New South Wales Court of Appeal CITATION: HERNANDEZ v NEFIKO MARBLE CONTRACTORS PTY LTD [2006] NSWCA 90 HEARING DATE(S): 23 March 2006 JUDGMENT DATE: 21 April 2006 JUDGMENT OF: Mason P at 1; Beazley JA at 43; Tobias JA at 44 DECISION: Appeal dismissed with costs CATCHWORDS: NEGLIGENCE – Principal's duty of care to independent contractor – Corporate Principal – Principal liable through its servants and agents – Where servant not in the employ of principal at time of negligent act – No liability in principal. (ND) Boylan Nominees Ltd v Sweeney [2005] NSWCA 8, (2005) ATR 81-780 CASES CITED: CSR Ltd v Maddalena [2006] HCA 1 Fox v Percy (2003) 214 CLR 118 Suuval v Cessnock City Council [2003] HCA 41, 77 ALJR 1449 PARTIES: Rafael HERNANDEZ NEFIKO MARBLE CONTRACTORS PTY LTD FILE NUMBER(S): CA 40216/2005 COUNSEL: Appellant: S Norton SC/ M Fraser Respondent: L King SC/ S Kettle SOLICITORS: Appellant: Brydens Respondent: Thompson Cooper Lawyers Pty Ltd LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 8711/2002 LOWER COURT JUDICIAL OFFICER: Ashford DCJ IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40216/05 DC 8711/2002 MASON P BEAZLEY JA TOBIAS JA Friday 21 April 2006 Rafael HERNANDEZ v NEFIKO MARBLE CONTRACTORS PTY LTD JUDGMENT 1 MASON P: The appellant was a subcontractor stonemason working for the respondent, itself a subcontractor at a building site called Wynyard Green in York Street, Sydney. Damages were claimed for a back injury allegedly suffered in an accident on 12 September 2001. The appellant's case was that he was lifting a 110kg piece of granite assisted by of a labourer named Steve Watson. Watson let go and the appellant injured his lower back when he took the whole load. 2 The trial presented an unusually difficult set of factual issues to be resolved. It was established to the satisfaction of the trial judge that the plaintiff had a substantial disability as a result of his back pathology. But there was a live dispute as to whether this was caused or exacerbated by the disputed accident on 12 September 2001. The two cases were diametrically opposed in key elements. The very accident was disputed and the allegedly negligent actor was said to have had nothing to do with the respondent at the relevant time. 3 The respondent was sued on the basis that Watson was a servant or agent it had made available to the appellant. It was common ground that Watson occupied this role between March and June 2001 when he was the respondent's employee. But, as the case was conducted, the pleaded date of the accident was critical because it was on 12 September 2001 that the appellant visited his GP, Dr Lau, with a complaint about a bad back; the appellant pointed to a phone record that day to corroborate his disputed account of having reported the incident to the principal of the respondent, Ms Cheong; and three of the appellant's fellow workers (Messrs Musgrave, Locarotolo and Bodrilla) placed Watson then at the site because (although none saw the accident) each man swore that Watson was the appellant's offsider at and after the time of the "September 11" catastrophe in New York City. The appellant said that Watson was his assistant until November or December 2001. 4 The respondent's case, in brief, was that no accident occurred and that Watson severed all ties with it and the Wynyard Green building site in June 2001, almost 3 months before the alleged event. Two principals of the respondent, Ms Cheong (Black 156, 157) and Ms Wong (205-8, 218, 219, 230, 233), each swore that Watson ceased any involvement in June. A letter of termination was produced by Watson (Blue 101). Watson's new employer denied any "lending" arrangement with the respondent. According to Ms Cheong, no lifting accident was reported to her on the day in question or at all. Nothing was recorded in the head builder's accident register although the appellant had previously reported injuries there (48). There were also significant inconsistencies in medical histories provided by the appellant. 5 Watson himself gave evidence that he knew of no accident and stating that he had had no contact with the appellant or the respondent after June 2001 apart from some correspondence with Ms Cheong about unpaid wages. However, he was found to be an unsatisfactory witness, unworthy of acceptance without corroboration (J51, 60). The trial judge was particularly unimpressed by the fact that Watson had told Musgrave and Locarotolo outside the Court that if the plaintiff had paid him money he would have helped him out. The plaintiff did not suggest that there had been any conversation with him on that topic but there was an unresolved question whether Watson was being flippant or worse in this remark to his fellow witnesses. Watson's presence at Wynyard Green on 12 September 2001 6 It was proved to the hilt that Watson's employment