Strahinja Pandurevic v Southern Cross Constructions

Judgment 1These are proceedings for damages for personal injury sustained by the plaintiff, Strahinja Pandurevic, in the course of his employment at a building site. The company undertaking the building work was the first defendant, Southern Cross Constructions (NSW) Pty Limited, to which I shall refer as "Southern Cross". The plaintiff was working for the second defendant, Allmen Steel Pty Ltd, which Southern Cross had engaged as a sub-contractor. (He was working for Allmen Steel by virtue of an arrangement with a related company, Allmen Installations Pty Ltd, which was his employer, but nothing turns on this for present purposes). I shall refer to the second defendant as "Allmen". 2The incident giving rise to the plaintiff's injury took place on 7 December 2005. He was involved in the installation of a steel window lintel on a building at the site, which was on Lyons Road, Camperdown. In the course of manipulating it into position he suffered a severe back injury. In the current statement of claim (the second amended statement of claim), he sues Southern Cross and Allmen in negligence. A number of particulars of negligence are pleaded, but it is unnecessary to go to the detail of them. It is sufficient to refer to the first of them, which alleges failure by both defendants "to provide, co-ordinate and/or maintain a safe system of work upon the building site ... ." 3The plaintiff and Southern Cross have settled the proceedings between them on the basis that there is to be judgment for Southern Cross. However, Allmen seeks leave to file a cross-claim (the proposed fourth cross-claim) against Southern Cross, seeking contribution or indemnity from it under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946. As I understand it, although the cross-claim seeks contribution or indemnity, it is only contribution which would be pursued. Leave is required because of the time limitation imposed by UCPR r 9.1(1). 4In addition, Allmen must deal with the settlement between the plaintiff and Southern Cross. In the ordinary course, Southern Cross would be entitled to judgment in its favour in accordance with that settlement. This gives rise to the problem identified in James Hardie & Co Pty Ltd v Seltsam Pty Ltd [1998] HCA 78, 196 CLR 53. If judgment for Southern Cross were entered, it would be absolved of liability to the plaintiff and could not be a joint tortfeasor liable in respect of the plaintiff's damage within the meaning of s 5 of the Law Reform (Miscellaneous Provisions) Act. To protect its position, it is necessary for Allmen to take the action suggested in the judgment of Gaudron and Gummow JJ at [19], that is, to seek deferral of the entry of judgment in favour of Southern Cross until the determination of the issue of its liability to the plaintiff for the purpose of its claim against Southern Cross for contribution. 5Hence the motion which I must determine. Allmen seeks not only leave to file the cross-claim but also an order that judgment not be entered in favour of Southern Cross until that cross-claim has been determined. 6Most of the argument on the motion was directed to whether the proposed cross-claim is arguable. For the purpose of it, Allmen repeats the allegations in the statement of claim and, in particular, relies upon the particulars of negligence set out in that document. However, the cross-claim expands upon that document considerably and provides further particulars of negligence by Southern Cross. At the heart of it is the assertion that Southern Cross "directed, co-ordinated and controlled activities on the site", including the installation of the lintels, and that it "failed properly to supervise the activity so as to alleviate the risk of injury to the plaintiff where the installation was undertaken at height using a scissor lift, involving manual handling, and involving moving heavy weight," and "failed to properly devise, maintain or institute a safe system of work in respect of the installation of the lintel so as to alleviate the risk of injury to the plaintiff" in those circumstances. 7On the day in question, the plaintiff was engaged in the installation of the lintel in a window aperture in an upper storey of the building. To gain access to that position he was standing on the platform of a scissor lift. The lintel was raised to the necessary level by a tower crane. According to a statement made by the plaintiff, it was positioned in such a way that one end was supported in the aperture and the other was protruding from it. The chains securing it to the crane were removed. He was required to use a piece of timber to lever it into place. The timber was resting on the guardrail of the scissor lift and he was using it as a fulcrum for the levering process. It was in the course of doing this that he suffered the back injury. 8In an expert report prepared for the plaintiff, a civil engineer, Mr Hugh Cowling, expressed the view that this method of installing the lintel was unsatisfactory. There should have been a "secure scaffold or other purpose-made support frame on which to lower and retain the heavy lintel." He also noted that the method of installation did not comply with a safe work method statement (SWMS) prepared by Allmen on 20 October 2005, which provided for the lifting of the lintels by a forklift. A statement by Mr Jacques Saba, a supervisor with Allmen, reveals that a crane was used for the installation of lintels above the ground floor of the building because a forklift could not reach the required height. If that procedure were to be adopted, Mr Cowling reported, a fresh SWMS should have been prepared by Allmen and submitted to Southern Cross for approval before the work was undertaken. 