Liability In Respect To Independent Contractors - Part 1

In what instances might a party’s duty extend to an independent contractor?

An employer’s duty to ensure their employee safety in the workplace is well established. However, in some instances liability may extend for injuries sustained to a worker who is an employee of another party. A party might also find themselves liable for the negligence of an independent contractor in the event that that negligence causes injury to someone else.

In the first instalment of this two part series, we will consider in what circumstances, a party might find themselves liable for injuries to a worker who is not their own employee.

Factors the Court will consider

Substance of the relationship

A Court will carefully consider the facts of each case and will look at the substance of the relationship between the parties rather than relying on the form of the relationship. A party might be found liable to (or for) an independent contractor if that party exercises control in the way in which work is to be undertaken, or, if there is a particular vulnerability or inequity of bargaining power between the parties.[1]

Control and degree of risk

A higher, non-delegable duty will be imposed in circumstances where the responsible party has undertaken the care, supervision or control of a person or property of another and the person affected might reasonably expect due care will be exercised. In considering the nature of any duty owed, a Court will look at the issue of control and the degree of risk. That is, the more control assumed and/or greater the risk, the greater the duty that will be imposed.[2]

By way of example, the High Court of Australia found against Woolworths (Qld) Pty Ltd[3] following an injury to an independent bread delivery contractor. Woolworths had implemented certain systems and procedures that the injured contractor was required to conform to in carrying out her duties. The High Court considered that Woolworths was on notice regarding the particular risk of injury and that there had been a systemic failure to exercise reasonable care for the safety of the contractor. Similarly, the NSW Court of Appeal found against Australia Post Corp[4] when an employee of an independent mail delivery contractor was injured whilst lifting parcels from an Australia Post depot into the back of her van. In this instance, the Court considered it particularly relevant that the injured party was working solely for the benefit of Australia Post, held no particular qualifications and was working within a system of work devised by Australia Post. This system included weighing of parcels by Australia Post so the Court also considered Australia Post to have specific knowledge of the risk associated with lifting the parcels.

Courts will also be inclined to impose a duty on principal contractors in circumstances where the presence of multiple contractors on site gives rise to an obligation to have in place appropriate, safe systems of work.[5] In some circumstances, even where there has been no specific criticism of the system of work, a Court has found against a principal contractor for failing to provide adequate training, instruction and supervision to workers over whom the principal contractor has assumed control.[6]

With great risk comes great responsibility

A higher duty of care will be identified where the work being undertaken involves a very high risk of significant injury such as trench work[7] or working with scaffolding. In the matter of Waco Kwikform Ltd v Perigo [2014] NSWCA 140, the NSW Court of Appeal went so far as attributing 75% liability to the principal contractor (Waco Kwikform Ltd) and only 25% liability against the employer of Mr Perigo (who was seriously injured when he fell 8m while dismantling scaffolding). At the date of Mr Perigo’s injury (and following several serious prior safety breaches by Mr Perigo’s employer), Waco Kwikform Ltd had assumed responsibility for devising and supervising the system of work to be followed by Mr Perigo and the lion’s share of responsibility was assigned to Waco Kwikform when that system failed.

In another high risk situation[8], Mr Coote suffered serious injury when he fell 3m through a skylight while working on a roof. Mr Coote was employed by Terry’s Crane Hire Pty Ltd as a dogman. Terry’s Crane Hire had been engaged to the site by Mallon Co Pty Ltd trading as Frontline. Mr Coote had been warned about the presence of the skylight and told to avoid working near it. Damages were reduced by 15% on account of Mr Coote’s own negligence. As between Mr Coote’s employer and the principal contractor, liability for the remainder of the claim was apportioned 60%/40%. Ultimately, the employer’s breach of duty was considered greater, however, the Court held that Frontline, as principal contractor, was aware of the risk of injury and the exposed danger and failed to take reasonable care in supervising the works.

Hossain v Unity Grammar College Ltd & Ors [2019] NSWSC 1313

A principal contractor may, in certain circumstances, be found liable for injuries sustained to a subsequent user of a building after construction works. In the matter of Hossain v Unity Grammar College Ltd & Ors [2019] NSWSC 1313, Mr Hossain suffered significant burns in a gas explosion at his place of work, Unity Grammar College. The Court found that there had been defective gas work undertaken during renovations at the College and a failure to properly test and certify the gas work upon completion. The Court found against the principal contractor on the basis that a reasonable principal contractor undertaking such works at a school ought to have familiarity with the compliance requirements regarding gas work and should have engaged independent contractors to test and inspect the gas installation and fittings to ensure such compliance. The Court also found, due to the control of the premises exercised by the principal contractor and the introduction of a dangerous substance (gas), the duty owed by the principal contractor to Mr Hossain was non-delegable. Ultimately, liability was apportioned equally between the principal contractor, Unity Grammar College (as employer), the relevant building certifiers and plumbers involved in the renovation work.

Hallmark Construction Pty Ltd v Brett Harford [2020] NSWCA 41

Finally, in a more recent NSW Court of Appeal decision[9], the Court was asked to consider a claim for damages by Mr Harford who was injured when delivering materials to a construction site. Mr Harford was directed where to unload by the builder’s supervisor and, in clearing the ground, Mr Harford removed an empty pallet which, unbeknownst to him was obscuring a 4m deep storm water retention pit. Mr Harford subsequently fell into the pit, suffering severe injuries. In apportioning liability between the building contractor occupying the site at the time and the principal contractor who had engaged the building contractor, the Court considered the immediate level of control available to the building contractor and the responsibility of the building contractor for the presence of Mr Harford on site, near the unguarded retention pit. Ultimately, liability was apportioned 75% against the building contractor and 25% against the principal contractor.

Key takeaways

What is clearly apparent from the Court’s approach in these cases is that the extent of any duty owed will increase relative to the degree of control exercised over the work as well as with the degree of risk of injury arising from the activity. Where a principal contractor takes a particular responsibility for workers of an independent contractor, the duty may be found to be non-delegable (that is, the principal contractor becomes the “quasi-employer”) and where a principal contractor becomes directly involved in devising the system of work, an apportionment of liability may be significant. Further, where coordination of various independent contractors is required, a principal contractor will have an obligation to ensure that this occurs safely. Having said that, the obligation does not go so far as to provide constant supervision or to control precisely how the independent contractors carry out their work once they have been safely coordinated.[10]

Additional Resources

In Part 2 of this series

In the next instalment of this series, we will consider circumstances where a principal contractor was not held liable for the actions of independent contractors.

The terms of any contract between principal contractor and independent subcontractor will be particularly relevant in the event of a claim for damages and the careful drafting of indemnity clauses can provide some protection.

Read Part 2: Liability in respect to Independent Contractors – Part 2

Contact us

If you need legal advice regarding your specific circumstances, regarding whether the method of engagement of your worker is an employee or independent contractor, or about broader workplace issues, including workplace injury law and employment law matters, please contact our Employment Lawyers on (07) 4637 6300.

This article was prepared by Carla Adams, Senior Associate with collaboration from Jennifer Kratzmann, Senior Associate, Emily Kelly, Solicitor, and Pat Hall, Legal Practitioner Director, who are based in the Toowoomba office