Lyschrome Pty Limited v Peter Cusato Transport
[2017] QDC 162
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- Unreported Judgment
- Lyschrome Pty Limited v Peter Cusato Transport[2017] QDC 162
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Lyschrome Pty Limited v Peter Cusato Transport[2017] QDC 162
Lyschrome Pty Limited v Peter Cusato Transport[2017] QDC 162
DISTRICT COURT OF QUEENSLAND
CITATION: | Lyschrome Pty Limited (ACN 005 846 104) v Peter Cusato Transport (a Firm) (ABN 20764790) [2017] QDC 162 |
PARTIES: | LYSCHROME PTY LIMITED (ACN 005 846 104) (plaintiff) v PETER CUSATO TRANSPORT (a Firm) (ABN 20764790) (defendant) |
FILE NO/S: | 1761/13 |
DIVISION: | Civil |
PROCEEDING: | Trial |
ORIGINATING COURT: | District Court |
DELIVERED ON: | 16 June 2017 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 8 March 2017 |
JUDGE: | Devereaux SC DCJ |
ORDER: | Judgment for the plaintiff in the sum of $292,000.00 |
CATCHWORDS: | CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the plaintiff and defendant entered into an agreement, partly oral and partly written “Standard Contract Provisions”, for the towing of refrigerated trailers – where an incident damaged trailers beyond repair – where the defendant’s insurance did not cover the damage to the trailers – whether the agreement was uncertain and should be voided – whether the defendant liable under the agreement to make good the damage – whether defendant in breach by failing to obtain the insurance cover required under the agreement Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 Erect Safe Scaffolding Pty Ltd v Sutton (2008) 72 NSWLR 1 Groves & Anor v BMW Australia Finance Limited & Anor [2001] QCA 16 Meehan v Jones (1982) 149 CLR 571 Re Theodorou [1993] 1 Qd R 588 |
COUNSEL: | Mr R. A. Parsons for the plaintiff Mr B. F. Charrington for the defendant |
SOLICITORS: | CLS Legal for the plaintiff HWL Ebsworth Lawyers for the defendant |
- [1]The plaintiff claims for damages for breach of an agreement made on or about 24 April 2012 between JAT Refrigerated Road Services Pty Ltd (JAT) and the defendant. JAT assigned its rights and interests in the cause of action to the plaintiff in February 2015.
- [2]The plaintiff was the owner of one and the lessee of another maxi-cube refrigerated trailer. The claim arises because the trailers were damaged beyond repair in an accident that occurred on the evening of 26 January 2013 at Hattonvale. An employee of the defendant was driving the defendant’s prime mover towing the trailers loaded with bananas from Tully. The collision was not due to any negligence of the defendant’s employee.
- [3]Although the claim is styled as one for damages for breach, the plaintiff’s primary claim is that the defendant is liable to make good the damage pursuant to the agreement by which the towing was done. The plaintiff says the agreement was oral and in writing, the oral part arising from a telephone conversation and the written part being a document entitled “Standard Contract Provisions” (Exhibit 1). The defendant replies that the agreement was so vague, imprecise and undefined as to be unenforceable.
- [4]As I set out below, looking at the contract as a whole - the written terms, taken with the telephone conversation - the parties’ intentions are clear.
- [5]The oral evidence was very brief.
- [6]For the plaintiff, Wayne John Azzopardi, then the Brisbane depot manager for JAT, gave evidence that he rang Peter Cusato, a self-employed truck driver trading under the business name Peter Cusato Transport, in early 2012 to discuss Mr Cusato being a towing subcontractor.
- [7]He could not recall the conversation well, but gave evidence that “we would have spoken about the appropriate insurances.” He called it “trailer in control insurance.” Such a discussion was part of his practice when speaking to proposed towing operators.
- [8]Wayne Azzopardi said he would have told Mr Cusato that a contract would be sent “with subject terms” and “insurance policies required.” The document would be sent from head office, which was then in Townsville.
