NO GROWTH IN CATEGORIES OF CASES IN WHICH A NON-DELEGABLE DUTY OF CARE IS OWED

Legal Directions

In the recent decision in Bettergrow Pty Ltd v NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid (No 2) [2018] NSWSC 514, the New South Wales Supreme Court found that principal contractors do not owe a duty of care to parties that interact with their sub-contractors.

Facts

The plaintiff, Bettergrow Pty Ltd (Bettergrow), claimed damages as a result of asbestos contaminated excavation waste being delivered to its drill mud processing facility in New South Wales. The facility was not licensed to receive waste containing asbestos and as a result, it was closed for approximately seven weeks to remove the waste and decontaminate the facility. The total cost of this closure, including lost profits and interest, was $1,500,000.

TransGrid owns an electrical substation in Beaconsfield, NSW, which was being refurbished. TransGrid had undertaken testing at the site and knew of the asbestos contamination. It required contractors to prepare environmental and safety management plans for the site that dealt with disposal of asbestos contaminated waste.

TransGrid engaged Powercor Network Services Pty Ltd (Powercor) to undertake the second stage of the refurbishment work. It disclosed to Powercor that the site was contaminated with asbestos, and it required that all material be disposed of on this basis.

Powercor subcontracted the civil works to TTR Construction & Excavation Pty Ltd (TTR). TTR engaged OnLine Pipe & Cable Locating Pty Ltd (OnLine) to undertake non-destructive digging (NDD) work. This involved blasting away ground surfaces with high pressure water and extracting the drill mud created. OnLine then disposed of the drill mud by delivering it to Bettergrow’s facilities.

When it contracted with TTR, Powercor gave TTR an Asbestos Management Plan it had prepared. However, TTR did not mention the asbestos risk to OnLine. OnLine was not licensed to dispose of asbestos contaminated waste.

Issues to be determined

The issues considered by the court included:

  • whether TransGrid, as principal, owed a non-delegable duty of care to Bettergrow;
  • whether TransGrid, TTR, Powercor and OnLine were liable for negligence, and if Online acted in breach of contract;
  • the court also considered issues of apportionment, and Transgrid’s defence of contributory negligence.

Non-delegable duty of care

Bettergrow argued that TransGrid owed it a non-delegable duty of care, which could not be passed on to a third party and thereby relieve TransGrid of responsibility.

Justice Ball noted that in the UK, such a duty has been found to exist in two broad situations. First, in cases in which the defendant employs an independent contractor to perform an inherently hazardous function. Second, where the duty arises by virtue of an antecedent relationship (personal to the defendant) which raises a positive or affirmative duty to protect a particular class of persons against a particular class of risks.

Justice Ball noted that the categorisation of cases involving a non-delegable duty has not been adopted in Australia. He referred to comments by the High Court in an earlier decision that in cases where a non-delegable duty arises, the duty is marked by a special dependence or vulnerability on the part of the person to whom the duty is owed. Justice Ball found that Bettergrow was not particularly vulnerable to the disposal of waste contaminated with asbestos. He found that it could have taken a range of steps to protect itself (such as testing). Bettergrow contended that it fell within the broader category of cases recognised by UK law, that of a contactor engaged to carry out an inherently dangerous function. Justice Ball held that the disposal of the waste from the NDD work was not a particularly hazardous activity to which Bettergrow was vulnerable. He also said that there was no reason to add cases such as this one to the categories of a case where a non-delegable duty was owed. He said that to impose a duty on a principal to prevent each specific act of negligence by an independent contractor would be to impose an impossible burden on that person; and it would be unreasonable where the contractor is likely to have specialised skills to undertake the relevant tasks which the principal does not have.

Negligence

Justice Bell also found that there was not any relevant proximity between TransGrid and Bettergrow, and that therefore TransGrid did not owe Bettergrow any duty of care. He found that in effect, the duty sought to be relied on by Bettergrow was a duty to everyone who might suffer loss if the waste was not properly disposed of. Further, that the imposition of such a broad duty was not consistent with the approach the law generally takes with the imposition of a duty of care. He found, for similar reasons, that Powercor, TTR and OnLine did not owe a duty of care to Bettergrow.

Breach of Contract

Justice Ball also found that Online did not act in breach of its contract with Bettergrow. There was an express term that the drill mud had to be free of ‘contaminants such as plastics, metal and other obvious rubbish’. He held that the asbestos contamination was not obvious rubbish, as it could not be detected with the naked eye. He also rejected Bettergrow’s argument that there was an implied term that asbestos would not be deposited at its facility.

Justice Ball also held that the claims against each defendant were apportionable claims. Therefore, if the negligence claims had succeeded, it would have been necessary to apportion the loss between the defendants.

Contributory negligence

TransGrid argued that Bettergrow failed to take reasonable precautions regarding the risk of asbestos contaminated waste being delivered to their facility. Justice Ball found that, in the circumstances of the case, the defence of contributory negligence would have failed. Bettergrow had approximately 38 years of experience and had received deliveries from Online for a number of years. He observed that it would not have been negligent for Bettergrow to act on the basis that Online would not knowingly deliver asbestos contaminated waste to their facility. Further, that even if Bettergrow had done more to make clear that they were not licensed to receive asbestos waste, Online would have still delivered the waste to the facility as they were not aware that the waste contained asbestos.

Conclusion

This case demonstrates the resistance of the courts in Australia to categorise cases in which a non-delegable duty of care will be found to exist.  It also demonstrates the court’s reluctance to expand the scope of the duty of care which may be owed by a principal to its independent contractors.

Further information / assistance regarding the issues raised in this article is available from the author, Greg King, Special Counsel, or your usual contact at Moray & Agnew.


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