AEA Constructions Pty Ltd v Wharekawa;; AEA Constructions Pty Ltd v Building Partners Pty Ltd

BASTEN JA: Two appeals, heard concurrently, were brought by AEA Constructions Pty Ltd from a judgment of Fagan J in the Common Law Division. [1]

The proceedings arose out of a workplace injury which occurred on 9 November 2012. Major renovations were being carried out on two terrace houses in Windsor Street, Paddington. The injured worker, Raymond Wharekawa, was working on one property for his employer, Building Partners Pty Ltd. A worker on the adjoining site, employed by AEA Constructions Pty Ltd, fired a nail from a Ramset gun which passed through the party wall and struck Mr Wharekawa in the head.

Following a trial in November and December 2017, Fagan J gave judgment for the plaintiff against AEA Constructions, on the basis of its vicarious liability for the negligent conduct of its worker, in an amount of a little under $1.5 million. In separate proceedings, he gave judgment for Building Partners against AEA Constructions for the recovery of workers compensation payments made by Building Partners to Mr Wharekawa, in an amount of some $365,000 plus interest.

AEA Constructions appealed with respect to the second judgment on the basis that the judge erred in failing to find that Building Partners was in breach of its duty of care to its employee, Mr Wharekawa. For the reasons given by White JA, I agree that that appeal must be dismissed.

AEA Constructions also appealed against the judgment in favour of Mr Wharekawa. The challenge focused on the assessment by the judge of the future working life of Mr Wharekawa, given his lack of skills and experience, which militated against him obtaining work other than as a labourer. He also suffered from a pre-existing degenerative condition of his neck and cervical spine which would probably require surgery, disabling him from continuing work as a labourer, well before the completion of a normal working life. The appellant submitted that errors in the assessment of the plaintiff’s condition and the effect of expert medical opinion led to an excessive award for non-economic loss and for future economic loss.

I agree with White JA that these grounds of appeal should be rejected, as should the challenge to the assessment of non-economic loss. My reasoning as to the latter conclusion with respect to non-economic loss follows.

An assessment of damages for non-economic loss is to be undertaken pursuant to s 16 of the Civil Liability Act 2002 (NSW). That provision requires the court to determine the severity of such loss by reference to a proportion of a most extreme case. That proportion having been determined, the quantum of the award is dictated by the table in s 16 and the prescription of the maximum amount.

Three matters of principle are in play in making such an assessment. First, it is necessary to have in mind the injury or harm for which damages are assessed. In accordance with the definition of “non-economic loss” in s 3 of the Act, damages are provided, in the present case, for pain and suffering and for loss of amenities of life. There is no clear distinction between these elements of loss, but, importantly, they will include the pain, suffering and discomfort which may result from, for example, future surgical intervention, the cost of which will be dealt with as a head of economic loss. Similarly, they will include the loss of pleasure derived from work, limitations on which will be the subject of a separate assessment of economic loss flowing from diminished earning capacity.

Two consequences derive from this consideration. The first is that there should be consistent assumptions upon which assessments of non-economic and economic loss are made. As explained in Berkeley Challenge Pty Ltd v Howarth, [2] “there will, in practical terms, usually be a rough equivalence between loss of earning capacity, the need for domestic assistance, and the degree of severity of the injuries. In any event, whether demonstrating equivalence or disparity, the exercise involved in each assessment is similar.” The same elements will determine aspects of non-economic loss. Where, for example, it is found that a worker has suffered a 40% reduction in his or her earning capacity, aspects of non-economic loss will derive from that assessment.

The second consequence is that there is a significant subjective element in the assessment of a plaintiff’s suffering for the purpose of calculating non-economic loss. It follows that an appellate court should usually give weight to the assessment of the severity in the particular case by the trial judge who had the benefit of considering oral testimony from the plaintiff.

The second principle, which flows in part from the last consideration, is that the appellate court will generally be constrained in its approach to a challenge based on an evaluative judgment made by the trial judge. But that factor goes further than the judge’s advantage of having formed a view as to the character and personality of the plaintiff; it has regard to the fact that the assessment of a proportion of a most extreme case involves an evaluative judgment which, in the language of Handley JA in Dell v Dalton, [3] “will involve questions of fact and degree, and matters of opinion, impression, speculation, and estimation, calling for the exercise of common sense and judgment.” In the absence of demonstrable error of fact or law, the court will not interfere with a proportion which was reasonably open on the material before the trial judge. As expressed by Mason J in Wilson v Peisley, [4] this Court will not interfere unless “a particular award of damages lies beyond the limits of what a sound discretionary judgment could reasonably adopt”. [5]

Thirdly, the range of reasonable opinion is to be assessed by reference to the task being undertaken (namely, the proportion of a most extreme case) and not by the financial consequences of a particular assessment. Because of the tapering effect which the statute provides for assessments between 15% and 33%, the financial consequences of a minor adjustment may be significant. That factor is irrelevant in determining whether the judge erred in assessing the proportion. [6]

The trial judge assessed Mr Wharekawa’s circumstances as 35% of a most extreme case: at [174]. In its submissions at trial, AEA Constructions stated that “the plaintiff’s non-economic loss should be assessed at 28%.” [7] Assuming that a defendant pitches its assessment towards the bottom of a reasonable range, it is unlikely that, absent specific error, an assessment which was 7% higher would be outside a reasonable range. However, AEA Constructions did not rely upon an unidentified error which led to a manifestly unreasonable assessment; rather, it submitted that the judge had been mistaken in his analysis of the effect of the medical evidence as to the likelihood of the plaintiff suffering a disabling condition of the cervical spine, necessitating surgery and rendering him unable to continue in labouring work, regardless of the effects of the accident. For reasons explained by White JA, that submission should be rejected.