was terminated by the respondent in on about 14 June 2001, under unhappy circumstances (Blue 101-2, Black 122, 205), and that he promptly returned to employment with a group of companies operating in the Central Coast under the trade name of Gosford Marble & Granite (Gosford Marble). Watson, who lived on the Central Coast, had worked for this organisation for about four and half years up to March 2001. Watson's supervisor, Mr Lazzaroni, produced business records and gave evidence showing that Watson again became his organisation's employee from 20 June onwards (see J34). At the end of the trial and in this Court, it was not in dispute that Watson was the employee of the Gosford Marble & Granite group of companies at the time of the alleged incident (12 September 2001). 7 The Gosford Marble wage records showed Watson working from 7.30am to 6.30pm on 12 September 2001. This included overtime. Mr Lazzaroni said he was paid on this basis (184) and that he was Watson's supervisor (100). Mr Lazzaroni described the suggestion that Watson had been swapped over to the respondent in return for a supply of marble as "absolutely outrageous" (115). 8 The trial judge recorded in detail the conflicting oral testimony about Watson's status and whereabouts on 12 September 2001 (J22-48). She was not prepared to make a positive finding in the appellant's favour, explaining her conclusions in the following terms: 59. Whilst other workers specifically relate the date of injury to the events of 11 September 2001 and are also prepared to say Steven Watson was working with the defendant in September 2001 it seems to me on the balance of probabilities the evidence which places Steven Watson in other employment from late June 2001 is telling, and it seems to me there is a satisfactory explanation for a payment to Steven Watson by the defendant company in November 2001. As I have said I thought Steven Watson an unreliable and unsatisfactory witness in many respects. It has been suggested by counsel for the plaintiff that there was some underhand arrangement between the defendant company and/or Steven Watson and/or the company conducted by his present employer Gosford Granite and Marble. This remains speculative and the wages material produced by that company clearly indicates Steven Watson to have been in continuing employment with them as at September 2001. 60. The evidence given in respect of the conversation between Musgrave, Locarotolo and Watson outside the Court is a factor which leads me to believe that any uncorroborated evidence of Steven Watson should not be accepted, however against the plaintiff's firm assertions of working with Watson on 12 September 2001 and of sustaining injury on that day as a result of Watson's actions it appears to me I should accept the material produced by the Department of Industrial Relations and the wages material which has been tendered and find that Steven Watson was not in the employ of the defendant on that day, or indeed from June 2001. 9 Apart from the slightly dismissive comment about "other workers" being "prepared to say Steven Watson was working with the defendant in September 2001" (J59), her Honour did not indicate acceptance (or otherwise) of the conflicting oral testimony on the details of the Watson issue. Perhaps she felt there was nothing tangible to go on, given that the cross-examination of the various witnesses was not very probing. Perhaps nothing in the demeanour of the witnesses gave any persuasive clue. Perhaps her Honour was left unpersuaded by the plaintiff's case but chose to say nothing specific about difficult credibility issues. 10 The litigation was resolved by Ashford DCJ in the respondent's favour on the basis that the material produced by the Department of Industrial Relations relating to Watson's wage dispute with the respondent and the wages material tendered by Gosford Marble should be accepted as proving on the balance of probabilities that Watson was not "in the employ" of the respondent in September 2001 (J59-60). As indicated, this is no longer in dispute. 11 Where does this leave the appellant's case? What are the possible theories that might suggest that the verdict for the defendant ought to be set aside? Might Watson have been "lent" to the respondent "off the books"? 12 The main theory still advanced is that Watson was in some way "lent" to the respondent by Mr Lazzaroni's Gosford enterprise after June 2001 and that he continued as before to work as the appellant's offsider at Ms Cheong's direction though not as her company's employee. The trial judge recognised that this case had been run (see J59, set out above). Her reference to Watson not being "in the employ" of the respondent in September may or may not have been intended to reject it in terms. 13 There are in any event several difficulties with this possibility. 