9It is not clear on the evidence who owned the crane, but it appears from the statements of Mr Saba and of Mr Rupert Henry, director of Allmen, that it was supplied by Southern Cross. Certainly, it needed to be booked through Southern Cross. However, it was operated by another sub-contractor, Resolution Rigging Services Pty Ltd (which is not a party to these proceedings). 10The installation of the lintels was work which Allmen was undertaking as sub-contractor and, of course, it was Allmen for whom the plaintiff was working. The evidence is certainly capable of establishing its liability to the plaintiff. The question is to what extent, if at all, Southern Cross was also responsible for the manner in which the work was carried out. 11I received into evidence a large body of material, comprising the contract between Southern Cross and Allmen and statements by the plaintiff, Mr Saba and Mr Henry. I also received copies of Resolution Rigging documents and of entries in site diaries of Southern Cross, and Mr Cowling's report. For the purpose of determining the viability of the proposed cross-claim, it is not necessary to recite this material in detail. 12The contract set out the work to be undertaken by Allmen, including the construction and installation of the steel lintels. It provided for Allmen to prepare an SWMS in respect of any work undertaken and to provide it to Southern Cross (cl 4.2.4). Allmen was to provide a full time project supervisor/foreman who would be responsible for co-ordination of the work with other trades, "taking and receiving instructions" from Southern Cross (cl 4.3.1), and was required to "co-ordinate with all other sub-contractors and consultants on the project" in the execution of its work (cl 4.3.2). Among Allmen's responsibilities was the "horizontal and vertical movement of equipment and materials, including loading in and out of loading platforms and man and materials hoists ..." (cl 4.5.2(d)). 13By cl 4.8.3, Allmen was to comply with any relevant legislative provisions and requirements of the WorkCover Authority, as well as "any other safety instructions" given by the project manager of Southern Cross. By cl 4.8.10, Southern Cross could direct Allmen to make changes to an SWMS and Allmen was bound to comply with any such direction. However, cl 4.8.11 provided that Allmen remained "responsible for all construction methods, techniques, sequences and procedures employed" by it in carrying out its work. 14Clause 14.1 required Allmen to ensure that all personnel engaged to carry out its work were "experienced and qualified for the particular tasks" they were to undertake. However, by the same clause, Southern Cross could "at its absolute and unfettered discretion and without giving reasons" direct Allmen to remove "any person, employee or secondary sub-contractor engaged" by Allmen in connection with the work. 15The extracts from the site diaries of Southern Cross contain entries concerning aspects of the work undertaken by Allmen, including two occasions in November 2005 when Southern Cross intervened to ensure compliance with an SWMS or to require Allmen to "re-do" an SWMS. Other entries record work being undertaken by Allmen. In particular, an entry for 7 December 2005, the day the plaintiff suffered his injury, records: "Resolution Rigging - lifting timber beams down from Block A to truck. Lift lentils for Allmen to Block A Lyons Road, Barr St: delay in crane due to wind reaching speeds of 70 kmph." Later in the entry for that day there appears a notation, "Allmen - Installing lintel to Barr Street and Lyons Road Block B ... ." 16In his report Mr Cowling expressed opinions about the duty to the plaintiff of Southern Cross and Allmen, assigning a measure of responsibility to both of them for his injuries. Mr Cowling gave oral evidence at the hearing of the motion in which his opinion about the responsibility of Southern Cross was challenged by counsel for that defendant, Mr Whyte. It is apparent that Mr Cowling did not have some relevant material at the time he prepared his report, and that it was prepared under two significant misapprehensions: that Southern Cross was the plaintiff's employer and that it was the operator of the tower crane. That said, it may be that some of his opinions about the responsibility of Southern Cross are salvageable. However, I am reluctant to rely upon Mr Cowling's opinions on this aspect and, in any event, I am able to resolve the issue which I must decide without reference to that aspect of his report. I shall have regard to the report only insofar as it explains the mechanism of the plaintiff's injury, how it might have been avoided, and the fact that the method of installing the lintel was not sanctioned by the SWMS. 17Counsel for Allmen, Mr Cooley, referred to the contract between Southern Cross and Allmen. He noted that, while generally it placed the responsibility for the sub-contract work upon Allmen, it provided for a measure of direction and supervision of the work by Southern Cross, particularly on issues of safety. So much appears from cll 4.8.3, 4.8.10 and 14.1, referred to above. 