That would be sufficient to dispose of this aspect of the appeal. However, an issue was raised in the course of the hearing as to the process of reasoning by which the judge identified the proportion of a most extreme case. After listing the factors which he took into account, the judge continued:

The appellant did not take issue with the approach which involved assessing the diminution of amenities by reference to the overall disabilities suffered by the plaintiff, and then removing from that calculation so much as resulted from a pre-existing condition. Rather, the notice of appeal (ground 8) stated that “the assessment of non-economic loss ought to have been no more than 25% of a most extreme case, subject to a discount of not less than 15% for contingencies.”

Discounting for contingencies is an exercise more usually associated with an assessment of future economic loss pursuant to s 13 of the Civil Liability Act and under general law principles. Further, it is unusual to see a two stage approach to the assessment of the proportion of a most extreme case, in assessing non-economic loss. More often, a single global assessment is made of the relevant proportion.

It does not follow that the approach adopted by the trial judge was wrong as a matter of law. Rather, it was correct in principle to dismiss from the calculation elements of loss of amenity or pain and suffering for which the defendant was not responsible. So much may be explained by two examples. First, one element of non-economic loss may be loss of expectation of life. What is required is an assessment of the plaintiff’s likely longevity, disregarding the effects of the tortious conduct of the defendant. Particular aspects of the plaintiff’s health may reduce the pre-accident expectation below the average for the community. Similarly, loss of amenities of life must refer to those amenities which the plaintiff would have enjoyed but for the tortious conduct, not to be assessed by reference to some abstract hypothetical standard.

A second example may be seen in circumstances where separate injuries have been sustained in two accidents. In such a case, an assessment of the consequences must be made separately with respect to each accident for which separate defendants are responsible. [8]

There is a danger in a two stage process for assessing non-economic loss which makes allowance for “vicissitudes”. That exercise is usually undertaken on a conventional basis in discounting the amount to be awarded for economic loss. However, the subjective element involved in assessing pain and suffering and loss of amenities renders that approach less appropriate. Further, although the final figure identified by the judge must be precise, there is an artificiality in making a precise assessment of aspects of the plaintiff’s condition on the hypothetical basis of that which would have happened absent the accident but disregarding disabilities not attributable to the defendant’s conduct. There is no countervailing benefit of greater transparency.

Although the two stage exercise undertaken by the trial judge may not be the preferred approach, it did not result in legal error warranting interference by the Court or requiring a reassessment of the proportion of a most extreme case.

In other respects I agree with the reasoning of White JA. I agree with the orders he proposes.

GLEESON JA: I agree with the orders proposed by White JA and, except for [111], with his Honour’s reasons. With respect to the challenge by AEA Constructions Pty Ltd to the primary judge’s award of non-economic loss, I agree with Basten JA that no error has been established for the reasons given by his Honour.

WHITE JA: These are appeals from orders made in the Common Law Division against the appellant, AEA Constructions Pty Ltd (“AEA”) (Wharekawa v AEA Constructions Pty Ltd; Building Partners Pty Ltd v AEA Constructions Pty Ltd [2018] NSWSC 684). The primary judge (Fagan J) dealt with two proceedings arising out of the same facts.

In the first proceeding, the plaintiff and respondent, Mr Wharekawa, claimed damages from AEA arising from personal injuries he sustained on 9 November 2012. Mr Wharekawa was working as a labourer on a property at 42 Windsor Street, Paddington on which extensive building works were being carried out. He was employed by Building Partners Pty Ltd (“Building Partners”) that was carrying out the renovations. AEA was carrying out building works on the adjoining property at 40 Windsor Street, Paddington. Mr Wharekawa was injured when struck in the head by a nail fired from an explosive nail gun by an employee of AEA. The employee of AEA who fired the nail, a Mr Ian Box, was seeking to attach more securely a wooden block to the wall of No 40, but the nail passed through both the wooden block and the party wall before striking Mr Wharekawa in the head. The primary judge found that AEA breached a duty of care it owed to Mr Wharekawa and was vicariously liable for a breach by Mr Box of a duty of care he owed to Mr Wharekawa. His Honour rejected a claim that Mr Wharekawa was contributorily negligent and rejected AEA’s contention that his damages should be reduced pursuant to s 151Z(1)(c) of the Workers Compensation Act 1987 (NSW) on the ground that Mr Wharekawa’s employer, Building Partners, if sued, would also have been liable for damages for Mr Wharekawa’s injury. Judgment was entered for Mr Wharekawa against AEA in the sum of $1,486,783.

Mr Wharekawa had received workers’ compensation from his employer. Building Partners brought separate proceedings under s 151Z(1)(d) of the Workers Compensation Act for indemnity from AEA for the workers’ compensation payments it had made to Mr Wharekawa. The primary judge gave judgment for Building Partners against AEA in the sum of $365,085.66 plus interest. His Honour noted that payment by AEA to Building Partners would operate as a credit in the sum of $365,085.66 against the judgment in favour of Mr Wharekawa.