- [9]Under cross-examination, Wayne Azzopardi agreed that he did not “run through the contract” with Mr Cusato over the phone. Mr Cusato did not have the document with him at the time. There was no detailed discussion of terms. For example, Wayne Azzopardi did not tell Mr Cusato about who was to be named as the insured party in any policy. It was put, and he agreed, that the only thing he spoke to Mr Cusato about was that he had to obtain cover for non-owned trailers – “trailer in control” – of $300,000.
- [10]John Alexander Azzopardi, the director and principal of JAT until it was placed in liquidation, spoke to Mr Cusato after the accident. John Azzopardi gave evidence that farmers had been contacting him asking when they would be paid. He said he asked Mr Cusato when he would get insurance money. Mr Cusato said “Oh, soon, soon.” He asked whether insurance for the trailers was organised. Mr Cusato said, “Yep, that’s all been done.”
- [11]John Azzopardi had received a report that the trailers were not salvageable.
- [12]John Azzopardi denied the proposition, put in cross-examination, that no such conversation happened.
- [13]For the defendant, Mr Cusato gave evidence. He said he was a self-employed truck owner. He had transported goods for JAT Road and Refrigeration Services since about 2009. He had, on occasion, also towed trailers for JAT. He recalled the telephone call in early 2012 with Wayne Azzopardi, the effect of it being the proposition that he would be “a prime mover with them on a little bit more permanent basis.” He said he agreed he was interested in a “tow operator’s position”.
- [14]Mr Cusato could not remember the discussion in detail but said there was probably a mention of insurance – “That the cover would just need to be $300,000 to – cover the B-double set.”
- [15]Mr Cusato could not recall receiving the Standard Contract Provisions, Exhibit 1, but agreed it contained his writing and signature.
- [16]Mr Cusato had insurance cover in place for his firm’s vehicles, referred to as a fleet and heavy haulage policy (Exhibit 5).
- [17]It is clear that after the conversation with Wayne Azzopardi, Mr Cusato took steps to obtain insurance cover for the B-double trailers he would be towing for JAT. Exhibit 6 is a Certificate of Currency naming his firm as the insured, the interest insured is “2 x Non Owned Refrigerated Trailers”, the sum insured is $300,000 and the “Principal” is JAT Transport. Mr Cusato could not recall the document but understood it to have been obtained and sent to JAT “at their request for proof of insurance”.
- [18]Mr Cusato gave evidence that he could not recall any telephone call with John Azzopardi after the accident. He contacted JAT to let them know what had happened and recalled speaking to Wayne Azzopardi.
- [19]Under cross-examination, Mr Cusato agreed it was common practice to sign terms and conditions when subcontracting. He agreed that he expanded his insurance cover to include non-owned trailers, knowing it was required for the purposes of towing JAT’s trailers. He agreed he made a claim under his insurance for the lost bananas, which was paid, and a claim for the damaged trailers, which was not.
- [20]There is no significant factual dispute. There clearly was a meeting of minds during the telephone call between Wayne Azzopardi and Mr Cusato – it included agreement that the latter’s firm would tow D-doubles for JAT and Mr Cusato would have to arrange insurance for the trailers.
- [21]Exhibit 1, the Standard Contract Provisions, was sent, signed and returned to JAT. It is necessary to set it out in full.
STANDARD CONTRACT PROVISIONS
- Liability for work with JAT Refrigerated Road Services Pty Ltd
1.1 Care of the work From the time You are given access to the work with the JAT Refrigerated Road Services until the Date of Completion, You are solely liable for the care of:
- The Goods and Liability as a Sub Contractor.
- Materials, equipment and things brought onto the work site by You or by Your subcontractors, employees or agents for the purpose of carrying out the work.
- Materials, equipment and things given to You by Us for the purpose of carrying out the work.
Subject to clause 2.2, you must make good loss or damage that occurs to any of the above while you are liable for their care.