18Mr Cooley relied on the entries in the Southern Cross site diaries to which I have referred, tending to demonstrate that measure of supervision by Southern Cross and, generally, its day to day awareness of the work undertaken by Allmen. He relied particularly on the notation for 7 December 2005 which I have set out above. He argued that that entry showed not only that Southern Cross was aware of the installation of lintels by Allmen on that day, but also of the method by which it was being done. Mr Whyte argued that that second inference could not be drawn from the note. This is not a dispute which I find it necessary to resolve. What can be said, however, is that, according to Mr Saba's statement, the crane had been used to lower lintels into place on several occasions before the day in question, and the inference is available that Southern Cross was aware that this was happening and knew, or ought to have known, that it was not in accordance with the SWMS. 19Generally, Mr Cooley noted that Southern Cross occupied the site and was undertaking the construction work there, and that on the relevant day there were two sub-contractors, Allmen and Resolution Rigging, interacting to complete the task in question. He referred to the nature of the site and, particularly, the fact that it abutted onto a public street. He argued that, in the circumstances, Southern Cross was under a duty to co-ordinate and direct the activities of the two sub-contractors and to ensure that the work method was safe. In that regard, he referred to a Job Safety Analysis prepared by Resolution Rigging in relation to its sub-contract generally, which included a notation that Southern Cross was "to provide a safe workplace, and instruct and implement any site specifics as required enabling the crane crew to adjust to any changes that may occur during the term of the project." 20Mr Cooley cited a passage from the joint judgment in Pacific Steel Constructions Pty Limited v Barahona [2009] NSWCA 406. In that case a principal contractor was found not to bear responsibility for an injury suffered by an employee of a sub-contractor. However, Mr Cooley relied upon the principles summarised at [89] - [90] of the judgment, as follows: "[89] In a number of decisions of this Court, it has been held that a principal owes to an independent contractor, or to the independent contractor's employee, a duty beyond the alleviation of risk of injury arising from a need for direction and co-ordination of activities on a site. Examples are Rockdale Beef Pty Limited v Carey [2003] NSWCA 132 (the configuration of the principal's work site brought the safety risk; see also the protruding scaffolding in Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114; 173 IR 412, although there was also a failure in coordination of activities); Tolhurst v Cleary Bros (Bombo) Pty Ltd [2008] NSWCA 181 (the principal created the conditions in which there was a risk in the system of work and retained control over it); Bostik Australia Pty Ltd v Liddiard [2009] NSWCA 167 (the principal exercised overall control over the activities on the premises, part of a more extensive collection of relevant matters at [89]). (An application for special leave to appeal from the decision in Bostik Australia Pty Ltd v Liddiard is pending). [90] In Sydney Water Corporation v Abramovic [2007] NSWCA 248; 5 DDCR 570; (2007) Aust Torts Rep 81-913 at [98] Basten JA, with whom Mason P agreed, essayed a statement of criteria which may give rise to a duty owed to a worker who is an employee of an independent contractor, although in Caltex Refineries (Qld) Pty Limited v Stavar [2009] NSWCA 258 his Honour observed that he had not intended a precise checklist but rather a guide to criteria suggested by existing caselaw. The statement was: '[98] However, the principal may also owe a duty to a worker who is an employee of an independent contractor. The legal question is to identify the criteria which must be satisfied to give rise to such a duty of care. The cases suggest that satisfaction of one of the following criteria may give rise to such a duty: (a) the principal directs the manner of performance of the work; (b) the work requires the coordination of the activities of different contractors; (c) the principal has or ought to have knowledge of the risk and the employer does not and cannot reasonably be expected to have such knowledge (d) the principal has the means to alleviate the risk and the employer cannot reasonably be expected to do so; (e) although the employer has or should have the relevant knowledge and can be expected reasonably to take steps to alleviate the risk, it does not, to the knowledge of the principal, do so.'" 21Mr Cooley also referred to Multiplex Constructions (NSW) P/L v Lopez [2004] NSWCA 319. In that case the appellant, Multiplex, was the principal contractor at a building site. The respondent, Mr Lopez, was employed by Pict Bricklayers Pty Ltd, a sub-contractor at the site. Mr Lopez was injured when he slipped on a concrete floor which was covered by rainwater. There was no question of the liability of Pict to its employee. The issue in the appeal was the liability of Multiplex for contribution. The Court had regard to terms of the contract between Multiplex and Pict, and the trial judge's finding that Multiplex "had assumed control and supervision of the premises." 