AEA filed a cross-claim against Building Partners in which it sought contribution or indemnity in respect of any judgment recovered against it by Mr Wharekawa pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Although no formal order was made dismissing the cross-claim the effect of the primary judge’s other orders was that the cross-claim was rejected.

Section 151Z relevantly provides:

On appeal, AEA did not dispute that it was liable to Mr Wharekawa for damages, either for its own negligence or vicariously for the negligence of its employee, Mr Box. Nor did it dispute the primary judge’s finding that Mr Wharekawa was not contributorily negligent. AEA did submit that his damages should be reduced by the amount of the contribution which it claimed it would be entitled to recover from Building Partners but for Pt 5 of the Workers Compensation Act.

AEA also appeals from the primary judge’s assessment of damages. It submitted that Mr Wharekawa had degenerative changes to his back prior to the injury that meant that his capacity for heavy labouring work was limited to a period of four to six years. It also submitted that the primary judge erred in his assessment of non-economic loss.

For the reasons which follow, I would dismiss the appeals.

Nos 40 and 42 Windsor Street are adjoining terraces with frontages facing south to Windsor Street. The rear of the properties abut Windsor Lane. No 42 is to the east of No 40. The terrace houses had been built in the 19th century. The renovations being carried out on both properties in November 2012 involved the houses being “basically knocked back to the original old structure to allow for the renovations and extensions of the new proposed works”. By 12 November 2012 the excavation at No 40 was underway, but was slightly behind the excavation at No 42. At No 40 excavation was probably to a depth of about four feet.

Three employees of Building Partners were working on the property at No 42. They were Mr Wharekawa, the foreman (Mr Craig Anderson) and a carpenter called Scott. At about 1.30pm it started to rain heavily. Mr Wharekawa moved all the equipment inside. This included electrical leads, grinders and jackhammers. The rain lasted for about half an hour and then the sky cleared.

Before the rain started, Mr Anderson had observed that the workers at No 40 had affixed plastic sheeting to a common wall of the terrace house at 38 Windsor Street to weatherproof it. He heard the charges of a power-charged nail gun. The firing of the nails on the boundary of No 38 and No 40 was “down the back area of the yard”. Those nails were discharged in the wall away from No 42 and posed no hazard to the workers at No 42.

After the rain cleared Mr Anderson instructed Mr Wharekawa to take the tools back outside. Mr Wharekawa made one or possibly two trips when he bent down to throw some cords out the door. As he was getting up from his bent position, he was hit in the head by a nail. That nail had been fired by Mr Box to secure a wooden block into the wall of No 40 and the nail penetrated both the wooden block and the wall before it struck Mr Wharekawa.

Mr Box died in July 2013. On 13 November 2012 he provided a statement to his employers about the incident that day. He was the site foreman for AEA at 40 Windsor Street. He said:

Mr Box stated that at approximately 2.15 pm, that is, after the rain, he fired a total of eight nails within the building on 40 Windsor Street. The “window opening in the north-east corner of the ground floor” was a window near the boundary with No 42. According to Mr Box’s statement, he fired three nails to secure plywood on the west side of the wall and then secured the plywood with timber blocks on the eastern wall, that is, the wall next to No 42. He said that he fired two nails into a bottom block and two nails into an upper block against that wall, and then fixed a third nail, evidently by firing it. It was then that he heard the commotion at No 42.

Mr Anderson explained that wooden blocks can be fastened to a wall to provide a block against the back of a plywood board covering the window to stop the board falling away from the window or offering some security to it.

Mr Wharekawa, who was inside No 42 at the time, said that he did not hear any explosive noises prior to being hit in the head.

The primary judge focused on the five nails fired into the party wall with No 42 (Judgment [10], [12]). His Honour found (at Judgment [12]):

In a statement that was admitted as Mr Anderson’s evidence-in-chief, Mr Anderson said:

In his statements in evidence-in-chief, Mr Anderson did not say how many power charges he heard coming from inside the adjacent terrace No 40, nor for how long after he first heard those charges he realised that Mr Wharekawa had been injured.

AEA pleaded that Mr Wharekawa would not have been injured had Building Partners:

In Mr Anderson’s cross-examination by counsel for AEA, counsel put to Mr Anderson that having seen a nail gun being used on the boundary between No 38 and No 40 Windsor Street to affix plastic material to the wall, it would have been a simple matter to have contacted the builder on No 40 about its use of an explosive power tool. Mr Anderson acknowledged that he was aware that if explosive power tools were to be used, there was a work, health and safety protocol that had to be followed. He gave the following evidence:

Mr Anderson was also cross-examined in relation to the use of a power tool on the common wall between Nos 40 and 42. He gave the following evidence:

To this point in Mr Anderson’s cross-examination the questions were directed to whether, having regard to his knowledge acquired before the rain break that AEA was using an explosive power tool (because such a tool had been used to affix plastic sheeting to the wall between Nos 38 and 40), he should have talked to the workers on No 40 to obtain reassurance that the explosive power tool would not be used in the direction of No 42 without adequate warning and compliance with protocols. Mr Anderson’s evidence was to the effect that that was not a concern because the explosive power tool was not being used in the direction of No 42.

