To what extent is a labour-hire employer negligent when its employee is injured on the premises of a ‘host’? Can a liability insurer rely on an employment-related exclusion clause in the policy to deny the occupier indemnity? What is required to overturn a finding on appeal? The Court of Appeal has examined these issues in the following case.
Author: Chad Farah
Judgement Date: 10 March 2020
Citation: Marketform Managing Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468 for the 2009 Year of Account v Ashcroft Supa IGA Orange Pty Ltd
Jurisdiction: NSW Court of Appeal1
Mr Paul (the worker) was employed by Skillset Ltd (the employer), a labour-hire company. He was a 20 year-old apprentice butcher dispatched by the employer to complete his apprenticeship at the premises of Supa IGA Orange Ltd (the host employer). It was not in dispute that the host employer gave day-to-day directions to the worker.
On 10 October 2012, during the course of his employment at the host employer’s premises, the worker suffered injury to his back when he slipped on a piece of sausage mince and fell against a wall. The sausage mince spillage had not been detected by the host employer and was estimated to have been on the meat room floor, concealed under a trolley, for up to two hours.
The worker sued the host employer for damages arising from negligence under the Civil Liability Act. He did not sue his employer.
The host employer sought indemnity under a policy of insurance (the Policy) held with Marketform Managing Agency Ltd (the insurer). The insurer denied indemnity on the basis that Clause 16.5 of the Policy wording excluded:
‘Liability for injury to any person under a contract of employment, service or apprenticeship with or for the provision of labour only services to the Insured where such injury arises out of the execution of such contract.’
The host employer cross-claimed against the insurer for indemnity pursuant to the Policy.
The primary judge held that:
On appeal, the insurer challenged the findings referred to in paragraphs (c), (d) and (f) above. In addition to relying on the exclusion clause, and in the alternative, it sought findings of 30% for contributory negligence and 20% for the employer’s negligence. This was no doubt done in an attempt to reduce its exposure in the event that it was found to be bound by the Policy.
The worker cross-appealed, seeking to challenge the primary judge’s calculation of the damages. He argued that the figure ought to have been $613,864.21. The insurer was in agreement that the primary judge erred in calculating the damages but came to a slightly different figure by about $1,000.
In a unanimous judgement delivered by Payne JA, the Court of Appeal dismissed the insurer’s appeal and allowed the worker’s cross-appeal.
It was held there was no reason to disturb the primary judge’s finding as to contributory negligence or the extent of the negligence by the employer.
In relation to contributory negligence, his Honour Payne JA said at paragraph 80:
‘In truth, this was a case where the only issue was whether this Court considered the apportionment to be plainly wrong. My conclusion is that on the unchallenged findings of fact…the 10% allowance for contributory negligence was well open to the primary judge and may even have been generous to the first respondent and the appellant.’
The Court of Appeal also rejected the insurer’s submissions in relation to the extent of the employer’s negligence. In doing so, the Court noted there was no evidence that the employer’s field officer ever detected a hazard of this nature during a prior visit to the host employer’s premises. Nor was there a failure to inspect the premises or to properly train the worker, on the part of the employer, that was causative of the accident. The accident was instead caused by a casual act of negligence on the part of the host employer. In preserving the primary judge’s findings, Payne JA said at paragraph 91 of the judgement:
‘The primary judge, however, determined that the relevant contribution from Skillset that Mr Paul would have been entitled to was 10% having regard to the non-delegable character of the employer’s duty to Mr Paul. This was because his Honour was persuaded that an employer’s non-delegable duty is one of a special and more stringent kind. That finding, on the evidence in this case, was favourable to the appellant and the first respondent.’
In relation to the question of indemnity, the insurer accepted that that Policy would have responded to the claim but for the exclusion clause. The Court re-iterated that the onus was on the insurer to show why the clause should be given effect. Taking a different approach to the primary judge, the Court then held that ‘the correct construction of Clause 16.5 was that the Policy did not cover:
(a) liability for injury to any person under a contract of employment, service or apprenticeship with the insured; or
(b) liability for injury to any person under a contract for the provision of labour only services to the insured
where the injury arises in the course of giving effect to the relevant contract.’
Payne JA held that the insurer’s liability that is excluded by Clause 16.5 is for an injury to a person who is under either of the two relevant types of contract with the insured. When used here, his Honour found ‘under a contract’ means ‘pursuant to’ a contract and that the injury arose out of the ‘execution of such a contract’ in the sense of the carrying out of the terms of the contract. As such, the first limb of the exclusion applied so that the Policy did not respond.
The remaining question for the Court was to determine whether the contract between the employer and the host employer was for the provision of ‘labour only services’. Of note is that the expression was not defined in the Policy.
When the contractual relationship between the employer and the host employer was examined by the Court of Appeal, it transpired that the services provided by the employer, in addition to labour, included recruitment, vocational training, payroll and administration services and other types of support.
The Court ultimately found that the second limb of the exclusion did not apply. Payne JA explained the Court’s reasoning in paragraph 69 of the judgement:
‘The phrase the parties have chosen to use is ‚Äúlabour only services‚Äù. The language used captures a narrower class of contractual arrangements than all ‚Äúlabour hire‚Äù arrangements. Whatever the limits of the expression labour only services, the contract between Skillset and the first respondent was not a contract for the supply of ‚Äúlabour only‚Äù services because a number of other important services were supplied under the contract.’
Lastly, the insurer had accepted the worker’s calculation of the damages during oral submissions. It was a decision that the Court deemed sensible in light of the insignificant difference. With the primary appeal having failed, the cross-appeal was allowed on the basis of the agreed figure ($613,864.24).
The employer’s liability in these cases is far from certain and will depend on the facts of each case. It should not be assumed that the employer’s non-delegable duty of care will sound in an apportionment of liability between it and the occupier. That said, plaintiffs that do not (or are unable to) join the employer to such proceedings run the risk that their award of damages will be discounted on account of the absent employer’s negligence. This risk must be finely balanced against the risk of a finding that the employer did not breach its duty of care, at all, which would attract an adverse costs order offsetting any damages awarded to the plaintiff against the occupier.
Similarly, whether indemnity will extend to an insured will also depend on the facts of each case. Caution must be exercised when drafting (and interpreting) exclusion clauses under a policy of insurance. It is suggested that the use of any expression containing a combination of words should be defined under the Policy, if possible. This will serve to remove any ambiguities and to assist the parties in determining whether the circumstances of the loss enliven the exclusion, before significant legal costs are incurred.
1 Ward CJ, Leeming JA and Payne JA.
In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract. Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed. Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph , Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)." Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter. Judgment At paragraph , Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship. Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph : "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the dictionary.com definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest. What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.
The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane  NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty. The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.
The recent decision in New Aim Pty Ltd v Leung  FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.