Non-delegable duty of care and when outsourcing does not end your liability

What a non-delegable duty of care is

Most Australian businesses know they owe a duty of care to the people their operations touch. What catches owners out is that some duties cannot be handed to someone else. A non-delegable duty of care is a duty the law treats as personal to the business that owes it. You cannot discharge it by engaging a competent independent contractor, because the duty is not simply to take reasonable care yourself. It is a duty to ensure that reasonable care is taken.

The High Court described the concept in CCIG Investments Pty Ltd v Schokman [2023] HCA 21 as a duty of "a special and more stringent kind", one in which the duty holder has assumed "the particular responsibility to ensure that reasonable care is taken rather than merely to take reasonable care". The same idea appears in Kondis v State Transport Authority (1984) 154 CLR 672, where Mason J spoke of "a special responsibility or duty to see that care is taken".

Under the ordinary rules, if your business engages an independent contractor who is competent and properly instructed, you generally will not be liable for that contractor's negligence. The non-delegable duty is the exception to that general rule. As Gleeson CJ explained in Leichhardt Municipal Council v Montgomery [2007] HCA 6, such a duty "enables a plaintiff to outflank the general principle that a defendant is not vicariously responsible for the negligence of an independent contractor".

Two things follow from this. First, the duty is not a guarantee. It is still measured against reasonable care, so your business is not liable for every accident that happens on its watch. Second, the duty is personal: if the person you engaged was negligent, the law treats that failure as your own breach, not just as a problem for the contractor to answer for.

When the law treats a duty as non-delegable

Courts do not impose non-delegable duties lightly, and there is no checklist that covers every case. In CCIG Investments, the High Court identified the common features: the relationship is one in which the duty holder has undertaken the "care, supervision or control of the person or property of another", and has assumed responsibility in a way that the affected person "might reasonably expect" the higher duty to apply.

For a business owner, the practical indicators are:

• Control: your business controls the premises, the equipment, or the way work is done, even where others perform the hands-on tasks.
• Reliance and vulnerability: the people affected depend on your business for their safety, because they are employees, children, patients, or customers following your instructions.
• Assumption of responsibility: your business presents itself as the party responsible for the environment or the service, so the people who enter reasonably look to you rather than to the subcontractor or agency behind the scenes.

The recognised categories are not closed, but courts are cautious about extending them. In Leichhardt Municipal Council v Montgomery, the High Court declined to find that a roads authority owed road users a non-delegable duty for reconstruction work performed by its contractor, because the work was not extra-hazardous and the statutory scheme did not impose such a duty. The lesson for business is that the doctrine turns on the specific relationship, not on a general principle that someone must always be liable.

Where non-delegable duties are recognised

The clearest categories, confirmed in recent High Court authority, are:

• Employer to employee: an employer's duty to provide a safe system of work is personal and non-delegable. In Leighton Contractors Pty Ltd v Fox [2009] HCA 35, the High Court said an employer owes "a personal, non-delegable, duty of care to its employees requiring that reasonable care is taken", and that while an employer is not vicariously liable for the negligent conduct of an independent contractor, it may still be liable where that negligence injures its employee.
• School to student: a school authority owes its pupils a non-delegable duty of care for their safety while at school, as the High Court recognised in New South Wales v Lepore [2003] HCA 4.
• Hospital or health provider to patient: the undertaking of care, supervision and control of a vulnerable person engages the same principle, and the duty is not discharged by leaving treatment to contractors.
• Occupier carrying on a dangerous activity on premises: a business that brings dangerous things onto premises it controls owes a non-delegable duty to those who may be harmed by a failure of care, following Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520.

A worked example: the bakery and the oven contractor

Suppose a family bakery employs an apprentice baker and engages an independent contractor to service its commercial ovens. The contractor is qualified, holds insurance and has serviced the ovens for years. On one visit, the contractor removes a safety guard to reach a burner, forgets to refit it, and the apprentice is badly burned when they use the oven later that day.

