In the recent decision of Bettergrow Pty Limited v NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid (No 2) [2018] NSWSC 514, the Supreme Court of New South Wales reiterated the narrow circumstances where a party can find itself liable for the negligence of others.

In or around March 2015, TransGrid engaged Powercor Network Services (Powercor) to undertake refurbishment work at one of its substations. Powercor subcontracted civil works to TTR Construction & Excavation Pty Limited (TTR), who subsequently engaged On-Line Pipe & Cable Locating Pty Limited (Online) to conduct non-destructive digging and associated waste disposal. Despite plans and procedures in place on the Project, in or around April 2016, Online unknowingly delivered asbestos-contaminated material to a drill mud processing facility owned by Bettergrow Pty Limited (Bettergrow). The facility was not licensed to receive waste containing asbestos. Bettergrow suffered loss from having to shut down the facility whilst the waste was removed and facility decontaminated, at a cost of $1.5 million.

Bettergrow brought proceedings against TransGrid, Powercor, TTR and Online alleging, amongst other things, that TransGrid owed it a non-delegable duty of care. If successful, this would result in TransGrid being liable for the negligence of the three subcontractors.

In finding that TransGrid did not owe such a duty, Ball J held that:

(a) cases where a non-delegable duty of care have been found to exist are generally

in specific categories from which the current facts are far removed;

(b) in general, courts have held that:

(i) a person does not owe a non-delegable duty of care to ensure that reasonable care is taken by an independent contractor, even where the

contractor undertakes ultra-hazardous activities; and

(ii) to impose a duty on a person to prevent each specific act of negligence by a

contractor would be to impose an impossible burden on that person;

(c) a duty is more likely to be found where a party is particularly vulnerable and

unable to protect itself; and

(d) Bettergrow was not particularly vulnerable to the disposal of waste contaminated

with asbestos and could have taken steps to protect itself against that risk. For

example, it was not obliged to take the waste and could have taken a range of

steps to protect itself against the possibility that waste containing asbestos may be

delivered.

This decision highlights the fact that establishing a non-delegable duty of care is subject to a high threshold and that, in general, it will take more than just a subcontracting structure to make the ultimate principal liable for the actions of its subcontractors.

The full decision can be here.