conclusion.

Taking into account material which was not in evidence

83 The doctors' reports were included in a book of medical reports. During the course of examination of Dr Ker, a witness called on behalf of Mr Melvan, the Commissioner asked:

"Perhaps at this point, can we reach some agreement that the whole book can come in as one exhibit?"

84 Counsel for Signet put in a qualification to that and as a result only Dr Ker's reports were tendered.

85 In the event, the witnesses were not called and so the reports did not go into evidence.

The Commissioner summarised the report of Dr Tye [62]:

"When the plaintiff returned to Perth he went to see Dr Tye, his general medical practitioner, on 25 August 1994. However Dr Tye was away and so the plaintiff did not get to see him until 1 September 1994. Dr Tye initially treated the plaintiff with analgesics and physiotherapy which produced some but not a satisfactory relief of symptoms. Dr Tye then referred the plaintiff to Mr Soo Tee Lim, ("Mr Lim") an orthopaedic surgeon, to arrange for an arthrogram and perform an arthroscopy."

86 The Commissioner also summarised the treatment undertaken by Mr Lim [63]:

"The plaintiff first saw Mr Lim on 22 November 1994. The arthrogram showed a tear of the rotator cuff tendon of the right shoulder. In view of persistent symptoms and the confirmation of a full thickness tear the plaintiff was admitted to hospital on 6 February 1995 and an arthroscopy was carried out. During surgery it was noted that the tear of the rotator cuff mainly involved the supraspinatus tendon. Mr Lim carried out open decompression, acromioplasty and repair of the torn rotator cuff. Thereafter the plaintiff was treated with physiotherapy. When the plaintiff was reviewed by Mr Lim on 28 March 1995 he complained of persistent pain in his right shoulder and that the surgery had not resulted in any significant improvement. On 7 April 1995 Mr Lim referred the plaintiff to Mr Robinson, orthopaedic surgeon, for further assessment."

87 The Commissioner also noted the opinion of Mr Robinson

"64 The plaintiff saw Mr Robinson on or about 3 May 1995. Mr Robinson thought that the plaintiff had some residual supraspinatus tendonitis and he injected the subacromial space with local anaesthetic to increase the plaintiff's range of movement. A technetium bone scan taken in May 1995 showed significant uptake in the shoulder on the AC joint on the right side. In light of this Mr Robinson decided to carry out an open excision of the acromioclavicular joint to inspect the rotator cuff repair through the superior approach and also inspect the acromion. On or about 29 May 1995 the plaintiff underwent an open decompression and incision of the outer 1 centimetre of the clavicle. The wound from the surgery became infected and for most of June 1995 the plaintiff needed to take antiobiotics and have the wound continually dressed.

65 When the plaintiff saw Mr Robinson on or about 7 August 1995 he complained of significant pain in his shoulder which limited his ability to elevate the limb beyond 90 degrees. Mr Robinson organised some hydrotherapy and injected the joint with some cortisone. An ultrasound showed a possible partial tear of the rotator cuff. However Mr Robinson dismissed this possibility because the rotator cuff had been inspected on two occasions at operation and there was no significant microscopic tear present. In a report dated 21 August 1995 Mr Robinson stated that the plaintiff was making satisfactory but slow progress with regard to the range of movement of the right shoulder. He stated that he did not think that the plaintiff would be fit enough to return to his duties as a boilermaker in the long term. He recommended vocational assessment and redeployment.

66 Mr Robinson continued to see the plaintiff in September and October 1995. During this period the plaintiff continued to complain about his right shoulder. His ability to elevate the shoulder reduced from about 90 degrees to about 45 degrees. He was admitted to Glengarry Hospital for three days for intensive physiotherapy treatment using slings and springs. After such treatment he still experienced pain but was able to elevate his arm to 120 degrees. He complained to Mr Robinson that shoulder pain woke him up at night. In November 1995 the plaintiff was discharged from Mr Robinson's care and advised to continue with his own exercises and continue to see Dr Tye."

