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HG Insurance Alert: Another loaded question – principal found 75 percent liable for injuries suffered by contractor’s employee after it negligently loaded a truck – 21 October 2014

In the recent decision of Grima v RFI (Aust) Pty Ltd [2014] NSWCA 345, the New South Wales Court of Appeal increased the contribution of a principal contractor toward an award of damages to a contractor’s employee from 50 percent to 75 percent.

In this Alert, Senior Associate Brooke Jacobs and Solicitor Elizabeth Harvey discuss the implications of this case for principals.

The facts

The plaintiff, Mr Grima, was employed by Allied Overnight Express Pty Ltd (Allied) as a storeman.  On 8 March 2010 he and a co-worker were unloading a delivery truck of carpet underlay received from RFI (Aust) Pty Ltd (RFI).  Mr Grima was injured when two of the rolls of carpet underlay fell out of the truck and struck him.

To save money on deliveries, RFI would utilise all the available space in the delivery truck, stacking rolls of carpet underlay both vertically and horizontally in the truck.  The delivery truck had five metal braces in place to secure the load (the vertical and horizontal rolls).  On the date of injury, RFI had only secured three of the five braces.  This represented a complete departure from RFI’s standard practice and was directly causative of the incident.

Mr Grima brought a claim for damages in negligence against RFI under the Civil Liability Act (NSW)  2002.  RFI cross-claimed against Allied, alleging that Mr Grima’s injury was also caused by its negligence as his employer.

Damages payable by RFI to Mr Grima were assessed under the Civil Liability Act (NSW) 2002 at $5.75 million.  In contrast, under the Workers’ Compensation Act (NSW) 1987, the damages payable by Allied to Mr Grima were assessed at $330,000.

The trial judge found RFI and Allied equally at fault and apportioned their responsibility for the injuries in the ratio of 50 percent each.  

Mr Grima appealed this decision, seeking to maximise RFI’s responsibility for the incident, and therefore reduce the percentage of damages restricted by the Workers’ Compensation Act  (NSW) 1987.

RFI cross-appealed, seeking to reduce its share of the responsibility.

Decision

The Court of Appeal found that liability should be apportioned 75 percent to RFI and 25 percent to Allied.

The Court agreed that Allied had some element of responsibility for Mr Grima’s injury.  This was because Allied’s system of inspection with respect to the delivery of loads only required workers to check for loose rolls of underlay visible from the ground level.  The Court accepted that a proper system of inspection would have mandated inspecting the load from a higher vantage point, to ensure an adequate view of the top of the load.  Such a system would have enabled Allied’s workers to identify the risk posed by only three of five braces being in place prior to attempting to unload the delivery.

The Court accepted that RFI’s failure to restrain the horizontal rolls of underlay with the fifth brace was of significantly greater importance in causing the incident than Allied’s deficient system of inspection. In failing to ensure that the five braces were in place, RFI created a hidden risk of injury.  In the circumstances, the Court found that it was plainly unreasonable to find that RFI and Allied were equally responsible and apportioned 75 percent of the liability against RFI.

Key points

  • This case is another example of a principal being liable for a contractor’s employee’s injury, in this case the principal in fact facing a greater exposure than the employer;
  • The fact that employers owe a high standard of care to workers does not necessarily translate into employers facing a greater liability exposure than principals;
  • A principal can be liable for injury, even if suffered within the sphere of a contractor’s  expertise, in circumstances where the principal has “control” over the system of work;
  • We question whether the result would have been different if there was not the (substantial) constraint on the assessment of Mr Grima’s damages under the Workers’ Compensation Act (NSW) 1987;
  • We have recently reviewed the decision in Gary Bennett v Baiada Poultry, where a principal was also found liable for injury caused to a subcontractor unloading a delivery truck. In that case no responsibility for the injury was attributed to the employer 

For more information on Insurance and Risk matters, please contact HopgoodGanim’s Insurance and Risk team.

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