DAC Finance (NSW/QLD) Pty Ltd v Cox (NSWCA 2024)

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Key Takeaways

• The Court of Appeal overturned a decision in the District Court which found no vicarious liability in the actual employer for the tortious actions of its employees.
• Whilst the owner and occupier were responsible for the premises where the worker’s accident occurred, the immediate cause of the accident was the negligence of the worker’s co-employees.
• The employer was held vicariously liable despite arguments raised that it was a conduit company setup for the payment of wages.

Brief Facts

The worker sustained injuries as a result of an accident on 4 July 2018, whilst working at a residential aged care facility known as ‘Opal Florence Tower’ (the premises). The worker was injured when the elevator she was travelling in stopped abruptly during its descent due to a test of the emergency power supply from a backup generator. The occupants of the elevator were not warned prior to the test being conducted.

Relevantly, the worker was employed by DPG Services (the Employer), which paid her wages, and held the relevant workers compensation insurance policy.

The residential aged care facility operated under the name, ‘Opal Florence Towers’ which was owed by a company called DAC Finance Pty Ltd (DACF). DACF was the parent company of the employer. The employer operated the business name ‘Opal Florence Tower’.

Another company called DAC Finance (NSW/QLD) Pty Ltd owned the land and buildings where the premises were located. All of the above companies (including the employer) were related entities. The two directors of the employer were also directors of DACF.

The worker did not sue the employer, but commenced proceedings against DACF and DACF (NSW/QLD) (collectively referred to as the defendants) for damages as the owner and occupier of the premises respectively. It was accepted at trial that the worker would not have satisfied the 15% WPI threshold to bring a claim against the employer.

It was further established in the evidence at the District Court trial that the two persons ultimately responsible for conducting the elevator backup generator test were Mr H, the on-site maintenance manager and Mr G, the facility manager, both employed by the employer.

The principal issue in dispute was whether the defendants were liable, or whether the employer was vicariously liable for Mr G and H’s conduct.

District Court Decision

The District Court judge held that the defendants were liable to the worker, as the elevators and power equipment on site were fixtures of the premises, for which they were responsible for as the owner and occupier. The plaintiff was awarded damages totalling $925,435.42.

The trial judge also found that the employer was a corporate conduit structure for the payment of wages to persons working at the premises. There was no evidence that the employer company had an office or a supervisory presence at the premises.

The defendants appealed to the NSW Court of Appeal.

Judgment on Appeal

Justice Leeming (with Justices Ward and Mitchelmore agreeing) allowed the appeal on the following grounds (amongst other issues):

• Whilst the defendants were the relevant owner and occupier of the premises, and owed a duty of care to the worker in their respective capacities, there was no evidence to suggest that the defendants undertook or engaged anyone to test the power supply.
• It was the positive act of Mr H and G by turning off the power without warning that caused the worker’s injury.
• The worker’s allegations of breach and negligence required imputing conduct to one of the defendants actually sued, and the only conduct that was relevant was Mr H and G’s negligence.

Since there can only be one party vicariously liable for their negligent conduct (i.e. the employer) there was no breach on the part of the defendants.

His Honour specifically distinguished this case (see paragraphs 65 and 66 of judgment) from earlier cases of Mt Owen Pty Ltd v Parkes (NSWCA 2023) and Williams v Metcash Trading (NSWCA 2019). Relevantly, those cases involved labour hire company arrangements, where the host employer was held separately negligent for a breach of its duties towards labour hire employees for them, as if they were its actual employees.

Implications

Whether an employer is held vicariously liable for the negligent acts/omission of its employees isn’t always straightforward, especially in circumstances where other entities (related or otherwise) are closely involved.

This case in particular was one which was decided on its own facts. A different outcome could have resulted if the situation involved, say, a labour-hire arrangement, where aspects of control and direction of employees, or systems of work adopted, are in dispute.

As such, it is important to establish at an early stage the specific commercial, management and control arrangements between multiple entities operating together in a commercial enterprise, to properly determine the potential exposure of an employer for injuries to workers.

Please feel free to reach out to our team to discuss this case, or any other matters that you may have involving multi-party claims.