The bakery cannot defend the claim simply by pointing to the contractor's competence and insurance. Its duty to provide a safe system of work is personal and non-delegable. The question for the court is not whether the bakery's owners were themselves careless, but whether reasonable care was taken in the running of the bakery's system of work. If the answer is no, the contractor's failure is the bakery's breach, because the bakery was required to ensure that care was taken.

The same facts can also engage the premises principle from Burnie Port Authority. The bakery controls the site and has brought high-temperature equipment into it, and a person harmed by a failure of care in relation to that equipment may look to the bakery regardless of who performed the work. The outcome in any particular case will depend on the facts, which is why a business should treat these categories as risk flags rather than predictions of liability.

None of this means the bakery was doomed to be liable. A non-delegable duty is discharged by taking reasonable care that care is taken, so supervision of the contractor's work, a check that guards are refitted before the oven is returned to use, and a record of those checks all go directly to whether the bakery met its duty. The practical point is that the bakery's own system, not the contractor's paperwork, is what a court would examine.

Separately, the bakery owes a statutory duty as a person conducting a business or undertaking under the Work Health and Safety Act 2011 (Cth) to ensure, so far as is reasonably practicable, the health and safety of its workers. Section 19 sets out that primary duty, and s 14 states plainly that a duty cannot be transferred to another person. So even where the contract with the contractor allocates responsibility to the contractor, the regulator can still pursue the bakery, and the statutory duty remains its own.

Misconceptions that cost small businesses

A few misconceptions recur when small businesses weigh up outsourcing and liability:

• "A competent, insured contractor takes the risk with them": Hiring careful contractors and checking their insurance is sensible risk management, but it does not discharge a non-delegable duty. The duty holder's own liability survives, and the contractor's insurance is not your insurance.
• "A waiver or a contract clause lets us contract out": Not as a general proposition. WHS duties cannot be transferred, and the common law duty attaches to the relationship rather than to what the paperwork says. Waivers do work in one narrow statutory setting: under the Civil Liability Act 2002 (NSW), a contract for recreation services can exclude liability for breach of the implied warranty of reasonable care and skill (s 5N), and ss 5L and 5M remove liability for obvious risks of dangerous recreational activities. Outside that recreational-activity context, a waiver will not remove a non-delegable duty owed to employees or to people entering your premises.
• "It is the same as vicarious liability": The two are related but distinct. Vicarious liability attributes an employee's tort to the employer. A non-delegable duty is a personal duty: the duty holder is liable for its own breach because it was required to ensure that care was taken. The High Court in CCIG Investments took care to keep the concepts separate, noting that the label "vicarious liability" is sometimes loosely applied to both.
• "It means we are liable for everything": No. The standard remains one of reasonable care. A non-delegable duty is a duty to ensure that reasonable care is taken, not a duty to guarantee that nobody is ever harmed, and it only arises in relationships that the law recognises.

How a lawyer helps assess and manage the risk

Because the doctrine turns on the relationship and the level of control, a lawyer's first job is diagnostic: mapping which of your business's relationships carry a non-delegable duty and which are ordinary delegable arrangements. That assessment changes how much risk you genuinely carry, and therefore where your systems need to be strongest.

A practitioner can also:

• review contractor agreements, indemnities and insurance requirements so they align with the duties you cannot transfer, rather than pretending the paperwork removes them;
• draft waivers and risk warnings that work within the recreational-activity provisions, and tell you honestly where a waiver will not help;
• check your WHS documentation, including safe work method statements and supervision arrangements, against the primary duty in s 19 of the Work Health and Safety Act 2011 (Cth);
• advise on incident response so that evidence of what actually happened is preserved, because the content of the duty is always assessed against the facts.

The question to answer before you outsource

The most expensive misconception in this area is the contractor assumption: the belief that handing work to a qualified, insured third party hands over the responsibility as well. It does not, wherever the law treats the duty as personal to your business.

Before you outsource any task, ask who the law would say had to ensure that reasonable care was taken if something went wrong. If the honest answer is your business, then the contract with the contractor is a starting point, not the finish line. The system you run, the supervision you provide and the records you keep are what will matter if the duty is ever tested.