88 The Commissioner relied heavily on Dr Tye at [68] and [69]. At [82] he reached the conclusion that Mr Melvan had at times exaggerated the extent of his right shoulder pain and been inconsistent on what he could and could not do with his right shoulder and arm, but his evidence was nevertheless accepted that he "continues to suffer from right shoulder pain." The Commissioner found:

"... I find that he suffered a right shoulder injury involving a tear of the supraspinatus tendon which required surgery and which has resulted in a permanent incapacity in the range of 15 per cent to 25 per cent of the efficient use of his right arm above the elbow."

89 The finding of the tear involving the supraspinatus tendon must have been based on the report of Mr Lim who carried out surgery on 6 February 1995 as detailed by the Commissioner at [63].

"All of Mr Lim, Mr Robinson, Dr Ker, Dr Home, Mr Bell, Dr Suthers and Dr Tye are of the opinion and I find that the plaintiff cannot return to work as a boilermaker/welder. ..."

91 Dr Bell, Dr Suthers and Dr Home, called on behalf of Signet, all gave evidence. Dr Ker was called on behalf of Mr Melvan. Dr Home assessed Mr Melvan as having a permanent disability of 20 per cent at the full efficient use of the right upper limb at or above the elbow. Dr Suthers assessed Mr Melvan as having a 15 per cent permanent loss of the full efficient use of his right arm, while Mr Bell stated that Mr Melvan had a degree of permanent disability in the right shoulder which he had assessed at 25 per cent loss of function.

92 In assessing economic loss, the Commissioner relied upon reports by Dr Tye and Dr Lim in parts. He also relied upon reports by Dr Ker, Dr Bell, Dr Home and Dr Suthers, together with Ms Jones, a vocational rehabilitation consultant called on behalf of Signet to reach a finding:

"I find that since about mid-1998 the plaintiff has been and in the future will be capable of work of a light duty nature and also work including welding work at bench height. I also find that given the factors mentioned by Ms Jones the plaintiff will find it difficult although not necessarily impossible to find work in the open labour market. I assess the plaintiff's retained earning capacity from mid-1998 at 25 per cent of his pre-accident capacity."

93 This ground, ground 8, has caused me particular difficulty. Neither finding in relation to permanent incapacity is directly challenged, although it may be that ground 10 indirectly challenges these findings.

94 On the one hand, the unadmitted material seems generally consistent with the admitted medical evidence.

95 However, the fact remains that the material not in evidence must have been relied upon to a considerable extent by the Commissioner judging from his repeated references to it in the evidence.

96 In the end, it is not possible to be confident that there has been no miscarriage of justice. The only course is to allow the appeal against the quantum of damages on this ground and remit the matter back to the Commissioner for him to assess the evidence without regard to the material not in evidence.

97 This ground relates to a particular payment of about $20,000. The ground is:

"Having found [86] an overpayment of 'about $20,000' the learned Commissioner erred in fact and in law in treating that sum as being part of the second respondent's 'liability to pay compensation' under s 93 of the Workers' Compensation and Rehabilitation Act, 1981 [111]."

98 This ground relates particularly to an issue between Signet and Abesque, the issue being the amount of any indemnity that may be ordered in favour of Abesque against Signet in relation to worker's compensation payments.

"108 From 1995 to 1997 inclusive the plaintiff was paid weekly workers' compensation payments at a higher rate than required. On or before 30 June 1997 the payments made reached the then prescribed amount under the WC Act and so the second plaintiff's workers' compensation insurer stopped making such payments. No weekly workers' compensation was paid thereafter. As previously mentioned a total of $103,708 gross was paid to 30 June 1997 and if the correct amount of workers' compensation had been paid each week then the plaintiff would have received a total of about $20,000 gross less. Counsel for the defendant has argued that any indemnity should not include the overpayment.

109 Usually the total gross amount of workers' compensation payments paid to a plaintiff worker and medical expenses paid by the workers' compensation insurer are included in the judgment because such amounts are a first charge on the judgment and must be repaid by the plaintiff. However in this case the second plaintiff's workers' compensation insurer by the second plaintiff does not seek any indemnity from the plaintiff. It seeks a full indemnity from the defendant."