Mr Anderson’s evidence was that after the rain he heard “some power charges coming from inside the adjacent terrace No 40”. Although the primary judge referred to there having been four such power charges before the one that caused the nail to strike Mr Wharekawa’s head, Mr Box’s statement suggests there were seven such power charges. Mr George Alexiou, a director of AEA gave evidence that the use of a power-actuated fixing device was preferred to drilling, plugging and screwing to secure a masonry component to a solid brick wall because of the time saved. He said that:

It was common ground that when Mr Anderson heard the further power charges from inside No 40, he did not know that they had been directed towards No 42. But it was submitted that he must have known that there was a possibility that they had been so directed. On appeal AEA submitted that this provided sufficient reason for Mr Anderson to have intervened by calling out to Mr Box at No 42 by asking what he was doing, or by going through the front door of No 42 to the front door of No 40 and asking Mr Box whether he was using the gun in the direction of No 42, and if so, to ensure that the established protocols were complied with.

This was not a scenario put to Mr Anderson in cross-examination. The only relevant questions asked by counsel for AEA as to what Mr Anderson might have done after he first heard the use of an explosive power tool from inside No 40 after the rain had ceased were as follows:

Mr Anderson was not asked where he was when he heard the sound of power charges from inside No 40. He was not asked how many power charges he heard. He was not asked how long it was after he first heard the sound of an explosive power tool being used that he heard Mr Wharekawa yelling out that he had been hit. He was not asked whether there were or were not any difficulties in his moving from wherever he was when he first heard the further power charges to obtaining access to No 40. Mr Morris SC submitted that it should be inferred that Mr Anderson had left the house at No 42 and had moved to the rear of the property where the garage was excavated that was three metres below the house. This was because he was not in the house with Mr Wharekawa when Mr Wharekawa was hit. There was no cross-examination on whether it would have been practicable for Mr Anderson to have made inquiries of AEA about what was being done once he heard further power charges coming from inside No 40 after the rain had cleared.

WorkCover NSW had issued a guide in January 1999 for operators of explosive-powered tools. The WorkCover guide included the following statement:

A Mr Phillip Buckland, a consulting engineer, who was called by Mr Wharekawa, gave expert evidence and his report was not challenged. He said:

Mr Buckland was cross-examined by counsel for AEA about what a person in the position of Mr Anderson might have done on hearing a report of an explosive power tool being used on the property of No 40. He gave the following evidence:

The managing director of Building Partners, Mr Vivien Weatherall, gave evidence as to Mr Wharekawa’s employment and earnings. He was not on the site on the day in question, nor was the project manager, a Mr Mackay. Mr Weatherall endeavoured to visit the site every day for a short time. It was Building Partners’ policy not to allow explosive power tools on any of its building sites without special prior approval. It was put to Mr Weatherall that if he were aware of explosive power tools being used next door to a property on which his workers were working, he would make inquiries to see what was being done. He rejected that suggestion, but said he might have a word to the foreman on his site about it. He rejected the suggestion put to him in cross-examination that as a matter of common practice, an employer who knew that explosive power tools were being used on the adjoining property that had a common wall would make inquiries to ensure that what was being done on the next door property did not put his workers at risk. He accepted that the work health and safety requirements for the use of explosive power tools were well-known in the industry and people were expected to comply with them.

His evidence in these respects was consistent with the evidence of Mr Buckland referred to above.

AEA did not call evidence as to any practice in the part of the building industry in which it and Building Partners worked that if one builder learned that another builder on an adjacent site was using an explosive power tool or was doing other work that, if performed negligently, might cause injury to the first builder’s worker, it would arrange for the second builder’s activities to be co-ordinated with its activities.

AEA alleged that Building Partners breached its duty of care to Mr Wharekawa by failing to identify a reasonably foreseeable hazard, being the use of an explosive powered tool (“EPT”) by workers on the adjacent premises and by failing to eliminate or minimise risks to the health or safety of Mr Wharekawa, being, relevantly, the risk of being struck by a projectile fired from an EPT used by workers on the adjacent premises. This was said to be a failure to comply with Building Partners’ obligations under regs 34 and 35 of the Work Health and Safety Regulations 2011. The particular step that AEA pleaded Building Partners failed to take in breach of its duty of care to Mr Wharekawa was its not co-ordinating its activities with those of AEA by requiring or requesting AEA to give notice to it and to Mr Wharekawa of the intended use of any EPT, where such EPT was intended to be used, when it was intended to be used, and the line of trajectory of any EPT missile should it enter the work space occupied by Mr Wharekawa or any of Building Partners’ employees.

By the time Mr Anderson heard an EPT being used from inside No 40 (while still being unaware of its direction of use), there was not shown to be time or opportunity for him to have sought to co-ordinate Building Partners’ activities on No 42 with those of AEA on No 40 by requesting AEA to give notice of intended use of an EPT. The EPT was already being used.

It was not a pleaded breach of Building Partners’ duty of care that on hearing the use of the EPT from inside No 40, Mr Anderson should have called out “What are you doing?”, or should have told Mr Wharekawa to “Get out of here until I find out what’s going on next door” as was put in oral submissions on appeal. As noted above, it was not put to Mr Anderson that he should have done either of those things.

Accordingly, the focus of the alleged negligence on the part of Building Partners must be on the lack of response by Mr Anderson to his having become aware before the rain came that workers at No 40 had affixed some plastic sheeting to the common wall with No 38 to weatherproof the wall. Mr Anderson’s statement about that was:

In cross-examination Mr Anderson said that he also observed the plastic sheeting being affixed to the wall. No evidence was adduced from Mr Anderson either in chief, or in cross-examination as to whether he observed the presence of a spotter or heard or was able to hear anyone call “Fire” before the power-charged nail gun was used. He agreed that it would have been a simple matter had he chosen to do so to make contact with the builders at No 40 by knocking on the door or telephoning (although in the latter case he said that he assumed that the builders had their telephone number on the front of the site and so presumably he would have had to go to the front of the site in order to telephone).

