Case Note: Transfield Services (Australia) v Hall; Hall v QBE Insurance (Australia) [2008] NSWCA 294

Originally Published 10th November 2008

Beazley JA; Campbell JA and McClellan CJ at CL

In Brief

The Court of Appeal was asked to consider whether or not an

"extra-hazardous" or "dangerous activity" gives

rise to a non-delegable duty of care.

The Court rejected the notion that there exists a doctrine of

"extra-hazardous" activities, and in doing so departed

from the High Court's decision in Burnie Port Authority v

General Jones Pty Ltd (1994) HCA 13 which expanded the

categories of non-delegable duty to impose on a principal a

liability for the negligent actions of an independent contractor in

respect of extra-hazardous activities.

Background

In 2002 the plaintiff was employed by the Royal Australian Navy

and worked as a facilitator and maintainer at a physical fitness

facility at HMAS Stirling in Western Australia. The facility

consisted of a course of low and high ropes, on which a participant

could carry out various physical activities.

The course had been installed by Rope Tech Australia Pty Ltd in

conjunction with Merrybrook Pty Ltd in 1993.

On 29 January 2002 the plaintiff carried out an inspection of

the course and was preparing to abseil down from it. As the

plaintiff placed his weight on the abseiling rope the safety strop

from which it was suspended broke and he fell about 10 metres to

the ground suffering significant injuries.

The plaintiff sued the following three defendants:

Adventure Training Systems Pty Limited ("ATS"), the

predecessor to Rope Tech Australia Pty Ltd. ATS was a New South

Wales based company which was involved in the fabrication,

installation, maintenance and repair of certain aspects of the

course and its component parts. ATS took no active part in the

trial or the appeal.

Transfield Services (Australia) Pty Limited

("Transfield"). Transfield had contracted with the

Commonwealth to maintain plant and equipment at HMAS Stirling. ATS

had inspected the rope course in question in December 2001 pursuant

to a contract it had entered into with Transfield.

QBE Insurance (Australia) Limited ("QBE"). QBE was

the public and product liability insurer of Adventure Training.

Leave was granted for QBE to be joined as a defendant pursuant to s

6 of the Law Reform (Miscellaneous Provisions) Act 1946

(NSW).

Supreme Court Decision

After the plaintiff's injury the strop was inspected and

the shrink wrap covering it was removed. It was found that the wire

rope underneath the shrink wrap was badly corroded. Uncontested

engineering evidence established that the corrosion underneath the

shrink wrap was foreseeable in an open-air environment near the

sea. The trial judge found that the shrink wrap should have been

removed by ATS during the inspection and that the removal of the

shrink wrap was easy, replacement of it was inexpensive and the

corrosion was such that it would have been readily visible if the

shrink wrap had been removed. On this basis ATS was held to be

negligent.

Even though ATS was an independent contractor, the trial judge

found that Transfield owed a non-delegable duty of care to the

users of the rope courses and was therefore liable for the

negligence of ATS.

The trial judge also found that QBE was not liable to indemnify

ATS for its liability. The basis of this finding was that QBE's

liability to indemnify arose under the policy only in relation to

liability arising out of the insured's business, and the

liability of ATS in the present case did not arise out of the

insured's business.

Against the possibility that she was wrong in that conclusion

the trial judge also considered three other arguments that QBE put

as to why the policy would not respond even if the loss had been

one that arose out of the Insured's Business. Those arguments

were:

the policy provided indemnity only concerning claims arising

out of or in connection with any Product, and the ropes course was

not a "Product" within the meaning of the policy;

the liability fell within an exclusion of liability caused by

or arising out of the rendering of professional advice or service

by the Insured; and

the liability fell within an exclusion of liability caused by

or arising out of advice given for a fee.

The trial judge rejected arguments (i) and (ii), but upheld

argument (iii).

Court of Appeal Decision

Non-delegable duty

Transfield appealed against the trial judge's finding that

a non-delegable duty of care existed. It submitted that it owed no

duty of care at all to the plaintiff, but in the alternative if it

did owe a duty of care, that duty of care was not a non-delegable

one.

In Kondis v State Transport Authority [1984] HCA 61

Mason J referred to a non-delegable duty as being one "...of

such a nature that its performance cannot be delegated to a

contractor on the footing that delegation to a competent contractor

is a sufficient compliance with the duty".

Campbell JA held that a non-delegable duty differs from an

ordinary duty of care in negligence, which only places on the

defendant a duty to take reasonable care to avoid causing harm of a

particular type to the plaintiff. A person subjected to a

non-delegable duty cannot perform it by taking reasonable care to

select an appropriate independent contractor to carry out the acts

that...