"In my view the amount of the overpayment should be regarded as workers' compensation payments. They were reasonably paid and they were paid on the basis that they were workers' compensation payments. Further, whatever application the workers' compensation insurer may in theory have been able to make the fact of the matter is that the medical evidence clearly shows that since 30 June 1997 the plaintiff has been and will continue to be unfit to return to work as a boilermaker/welder. Even if the weekly workers' compensation payments were reduced to take account of the plaintiff's capacity for light duty employment from about mid-1998 I have no doubt that given the medical evidence and the length of time from 30 June 1997 to trial an amount equivalent to the amount of the overpayment would have been paid after 30 June 1997 and before trial."

101 As a result the Commissioner found that Abesque was entitled to a full indemnity against Signet in the sum of $132,385.94.

102 In my opinion the Commissioner erred in finding that the amount of the overpayment should be regarded as worker's compensation payments. It was an overpayment.

103 At trial Abesque called Mr Fong a clerk for Abesque's insurers. Mr Fong's evidence was that payments were originally made at $836 gross per week but reduced to $592.60 per week pursuant to an order of the Conciliation Review Directorate on 20 June 1996. Payments were continued until 30 June 1997 so that the total sum of $103,708.04, by way of weekly payments, was reached. Payments were ceased because the prescribed limit had been reached. Mr Fong said that had the prescribed limit not been reached and had he continued to receive certification from Dr Tye, weekly payments would have continued until the balance or the additional amount had been reached. Mr Fong acknowledged that payments could have been reduced by 29 September 1994. He agreed $20,000 should not have been paid by 30 June 1997 but eventually conceded that in hindsight he could not comment on what would have happened had the payments continued beyond 30 June 1997 due to the fact that reviews about Mr Melvan's rehabilitation were being sought.

104 It is not to the point to speculate that payments may have continued at the full rate until $20,000 was absorbed because in fact there was a $20,000 overpayment. To this extent the ground is made out.

"Although it is not to the point it seems to me that the defendant is in a no-win situation overall because if the overpayment is not regarded as workers' compensation payments then the plaintiff's past economic loss would be assessed in an amount greater than otherwise because the amount of the overpayment would not be included in the amount of income actually received by the plaintiff during the relevant period and discounted in making the assessment."

106 I would allow this ground of appeal and also remit this ground to the Commissioner to assess damages in the light of these reasons.

"10. The learned Commissioner erred in fact and law in assessing the economic loss of the first respondent by failing to give weight, or sufficient weight, to:

(a) the evidence of Mrs Jones as to the first respondent's negative attitude;

(b) the first respondent's evidence that he would not, irrespective of the accident, have been doing the kind of work he had been doing pre-accident;

(c) the evidence of Professor Mulvey as to wage rates for alternative occupations (a minimum of $527.30 per week);

(d) accepted principles for discounts for retained earning capacity and for contingencies."

108 The grounds are selective and grounds 10(a) and 10(b) in particular do not properly reflect the evidence. Ms Jones is a vocational rehabilitation consultant. She did not in her evidence, nor in her reports, use the expression "negative attitude". On the contrary, she indicated that Mr Melvan was positive and keen in relation to a work trial at Coventry's. This work trial was discontinued after a short time due to increasing pain. On 30 January 1997 Ms Jones wrote:

"Vocational rehabilitation recommendations must remain of pursuing a work trial to determine Mr Melvan's abilities, however Mr Melvan is not keen to undertake this plan as he considers it inappropriate if there is no work for him thereafter."

"94 Adrianne Jones ('Ms Jones') is a vocational rehabilitation consultant. She was called as a witness by the defendant. Her prognosis of the plaintiff returning to work was guarded given his age, injury, work history, lack of educational qualifications, that English was not his first language and potential reluctance by some employers to employ a person with an injury.

95 I find that since about mid-1998 the plaintiff has been and in the future will be capable of work of a light duty nature and also work including welding work at bench height. I also find that given the factors mentioned by Ms Jones the plaintiff will find it difficult although not necessarily impossible to find work in the open labour market. I assess the plaintiff's retained earning capacity from mid-1998 at 25 per cent of his pre-accident capacity."