1.2 Payment for Loss or Damage to goods and other Property You do not need to make good loss or damage under clause 1.1 unless We direct You to do so as a variation to the work if the loss or damage is caused by one or more of the following:
- A negligent act or omission by Us, Our employees or agents
- War or other hostilities or confiscation by order of a public authority
- Contamination by radioactivity that is not caused by You, Your employees, subcontractors or agents.
- Indemnity for Property Damage & Personal InjuryYou indemnify Us against loss or damage to Our property and against any claim or action which may be brought or made against Us, Our employees or agents in respect of personal injury or death or loss or damage to property caused by Your act or omission or the act or omission of Your employees, subcontractors or agents.
- Indemnity for Breach of Contract You indemnify Us against financial loss (including consequential damages) arising from breach of Your contract with Us for the Project Works. Your indemnity under this provision shall not exceed the total value of Our contract with You.
- Insurance
4.1 Insurance Polices you must have. You must hold the insurance policies set out in the Contract Schedule whenever You are performing works for JAT Refrigerated Road Services Pty Ltd.
4.2 Policies must be with Approved Insurers To meet the requirements of this Contract, an insurance policy must be issued by:
- An Australian registered insurance company that is approved by the Australian Prudential Regulation Authority to conduct general business in Australia; or
- A Lloyd’s underwriter approved in writing by Us; or
- Another Insurer approved in writing by Us.
Worker’s Compensation policies are only acceptable if issued by an insurer (or self insurer) licenced by the statutory authority in the state or territory where the Project Works take place.
4.3 Requirements for Liability Policies The Motor Vehicle Third Party Property Damage & Non Owned Trailer & Public & Products Liability & Marine Transit Insurance policies must:
- Include Us and Your subcontractors (if any) as additional named insured for liability arising out of this contract, in accordance with the operative clause of the policy, but excluding any claims arising out of a negligent act or omission by Us; and
- Include a cross liability clause in which the insurer agrees to waive all rights of subrogation or action that it may have or acquire against Us or any subcontractors, unless in relation to the negligent, act, error or omission of such parties.
- Cover each insured party to the same extent as it would if each of the insured parties had a separate policy of insurance (subject always to the limits of indemnity under the policy).
4.4 Evidence of Insurance You must provide evidence of insurance prior to starting work for the JAT Refrigerated Road Services and whenever requested to do so. The evidence must be in the form of a current annual certificate of insurance from your Insurer.
DISCLAIMER: I/we have read and understood the above conditions and agree to comply and to provide JAT Refrigerated Road Services of current annual insurances at all times.
Signed ……
- [22]In terms of clause 1.1, it is pleaded by the plaintiff and admitted by the defendant that pursuant to the agreement the plaintiff ‘gave’ the defendant the two refrigerated trailers.
- [23]Exhibit 2 is a single-page photocopy of a document entitled JAT Refrigerated Road Services Pty LTD Compulsory Sub-Contractors Insurance Requirements – Contract Schedule. It is not signed. It was admitted by consent during the plaintiff’s opening, it being the plaintiff’s case that it was one of ‘the appropriate forms’ referred to by Wayne Azzopardi that ‘would be sent’ by head office. Exhibit 2, the Contract Schedule includes as a required policy, Non Owned Trailer Insurance, defined as Cover for trailers towed, but not owned by the Contractor, the level of insurance to be $150,000 per trailer, unless stated otherwise.
- [24]Mr Cusato expanded his insurance as discussed. The policy (Exhibit 5) included cover for “legal liability for damage to trailers under your control not owned, leased or rented by you and belonging to a principal”. Provisos to the cover set out in that clause were not relied on by the plaintiff.
- [25]I have already referred to Exhibit 6 which tends to confirm the defendant obtained insurance as required in the Contract Schedule.