22The leading judgment was given by Santow JA, with whom Handley and Beazley JJA agreed. At [42] - [46] his Honour said: "[42] After hearing argument on the appeal, the presiding judge, Handley JA with the concurrence of Beazley JA and myself stated the duty of Multiplex as head contractor in these terms: 'Multiplex's head contractor owed: (i) a duty of care to persons such as Mr Lopez who are on site as employees of Pict, the sub-contractor, and (ii) was in breach of that duty because it authorised the commencement of work by Mr Lopez and other employees of Pict without taking reasonable steps to ensure that the site was safe.' [43] This statement derives from the principles laid down by the High Court in Stevens v Brodribb Sawmilling Co Limited (1985) 160 CLR 16. In particular it is based upon the fact that Multiplex, as head contractor, was necessarily involved in the co-ordination of activities in what was undoubtedly a large scale and complex construction site involving a number of different trades. [44] That conclusion is not precluded from application in the present case merely because of the clauses in the contract between Multiplex and Pict that I have earlier quoted. I refer in particular to the provision whereby responsibility for removal of 'casual water' remaining from work areas and access ways was placed upon the sub-contractor; special condition 2.07. Indeed there is a question as to whether the expression "casual water" applied at all to the kind of rainfall that left 3 to 4 centimetres of water, though that matter was not argued on appeal. [45] Nor is any different result mandated by clause 19 of the contract which provides that: 'The sub-contractor shall be responsible for co-ordinating the execution and the location of the Works and working with all other Sub-contractors and adequate protection of its equipment, materials, Works and adjoining or affected works for the extended duration of the Principal Works, and shall allow for all time and cost associated with the requirements of this clause.' [46] Such a co-ordination obligation is simply directed to the sub-contractor co-ordinating the execution and location of its own works, here the brickworks. Beyond requiring co-operative working with other sub-contractors, it has no bearing upon the principal contractors' overriding obligations with respect to the site, derived from the necessary co-ordinating role that the head contractor, Multiplex, was required to exercise." 23For Southern Cross, Mr Whyte submitted that the cross-claim is unsustainable. He argued that Pacific Steel Constructions v Barahona and Multiplex Constructions v Lopez are distinguishable on their facts, as indeed they are. He noted that Allmen chose the method of installation of the lintels on the day in question, in the teeth of the SWMS. According to the plaintiff's statement, he was working under the supervision of Mr Saba that day. By adopting that method of installation, Mr Whyte said, Mr Saba had gone off on a frolic of his own. (I should note that Mr Saba in his statement says that he was not present at the time the plaintiff suffered his injury, but that also is a matter I do not need to resolve.) 24Mr Whyte emphasised the responsibility for its own work methods placed upon Allmen by cl 4.8.11 of the contract, also referred to above. Put shortly, his submission was that Southern Cross was not responsible for the work methods adopted by sub-contractors such as Allmen and Resolution Rigging, skilled in specialised trades. In the circumstances, he argued, it would be unreasonable to impose upon it the duty for which Mr Cooley contended. I can see the force of these arguments but, in my view, it is appropriate that they be determined at a trial. For the reasons articulated by Mr Cooley, I am satisfied that the cross-claim is arguable. 25There remains the question of delay, which has been substantial. The steps in the preparation of the matter by Allmen are disclosed in an affidavit of its solicitor, Mr Gee, of 15 March 2011. It seems that, to some extent at least, the progress of the matter has been complicated by the denial of indemnity by Allmen's insurers. As a result of orders I made in relation to another cross-claim by Allmen, a hearing date in February of this year had to be vacated. The matter is now to be heard late next month. 26It is fair to say, as Mr Whyte observed, that the progress of the matter by Allmen appears to have been slow until what he described as a "flurry" of activity at the end of last year and in the early months of this year. No doubt, the vacation of the hearing date in February has occasioned significant cost to all parties. Moreover, as I have said, to allow the fourth cross-claim to proceed means that Southern Cross is deprived at this stage of its right to have judgment entered in its favour in accordance with its settlement with the plaintiff. That is not a step to be taken lightly. 27Nevertheless, I am satisfied that the interests of justice require that Allmen be granted leave to pursue this cross-claim. Accordingly, I make the orders set out in paragraphs 1 and 2 of the notice of motion of 28 March 2011 (noting that this will be the fourth cross-claim rather than the third, as appears in those paragraphs.) If necessary, I shall hear the parties on costs.