The onus was on AEA to prove that Building Partners breached its duty of care to Mr Wharekawa. The evidence it adduced in relation to the use of the EPT against the wall of No 38 before the rain went no higher than mere knowledge of the fact that such a tool was being used. This is also true of Mr Anderson’s knowledge that an EPT was being used inside the house of No 40 after the rain. AEA did not prove that Mr Anderson knew that the EPT was being used contrary to health and safety requirements. Nor did AEA plead that he did.

Knowing that a worker or workers on No 40 were using a power-charged nail gun, Mr Anderson was aware that it would be dangerous if the nail gun were used against the party wall between No 40 and No 42. He accepted as much in cross-examination. The reason it was dangerous was because the party wall between the houses at No 40 and No 42 had been constructed in the 19th century. It was a double brick wall with two skins of brick side by side without a cavity between them. They were bound together with every fifth course of bricks being laid at 90 degrees to the courses below. They were sandstock bricks which could be soft and the mortar used to bind them was lime and sand, which could be very soft.

Mr Anderson could reasonably have foreseen that just as the power-charged nail gun was used to affix plastic sheeting to the wall at No 38, it might be used against a wall dividing No 40 and No 42, and he was aware that if that were done, without proper precautions being taken, that would be dangerous. But there is no evidence that he had reason to think that a power-charged nail gun would be used against a wall dividing No 40 and No 42 without the required precautions being taken.

The same is true in respect of the couple of minutes in which he heard an EPT being used within No 40 immediately before Mr Wharekawa’s being injured.

As Mr Wharekawa’s employer, Building Partners owed him a duty to take reasonable care to avoid exposing him to a real risk (as distinct from a merely fanciful risk) of injury in the performance of his tasks in the workplace (Czatyrko v Edith Cowan University (2005) 214 ALR 349; [2005] HCA 14 at [12]; Hamilton v Nuroof (WA) Pty Ltd (1956) 96 CLR 18 at 25; [1956] HCA 42).

The employer’s duty is not an absolute duty to keep the employee free from injury, but a duty of reasonable care (Dib Group Pty Ltd (t/as Hill and Co.) v Cole [2009] NSWCA 210 at [27]).

In addressing Mr Wharekawa’s claim against AEA (which was subject to the terms of the Civil Liability Act 2002 (NSW)), the primary judge said (at [32]):

In dealing with AEA’s claim that Building Partners, if sued, would have been liable to Mr Wharekawa, the primary judge said:

In these observations the primary judge dealt with and rejected submissions advanced by AEA in its final submissions on matters that had not been squarely put to Mr Anderson. The primary judge did not hear submissions from the respondents on this question. At the conclusion of oral submissions on 8 December 2017, the primary judge directed that AEA file and serve written submissions on liability. His Honour directed that Mr Wharekawa and Building Partners provide written submissions on issues of medical causation of injuries, symptoms complained of, continuing disabilities, and quantum. His Honour said that he did not require in the first instance submissions from those parties on issues of liability, unless later asked for. The primary judge did not later require submissions on liability from Mr Wharekawa, nor from Building Partners. Mr Wharekawa and Building Partners are entitled on appeal to complain that the case mounted on appeal and in AEA’s written submissions before the primary judge, was not the case advanced at the hearing.

AEA submitted that the primary judge’s reasons were flawed because he adopted a too narrow view of the risk of harm to workers on No 42. Its ground of appeal was that:

The criticism is unfair. By its cross-claim in the proceedings brought by Building Partners, AEA had pleaded:

Building Partners was required to use reasonable care to provide and maintain a safe system of work. AEA submitted that by formulating the risk of harm at too particular a level the primary judge foreclosed proper consideration of whether Building Partners breached its duty to its employee. It submitted that as Building Partners had more limited knowledge about the use of explosive power tools on No 40 than did AEA, the foreseeable risk of harm in respect of which Building Partners was required to take reasonable precautions should have been formulated more generally than the risk of harm to be formulated under s 5B of the Civil Liability Act in respect of which AEA was required to take precautions. It did not precisely formulate the risk of harm in respect of which Building Partners was required to take precautions, but as I understood the submission it was the risk of harm to its employees from the use of an explosive power tool or explosive power tools on No 40.

The primary judge cannot be criticised by AEA for adopting the very formulation of the risk of harm in respect of which Building Partners was required to take precautions pleaded by AEA. But it is of no moment because the primary judge’s reasons quoted above would be equally applicable to the wider formulation of the risk of harm indicated above.

AEA relied on the reasoning of the Privy Council in Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty Ltd (“Wagon Mound No 2”) [1967] AC 617 at 642, 643-644 and its endorsement by the High Court in Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47. In Wagon Mound No 2 the Privy Council said (at 642-644):

In Wyong Shire Council v Shirt, Mason J said (at 47-48):

I accept that the risk that a workman at No 40 would fire an explosive power tool in the direction of No 42 without complying with the WorkCover Guidelines was a risk that was foreseeable, although unlikely. It was not a risk created by the conduct of Building Partners and the “Shirt calculus” quoted above is not directly applicable. The question of fact is whether acting with reasonable care for the safety of its employees, Building Partners ought to have responded to the risk by talking to the foreman at No 40, Mr Box, to seek his agreement to co-ordinating activities on the two building sites so that the explosive power tool would not be used on No 40 in a way which might create danger to workers on No 42 (this being the pleaded breach of the duty of care (see [56] above)).

