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Corporate structure and duty of care March 27, 2018

Strategic Formwork Pty Ltd v Hitchen [2018] NSWCA 54

The Court (Basten JA, Sackville AJA and Simpson JA) allowed the appeal on damages in part but otherwise dismissed the appeal; by majority the Court (Basten JA and Sackville AJA, Simpson JA dissenting) dismissed the cross-appeal.

The Court held:

In relation to (i):

(1)   Neither the separate corporate structures of RTS and Strategic, nor the fact that the plaintiff was formally employed by RTS, precluded the possibility of Strategic owing Mr Hitchen a duty of care: [16].

(2)   RTS and Strategic ran a single integrated business operation, directed by Strategic’s general manager: [57]-[58]. Strategic exercised control over the operations of RTS at Corrimal, and this control extended to supervision of occupational health and safety. It therefore owed Mr Hitchen a duty of care: [61]-[62].

Caltex Refineries v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 discussed; CSR Ltd v Wren (1997) 44 NSWLR 463 considered; TNT Australia Pty Ltd v Christie (2003) 65 NSWLR 1; [2003] NSWCA 47 cited.

(3)   There was no reason to doubt the trial judge’s conclusion that Strategic breached this duty by failing to take precautions with respect to the stacking of the beams; by failing to ensure a proper inspection was carried out by an experienced person and by failing to instruct employees as to safe stacking practices: [67].

In relation to (ii):

(4)   (Per Basten JA, Sackville AJA agreeing): The Court should not interfere with the trial judge’s conclusion on apportionment as it was within a reasonable range: [72]-[74].

Re Grayan Building Services Ltd [1995] Ch 241; In the Matter of B (a child) (FC) [2013] 1 WLR 1911; [2013] UKSC 33 cited.

(5)   (Per Simpson JA, dissenting): The trial judge’s conclusion on apportionment did not reflect her earlier finding that culpability was overwhelmingly against Strategic: [134]. Apportionment should be modified to 75% for Strategic and 25% for RTS: [135]-[136].

In relation to (iii):

(6)   No error of principle was identified in the trial judge’s reasoning regarding non-economic loss. In the absence of any specific error, the Court should not disturb her Honour’s finding that the plaintiff’s circumstances were 70% of a most extreme case for the purposes of Civil Liability Act 2002 (NSW), s 16: [80].

(7)   The damages awarded for economic loss should be reduced on three bases. First, as Mr Hitchen worked and resided in the United Kingdom, damages for loss of superannuation should not have been calculated at the Australian superannuation rate: [83], [105], [107]. Secondly, damages awarded for future economic loss until age 50 needed to be reduced to make allowance for the significant possibility that the plaintiff would not suffer any loss of earning capacity in that period: [96]-[97]. Thirdly, a cushion for future unemployment and sick leave should not have been awarded in addition to the damages already awarded for future loss of earnings: [106]-[107].

Malec v JC Hutton Pty Ltd    (1990) 169 CLR 638; [1990] HCA 20 applied.

In relation to costs:

(8)   Apart from the reduction of its judgment by less than 10%, Strategic was unsuccessful on the appeal: [115]. It should therefore bear 90% of Mr Hitchen’s costs on the appeal: [116].

(9)   Strategic should pay RTS’s costs: [124]. Strategic had not given advanced warning that it viewed separate representation as unnecessary: [123]. Although RTS and Mr Hitchens shared a forensic purpose in the proceedings, their legal interests were not identical: [124].

Harbin v Masterman [1896] 1 Ch 35; Milillo v Konnecke [2009] NSWCA 109; (2009) 2 ASTLR 235; Credit Lyonnais v Darling (1991) 5 ACSR 703; Taylor v Owners – Strata Plan No 11564 (No 2) [2013] NSWCA 153 cited.

Related Articles:

Civil Liability Act: Wednesbury unreasonableness (s43A – NSW)

Building site Head contractor: liability to and for the employees of others

“Class actions” – some ground rules

NSW Court of Appeal: appeal books




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