- [26]After the accident, the insurer did not pay, apparently relying on a clause that read:
This policy does not cover:
…
10. any liability or obligation assumed by you under any contract, agreement or warranty which would not have otherwise arisen or been implied by law,”
…
- [27]The plaintiff’s pleaded case is that the defendant breached the agreement. The alleged breaches all referred to the Standard Contract Provisions, namely:
Not making good the loss and damage to the trailers as required by clause 1;
Not indemnifying JAT in accordance with clause 2;
Not indemnifying JAT in accordance with clause 3;
Not holding insurance policies in accordance with clause 4.2;
Not holding policies in accordance with clause 4.3.
- [28]Counsel for the plaintiff limited the argument to alleged breaches of clause 1 and clause 4. This, with respect, was proper. Clause 2 provides for an indemnity for loss arising from the defendant’s act or omission. It was not the plaintiff’s case at trial that the damage to the trailers was caused by the acts or omissions of the defendant. It is understandable that no reliance is placed on Clause 3, there being no definition of “Project Works” and “the total value of Our contract with you”.
- [29]The defendant submits the agreement is so uncertain that it does not sufficiently identify the parties’ rights and obligations and should be held void for uncertainty.
- [30]As Counsel for the defendant points out, clause 1 is not straightforward. There is no definition of ‘the work’ or ‘work site’, nor a ‘date for completion’. The words ‘and Liability as a subcontractor’ seem to add nothing.
- [31]The words in clause 1.2 ‘unless We direct You as a variation to the work’ appear ill adapted to the subject matter of the contract.
- [32]There is no clause 2.2, to which clause 1.1 is expressed to be subject. The Standard Contract Provisions appear to be adapted from a construction site sub-contractor agreement.
- [33]The defendant suggests several possible understandings of the reference to the absent clause 2.2.
- [34]In my opinion, the obvious inference is that clause 1 was taken from a document where it was clause 2 and, while the clause was renumbered, the reference to “clause 2.2” within the text of subclause 1.1 was overlooked. The term, “Clause 2.2” obviously refers to the next sub-clause, ie. clause 1.2. Clause 1.2 refers expressly to clause 1.1 in a sensible way. In any case, the plaintiff does not rely on clause 1.2.
- [35]A court will be reluctant to hold an agreement void and it would be wrong to do so in the present case. As Williams J said in Re Theodorou [1993] 1 Qd R 588 at 593:
Whilst there is no doubt that the courts will not enforce an agreement which is in truth illusory, they have always been reluctant to deprive a commercial transaction of efficacy. One need only refer to Meehan v. Jones[1] as an illustration of that approach.
- [36]Clause 1 makes sensible enough reading if the term ‘clause 2.2’ is read as ‘clause 1.2’. The relevant operative words become:
“From the time You are given access to the work with the JAT Refrigerated Road Services until the Date of Completion, You are solely liable for the care of:
…..
…...
…….. things given to You by Us for the purpose of carrying out the work.
Subject to clause [1.2], you must make good loss or damage that occurs to any of the above while you are liable for their care.”
- [37]Despite the indefinite term ‘Date of Completion’, the provision clearly covers the circumstances that arose. The situation is quite distinguishable from that which arose in Groves & Anor v BMW Australia Finance Ltd [2001] QCA 16, referred to by Counsel for the defendant, where McMurdo P said it was impossible to determine the parties’ intentions once vehicles the subject of a lease were sold to the lessee.
- [38]The defendant next submits clause 1 is a strict liability indemnity clause but is inherently ambiguous because of the undefined terms, the absent clause 2.2 and the conflicting scope of liability provided for in clause 2. So, it is argued, the clause should be interpreted against the plaintiff.
- [39]Counsel for the defendant submits, by reference in particular to Erect Safe Scaffolding (Australia) Pty Ltd v Sutton (2008) 72 NSWLR 1 and cases referred to in it, that the term must be analysed ‘in the context of the particular act, omission or circumstance that gives rise to the event that potentially enlivens the indemnity clause.’ McClellan CJ at CL said, at [154],
The resolution of any disagreement about a particular clause in a contract must be approached by considering the terms of the relevant document. Although the resolution of disputes in other cases may provide guidance, each dispute must be resolved by the application of the accepted principles of construction to the particular contract.
