Upwood Stairs Pty Limited, Qualimaster Pty Limited & Hunter Stairs Pty Limited t/as Allwood Stairs v Insurance Australia Limited [2018] NSWSC 1506 (4 October 2018)

Last Updated: 11 October 2018

Supreme Court New South Wales

Case Name:	Upwood Stairs Pty Limited, Qualimaster Pty Limited & Hunter Stairs Pty Limited t/as Allwood Stairs v Insurance Australia Limited
Medium Neutral Citation:	[2018] NSWSC 1506
Hearing Date(s):	4 October 2018
Date of Orders:	4 October 2018
Decision Date:	4 October 2018
Jurisdiction:	Common Law
Before:	Beech-Jones J
Decision:	(1) The Statement of Claim be amended by deleting paragraph 1 and replacing it as follows: “1. At all material times, the Plaintiff was a partnership carrying on the business of stair installations and trading under the registered business name of Allwood Stairs. 1A. At all material times, the Plaintiff entered into a contract for services with Andrew Hoffman (Hoffman) whereby Hoffman, as an independent contractor, provided to the Plaintiff services by way of carpentry and installation of stairs.” (2) The Plaintiff (as Cross-Defendant in proceedings 2017/00210228) have leave to withdraw the admission of paragraph 4(b) of the First Cross-Claim and to amend its Defence to the First Cross-Claim in proceedings 2017/00210228 to deny that paragraph. (3) Grant the Plaintiff in proceedings 2017/00184097 leave to file an Amended Statement of Claim in the form attached to their solicitor’s submissions dated 25 September 2018. (4) In proceedings 2017/00210228 grant the first cross-defendant leave to file an Amended Defence to the First Cross-Claim in the form attached to their solicitor’s submissions dated 25 September 2018. (5) In proceedings 2017/00184097 grant the defendant 14 days to file an Amended Defence to the Amended Statement of Claim. (6) In each of proceedings 2017/00184097 and 2017/00210228, Upwood Stairs Pty Limited, Qualimaster Pty Limited and Hunter Stairs Pty Limited t/as Allwood Stairs pay the costs thrown away by reason of the amendment to the Statement of Claim in proceedings 2017/00184097 and the amendment to its Defence to the Cross-Claim in 2017/00210228. (7) Upwood Stairs Pty Limited, Qualimaster Pty Limited and Hunter Stairs Pty Limited t/as Allwood Stairs to pay the costs of the Notice of Motion.
Catchwords:	PLEADINGS – withdrawal of admission – no question of principle
Legislation Cited:	Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Workers Compensation Act 1998 (NSW)
Category:	Procedural and other rulings
Parties:	Hunter Stairs Pty Ltd, Qualimaster Pty Ltd & Upwood Stairs Pty Limited t/as Allwood Stairs (Plaintiff) Insurance Australia Limited (Defendant)
Representation:	Counsel: SL Flett (Plaintiff) JC Lee (Defendant) Solicitors: McCabe Curwood (Plaintiff) Holman Webb Lawyers (Defendant)
File Number(s):	2017/184097

EX TEMPORE JUDGMENT

1. By a notice of motion filed 4 July 2018 Upwood Stairs Proprietary Limited, Qualimaster Proprietary Limited & Hunter Stairs Proprietary Limited trading as Allwood Stairs (“Allwood Stairs”) seek leave to amend their statement of claim in proceedings 2017/184097 to withdraw the assertion that a particular worker was their employee, and also seek leave to withdraw an admission made in their defence to a cross-claim in proceedings 2017/00210228 that that person was an employee.
2. To explain the significance of the orders sought it is necessary to say something about the background to the matter and the two proceedings that are on foot.
3. At the relevant times Allwood Stairs carried on the business of stair installations. From around 2007 a Mr Andrew Hoffman was engaged to work as a carpenter at the business premises of Allwood Stairs.
4. In December 2014 Mr Hoffman purchased a drop saw from Global Power Brands International Pty Ltd, trading under the name Masters Home Improvement.
5. In February 2015 while he was using the drop saw in the course of his work for Allwood Stairs Mr Hoffman severely injured his right hand. At some stage Allwood Stairs workers compensation insurer QBE Workers Compensation (NSW) Ltd (“QBE”) started making payments to Mr Hoffman.
6. On 20 June 2017 a statement of claim was filed in the name of Allwood Stairs, although the claim was conducted by QBE, seeking contribution from the insurer of Global, then being called CGU Insurance Limited and which later changed its name to Insurance Australia Limited (CGU). In those proceedings Allwood Stairs pleaded that Mr Hoffman was employed as a carpenter and that it was the employer. In its defence CGU admitted that allegation.
7. On 11 July 2017 Mr Hoffman commenced proceedings 2017/210228 against CGU as the insurer of Global. In December 2017 CGU filed a cross-claim in those proceedings against Allwood Stairs seeking indemnity and/or contribution pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), as well as contribution pursuant to s 151Z(2) of the Workers Compensation Act 1987 (NSW).
8. In its cross-claim CGU pleaded that Allwood Stairs was the employer of Mr Hoffman. In a defence to the cross-claim filed 6 March 2018 Allwood Stairs admitted that allegation.
9. The contention that Mr Hoffman was an employee of Allwood Stairs is relevant in at least two respects. First, it is clearly relevant to any determination of the scope, content and nature of any duty of care said to have been owed by Allwood Stairs to him. Without traversing the authorities, there is clearly a difference between the nature, scope and content of the duty owed to an employee as opposed to a contractor.
10. Second, at least as I understand it, the status of Mr Hoffman as an employee is an essential element of at least so much of CGU’s cross-claim that seeks contribution under s 151Z(2) of the Workers Compensation Act 1987.
11. Both sets of proceedings have been set down for hearing in June 2019.
12. On this application Allwood Stairs read an affidavit of Brendan Maher dated 2 July 2018. Mr Maher is the solicitor with the conduct of both matters on behalf of Allwood Stairs.
13. In his affidavit Mr Maher seeks to explain how a mistaken assumption was built in to the conduct of both proceedings that Mr Hoffman was an employee. He points to material suggesting that Mr Hoffman was in fact an independent contractor.
14. Not surprisingly soon after Mr Hoffman’s accident there was an investigation of what had occurred. A factual report from an investigator was provided dated 23 March 2015 to Allwood Stairs and presumably QBE. In that report the author stated that their investigation had established that Mr Hoffman was engaged as a subcontracted carpenter.
15. The investigation report included a statement from a director of Allwood Stairs stating that Mr Hoffman had been engaged as a subcontractor and referring to various documents noting his sole trader status, and in which Mr Hoffman had acknowledged that he had that status.
16. Mr Maher notes that QBE and Allwood Stairs were represented by solicitors around this time and they engaged counsel in August 2016 to advise on the prospects of recovering workers compensation payments. For some reason that Mr Maher cannot explain, Counsel provided an advice in August 2016 which contained the observation that there was “no issue as to Mr Hoffman’s employment”.
17. He notes that Counsel settled the statement of claim that pleaded that Mr Hoffman was an employee of Allwood Stairs. He then annexes correspondence from Allwood Stairs’ solicitors to CGU’s solicitors beginning around May 2018 up to June 2018 pointing out that there was a basis for asserting that Mr Hoffman was not an employee as had been pleaded.
18. In both his written and oral submissions counsel for CGU pointed out that there was in this no explanation for how it was that as at late as March 2018 Allwood Stairs and QBE were still admitting in pleadings that Mr Hoffman was an employee.
19. I accept the material is a bit thin, but in the end I think it is clear enough that the explanation is simply no better and no worse than the perpetuation of a fairly basic mistake. I cannot conceive of any forensic reason why Allwood Stairs and QBE would ever seek to maintain an assertion that Mr Hoffman was an employee if they were cognisant of material suggesting he was a contractor. Instead, as regrettably sometimes happens in litigation, a mistake was built in to the instructions either going to counsel or the advice from counsel which was then built upon before someone realised that the error had been made.
20. Counsel for CGU further submits that leave to withdraw the admission should not be granted given the relatively late stage of the proceedings and that the work that will be involved in litigating the issue of Mr Hoffman’s status will cause further costs, as well as a potential expansion of the hearing time in June 2019.
21. I accept there is some force in that. Nevertheless, given that the inconvenience caused to CGU in the past can to a large extent be ameliorated by a costs order and the amount of time available between now and the hearing to investigate the issue, then overall I do not consider that that prejudice warrants Allwood Stairs and QBE being shut out from litigating what appears to be an issue of substance to their defence to the cross-claim, as well as to the overall scope of any ascertainment of the nature, duty and scope of the duty of care owed to Mr Hoffman. In that regard I note that Mr Hoffman himself did not wish to be heard on this application.
22. There was a further suggestion that if leave was granted to Allwood Stairs to withdraw the admission in its defence to the cross-claim in Mr Hoffman’s proceedings that he was an employee, then it is possible that a different insurer may need to come into the matter to indemnify Allwood Stairs against the contribution claim being made by CGU. At the moment that possibility appears to be speculative, and in the end, in the absence of anything to suggest that that is realistic, it does not affect my ultimate decision.
23. In circumstances where a party has clearly made a mistake, has freely admitted they made a mistake, where the matter they made the mistake upon is potentially a matter of substance to a determination of the real issues in the proceedings, and where the time between the discovery of the mistake and the hearing of the proceedings is such that its effects can be remedied, I think the court must allow Allwood Stairs and QBE to withdraw its admission.
24. Accordingly, I will make orders.

[Counsel addressed on form of orders, directions and costs.]

25. It would follow, from everything that I have stated, that one appropriate order in both sets of proceedings is that Allwood Stairs pay the costs thrown away by reason of its amendment to the statement of claim in proceedings 2017/00184097 and its amendment to its defence to the crossclaim in 2017/00210228.
26. In respect of the notice of motion filed 4 July 2018, while it is true that Allwood Stairs and QBE were ultimately successful on the motion, in the end they seek an indulgence and a fairly generous one. I cannot see any basis upon which they could avoid paying the costs of that motion as well.
27. Accordingly, they will pay the costs of the motion filed 4 July 2018.

Orders

(1) The Statement of Claim be amended by deleting paragraph 1 and replacing it as follows:

“1. At all material times, the Plaintiff was a partnership carrying on the business of stair installations and trading under the registered business name of Allwood Stairs.

1A. At all material times, the Plaintiff entered into a contract for services with Andrew Hoffman (Hoffman) whereby Hoffman, as an independent contractor, provided to the Plaintiff services by way of carpentry and installation of stairs.”

(2) The Plaintiff (as Cross-Defendant in proceedings 2017/00210228) have leave to withdraw the admission of paragraph 4(b) of the First Cross-Claim and to amend its Defence to the First Cross-Claim in proceedings 2017/00210228 to deny that paragraph.

(3) Grant the Plaintiff in proceedings 2017/00184097 leave to file an Amended Statement of Claim in the form attached to their solicitor’s submissions dated 25 September 2018.

(4) In proceedings 2017/00210228 grant the first cross-defendant leave to file an Amended Defence to the First Cross-Claim in the form attached to their solicitor’s submissions dated 25 September 2018.

(5) In proceedings 2017/00184097 grant the defendant 14 days to file an Amended Defence to the Amended Statement of Claim.

(6) In each of proceedings 2017/00184097 and 2017/00210228, Upwood Stairs Pty Limited, Qualimaster Pty Limited and Hunter Stairs Pty Limited t/as Allwood Stairs pay the costs thrown away by reason of the amendment to the Statement of Claim in proceedings 2017/00184097 and the amendment to its Defence to the Cross-Claim in 2017/00210228.

(7) Upwood Stairs Pty Limited, Qualimaster Pty Limited and Hunter Stairs Pty Limited t/as Allwood Stairs to pay the costs of the Notice of Motion.

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