Duty of care to the parties with whom their sub-contractors may interact

A recent NSW Supreme Court case confirms that principal contractors may not owe a duty of care to the parties with whom their sub-contractors interact. 

In the case 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 plaintiff Bettergrow, a waste management company, sued for damages after receiving a consignment of asbestos contaminated waste which it was not licensed to process and was not advised of the contamination.   

They only realised later, after testing, that the mud was contaminated, requiring the whole facility to be closed down for decontamination for seven weeks to clean it, causing a claimed loss of $1.5 million. 

Bettergrow brought a claim of negligence against each of TransGrid, Powercor, TTR and On-Line, the contractors and sub-contractors on the site.  

In order to succeed, a claim of negligence requires that the negligent party owe a duty of care to the injured party, and have breached that duty. Bettergrow argued that TransGrid had a special duty of care – a non-delegable duty – which would have made it liable for the negligence of all the sub-contractors. 

The NSW Supreme Court however has dismissed a claim for damages against TransGrid and three subcontractors for the delivery of the contaminated waste. 

·        TransGrid had carried out testing and was aware of asbestos contamination at the site. TransGrid  had disclosed that information and required contractors to prepare specific plans to manage risks at the site, including the risk of encountering asbestos and disposing of any asbestos contaminated waste. 

·        Powercor Network Services contracted with TransGrid to refurbish the Beaconsfield site.  The contract noted that the soil at the site was classified as contaminated with asbestos, and that all disposal needed to be carried out in accordance with that classification.  Powercor prepared an Asbestos Management Plan. 

·        Powercor engaged TTR Construction & Excavation Pty Limited (TTR) to carry out some civil works for the refurbishment. Powercor was obliged under its contract to get TransGrid's approval for the appointment of subcontractors, but did not do this in relation to TTR. TTR was given the Asbestos Management Plan and told about the contamination risks. 

·        TTR engaged On-Line Pipe & Cable Locating Pty Ltd to carry out "non-destructive digging" work, which involved water blasting of soil and removal of the resulting excavated mud.  On-Line gave evidence (which was accepted) that TTR did not mention the asbestos risk.  On-Line was not licensed to dispose of asbestos contaminated materials and the Court found that it would not have accepted the job if it had known of the asbestos issue. 

A non-delegable duty of care is one that cannot be passed on to someone else. It is a duty on the principal person owing the duty to ensure that reasonable care is taken by others in carrying out a particular task. 

Bettergrow argued that TransGrid owed such a duty, and that therefore TransGrid was liable for the damage caused by sub-contractors failing to take reasonable care regarding asbestos contamination.