I have accepted that there was no evidence that Mr Anderson had reason to think that a power charged nail gun would be used against the wall dividing no 40 and No 42 without required precautions being taken, including having a spotter and having someone call out “Fire”. AEA did not seek to prove that such precautions had not been taken when the power charged nail gun was fired into the dividing wall with No 38 and Mr Anderson was asked no questions about it. Nonetheless, it was a reasonably foreseeable possibility that the power charged nail gun might be so used without required precautions being taken.

What then, if anything, was Building Partners required to do in response to that foreseeable risk?

The primary judge’s reasons quoted at [68] above focused upon what Mr Anderson should reasonably have done when he heard the nail gun being fired within the premises at No 40 very shortly before Mr Wharekawa’s injury. As indicated above at [59], having regard to the pleadings and the cross-examination of Mr Anderson, the focus should have been on whether Building Partners should have responded to Mr Anderson’s seeing the tool being used to fire nails into the wall at No 38.

The fact that a tool was being used on the premises at No 40 which, if misused, could create a danger to workers on No 42 would not itself call for a response against the possibility of misuse, unless there was something to indicate the possibility of misuse of the tool. There is force in the primary judge’s reasoning that mere knowledge that a tool is being used on adjacent premises does not require intervention merely because if the tool were misused that could be dangerous. His Honour’s illustration of the misuse of a jackhammer or the misuse of a saw that could cause the collapse of a party wall through undermining its foundations or the removing of lateral support is compelling. If it were established that Mr Anderson knew that not only was the nail gun being used to fire nails into the party wall at No 38, but that he observed that the precautions prescribed in the WorkCover Guidelines were not being complied with, then he would know that there was a chance that the tool might be applied to the wall with No 42 without complying with the Guidelines. But there was no evidence that Mr Anderson observed that the WorkCover Guidelines were not complied with when nails were fired into the plastic sheeting on the party wall with No 38. The onus was on AEA to establish that matter. It did not do so.

As noted at [52] above, Mr Buckland said that it was not a common thing for a builder to go onto somebody else’s building site and demand to know what is going on, and Mr Weatherall rejected the suggestion that it was common practice for an employer who knew that explosive power tools were being used on an adjoining property that had a common wall to make inquiries to ensure that what was being done on the next door property did not put the employer’s workers at risk (at [52] and [53] above). There was no contrary evidence.

It can be inferred from the fact that it was Building Partners’ policy not to allow explosive power tools on any of its building sites without special prior approval (see [53] above) that Building Partners considered that the use of an explosive power tool created a greater safety risk than the use of other tools. That does not mean that reasonable care to provide a safe system of work for its employees required Building Partners through Mr Anderson to speak to Mr Box, the foreman of AEA, to inquire about AEA’s use of the explosive power tool and to co-ordinate activities when AEA proposed to use the tool. It would not be unreasonable for Mr Anderson to assume that if the tool were to be further used, the required safety protocol would be followed. The mere possibility that it might not be followed, whilst foreseeable, would not require a response unless there were some reason, beyond a theoretical possibility, to think that the protocol would not be followed.

For these reasons I would reject AEA’s contention that Building Partners, if sued, would also have been liable for damages for Mr Wharekawa’s injury.

Building Partners and Mr Wharekawa submitted that even if Building Partners, in exercising reasonable care, ought to have spoken to Mr Box of AEA (he being AEA’s foreman) about his plans for using the explosive power tool, AEA had not established that Mr Box would have responded by agreeing to comply with the safety protocol before the tool was used against the wall of No 42. In support of that submission Building Partners and Mr Wharekawa said that no evidence had been called from the directors of AEA, Messrs George Alexiou and Damon Alexiou, nor from Mr Anthony Alexiou who was responsible for the job at No 40, as to what Mr Box’s likely response would have been to such an approach.

Mr Damian Alexiou gave evidence that Mr Box had informed him that he (Mr Box) had undertaken a course in the use of actuated power tools with a previous employer prior to commencing work with AEA and had used the nail gun at numerous sites without incident. Mr George Alexiou gave evidence to the effect that he recalled seeing certificates which supported Mr Box’s claim that he was competent in the use of power actuated fixing tools. Their evidence was to the effect that Mr Box was competent in using the equipment.

Any evidence given by any of the Messrs Alexiou about Mr Box’s likely reaction to an approach from Mr Anderson regarding AEA’s use of explosive power tools would have been purely speculative. I would not draw an adverse inference against AEA for not seeking to call such evidence. Such evidence would not have been rendered inadmissible by s 5D(3)(b) of the Civil Liability Act as was suggested during the course of argument. This is because any such statement by any of the Messrs Alexiou would not be a statement by the person who suffered harm, and in any event, the case postulated in AEA’s claim against Building Partners for contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) is a claim by Mr Wharekawa against his employer. Such a claim is in respect of civil liability relating to an (hypothetical) award of damages to which Div 3 of Pt 5 of the Workers Compensation Act applies. The Civil Liability Act does not apply to or in respect of such civil liability (see s 151E of the Workers Compensation Act and s 3B(1)(f) of the Civil Liability Act).

