The NSW Court of Appeal held that the defendant business owners/occupiers were not vicariously liable for the acts and omissions of contractors (i.e. not employees) who performed electrical services works on the defendant’s premises which resulted in the injury alleged by the plaintiff.
In issue
The issues in dispute relevantly included the following:
- The interaction between claims for common law damages and the entitlement for workers compensation;
- Vicarious liability with respect to employees and the responsibilities of employers.
Background
Ms Patricia Cox was employed at a residential aged care facility in Tweed Heads by DPG Services. During the course of her employment, she was in an elevator which stopped abruptly during its descent because of testing of a backup generator conducted by employees of DPG Services. While the tests of the backup generator were planned, no notice was given to staff, including Ms Cox, that a power outage was to occur. Ms Cox suffered an injury to her spine because of the sudden stopping of the elevator.
Ms Cox successfully brought proceedings in the first instance against DAC Finance and DAC (NSW/QLD) (the Appellants) in the NSW District Court (Action). In the Action, Ms Cox alleged that both entities were liable as owners/occupiers of the land where the incident occurred and breached a duty of care to her. The Action was not brought against her employer, DPG Services, because her incident related injury had been assessed with 8 per cent whole person impairment (WPI) which did not overcome the 15 per cent WPI hurdle imposed by s151H of the Workers Compensation Act 1987 (NSW) (the Act).
The decision at trial
In the Action, the primary Judge found that DAC Finance (and its subsidiaries) were both relevant occupiers of the premises where Ms Cox was injured. The duty of care was held to extend to ‘consideration of matters of safety with regard to scheduled maintenance of fixtures within the premises, including passenger elevators’. DAC Finance’s liability turned on its ownership of the lift and the power generator as fixtures of the premises.
The issues on appeal
DAC Finance (and its subsidiaries) appealed the decision in the Action. The key issue on appeal was who caused the breach of duty and what entity (if any) was liable for the breach.
The decision on appeal
The New South Wales Supreme Court allowed the appeal on the following grounds:
- The individuals who performed the works to repair the lift failed to warn staff and residents that the power was to be tested and therefore failed to take a reasonable step that would have avoided the not insignificant risk of harm.
- The employer of those individuals (DPG Services) was vicariously liable for the negligent acts of its employees. However, DPG Services was not a defendant to the claim.
- The breach of duty that caused Ms Cox’s injuries was not some failure to repair or maintain the lift, or failure of electricity to the building due to a poorly maintained power supply. Rather, it was the positive act of two employees of DPG Services. Therefore, the only conduct that was relevant towards the breach of duty to the Respondent was the conduct of those individuals who performed the works and the only liability available based on their conduct was the vicarious liability of their employer, DPG Services.
Implications for you
It is important for sophisticated entities (with multiple interconnected subsidiaries) to ensure that there is a clear hierarchy within those businesses. While it is commercially sensible to divest liability between related entities, those entities (as employers) must ensure that their employees are 'alive' to the scope and associated responsibilities of their employment.
In this case, the employees were unclear as to what entity they were performing the relevant works for which ultimately contributed to a finding against the employees at first instance (although that decision was corrected on appeal). Further, while not an issue considered in this case, the employer of the individuals who performed the works to the lifts had seemingly failed to advise its employees of the steps and procedures that ought to be taken before conducting the relevant task. Employers must be sure to advise their employees of the checks and balances that comprise a duty of care when performing potentially dangerous tasks.
