Builder’s appeal fails to overturn heavy damages ruling

The worker was a labourer employed by a cement rendering subcontractor. In June 2020, while walking across a Sydney suburban building site, he fell into a drainage hole from which the grate had been removed. The hole had then been covered only by a sheet of black plastic. Though he did not fall far, he suffered injuries to his shoulder, back, neck and hip.

The worker claimed substantial damages from both the builder and his direct employer, the cement rendering contractor. 

Both were found to have been negligent when the case was heard in late 2023, and the calculation of the damages owed was complicated by the provisions of ss 151A and 151Z of the Workers Compensation Act 1987, which concern the effect of the recovery of damages on compensation. 

The worker was ultimately awarded $806,562.50 plus costs in damages to be paid by the builder, and $440,864.29 plus costs to be paid by the subcontractor.

The builder appealed, claiming that the evidence at the earlier hearing did not establish that the builder knew the drainage hole was not covered by a steel grate under the black plastic – a point on which the testimony of the builder and the worker had contradicted each other.

The builder claimed that regardless of whether he knew (or ought to have known) the drain hole was not covered by the grate on the morning of the accident, it was reasonable for him to assume that a competent contractor would have addressed the risk, and the builder’s duty of care as occupier did not extend to ensuring that this had been done. 

He argued that the subcontractor’s actions were the proximate cause of the harm. The builder also questioned whether the orders made by the primary judge correctly gave effect to ss 151A and 151Z of the Workers Compensation Act.

The appeal was heard in the Supreme Court of New South Wales.

 

In court

After considering the evidence, Court of Appeal Justices Mark Leeming and Jeremy Kirk, and Acting Justice John Griffiths did not accept the first strand of the builder’s argument, saying it was apparent that in the earlier hearing, his Honour did conclude that the builder knew the drain was not covered by the grate on the morning of the accident.

With regard to the builder’s assertion that it was up to the subcontractor to address the risk presented by the drain and it had been reasonable for him to assume the subcontractor had done so, the issue turned on the extent of the builder’s duty of care to the worker as an employee of a contractor.

The nub of the builder’s argument was that it was not incumbent on him ‘to go and lift up the black plastic to ensure that a competent independent contractor had put something under the black plastic, over a hole that everybody knew was there’. 

The builder submitted that as principal contractor and occupier, it did not owe the same duty of care to the worker as the worker’s direct employer, the subcontractor. In taking this line of argument, the builder was relying on a number of previous cases which discussed the duties principal contractors owed to workers at their sites.

The judges found that the cases the builder relied on showed that principal contractors did not necessarily need to ensure that contractors at the site had a safe system of work in carrying out their own particular activities. 

However, principal contractors did have a duty of care to avoid injury to anyone coming onto the site, including employees of independent contractors.

The worker was not injured when he was undertaking the rendering process itself – his injury occurred when he was ‘simply doing what any worker on the site may have done, that is, walking across part of the site’.  

It was not the case that the builder did not owe a duty of care to the worker simply because he was an employee of a contractor.

Regarding the builder’s argument that the subcontractor’s actions were the proximate cause of the harm, the court found that this was not the relevant legal test for causation in negligence – the issue was whether the negligence was a necessary condition of the occurrence of the harm. The builder’s failure to check the hole was adequately covered materially contributed to the harm, even though there were other contributing causes.

With regard to the proper interpretation of ss 151A and 151Z of the Workers Compensation Act, in the light of a subsequent judgment the parties agreed to new calculations on this point.

The orders made by the primary judge were varied as follows:

• the builder was ordered to pay the worker $839,869
• the subcontractor and the Workers Compensation Nominal Insurer were ordered to pay the worker $619,925, and
• the builder was entitled to $309,962 on its cross-claim against the cement rendering subcontractor.

 

What it means for employers

Principal contractors on building sites have a duty of care to anyone who comes onto the site, but independent contractors must ensure they have a safe system of work in carrying out their particular activities at the site.

 

Read the judgment

Value Constructions Pty Ltd v Badra [2024] NSWCA 181 (31 July 2024)