I would infer that had Mr Box been spoken to about his plans for using the explosive power tool on No 40, so as to remind him of the health and safety protocol that a spotter be used and the warning of “Fire” given, he would have complied with the request. He would not have been able to advance a justifiable reason for declining it. If Building Partners were required to take the step for which AEA contends I do not accept that AEA has failed to establish that it would probably have made a difference.

If, contrary to my view, Building Partners did breach its duty of care to Mr Wharekawa and AEA would be entitled to contribution under s 5(1)(c) (subject to s 151Z(2)(c) of the Workers Compensation Act), I would regard the extent of Building Partners’ responsibility for Mr Wharekawa’s injuries to be minimal compared to the responsibility of AEA (s 5(2)).

Mr Wharekawa was taken from the site by ambulance to St Vincent’s Hospital. The primary judge recorded that radiological studies of his head and neck showed a depressed fracture of the skull but the nail had penetrated only approximately half the thickness of his skull and there appeared to be no damage to the functional tissue of the brain. The nail was removed under local anaesthetic (Judgment [14]). Twenty-four hours later he displayed signs of neurological damage. His gait was ataxic and he had diminished control and power in his lower limbs (Judgment [15]). A CT scan and MRI showed pre-existing degenerative changes to the spine. He had a “broad-based disc bulge at C3/C4 and the disc was touching the thecal sac (the membrane surrounding and encasing the spinal cord)” (Judgment [16]). There were also osteophytes (bony growths) and hypertrophy (swelling of the joint capsules).

Mr Wharekawa complained of continuing headaches. The primary judge recorded that during the next year he suffered recurring migraines and impairment of balance from reduced control over his lower limbs (Judgment [18]).

On 25 November 2013, Mr Wharekawa undertook a surgical operation to fuse his vertebrae at the C3/C4 level to avoid risk of further damage to his spinal cord. AEA submitted that owing to the pre-injury degenerative changes to the spine, such surgery would have been required sooner or later and, in AEA’s submission, would have been required sooner. In ground 2 of its notice of appeal AEA contended that there was a high degree of likelihood that such an operation would have been required within four to six years even if Mr Wharekawa had not been injured.

The primary judge recorded that Mr Wharekawa, who was 28 years old at the date of the accident, was fit and strong and a capable labourer. He had not done well at school and had not been able to complete an apprenticeship as a mechanic. He was a reliable employee and his services were valued by Building Partners. The primary judge found (Judgment [138]-[139]):

The primary judge also found that Mr Wharekawa was engaged in physical sports, including body surfing and boogie boarding that exposed him to the risk of damage to his spinal cord. His Honour found (Judgment [141]) that it was highly likely that his prolapsed disc would sooner or later have contacted his spinal cord with consequences much the same as those which he experienced after 9 November 2012, including surgery, but it was not possible to say when that might have taken place (Judgment [141]).

That finding must be understood in context that the “consequences” to which the primary judge was referring would be the consequences arising from the need for surgery for the spinal cord, not the other consequences referred to below arising from his having been hit in the head by the nail.

There were three such consequences which have disabled Mr Wharekawa from returning to work as a builder’s labourer. First, Mr Wharekawa suffered neurological damage, that is, damage to his nervous system, such that he had an altered gait, diminished control over his lower limbs and impaired balance (Judgment [15], [19]).

The primary judge observed that the medical evidence was that by late 2017 Mr Wharekawa’s balance disorder was relatively mild, but none of the doctors suggested that he had improved or would improve to a point where he could safely work on a building site. The primary judge found that he was not presently fit to do so and would not be fit to do so in the future (Judgment [110]).

The primary judge recorded that in the year following his injury, Mr Wharekawa suffered recurring migraine, impairment of balance and reduced control over his lower limbs. His treating neurological surgeon, Dr Winder, concluded that he was at risk of suffering further severe damage to his spinal cord at the C3/C4 level and recommended an operation to fuse those vertebrae. The operation was carried out on 25 November 2013 (Judgment [18]).

Contrary to the assumption in AEA’s submissions, it does not follow from the fact that it was likely that if the injury on 12 November 2012 had not occurred Mr Wharekawa would have required surgery at some point that he would then not have been able to work as a builder’s labourer.

Dr Winder gave evidence that to his knowledge there was no longitudinal study which has done comparisons of single-level narrowing of the spinal canal to say whether a patient would be likely to have surgery. He said:

The case made by AEA at trial was that as a result of the surgery undertaken in November 2013, Mr Wharekawa was fit for a wide range of employment.

The primary judge concluded (Judgment [144]):

To take account of Mr Wharekawa’s underlying vulnerability to spinal cord damage, the primary judge assessed future economic loss on the assumption that he would work to age 60 (rather than 67), and allowed a 20 per cent discount for adverse vicissitudes.

