Trash or treasure? New South Wales Court of Appeal sifts through complex contractual and indemnity issues in case of injured garbage man – Penrith City Council v Healey; GIO General Ltd v Healey [2016] NSWCA 161

Mr Healey (the plaintiff), injured his shoulder while lifting and emptying a heavy and damaged bin during the course of his employment as a garbage collector. Between 7 February 2000 and 25 April 2005, the plaintiff was employed by an independent contractor which was engaged to collect and empty garbage bins by the Penrith City Council (the Council). Until 1 December 2004 the plaintiff's employer was Usshers Pty Ltd (Usshers). On 1 December 2004 following a restructure the plaintiff was employed by a related company, Usshers Solid Waste Pty Ltd (Solid Waste). The contract with the Council was not assigned to Solid Waste.

The plaintiff pleaded a discrete injury on 29 November 2004 while lifting and emptying a heavy and damaged bin whilst employed by Usshers and a nature and conditions claim thereafter whilst employed by Solid Waste.

WorkCover found that he did not meet the requisite 15% permanent impairment threshold required to bring proceedings against Usshers for his specific shoulder injury. The plaintiff initially commenced negligence proceedings against the Council for breaches in its duty of care as a ‘quasi-employer’ which caused his specific injury and also an accumulated injury due to the nature and conditions of his work. Against GIO General Limited (GIO), the public liability insurer of Usshers (deregistered), the plaintiff claimed for his accumulated injury due to the nature and conditions of his work on the basis Usshers retained supervisory responsibilities once the plaintiff was employed by Solid Waste.

The trial judge, Adams J, found both the Council and GIO liable for the plaintiff’s injuries and awarded the plaintiff sums equalling over $1 million in total against the defendants. The Council and GIO both appealed the decision.

In the New South Wales Court of Appeal (Court of Appeal), the appeals by the Council and GIO were allowed on the basis of separate issues. Only Simpson JA, in a dissenting opinion, found that GIO’s appeal should be dismissed.

The Council appealed the trial judge’s factual findings that the main cause of the plaintiff’s injury were the damaged bins. Simpson and Basten JJA accepted that the medical evidence did not support this finding, and indeed that the evidence suggested that the nature and conditions of the work were the cause of the plaintiff’s ongoing symptoms. They concluded that the plaintiff could not establish that his discrete shoulder injury was caused by the Council’s unreasonable failure to repair damaged bins. The Court of Appeal found unanimously that the Council had not breached a relevant duty of care to the plaintiff, as it had no responsibility for the plaintiff’s day-to-day work or the conditions of his work. Emmett AJA also opined that there was no breach by the Council of its limited duty to repair the bins. The Court of Appeal therefore allowed the Council’s appeal.

GIO appealed on two separate issues: firstly, that the primary judge erred in finding Usshers owed a duty of care to the plaintiff, and secondly, that GIO was entitled to rely upon a policy exclusion which excluded public liability insurance for persons falling within the category of contractors or supplied labour.

Basten JA opined that the trial judge made inconsistent findings in relation to the duty of care owed by Usshers in relation to the nature and conditions of the plaintiff's work. His Honour found the evidence did not support the view that when the plaintiff's employment was transferred to Solid Waste, Usshers no longer retained any obligation to supervise his work as the contract with the Council was not assigned to Solid Waste, and Usshers remained responsible for carrying out the work. Given his factual findings on this issue, his Honour opined that the public liability policy exclusion applied on the basis the plaintiff was supplied labour, and the policy accordingly did not respond to any liability Usshers may have had to the plaintiff. On this basis his Honour allowed the appeal.

Emmett AJA and Simpson JA, however, both found that the policy exclusion could not be relied upon. Emmett AJA and Simpson JA both found that the circumstances of the claim did not fall within the policy wording because Solid Waste which employed the plaintiff was not a labour supply company, rather, as Simpson JA observed, the related company operated a business which emptied garbage bins. Emmett AJA also found the policy exclusion could not apply for further reasons. Firstly, his Honour accepted the primary judge’s factual finding that the plaintiff’s work was not performed under the care control, direction or supervision of Usshers. Secondly, his Honour also found that the plaintiff’s injury did not arise in connection with defects in plant or fittings belonging to Usshers, given that the Council owned the bins.

The exclusion issue notwithstanding, Emmett AJA and Simpson JA disagreed on the issue of duty of care. Emmett AJA found that following transfer of the plaintiff’s employment to Solid Waste, Usshers did not owe a duty equivalent to an employer’s duty to the plaintiff, and the trial judge’s finding that the plaintiff was no longer under the care, control, direction or supervision of Usshers was inconsistent with the finding of a breach of duty by Usshers. His Honour accordingly allowed GIO’s appeal. Dissenting, Simpson JA commented that the trial judge’s failure to make conclusive liability findings should not mean that GIO’s appeal should succeed. Her Honour considered that it was open to the trial judge to find Usshers had continued to owe a duty of care to the plaintiff after he was employed by Solid Waste, and set aside the trial judge’s conflicting finding that the plaintiff was not under the care, control, supervision or direction of Usshers. Her Honour opined there was ample evidence that Usshers had breached its duty of care to the plaintiff, and accordingly should be liable to the plaintiff.
Ultimately, GIO’s appeal was also allowed, despite the lack of consensus on reasoning.

While the insurer won the appeal, it actually lost its argument that the policy exclusion for contractors and labour hire workers should apply. The majority found that in order to rely on the ‘supplied worker’ exclusion, the plaintiff would have had to be supplied by a labour hire company whose business was to supply workers.

Case managers need to be mindful that duty of care questions will be decided on the basis of the individual circumstances of each claim, and is often not clear-cut. While in this instance, the Council could show it had no direct control, care, supervision or direction over the plaintiff, this finding depended on the particular contractual relationship between the Council and the contractor, and the communication channels between the contractor and the plaintiff. Similarly, the duty of care that the contractor owed to the employee of a related company was not conclusively decided. Due to his view on the policy exclusion, Basten JA did not proffer an opinion on the issue, while Emmett AJA and Simpson JA had opposing opinions.