Pleading guilty to a WorkCover prosecution for breach of occupational health legislation by a homeowner/building supervisor for injuries to a subcontractor did not entitle his insurer to deny indemnity when the subcontractor subsequently sued.
Carneys recently successfully appeared for a client who was sued as the owner/occupier and principal of home unit building works, where a subcontractor suffered injury.
The subcontractor plaintiff suffered personal injury when he fell down an unguarded stairwell void on a construction site. He was engaged as a subcontract labourer by a contractor. The contractor was contracted by our client to do roofing work in a team of subcontractors. Though our client had engaged a builder/supervisor, the evidence was that our client assumed the role of engaging various contractors in the place of the builder.
Our client and the builder were prosecuted by WorkCover alleging a breach of Section 10(1) of the Occupational Health and Safety Act 2000. That Section required that a person who has control of premises used by people as a place of work must ensure that the premises are safe and without risks to health. We did not act for our client then. He entered a plea of guilty on other legal advice and was fined.
Our client had a Contract Works Policy with Mecon Insurance Company requiring it to provide indemnity for all amounts which our client became legally liable to pay in compensation of personal injury. Mecon could avoid paying the claim if our client failed to observe nominated conditions and such failure increased Mecon's exposure to a claim.
When the plaintiff lodged the claim against our client, he notified Mecon. After investigation it declined liability referring to a clause in the policy which required our client to fully comply with all legal requirements and relevant work place authority regulations and take all reasonable steps to prevent damage. It said that failure to do so entitled them to avoid paying any claim. They said that the plea of guilty and the events which occurred amounted to an admission of breach.
Our client defended the claim made by the injured work and cross claimed against the insurer. Amongst other cases and defences he relied upon the recent High Court case of Leighton Contractors Pty Limited v Fox (2009) HCA 35 which said that a head contractor was not responsible for negligence of a subcontractor or the employee of a subcontractor.
The Court held that the relationship between principal and independent contractor was not one which, of itself, gave rise to a common law duty of care, much less to the special duties resting on an employer to ensure that care was taken. However in some circumstances a duty will be owed by the principal to use independent care to ensure that a system of work for one or more independent contractors is safe.
The insurer alleged a breach of Regulation 39 of the Occupational Health and Safety Regulations 2001 which relevantly required the controller of premises to ensure safe access to all parts of a place of work and that floors have appropriate floor coverings. Justice Hislop, in the Supreme Court in Dargham v Kovacevic 2011 NSW SC 2, held that our client owed a duty to the plaintiff as occupier and pursuant to the principles of Leighton Contractors and Fox, in that reasonable care required a fence or barrier should have been placed and maintained near the stairwell void to prevent injury. The Judge found that a breach of Section 10 of the Occupational Health and Safety Act does not give rise to a statutory cause of action for damages. He specifically referred to Section 32 of the Act which stated that a finding of breach under the Act did not confer a right of action in any civil proceedings.
The Court found that the commercial purpose of the policy was to provide insurance cover to the insured. The Court said that where there was a requirement that the insured take all reasonable steps to avoid or minimise injury, that was satisfied by the insured either proving he did not recognise that a danger existed or that perceiving its existence, he took some action to avoid it and was not indifferent to whether the danger was averted or not. The Court found that our client was aware of the danger posed by the void but that he had retained qualified personnel to perform the work in which the plaintiff was injured. Action was taken either by those persons or by our client to cover the void to an extent consistent with its use as a means of access. Our client and the plaintiff were not aware that the cover was not satisfactory in that it could give way. The evidence did not establish indifference. The Court found that there was no deliberate or reckless act and no indifference to the normal precautions that should have been taken and that he had acted reasonably.
Accordingly the Court ordered the insurer indemnify our client for his liability to the plaintiff. As the Court case took 13 days, this was a very pleasing outcome.
Carneys regularly do Common Law claims. These often lead into aspects of insurance and commercial litigation. We regularly advise clients on insurance policies. If you have any queries contact Stephen Titus or Arthur Carney on (02) 8226 5555.