In Brief

• Careful consideration of the scope and content of the duty of care owed by an occupier to employees of an independent contractor is required when determining whether there has been a breach of duty.
• The terms of contractual relationships between parties are significant in determining the responsibilities and obligations of the respective parties.
• The general rule is that an insured and an insurer cannot have separate representation even if there are "insured" and "uninsured" elements to the claim unless the Court grants leave for each person/entity to have separate representation.

Background

The plaintiff, Mr Ross Lovell Elphick (Elphick), was employed by All Cleaning & Security Pty Limited (ACS) at the Westfield Shopping Centre at Tuggerah on the Central Coast. The shopping centre was owned and operated by Westfield Shopping Centre Management Co Pty Limited (Westfield) which contracted with ACS to provide cleaning services at the Centre.

Westfield and ACS entered into a written agreement on 1 June 2006 in which ACS was engaged as a contractor to provide cleaning services at the centre. The agreement required, amongst other things, that ACS would:

• furnish all labour, materials, supplies, equipment, services, machinery, tools and other facilities required for the prompt and efficient supply of the service;
• maintain all equipment in good, safe and working condition;
• ensure its employees did not undertake work activities detrimental to their health, safety or welfare;
• implement environmental, health and safety procedures for the instruction and training of its employees and provide supervision to ensure workplace safety;
• indemnify Westfield "from and against all claims, demands, writs, summons, actions, suits, proceedings, judgments, orders, decrees, costs, losses and expenses of any nature...in relation to any...personal injury...arising out of any act, omission or negligence of [ACS], or any of its employees,...including any breach of this agreement..." (clause 9); and
• indemnify Westfield against "all costs, losses, damages or penalties...as a result of a civil claim...arising out of or in connection with a breach by ACS of any of its obligations under (this) clause 14".

In 2008 the agreement was assigned to another company in the ACS group of companies, Atlantic Cleaning & Security Pty Limited (Atlantic). When the agreement was assigned Westfield purported to seek indemnities in relation to various matters from ACS and Atlantic. The correspondence requiring the indemnities was not forwarded to Atlantic.

On 21 July 2006 Elphick was unloading the cage when he placed his right foot inside the cage. Whilst he had his foot inside the cage it rolled slightly. As the cage rolled Elphick twisted his hip causing injury to his back. Elphick reported the incident to his supervisors. Elphick continued working on limited duties for a short period of time. Eventually the pain in Elphick's back deteriorated to such an extent that he was unable to continue working. At the time of the trial Elphick had not worked since 30 November 2006.

Westfield did not become aware of Elphick's injury until Westfield's Risk Management coordinator saw Elphick walking awkwardly. She enquired what had happened to him and he provided her with an explanation. Thereafter, Westfield arranged for a metal hook to be used by the cleaners to reach inside the cage. This eliminated the hazard posed to workers by stepping into the cage. Further steps were taken by Westfield to improve safety.

Elphick brought proceedings in the District Court of New South Wales alleging Westfield and ACS were negligent.

The trial judge, Hungerford ADCJ, found that Elphick was an honest and credible witness. He accepted that Elphick had attempted to return to work however as a result of his physical injuries and previous training he had been unable to find gainful employment. The trial judge found that Elphick's capacity to earn on the open labour market was less than one third of his pre-injury capacity.

The trial judge found that ACS was responsible for the system of work that was adopted at the shopping centre. He also found that the cage that was provided by Westfield was not unsuitable or unsafe, rather the system for unloading the cage was unsafe. This process did not involve Westfield. Accordingly, he found that Westfield owed no relevant duty of care to Elphick.

The trial judge found that ACS adopted an unsafe system of work and that there was a foreseeable risk of injury in the system of work which was implemented at the shopping centre.

The trial judge assessed damages pursuant to the Civil Liability Act 2002 (CLA) in the sum of $822,569. The damages allowed pursuant to s 151G of the WCA totalled $525,658. Accordingly, Elphick was awarded $525,658 plus costs.

On appeal, Elphick argued that both ACS and Westfield were responsible for the system of work implemented at the shopping centre.

In the Court of Appeal, Whealy JA delivered the unanimous judgment of the Court.

Ultimately, Whealy JA found that clause 14 of the agreement required ACS to indemnify Westfield for its costs (or losses). The effect of the agreement, together with a limited concession made by ACS's Counsel in the District Court and the execution of Short Minutes of Order agreeing to such an outcome in the District Court were further factors which were considered by Whealy JA in finding that Westfield was entitled to an order for costs in its favour.

Whealy JA found there had been no error on the part of the trial judge. Accordingly, Westfield was found to have no liability to Elphick. Elphick was ordered to pay Westfield's costs of the appeal. ACS was ordered to pay Westfield's costs of the appeal on an indemnity basis less any amounts Elphick had to pay Westfield. ACS was also ordered to pay Westfield's costs of the respective cross-appeals.

The case also demonstrates that the obligations and duties contained in contractual agreements are relevant to determining the scope and content of a party's duty of care.

The Court of Appeal, in obiter, has reminded those who work in the insurance industry that separate representation for an insurer and insured or in relation to insured and uninsured losses should only be granted by Courts in exceptional circumstances.

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