“Prices are Down” for host employer in section 151Z recovery action

The Court of Appeal of New South Wales has overturned a District Court decision which found Coles liable to pay $37,495.01 in worker’s compensation payments made by Ready Workforce to an injured worker pursuant to section 151Z(1)(d) and (2)(e) of the Workers Compensation Act 1987 (NSW).

Background

Ready Workforce supplied an employee, Nicole Murphy, to work as a picker and packer at Coles’ warehouse and distribution centre pursuant to a labour hire agreement. On the morning of 17 November 2011, Ms Murphy was labelling and loading packets of pet kibble onto a machine in a packing aisle at the warehouse when she slipped and fell on a fine layer of crushed dry kibble that had spilt onto the floor.

Findings at first instance

The primary judge made the following findings of fact:

• Coles used a sweeping machine to clean the floors of the warehouse once every four hours. The aisle floor where the plaintiff fell was last cleaned at 9:15 pm on the previous evening. Warehouse operations commenced at 5:00 am and Ms Murphy’s fall occurred at approximately 7:00 am. The next sweep was scheduled to occur after her fall at 9:15 am, and it was completed by 8:30 am.
• Coles provided general housekeeping directions to the workers at the warehouse that if they observed any spillages, they were required to either clean it immediately, mark the spill with safety signage or barricade it until the spill was cleared.
• Telephones were placed at the end of each packing aisle so that in the event a spillage was detected, workers could contact cleaning staff to remove the spillage.

Despite Coles adopting the above measures, the primary judge found that, given the high volume of foot traffic and the probable risk of dry kibble dust being on the floor at that location, Coles’ should have implemented a more frequent machine cleaning schedule. The primary judge apportioned 60% liability against Coles and 40% against Ready Workforce.

Coles appealed.

Findings on appeal

The Court of Appeal found in favour of Coles on the following basis:

• There was no evidence to suggest that a reasonable person in Coles’ position would have cleaned the aisle more frequently than once every four hours, noting that the plastic packets of kibble were supposed to be sealed.
• Ready Workforce had not established that slipping was a particular hazard of Ms Murphy’s job, or that the sealed packages of dry kibble were more likely to leak and posed a greater slip risk than other packages.
• Even if Coles owed a duty to clean the floor more regularly, there was no evidence that doing so would have prevented the plaintiff’s injury, which occurred just two hours into her shift.

Judgment against Coles was set aside.

Commentary

This case may provide some relief to public liability insurers as an example of where a host employer’s system to identify and remove hazards at its worksite has been held to be reasonable. The decision demonstrates that what constitutes a reasonable system of inspection and cleaning will turn on the individual facts of the case.

Importantly, the Court of Appeal also reaffirmed the position in J Blackwood & Son v Skilled Engineering¹ that where a worker’s injures have been assessed below 15% permanent impairment, a third party tortfeasor cannot reduce its liability to provide an indemnity under section 151Z(1)(d) by any contribution from the employer.

This means that where the 15% impairment threshold has not been met, third party tortfeasors will find themselves liable to indemnify the employer for 100% of the worker’s compensation payback, plus interest, once found liable.

Coles Supermarkets Australia Pty Ltd v Ready Workforce (A Division of Chandler Macleod) Pty Ltd [2018] NSWCA 140

¹[2008] NSWCA 142