In the context of a worker’s claim for damages against both his direct employer and head contractor, contractual indemnity was properly interpreted, but was void due to s 236B of the Workers Compensation & Rehabilitation Act 2003.
In issue
- The Queensland Court of Appeal has recently considered the interaction of section 236B of the Workers Compensation and Rehabilitation Act 2003 (WCRA) and contractual indemnities, which is likely to have implications for principal contractors pursuing contractual indemnity claims against employers of injured subcontractors and host employers.
The background
The plaintiff alleged that he sustained injuries during the course of his employment with Vatsonic Communications Pty Ltd (Vatsonic). Vatsonic had a contract with the Townsville City Council (Council) under which it agreed to provide 'wet hire' of a hydro vac truck as required. The operator of the hydro vac truck had to work in cooperation with workers employed by Council, who used a Council truck with a crane and sling to manoeuvre a hose into and out of a pit. On 28 August 2017 the plaintiff was 'wet hired' to Council. He was required to work in conjunction with Council employees to complete works using the vac truck and suffered an injury to his eye whilst doing so.
The plaintiff brought a claim for damages against Vatsonic pursuant to the WCRA and a claim for damages against Council pursuant to the Personal Injuries Proceedings Act 2002 (PIPA).
In turn, Vatsonic pursued a claim for contribution and/or indemnity against Council and Council sought to rely on its contractual indemnity against Vatsonic. Council also made an alternative claim for indemnity and contribution pursuant to section 6 of the Law Reform Act 1995 (Qld).
We note that clause 1.39.1 of the contract between Council and Vatsonic stated:
1.39.1 You (Vatsonic) agree to indemnify The Principal (Council) and keep The Principal (Council) indemnified against all claims for injury loss or damage suffered by any person or property arising out of your performance of the Contract and all liability for costs, charges and expenses incurred by The Principal (Council) in respect of the claim of any person or body. (emphasis added)
Vatsonic argued that section 236B of the WCRA rendered the contractual claim void. We note that section 236B of the WCRA states:
236B Liability of contributors
- This section applies to an agreement between an employer and another person under which the employer indemnifies the other person for any legal liability of the person to pay damages for injury sustained by a worker.
- The agreement does not prevent the insurer from adding the other person as a contributor under section 278A in relation to the employer’s liability or the insurer’s liability for the worker’s injury.
- The agreement is void to the extent it provides for the employer, or has the effect of requiring the employer, to indemnify the other person for any contribution claim made by the insurer against the other person.
- In this section damages includes damages under a legal liability existing independently of this Act, whether or not within the meaning of section 10.
The decision at trial
At first instance, Croker DCJ found that both Vatsonic and Council caused the plaintiff’s injuries, apportioning liability 70% and 30% respectively but Council’s contractual indemnity applied such that Council was entitled to be indemnified by Vatsonic in relation to any damages awarded against it. Further Croker DCJ determined that section 236B of the WCRA did not operate to void Council’s contractual indemnity claim.
The issues on appeal
All parties appealed. The Plaintiff appealed the trial judge’s failure to order judgment for him against Council, for failing to assess damages against Council, and in relation to costs. Vatsonic and WorkCover Queensland appealed on numerous bases including that Vatsonic breached its duty of care, that causation was established, in apportioning liability, in the construction of the indemnity clause, and the application of s 236B WCRA 2003.
The decision on appeal
On appeal, the leading judgement was delivered by her Honour Chief Justice Bowskill, who agreed with the trial judge’s findings regarding liability apportionment between Vatsonic and Council, upholding the apportionment of liability at 70/30 in Council’s favour. The Court of Appeal also concurred with the earlier conclusion that the indemnity clause in the agreement between Vatsonic and Council was engaged and required Vatsonic to indemnify Council, because the ordinary meaning of the language used in the clause did not reveal any ambiguity.
However, her Honour ultimately concluded that the trial judge erred in determining that section 236B of the WCRA did not void the contractual indemnity, citing extracts from the notes accompanying the Bill introducing section 236B of the WCRA. Chief Justice Bowskill accepted that Council’s claim for indemnity did not arise from a breach of contract but related to the plaintiff’s claim against Council for injury, loss and damage and consequently triggered section 236B of the WCRA.
Consequently, Vatsonic was entitled to recover 30% of the WCRA damages from Council and Council was entitled to recover 70% of the damages from Vatsonic (being what each was entitled to recover pursuant to s. 6(c) of the Law Reform Act 1995).
Implications for you
This judgment will have implications in relation to claims where principals seek to rely on contractual indemnities against an injured person’s employer, where the injured person is also pursuing a claim for damage against their employer.
Bilson v Vatsonic Communications Pty Ltd; Vatsonic Communications Pty Ltd v Bilson [2024] QCA 171