The second and most significant barrier to Mr Wharekawa’s obtaining remunerative employment after his injury was his suffering of frequent severe migraines. He had suffered some migraine headaches prior to the injury. His treating neurologist, Dr Tisch, made a report in 2014 that he had suffered migraines “since his 20s which have occurred 1 or 2 times per year lasting up to 4 days” (Judgment [145]). After his injury he suffered severe and almost daily migraines for which he had to lie down with the lights turned off in a darkened room (Judgment [149]). Dr Tisch gave evidence that the primary judge accepted and summarised as follows:

The primary judge accepted Mr Wharekawa’s evidence that a migraine attack could happen at any time and that sometimes he had such attacks every day for a few days, or even up to two weeks and that he was not completely free from attacks even after Botox injections. The primary judge found:

The primary judge found that the spinal fusion operation did not itself cause the migraines of the type which Mr Wharekawa suffered. He accepted Dr Tisch’s evidence that he had not previously seen a patient suffering such migraines as a consequence of surgery (Judgment [167]). The primary judge accepted Dr Tisch’s evidence that the migraines were caused by the blow to the head. The doctor said:

The primary judge also found that Mr Wharekawa suffered from post-traumatic stress disorder (“PTSD”). His Honour accepted medical evidence that his reaction to building site environments, which was a manifestation of his PTSD, disabled him from returning to work as a builder’s labourer, but did not otherwise prevent his working (Judgment [172]). Nonetheless, the primary judge accepted that Mr Wharekawa’s frequent and unpredictable migraine attacks made it impossible in practical terms for him to obtain regular full-time employment within the limited range of jobs for which he was suited (Judgment [183]).

The primary judge quantified Mr Wharekawa’s damages as follows:

In assessing damages for non-economic loss the primary judge was required to assess the severity of the non-economic loss as a percentage of a most extreme case (Civil Liability Act, s 16).

The primary judge’s reasoning on this question was as follows:

“Non-economic loss” is defined in s 3 of the Civil Liability Act as meaning any one or more of pain and suffering, loss of amenities of life, loss of expectation of life, or disfigurement. In Mr Wharekawa’s case the relevant matters are pain and suffering and loss of amenities of life.

In a previous draft of this judgment I considered that the primary judge had erred in his approach to assessing non-economic loss by first assuming that all of Mr Wharekawa’s pain and suffering and loss of amenities of life were attributable to AEA’s negligence, then assessing that severity of non-economic loss as a percentage of a most extreme case and then adjusting that percentage for vicissitudes to take account of the possibility or probability that some loss of amenity of life would have occurred at some future time even if the accident had not occurred. The structure of s 16 is that the severity of non-economic loss caused by the defendant’s negligence will be determined first and then compared with an hypothetical most extreme case without adjustment for vicissitudes.

I have since had the benefit of reading Basten JA’s reasons on this question and am persuaded that my initial view (that the primary judge’s approach was affected by a material error) was wrong. I gratefully adopt his Honour’s reasons on the issue of damages for non-economic loss.

In assessing past economic loss, the primary judge found that Mr Wharekawa was a permanent casual employee with Building Partners and earned $846 net per week at the date of the accident (Judgment [178]). He worked only 48 weeks per year and the primary judge found he would not have been entitled to holiday pay during the usual four-week shutdown of the building industry over late December and January. Mr Weatherall, the director of Building Partners, gave evidence that had Mr Wharekawa continued to work with Building Partners, that as at 29 April 2016 he would have been earning $1,042 net per week.

The primary judge found that:

AEA challenges this finding on the basis that it was unsupported by the evidence. But Mr Weatherall’s evidence established that had Mr Wharekawa been able to continue working with Building Partners, his earnings would have increased by more than two per cent per year on an annual compounded basis between 2012 and 2016.

AEA’s principal challenge to the assessment of damages was that, according to its submission, it was likely that within a very few years Mr Wharekawa would have come to have cervical surgery and would have been in no different position than he is as a result of the tort. I do not agree. Whilst the primary judge concluded that at some indeterminate time Mr Wharekawa would have required surgery to his back, there is no basis for inferring that that would have occurred within a very few years. When it did occur, it would not permanently disable him from carrying out the kind of labouring work which he carried out with Building Partners. The primary judge said that damages should be discounted to allow for the likelihood that at some point the plaintiff would have been unable to earn income for 18-24 months as a result of a cervical spinal incident and the need for an operation. His Honour took that into account in increasing the allowance for the vicissitudes of life to 20 per cent (Judgment [185] and [186]).

The increase of the allowance for adverse vicissitudes of life also took into account that following such surgery Mr Wharekawa’s available range of work would be narrowed (Judgment [185]). His Honour nonetheless took into account that he would have been able to continue working in some less heavily physical capacity had he not been afflicted with migraines and PTSD (Judgment [185]). In oral submissions AEA contended that it was unrealistic to assume that Mr Wharekawa’s working life would have been up to the age of 60 and submitted that if the case were to be approached on the basis of contingencies, the contingencies would be significantly greater than 15 per cent and well over 50 per cent.

However, AEA accepted that the critical matters that prevented Mr Wharekawa from earning more than a token income, mostly, his recurrent migraines, but also his ataxia and PTSD, were wholly attributable to his injury.

Thus, AEA’s case on damages for economic loss was dependent upon its establishing that the surgery that the primary judge accepted would be very likely at some time, would be likely within a few years, rather than in one or two decades, and that the result of such surgery would have been that the plaintiff would then have effectively been unemployable. Those were more than merely speculative possibilities, but they were not established to be likely. The primary judge was correct in discounting the assessment of damages for the vicissitude that such an adverse outcome would occur before the age of 60. There is no basis to say that the primary judge’s assessment of damages on the basis of an estimated working life to 60 years and an increased allowance for adverse vicissitudes to 20 per cent did not adequately account for those necessarily unknown and speculative possibilities.

For these reasons I would reject AEA’s challenge to the assessment of damages.

For these reasons I propose the following orders: