The Queensland Court of Appeal recently delivered judgment in Bilson v Vatsonic Communications Pty Ltd [2024] QCA 171, considering the interaction of s 236B of the Workers’ Compensation and Rehabilitation Act 2003 (‘WCRA’) and contractual indemnities
Section 236B of the WCRA provides that: –
- This section applies to an agreement between an employer and another person under which the employer indemnifies the other person for any legal liability of the person to pay damages for injury sustained by a worker.
- The agreement does not prevent the insurer from adding the other person as a contributor under section 278A in relation to the employer’s liability or the insurer’s liability for the worker’s injury.
- The agreement is void to the extent it provides for the employer, or has the effect of requiring the employer, to indemnify the other person for any contribution claim made by the insurer against the other person.
- In this section — “damages” includes damages under a legal liability existing independently of this Act, whether or not within the meaning of section 10.
Factual Background
Leigh Bilson (‘Bilson’) was employed by Vatsonic Communications Pty Ltd (‘Vatsonic’) as a “vac truck operator”. Bilson’s duties primarily involved operation of a hydro vac truck, which was used to remove water or debris from drainage pollution traps. Townsville City Council (‘Council’) contracted Vatsonic to provide “wet hire” of a hydro vac truck, along with its operator, as required. The operator of the hydro vac truck would work in consult with employees of the Council, with these workers utilising a Council truck and attached crane and sling to move the hose in and out of the traps.
Bilson sustained an eye injury during the course of his employment, in line with the arrangement described above. Bilson subsequently brought a claim for damages against Vatsonic under the WCRA and against the Council at common law
Clause 1.39.1 of the contract between Council and Vatsonic relevantly provided that: –
“You [Vatsonic] agree to indemnify The Principal [Council] and keep The Principal indemnified against all claims for injury loss or damage suffered by any person or property arising out of your performance of the Contract and all liability for costs, charges and expenses incurred by The Principal in respect of the claim of any person or body.”
In response to Bilson’s claim, Council issued proceedings against Vatsonic, making a claim for indemnity pursuant to the contract between them.
Decision at First Instance
At trial, Coker DCJ found in favour of Bilson, opining that Vatsonic had breached the duty of care it owed to Bilson by failing to undertake a proper assessment of the risk of injury to Bilson, as well as by failing to prepare a safe work method statement. Similarly, his Honour found that the Council breached its duty of care to Bilson due to its employees’ failure to follow the informal work system established for operating the hydro vac truck.
Vatsonic had submitted that s 236B of the WCRA operated as to render cl 1.39.1 of the contract between it and Council void. His Honour found that the Council was entitled, pursuant to the relevant provision, to be indemnified by Vatsonic for damages awarded against it, and that s 236B of the WCRA did not invalidate the agreement in that regard.
Bilson v Vatsonic: Employment and Contractual Background
In a unanimous judgment, the Court of Appeal affirmed the trial judge’s finding in respect of liability, upholding the apportionment of liability of Vatsonic of 70%, and Council of 30%. Further, the Court opined that the trial judge’s conclusion that clause 1.39.1 had been engaged, such as to require Vatsonic to indemnify Council against Bilson’s claim, was correct. In this regard, Bowskill CJ opined that “the natural and ordinary meaning of the language used in clause 1.39.1 does not reveal any ambiguity, such as to warrant any reading down in favour of Vatsonic.”
However, the Court found that the trial judge had erred in deciding that s 236B of the WCRA did not operate to render cl 1.39.1 of the relevant contract to be void.
In support of its conclusion, the Court made reference to the explanatory notes to the Bill that inserted s 236B to the WCRA, noting that the relevant provision was an express attempt by the legislature to reverse the effect of Byrne v People Resourcing (QLD) Pty Ltd [2014] QSC, in which WorkCover Queensland was held to be liable for damages in the sum of $450,000.00 pursuant to a contractual indemnity. The Court opined that s 236B goes further than just reversing Byrne, not only clarifying that WorkCover is not obliged to indemnify an employer under a contractual indemnity clause, but that any such agreement is void. Thus, the Court concluded that s 236B of the WCRA had the effect of voiding clause 1.39.1 of the contract between Vastonic and Council.
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