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					                                                               Limelight
                                                               Issue No. 1

                                                               –   AFA Air-conditioning Pty Ltd v Mendrecki & Ors
                                                               –   Occupiers
                                                               –   Occupational Health Safety & Welfare Act – duties
                                                               –   Development Act – proportionate liability
                                                                   Quantum Trends




Mendrecki                                                      Occupiers

On 17 July 2008 the Supreme Court of South Australia           The trial judge had found that the owners were
handed down its judgment in the appeal of AFA                  ‘occupiers’ within the meaning of the Wrongs Act 1936
Air-conditioning Pty Ltd v Mendrecki & Ors.                    (now the Civil Liability Act) and the OHS&W because
                                                               they had remained in possession. AFA was also found
The saga commenced in the winter of 1998 when Drs Doan         to be an occupier of the premises for the purpose of the
and Phan (the owners) decided to renovate their house.         installation of the air conditioning.
The owners engaged a builder who in turn engaged a
carpenter to erect ceiling joists. As it transpired the        On appeal the Court affirmed that the owners were
carpenter failed to properly affix one of the joists. The      occupiers but found that AFA was not. The Court said
owner contracted directly with AFA for the supply and          that whether a person is an occupier under either statute
installation of an air-conditioning unit. AFA in turn          is a question of the nature and extent of the occupation
subcontracted with the plaintiff, Mr Mendrecki to install      and the degree of control. A sub-contractor attending
the unit. As luck would have Mr Mendrecki stood on             for a limited purpose might have no relevant control and
the faulty joist and fell to the concrete floor below. He      might be likened to a licensee rather than an occupier.
fractured his right heel and has not worked since.
                                                               Occupational Health Safety and Welfare Act
Mr Mendrecki sued the owners, the builder, AFA and the
carpenter. At first instance, the trial judge found that all   The trial judge had found that breach of the OHS&W gave
defendants were liable in negligence, and apportioned          rise to a private right of action. On appeal, the Court
the liability as follows:                                      like those deciding Complete Scaffold Services Pty Ltd v
– The owners           10%                                     Adelaide Brighton Cement & Henry and McVicar v S & J
– The builder          10%                                     White Pty Ltd, elected to simply assume that the breach
– AFA                  30%                                     would give rise to a private cause of action without finally
– The carpenter 50%                                            determining whether that should be the case. For this
and awarded Mendrecki $791,973.96.                             reason the Appeal Court had to consider the nature and
                                                               scope of the duty under the OHS&W.
The owners and AFA appealed on questions of liability.
The plaintiff cross-appealed on quantum. The finding           Whereas the trial judge had considered that the duty
of liability against the owners and AFA was overturned         under the OHS&W was non–delegable ‘on its face’
(apportionment between the builder and the carpenter           the Appeal Court decided that neither the duty under
was remitted to the trial Court for determination).            the Wrongs Act nor the duty under the OHS&W was
Damages were increased to $988,603.96. In so doing             inherently non-delegable. It said in both cases that
the Full Court considered the law relating to occupiers        whether a duty is non-delegable and whether a duty
and whether the Development Act 1993 imposes a                 under the OHS&W is of a higher standard is always
proportionate liability regime in personal injury cases but    determined by the facts. The question of the non-
once again side stepped any definitive determination of        delegability of a duty depends on factors such as control,
whether a breach of the Occupational Health Safety &           supervision, special dependence or an inherent and
Welfare Act 1986 (OHS&W) gives rise to a private cause         high risk of harm. The Court observed that ‘carpenters,
of action.                                                     electricians, roofers, tilers and [...] air-conditioning
installers’ may work at heights requiring balance and         the defendant to show the value of any residual earning
dexterity, but that does not make the work inherently         capacity. The appeal therefore increased the plaintiff’s
dangerous. It was decided that the duty owed by               past and future economic loss and added an award for
the owners was not non-delegable and that they                future psychiatric treatment.
had discharged their duty by the appointment of an
independent contractor.                                       It is worth noting that the incident took place before the
                                                              operation of the Civil Liability Act and that the relevant
Deemed Employment                                             actuarial multiplier was 3% rather than the 5% which
                                                              now applies.
The trial judge had decided that AFA was a deemed
employer for the purpose of s4(2) of the OHS&W and            It would seem that in South Australia the Courts are in
therefore had a duty to check that the roof was safe for      a generous mood when it comes to psychiatric injury.
Mr Mendrecki. The Appeal Court however once again             2008 has seen cases where a plaintiff with minor soft
focussed on the question of control to determine the          tissue injuries developing into a chronic pain syndrome
application of s4(2). It said that a mere contractual chain   was awarded $237,125.00 (Ritter v Kenny), a 54 year
does not trigger the operation of the OHS&W. In this          old vineyard hand with a fractured knee and subsequent
case AFA had no actual control over how Mr Mendrecki          adjustment disorder was awarded $560,081 (Bramberger
performed his duties and was therefore not considered         v Doecke) and most significantly a 36 year old who
his employer.                                                 sustained a whiplash injury leading to psychiatric injury
                                                              was awarded $2,681,547.74 (Collins v Stratford (No 2)).
Section 72 Development Act
                                                              Contact Details
                                                              For further information in relation
The trial judge had determined that section 72 of the         to this subject please contact:
Development Act, which provides for proportionate
liability in building cases, does not apply to personal       Richard Wood Principal
                                                              Telephone: (08) 8215 7001
injury cases. Albeit obiter the Appeal Court agreed.          Email: rwood@gclegal.com.au


Quantum                                                       Amanda Adamson Consultant
                                                              Telephone: (08) 8215 7004
                                                              Email: aadamson@gclegal.com.au
The facts assumed by the trial judge were that Mr
Mendrecki had fully recovered from a psychological
condition that had developed in response to the accident
and its sequelae and that whilst he was incapacitated
by the injury to his foot, the level of incapacity could
be reduced by an operation that he had elected not
to undertake and that in any event he had retained a
capacity for sedentary employment which he had not
exercised. Notwithstanding this quantum was assessed at
$791,973.96. By far the largest component of the award
was lost earning capacity. Mr Mendrecki had made his
case on comparator evidence from the person who had
taken over his business.

On appeal the Court favoured the evidence of the
treating psychiatrist, who gave evidence that the plaintiff
had not recovered from his psychological condition. The
Court therefore found that Mr Mendrecki’s refusal to
undergo a fusion operation was not unreasonable and
could not be used to reduce the quantum of damages.
The Appeal Court further refused to make significant
discount to reflect the residual capacity for sedentary
employment because no evidence had been called by
the defendants as to the value of that capacity. Where
a pre-accident capacity to earn is lost, the onus is on

                                                              Adelaide	        Telephone: +618 8215 7000   www.gclegal.com.au
                                                              Sydney	          Telephone: +612 8240 8000   info@gclegal.com.au

				
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