110 Paragraph 10(b) of the grounds of appeal does not completely reflect the evidence or the finding. The Commissioner held:

"100 By about mid-1998 the plaintiff had had a long history of working as a boilermaker/welder. It is heavy work. Much of his work was undertaken in relatively remote country towns or at least away from Perth. The plaintiff had reached the point in 1994 where he did not want to work away from Perth. On my assessment of the plaintiff I think there is a real possibility that he would have at least reduced the amount of work he did as time progressed. I also think that there is a real possibility that the plaintiff would not have worked to age 65 years.

101 I think that the plaintiff was wanting to at least reduce his level of working hours given the combination of his age, the length of time he had been a boilermaker/welder, the heavy nature of the work and his desire not to be away from home. I note that the plaintiff's taxation returns for the years ending 30 June 1995 and 1996 include deductions of $35,075 and $4,088 respectively for a fee to manage a vineyard. This is consistent with my view that the plaintiff was at least becoming less interested in work as a boilermaker/welder and was turning his interest elsewhere.

102 It seems that the nature of the plaintiff's work required him to go from one project to another with the potential for periods of unemployment in between. The economic environment for the construction industry is cyclical and is well known to have been fairly difficult in recent years. The future looks better with the prospect of developments in the north west of the State. On the positive side for the plaintiff it should also be borne in mind that he was a good tradesman and so his prospects of securing employment would have been better than for many others.

103 The average annual gross income of a boilermaker/welder in Western Australia in the financial year ending 30 June 1994 was $37,845. The plaintiff's gross income of $25,746 in the financial year ending 30 June 1994 equates to 68 per cent of the average. Even when taking into account that there would have been boilermaker/welders who earned less as well as more than the average it would be fair to say that in both years ending 30 June 1993 and 1994 the plaintiff was not working to full capacity. This needs to be taken into account when assessing contingencies. The possibility of working more hours is, of course, a positive contingency for the plaintiff.

104 By not working the plaintiff has saved in the past and will save in the future the expenses necessary to earn an income as a boilermaker/welder. The plaintiff's taxation returns show that he has claimed and received deductions for expenses relating to a motor vehicle and tools. This saving should be taken into account as a contingency. It is a negative contingency for the plaintiff."

111 Professor Mulvey was Professor of Industrial Relations and Economics at the University of Western Australia and at the time of trial was the Director of the Centre of Labour Market Research at UWA. He made enquiries about the earnings and job prospects for a person seeking work in the occupations that had been suggested as principal options for Mr Melvan. He gave general evidence as to vocational options such as assembler, process worker, machine operator, boilermaker-welder and also possibly sales assistant (hardware/building supplies) and stock and purchasing/sales inquiry clerk.

112 Professor Mulvey did not of course give specific evidence as to the prospects in respect of Mr Melvan. The Commissioner set out the medical evidence about the work which Mr Melvan might be able to undertake before reaching his finding at [95]. Each of the doctors, whose evidence was summarised by the Commissioner from [88] to [93] of his judgment, put qualifications on Mr Melvan's ability to work. For example, Dr Ker concluded on 19 February 2002 that Mr Melvan "... is unfit for work for the foreseeable future".

113 Having reviewed the evidence I remain unpersuaded that the Commissioner's assessment of the plaintiff's retained earning capacity from 1998 at 25 per cent of his pre-accident capacity is manifestly wrong.

114 I would dismiss the appeal as it concerns liability in respect of both respondents. I would allow the appeal on quantum of damage, set aside the judgment, and remit the action to the Commissioner for damages to be assessed in the light of these reasons.

115 I would allow the appeal as against the second respondent to the extent indicated with a consequent adjustment in the judgment in relation to the first respondent.

• Introduction
• The relationship between the parties
• Background
• The evidence of Ivan Melvan
• Daniel Peter McManus:
• The Commissioner's reasons
• Grounds relating to negligence
• Contributory negligence
• Appeal against quantum

• Taking into account material which was not in evidence

• Ground 9
• Failure to assess economic loss properly
• Conclusion