New South Wales Court of Appeal CITATION : F H Faulding & Co Limited t/as Faulding Pharmaceuticals v Masters & Anor [2004] NSWCA 253 HEARING DATE(S) : 20/07/04 JUDGMENT DATE : 30 August 2004 JUDGMENT OF : Mason P at 1; Giles JA at 2; Ipp JA at 3 DECISION : (1) The appeal is partially upheld (2) Bonmari is ordered to contribute to the extent of 50% to the amount of damages payable by Faulding to Mr Masters (3) Mr Masters and Bonmari pay Faulding's costs of the appeal (4) Mr Masters and Bonmari each have a certificate under the Suitors' Fund Act 1951 if otherwise qualified (5) The parties have liberty to apply within 21 days in regard to the amounts of damages to be paid by Faulding and Bonmari. CATCHWORDS : WORKERS' COMPENSATION - TORT - Security guard injured in the course of his employment - Where injury occurred because of a defective gate mechanism - Duty of occupier of the land - Duty of employer - Apportionment of fault between employer and occupier - Contributory negligence. ND LEGISLATION CITED : Workers Compensation Act 1987 (NSW) , s151Z Sullivan v Macquarie Pathology Services Pty Ltd (1995) ATPR 46-143 Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 529 CASES CITED : Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431 Sullivan v Macquarie Pathology Services Pty Ltd (1995) ATPR 46-143 Wynbergen v Hoyts Corporation Ltd (1997) 149 ALR 25 F H Faulding & Co Limited t/as Faulding Pharmaceuticals (Appellant) PARTIES : Kevin William Masters (First Respondent) Bonmari Pty Limited (Second Respondent) FILE NUMBER(S) : CA 40007/04 P Morris (Appellant) COUNSEL : R V Letherbarrow SC/S Dixon (First Respondent) J Fernan (Second Respondent) Moray & Agnew (Appellant) SOLICITORS : Robert Johns & Company (First Respondent) Turks Legal (Second Respondent) LOWER COURT District Court JURISDICTION : LOWER COURT DC 12558/01 FILE NUMBER(S) : LOWER COURT Black DCJ JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40007/04 DC 12558/01 MASON P GILES JA IPP JA Monday 30 August 2004 F H FAULDING & CO LIMITED T/AS FAULDING PHARMACEUTICALS v KEVIN WILLIAM MASTERS & ANOR Judgment 1 MASON P: I agree with Ipp JA. 2 GILES JA: I agree with Ipp JA. 3 IPP JA: The second respondent ("Bonmari") is part of a group of companies carrying on business as providers of security services to commercial organisations. Group 4 Securitas Pty Ltd ("Group 4") is the holding company of the group. Bonmari employed the first respondent ("Mr Masters") as one of its security guards. 4 Group 4 entered into a contract with the appellant ("Faulding") to provide security services at factory premises at Rydalmere. Faulding occupied the premises and used it for the purposes of manufacturing pharmaceuticals. Bonmari assisted Group 4 in discharging the latter's obligations under that contract and Mr Masters was one of the security guards provided by Bonmari for that purpose. 5 By the contract between Faulding and Group 4, security guards employed by or on behalf of Group 4 were required to close and lock the gates at the front of the factory premises when departing at 8.00 pm at the end of each evening shift. The gates were locked by a bolt on the one gate which passed through an eyelet in the other. 6 For a period from about 1999 or 2000 to October 2001, the gate with the bolt sometimes sagged. When this occurred, the bolt was fractionally lower than the eyelet and, without the level of the gates being adjusted, the bolt could not readily pass into the eyelet. 7 At about 8.00 pm on 8 January 2001, Mr Masters attempted to lock the gates. He found that they were out of alignment and he could not slot the bolt into the eyelet. He attempted to lift up the gate with the bolt in order to overcome this problem and thereby injured himself. 8 Mr Masters contended that the injuries he sustained were caused by the negligence of Faulding and brought proceedings for damages against it in the District Court. Faulding joined Group 4 and Bonmari as cross defendants. At trial, the cross claim by Faulding against Group 4 was severed. 9 The trial judge, Black DCJ, upheld Mr Masters' claim and found that Faulding negligently caused his injury. His Honour also held that Bonmari was negligent and ordered it to contribute to the extent of 10% to the damages Faulding was required to pay Mr Masters. The judge assessed damages at common law at $418,673 and under the Workers Compensation Act 1987 (NSW) at $383,225. Separate assessments were required as Faulding was liable as occupier under common law and Bonmari, as Mr Masters' employer, was liable under the Act. Adjustment in accordance with s 151Z of the Workers Compensation Act 1987 led to judgment for Mr Masters against Faulding for $415,128 and for Faulding against Bonmari for $41,513. 10 Black DCJ found that Faulding was aware of the problem with the gates and it knew that that problem presented a risk of injury to the security guards, including Mr Masters. His Honour said: "[Faulding] did nothing sufficiently to address the problem prior to [Mr Masters' accident] and in my judgment they should have done." For those reasons the judge held that Mr Masters had established negligence on the part of the Faulding. 11 In dealing with Faulding's contention that Mr Masters was guilty of contributory negligence, Black DCJ said: "In my judgment, [Mr Masters] was a decent, conscientious worker who was attempting to perform his duties to the best of his abilities. Not only did he try to secure the gates in what he reasonably believed was the normal and proper way but having failed to do so, despite heavy rain, he sought alternative means of securing the gates and did not leave until he had done so. I do not think it would be right to criticise him for attempting to adjust the gates in the way he did and he would not necessarily have known of the weight or forces involved. It was further suggested he should have telephoned Mr McGuire [a co-worker] or someone else for instructions but did not do so. I am not satisfied that that would have achieved anything even if anybody had been available to respond to his telephone queries. In the result therefore I reject the allegations of contributory negligence." 12 The judge then turned to Bonmari and found that, as Mr Masters' employer, it was "liable for failing to take any proper care for [Mr Masters'] safety". The judge held that a co-employee, Mr McGuire (who knew of the problem with the gates), should have warned Mr Masters about the locking difficulty and of alternative methods for closing and locking the gates. Black DCJ also found, in regard to Bonmari: "[o]n the evidence nobody was in any position of authority over [Mr Masters] or had the slightest concern about his welfare and system of work and [Faulding's] premises. There should have been such a person in existence who should have known what was known to Mr McGuire and should have done something about it." For those reasons Black DCJ found that Bonmari was in breach of its duty to Mr Masters. 13 When dealing with the apportionment of liability as between Faulding and Bonmari, Black DCJ said: "I find by far the major responsibility for this accident lies with [Faulding] … and it is clear from the lack of response or interest shown to the complaints by Mr McGuire [of problems with the alignment of the gates] that the remedy was far more in the hands of [Faulding] and [it] chose in my judgment to ignore the very real risk of injury to people who [it] knew and indeed had contracted for to be on the premises to ensure the security of the premises and did nothing much about it until October 2001." His Honour held that Bonmari should contribute to the extent of 10% to the damages awarded to Mr Masters. 14 Faulding appeals against the findings of the judge. It contends that it did not owe a duty of care to Mr Masters. It contends that, if it did, it did not breach that duty of care. It argues that it fulfilled any duty that it had by making Group 4 and Bonmari aware of the fault with the locking mechanism. Faulding contends, also, that the judge wrongly held that Mr Masters was not guilty of contributory negligence. Finally, it contends that the judge should have found that Bonmari "was liable for a greater proportion of the damages payable by [Faulding] to [Mr Masters]". 15 During argument on appeal, Mr Morris, who appeared on behalf of Faulding, only faintly pressed the point that Faulding did not owe a duty of care to Mr Masters. That is understandable as the contention that it did not is without substance. At common law an occupier must take reasonable care to avoid foreseeable risks of injury to persons entering its property: Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431 (at 478). Faulding was the occupier of the Rydalmere premises and it knew that, pursuant to the contract for the provision of security services, Group 4 or Bonmari security guards would enter the property. Faulding also knew that, at the end of every evening shift, a security guard (such as Mr Masters) on leaving the property would close and lock the heavy gates at the entrance. This, indeed, is what Faulding required the security guards to do. In these circumstances, Faulding owed Mr Masters a duty to take reasonable care to avoid foreseeable risks of injury to him. 16 I now turn to the question whether Faulding committed a breach of the duty of care owed by it. 17 In 1989, Mr Masters obtained a licence to work as a security guard. In October 1999, he commenced employment with Group 4. In 2000, he commenced working at the Rydalmere premises. 18 Immediately before commencing working at Rydalmere, Mr Masters undertook a four-hour training shift in the company of Mr McGuire. Mr McGuire was also a security guard employed by Bonmari. He had not received instructions from Bonmari or Group 4 to train new security guards but he voluntarily undertook those duties himself. This apparently had become well known to Bonmari and Group 4 and when Mr Masters commenced working at Rydalmere he was told by a person at Group 4 that he should find Mr McGuire who would explain what his duties were. 19 Part of Mr Masters' training by Mr McGuire involved the opening and closing of the front gates. Mr McGuire explained to Mr Masters in great detail how the gates were to be closed and locked by sliding the horizontal bolt on the one gate into the eyelet in the other gate. Mr McGuire, however, did not tell Mr Masters about any problem in the alignment of the bolt with the eyelet and did not inform him of any alternative means of locking the gates. 20 In 2000, Mr Masters worked as a security guard at Rydalmere for a three-week period. Thereafter, he did not work there again until he returned on 8 January 2001. 21 On the evening of 7 January 2001, Mr Demmenz, a Bonmari employee who was Mr Masters' area supervisor, telephoned Mr Masters at his home. Mr Demmenz told Mr Masters that he was to do the next day's early morning shift at Faulding and it would his task to open the gates that morning. Mr Masters told Mr Demmenz that he did not have the necessary keys and did not have authorised access to the premises. Mr Demmenz advised Mr Masters that he would investigate the matter and call him back. Later, Mr Demmenz telephoned Mr Masters and informed him that he was to do the afternoon shift and do the "lockup" when the premises closed for the day. That would give Mr Masters sufficient time to get the keys to the premises and an access card. 22 Mr McGuire had previously informed Mr Demmenz about the difficulties that he had experienced in locking the entry gates at the Rydalmere premises. Mr Demmenz, however, did not mention anything to Mr Masters about these problems. 23 It is not possible to determine from the evidence precisely when the gates first began to give trouble, but Mr McGuire, who commenced working at the Rydalmere premises in late 1999 or early 2000, experienced problems with the gate about a week after he had commenced working there. 24 At first, when the misalignment occurred, Mr McGuire attempted manually to lift the sagging gate. The gates were very heavy, however, and later he used a different method. This involved standing on the higher gate in order to depress it by his weight. If this method did not work, he attempted to lift the sagging gate manually. If he still could not close the bolt, he would use a chain that was kept under the sink in the gatehouse about 50 metres from the gates. 25 Mr McGuire complained about the gates on several occasions to Mr Weaver, one of Faulding's managers. When Mr McGuire first told Mr Weaver that the gates did not line up properly, Mr Weaver replied: "There's a problem with it anyways but see if you can get it closed" 26 Despite this conversation, little changed and Mr McGuire again complained, not only to Mr Weaver but also to Mr Geoff Menz, Faulding's general manager, and Mr Ian Steir, Faulding's maintenance engineer. These complaints were made orally. In addition, according to Mr McGuire, he complained about the gates in a monthly written report that he provided to Faulding. The report was not produced but three reports over the relevant period had been mislaid. According to Mr McGuire, he complained orally at least 10 to 12 times. This evidence was not disputed. 27 Mr Menz told Mr McGuire that he would pass the problem on to Mr Steir whose particular task was it to oversee the maintenance of machinery on the premises. When nothing effective was done, Mr McGuire took Mr Steir to the gates and pointed out the problem to him. 28 Eventually, about three or four months before the accident, the eyelet was elongated. This made a difference initially, but two to three weeks later the gates continued, from time to time, to be misaligned. Prior to the elongation of the eyelet, one or two other unsuccessful attempts had been made to fix the problem. 29 When Mr Masters came on duty on 8 January 2001, Mr McGuire was at the premises and he showed Mr Masters around the property. He assisted Mr Masters in obtaining an access card from Mr Weaver and gave him a set of keys as well as a Faulding ID tag. He did not, however, say anything to Mr Masters about any problem with the gates. 30 At about 8.00 pm at the end of Mr Masters' shift, it was, in Mr Masters' words, "absolutely teeming down with rain". He passed through the gates and attempted to close them. He found that he could not slot the bolt home. The misalignment between the gates was not large. The bolt missed the eyelet by a very small fraction, less than 1/32 of an inch. 31 As the bolt was missing the eyelet by such a small fraction, Mr Masters thought that all it needed was "just a little jerk". He attempted to lift the gate to give it that "jerk". When he did so, he felt what he described as a burning or stinging sensation in the groin. He thought that he had merely pulled a muscle so he changed his stance and tried to lift the gate again. 32 Making no headway, and again experiencing the burning or stinging sensation in the groin, he decided to go into the gatehouse to look for a piece of chain. He made a search in the gatehouse and eventually found the chain under the sink. He used the chain to lock the gates. He had not previously been told about the chain and until he found the chain under the sink he did not know of its existence. 33 Mr Morris submitted that the true cause of Mr Masters' injuries was a defective system of work implemented by Bonmari. He pointed out that Mr Demmenz and Mr McGuire knew full well of the problems with the gates. Mr McGuire had testified that the gates were "very heavy" and this was obviously the case. Mr McGuire conceded that he appreciated that "trying to lift very heavy gates presented some risk of injury". Nevertheless, no person on the part of Bonmari had informed Mr Masters of the problems with the gate and that safe methods existed to close and lock them. Mr Masters testified that had he been told not to lift the gate he would have complied with that instruction. 34 Mr Morris submitted that there was no evidence that Faulding knew that, because of the sagging gate, the security guards, from time to time, would have to lift that gate in order to lock it. He stressed that no one had told Faulding that this problem constituted a risk to the health of the security guards. He submitted that it should be inferred that Faulding believed that Group 4, Bonmari and the security guards knew of the existence of the chain and were content to use the chain to lock the gates. In any event, Faulding knew that Group 4 and Bonmari were aware of the problem. He argued that, in these circumstances, Faulding had not breached its duty of care. 35 I do not accept these submissions. 36 Everything that Mr Morris said about the knowledge of Group 4 and Bonmari concerning the danger constituted by the misalignment of the bolt was known or should have been known to Faulding. Senior officers, including the general manager and the manager responsible for site maintenance had been told several times by Mr McGuire of the problem. Mr Weaver knew from the very first complaint that the misalignment made it difficult for the security guards to lock the gates. Nevertheless, he told Mr McGuire to persist in attempting to effect the locking of the gates. 37 Mr Weaver should have known that it was likely that guards, in attempting to comply with that request, might attempt to lift the gate in order to lock it. As one complaint succeeded another, the reasonable possibility of this occurring should have been impressed on the consciousness of those responsible at Faulding. 38 There was no evidence of anything that could have led Faulding to believe that Group 4 or Bonmari had told the security guards about the danger and how to avoid it. Indeed, no evidence from any employee of Faulding was led and there was no evidence of any relevant belief held by Faulding. 39 Faulding should have known of the risk of injury to security guards who attempted to lift the gate in order to lock up the premises. Just as the risk of injury must have been obvious to Mr Demmenz and Mr McGuire, it must have been obvious to those in positions of responsibility at Faulding. 40 In support of his argument that Faulding believed that the security guards knew of the chain and were using it to lock the gates, Mr Morris suggested that Faulding employees would arrive in the mornings, before the gates were opened, and would see the gates locked with the chain. The evidence, however, does not support this submission. On the evidence, security guards opened the gate at 4.00 am each morning before any Faulding employees arrived. 41 The measures that Faulding took to remedy the problem were tardy and inadequate. The problem was resolved in October 2001 when a wheel was attached to the bottom of the sagging gate, thereby holding it at the correct level. No evidence was given that explained why this was not done earlier. 42 Mr Masters' reaction, when he first realised that the bolt was a fraction out of alignment was a perfectly reasonable response. Faulding should have foreseen that a security guard such as Mr Masters might attempt to lift the gate manually and thereby injure himself. 43 In the circumstances I would not uphold Faulding's submissions that it had not breached its duty of care to Mr Masters. 44 Mr Morris did not press the issue of contributory negligence with any enthusiasm. This is readily understandable as it is difficult to fault Mr Masters' conduct on the evening in question. I agree with the comments of Black DCJ (which I have quoted above) in this connection. I repeat that, in my view, Mr Masters acted reasonably. I do not think that he was guilty of contributory negligence. 45 I turn next to the apportionment of responsibility between Faulding and Bonmari. As employer, Bonmari had a non-delegable duty to take reasonable care to avoid injury to its employees. Bonmari did not dispute that it breached that duty but supported the finding by Black DCJ that it should be liable for only 10% of the damages payable by Faulding to Mr Masters. Mr Masters supported Bonmari's contention in this regard. 46 The principles governing the apportionment of damage were expressed by Hayne J, with whom the other members of the High Court agreed, in Wynbergen v Hoyts Corporation Ltd (1997) 149 ALR 25 (at 29) as follows: "No doubt the making of the apportionment which the legislation requires involves comparison of the culpability of the parties, ie, the degree to which each has departed from the standard of what is reasonable ( Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 529 at 532 …), but that is not the only element to be considered. Regard must be had to the 'relative importance of the acts of the parties in causing the damage' ( Podrebersek at 532-533) and it is 'the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination' (Podrebersek at 533)". 47 In determining the degree of fault on the part of Bonmari, Black DCJ took into account only the negligent conduct of Mr McGuire. He made no reference to the conduct of Mr Demmenz. 48 At the relevant time, Mr Demmenz was the supervisor of both Mr McGuire and Mr Masters. He gave instructions to the men, generally, and visited and inspected the different sites. He also, as I have mentioned, gave the instructions to Mr Masters on 7 January 2001 to commence working at the Rydalmere premises the next day. 49 Although Mr Demmenz knew of the problem, he did not warn the security guards, in general, and Mr Masters, in particular, that the misaligned bolt at times made it difficult to lock the gates and that, should that occur, they should not lift the gates manually; instead, they should use a chain to lock the gates. Mr Demmenz had ample opportunity to issue such a warning and, in my view, he was negligent in not doing so. 50 Accordingly, the "whole conduct" of Bonmari to be considered in determining the apportionment of liability involved not only the conduct of Mr McGuire, but Mr Demmenz, as well. In my view, Black DCJ erred in omitting to have regard to the negligence of Mr Demmenz. That omission was an error in the exercise of his Honour's discretion. 51 In any event, in my opinion, his Honour accorded far too little weight to the negligence of Bonmari. In my view, for the reasons I have stated, there was no material difference in the relative blameworthiness and the relevant causal potency of the negligence of each of Faulding and Bonmari (cf Sullivan v Macquarie Pathology Services Pty Ltd (1995) ATPR 46-143 per Clarke JA). 52 Thus, apart from the error that I have identified, I consider that to hold Bonmari responsible for only 10% was so unreasonable as to amount to a further error in discretion. 53 In my opinion, taking into account the factors to which I have referred, it would be just and equitable for Faulding and Bonmari to contribute equally to Mr Masters' damages. 54 A necessary consequence of a change in the apportionment would be an alteration in the damages awards made by his Honour. The parties have indicated that, should this Court alter the apportionment, they should be able to agree between themselves upon the amounts of damages for which each of Faulding and Bonmari will be liable. I will, therefore, not propose any orders fixing the amounts of damages to be paid but will propose that liberty to apply in this regard be ordered. 55 Faulding was substantially the successful party in the appeal and should be awarded the costs against both Bonmari and Mr Masters (Mr Masters having supported Bonmari in resisting any change to the apportionment). There should be no change to the costs orders made at the trial. 56 I propose the following orders: (a) The appeal is partially upheld. (b) Bonmari is ordered to contribute to the extent of 50% to the amount of damages payable by Faulding to Mr Masters. (c) That Mr Masters and Bonmari pay Faulding's costs of the appeal. (d) That Mr Masters and Bonmari each have a certificate under the Suitors' Fund Act 1951 if otherwise qualified. (e) That the parties have liberty to apply within 21 days in regard to the amounts of damages to be paid by Faulding and Bonmari. ********** Last Modified: 08/30/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.