14 Mr Lazzaroni, Ms Cheong, Ms Wong and Mr Watson swore that Watson ceased involvement at Wynyard Green in June 2001. Nothing in the business records of the Lazzaroni companies or of the respondent support the idea of some "lending" of his services. Watson had left the respondent's employment in June in circumstances indicating that the respondent was unhappy with his reliability and there was an unpaid wages dispute during this period. Watson was hardly a key employee of the respondent and no reason is advanced why he would have continued to work for the respondent "off the books" under some arrangement between Mr Lazzaroni and Ms Cheong. It was not even put to Ms Cheong that she had entered into any such arrangement beyond the suggestion (firmly denied) that Watson "just wasn't on the books" (233). There is nothing to show why Mr Lazzaroni had an incentive to perjure himself for the benefit of the respondent, because there appears to have been nothing but a business relationship between Gosford Marble and the respondent based on the respondent selling stone to Gosford Marble from time to time. Gosford Marble had approximately nine employees (187) and there is no reason to doubt the evidence that it was Mr Lazzaroni's organisation that paid him for his work in September 2001, including the day in question. Mr Lazzaroni's inability to locate the original bundy records was explained (153, 179, 196). 15 Three workmates of the appellant swore that Watson was the appellant's assistant around the time of the September 11 catastrophe. However, the possibility of mistake as to timing cannot be excluded, especially since the three witnesses were first contacted about the issue in 2004, Mr Bodrilla on the day of his testimony (89). Watson was undoubtedly the appellant's assistant for several months earlier in 2001. The events in New York were undoubtedly memorable, but I fail to be persuaded how they helped fix an event of this nature as occurring before or afterwards. 16 I do not overlook the testimony of the plaintiff's nephew, Mr Bodrilla who said that he first arrived at Wynyard Green in August 2001 and whom Mr Watson remembers seeing on site (Black 88, 148). I do not see this as overwhelming support for the plaintiff's case, because it really depends on the accuracy of Mr Bodrilla's recollection that he was at the site "Probably late August" (88). 17 The decision not to accept the plaintiff's case was not glaringly improbable or otherwise of a character as to attract favourable appellate review. In so stating, I have considered all of the matters raised in the "Credit Submissions" prepared by the appellant's counsel. Many have already been touched upon. Some are quite inconsequential or involve inferences being drawn from debatable breaches of the rule in Browne v Dunn. Others point to unexplained conflicts in the evidence that remain mysterious but do not compel a conclusion in the plaintiff's favour. Watson's credibility problems cannot be used to establish a case in the plaintiff's favour. 18 The credibility of the appellant's account was challenged at trial in several respects and difficulties remain on his side of the record. The recorded histories he provided to Dr Lau on 12 September 2001 (Blue 65) and to Dr Sheridan on 6 February 2002 (Blue 69) do not assist his case of a sudden back injury on 12 September. Neither doctor was called as a witness at trial. 19 Dr Lau's note states: 1/52 LBP – 1/7 worse can't walk, lifting marble, pain bad (L)leg/foot (L) buttock PH LBP. 20 On 28 November 2002 Dr Lau provided the plaintiff's solicitors with a medical report (Blue 10) containing a history of the plaintiff "lifting a heavy granite panel above his head with another worker who suddenly let go the panel". It is not known when Dr Lau obtained this history. It states the date of injury as 10 September 2001, ie two days prior to the recorded date of initial consultation of 12 September 2001 (Blue 10K-L). 21 Dr Sheridan records a "history of back pain. He has worked for 20 years as a stonemason and has gradually increasing pain with time". Other theories 22 It was submitted that the trial judge failed to deal adequately with alternative possibilities. This provoked a debate as to whether they had been advanced at trial. I shall assume that they all were, although I have my doubts. 23 I have considered whether it was and is open for the appellant to sidestep the "Watson on 12 September" case by suggesting that the incident happened before mid June, when Watson was undoubtedly on site as the assistant provided by the respondent, then Watson's employer. But the September date was critical on the pleadings (that were amended at trial to aver 12 September in lieu of 10 September); it was vital to the appellant's evidence of reporting the injury to Ms Cheong and Dr Lau on 12 September; and it was the issue joined when the appellant called the three witnesses who located Watson at the site around the time of the September 11 disaster in New York. There was also the appellant's evidence that heavy lifting involving soffits only commenced in September (43). 24 Nor, in my view is it open for the appellant to say that he might have named the wrong agent. It is true that he continued to need occasional assistance with heavy stones when lifting equipment could not fit in a tight corner. The possibility that persons other than Watson might have helped from time to time was also acknowledged by Ms Cheong (169). 25 However, the appellant was adamant that it was Watson who dropped the stone (eg Black 41). This was the sole case pleaded and it was the case that the respondent endeavoured to meet, even to the extent of calling Watson himself. 26 One variant of the appellant's case was that the respondent was liable, not for the casual act of negligence of its "servant or agent", but because Watson was an "ill-trained and incompetent" assistant provided to him by the respondent. Some fairly inconclusive evidence was led on this issue, in an endeavour to show that the appellant was forced to retain Watson despite his protests to Ms Cheong (44, 48). It is unclear whether they extended to complaints about Watson's capacity to lift heavy weights. 27 There was however no suggestion of any complaint being made to Ms Cheong about the capacity of anyone but Watson. In this context, it would be positively unjust to permit reliance on a not-Watson scenario. The principles discussed in Suuval v Cessnock City Council [2003] HCA 41, 77 ALJR 1449 apply. 28 A further impediment for the not-Watson theory lies with the difficulty of sheeting home to the respondent legal responsibility for an accident that did not involve an employee. The respondent had other subcontractors on site and it is conceivable that one of them, or one of their employees, might have assisted the appellant in the era after Watson's departure from the scene. Even if he did so at Ms Cheong's request, more would have been required to make the respondent liable for a casual act of negligence on his part (see Boylan Nominees Ltd v Sweeney [2005] NSWCA 8, (2005) ATR 81-780). The transcript confirms my impression that the furthest any not-Watson scenario was floated, if at all, was in the direction of any employee of the respondent (see Black 263.24). Inadequate reasons? 29 The appellant was critical of the paucity of exposed reasoning. The judge was said to have summarised a lot of conflicting testimony without addressing the conflict in its particularity. In my view, this criticism is unjustified. 30 A trial judge who is unable to resolve a sharp conflict of testimony by reference to "demeanour" grounds is not to be criticised on that account (CSR Ltd v Maddalena [2006] HCA 1 at [46]). Demeanour assessments have their own sets of problems (see Fox v Percy (2003) 214 CLR 118 at 128[30]-[31]). Sometimes an irreconcilable conflict has to be resolved by application of the law's onus of proof. Sometimes "objective" factors tilt the balance. This is what occurred here, as her Honour makes sufficiently plain in her reasons (J59-60). 31 Thus far, I have rejected the various submissions challenging the verdict for the defendant. Most of those submissions contend for a new trial. A new trial is also inappropriate for an additional reason. Was "Watson" negligent? 32 There is a dispute as to the alternative ways that the plaintiff's case in negligence was pressed at trial. Nevertheless, it clearly included the respondent being liable for the casual act of negligence on the part of its "servant or agent Watson". 33 The trial judge made no finding as to negligence, although she did concede the possibility that the plaintiff "suffered discal injury in the manner described by him in the course of lifting heavy stone. It may well be he was lifting stone in company with another worker who let go of his end of the stone" (J57). The respondent contends that there was no evidence of negligence and, for this reason alone, the verdict must stand. I agree. It would not be appropriate to order a new trial in such circumstances even if (contrary to my view) the judge's reasons on the other matters were inadequately expressed. 34 The appellant's submission at trial (Black 264) and in this Court was that Watson was negligent because he dropped his end of a slab of stone without warning. 35 The appellant did not suggest that anyone but himself witnessed the accident. He said that he and Watson were installing the external cladding and had reached the stage where the first soffit stone was to be put in place. The soffit was to be laid approximately 2.2m above ground and the men were working from a mobile scaffold. The appellant described the stone as 1.4m long, 700mm high and 30mm thick. It weighed about 110kg (14). The task was described in chief as follows (14): You've got to slide a stone down on the 700 side, one man on either end, you've got to both lift the stone at exactly the same time and lift it over your head on to timber blocks that are already provided so the stone sits on so it doesn't fall until the … epoxy is dried. 36 The accident was described as follows (15): Q. I want to take you to the stage where you and your helper – who was it by the way? A. Steve Watson. Q. Positioned yourselves on top of the scaffold and took hold of your ends of the piece of stone –you with me? A. Yes. Q. What did you do then? A. I asked – we got it up to our waist high – I asked Steve was he all right, could he handle the weight, he said, "Yes, I think I can". As we got it up over our heads he started to struggle and I got scared and then he just – he couldn't hold the weight and he just let it go and I just took the whole weight down -- HER HONOUR: Q. Slow down a minute. You got it as high as - A. Up over our head. Q. Over your head? A. Yes. LIDDEN: Q. You have said he started to struggle – take it bit by bit, you see? A. Okay. Q. You have said he let it go then? A. Yes. Once it was over his head he couldn't hold it and he actually just let it move out of the way and let it go. Q. When he let it go, what happened to you? A. I still had hold of it so the actual – I had all the weight until stone actually hit the scaffold and just missed both of us. So I still had the whole stone. Q. In the course of doing that, what happened to you? A. I had severe pain instantly straight after -- Q. Whereabouts? A. In the lower middle back. 37 Counsel for the defendant elicited from the appellant that he was aware that the defence case asserted that Watson was not working on the site on the day (41). Asked if there was any possibility that the appellant was mistaken that it was Watson, the appellant answered "No. No possibility" (41). No one but Watson had helped him within the period from March 2001 onwards (41). Watson was described as a younger man to whom the appellant had explained how to lift stone (42). It was clear that Watson was under his direction and supervision albeit that the appellant considered him to be not very efficient. This was the first soffit that the two men attempted to lift (44). 38 The appellant thought Watson was capable of doing the task and the latter's response was "I'll have a go" (45). In cross-examination, the appellant gave the following description of the accident (45): Well, again we laid the stone down on the long side – the 1400 side – he got on one end, I got on the other end; we picked it up flat. When we got it to our waist height I said to him, "Steve, are you all right, can you handle the weight?" He says "Yes, I'm all right". When we got it above our head he started like shaking, I saw he was struggling and then all of a sudden he just – he's just said, "I can't hold it" and then he just let it go. A short time later there was the following evidence (46): Q. And so it was only when it was above his head -- A. Above his head, yes. Q. And did he, what, start wobbling or something? A. Well, yeah, by then it was too late, he let – he let go and then I had to grab it. 39 This evidence does not support a case that Watson (or any one else) negligently failed to warn that he was about to drop the stone or that such negligence was a cause of the injury. On the contrary, the versions in chief and in cross-examination were to the effect that the weight of the stone caused Watson to "struggle", "start[ing] wobbling or something". In the appellant's words (46) "by then it was too late". Watson let go and, as the appellant took the whole weight of the stone, he injured his back. 40 The appellant's version of his conversation with Ms Cheong on 12 September 2001 contains no assertion of negligence on Watson's part (16). 41 I cannot see that there was any negligence on "Watson's" part. It was the appellant who was in control of what was undoubtedly a risky enterprise. He was the senior, experienced stonemason. He knew Watson was slight of build. In the plaintiff's words, to lift a stone weighing between 90 and 120 kg "you have to have experience and physically you've got to be strong" (7). Watson owed the appellant no duty of care analogous to that of an employer. If anything, it was the appellant who bore responsibility to his younger offsider. Nothing about the way in which "Watson" handled the agony of the moment betokened negligence, let alone causative negligence, on his part. 42 This gap in the proof of negligence is an independent reason why the appeal should be dismissed with costs. 43 BEAZLEY JA: I agree with Mason P. 44 TOBIAS JA: I agree with Mason P. **************** 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.