- [40]As I have set out, I am not persuaded there is significant ambiguity. It is relevant that the standard terms were drawn by the plaintiff or its advisors[2] but if the defendant or his advisors read it the meaning would have been plain. The Standard Contract Provisions are consistent with the meeting of minds on the telephone – the so-called oral part of the agreement. Briefly put, the defendant would tow the plaintiff’s refrigerated trailers for a calculable consideration; the defendant would insure the trailers. The only inference from the latter is that the defendant would be liable for damage to the trailers while the defendant was towing them. If “strict-liability indemnity clause” is the description of clause 1, it is plainly and unambiguously so.
- [41]Clause 1 and clause 4, the insurance clause which I will come to, are congruous.
- [42]I am satisfied the evidence of the telephone call and the documents shows the process of formation of a contract has taken place. The defendant’s expanding of his insurance, as shown by his oral evidence and exhibits 3, 5 and 6, tends to confirm it was a term of the agreement, and by necessary implication his liability to make good loss or damage to the trailers while in his care was part of the subject matter of the contract.
- [43]The defendant submits that such a construction of clause 1 would make clause 2 redundant because clause 2 is plainly intended to govern the scope of the defendant’s liability for damage to the plaintiff’s property. So, it is argued, the effective sum of clauses 1 and 2 is that clause 2 meaningfully governs the defendant’s liability – limiting it to damage arising out of his (or his employees’) acts and omissions. That is, that where clause 1 and clause 2 conflict, the latter should prevail.
- [44]It is common ground that clause 2 has not made the defendant liable for the damage to the trailers. Clause 2, as counsel for the plaintiff submitted, covers different ground from clause 1, even if there may be some overlap. Clause 1 makes the defendant liable to make good loss or damage to things given to it for the purposes of the contract. The things might not be the property of the plaintiff. The property which is part of the indemnity provided for by clause 2 includes all property of the plaintiff’s lost or damaged by the defendant’s act or omission. And clause 2 also provides for other indemnities.
- [45]The defendant submits there has been no breach of clause 4 because the defendant obtained insurance to cover the non-owned trailers to the value of $300,000.00. He provided a certificate of insurance in accordance with clause 4.4 which prompted no adverse response.
- [46]Neither party submitted the insurer was wrong to refuse to pay the defendant’s claim on the policy with respect to the loss of the trailers. The insurer is not a party to this litigation. It does not fall to me to adjudicate upon the insurer’s action.
- [47]If the submission that the certificate of insurance prompted no adverse response was designed to raise an estoppel against the plaintiff taking the insurance point it was not pleaded nor pressed in argument. In any case, the certificate of currency does not provoke inquiry as to whether the policy satisfies the contractual term.
- [48]The defendant submits that the failure to define ‘the total value’ of the contract, in clause 3 has an effect on the interpretation of clause 4 and the whole Standard Contract Provisions. As I understand the argument, it is that clause 3 intended to limit the defendant’s liability for any breach but did not define the limit; if there were a breach of clause 4 by failing to obtain insurance in accordance with, say, sub-clause 4.3, the plaintiff would be entitled to limitless damages. This, it was argued, fails the need for certainty as in Groves. I do not accept the analogy. The uncertainty in Groves prevented the contract from being carried out. In this case, the asserted “illimitation” is as to damages. If the breach were of clause 4.3.3, the damages would be easily calculable and limited to the indemnity under the policy.
- [49]The insurance policy the defendant obtained did not meet the requirements of clause 4.3 because it did not insure the plaintiff against the loss of the refrigerated trailers. It insured the defendant against third party liability but with the exclusion referred to above. In this respect, the defendant breached the agreement.
- [50]The plaintiff has made out its case. The defendant is liable to make good the damage to the trailers which occurred while in its care. Counsel informed me the loss is agreed at $292,000.00. There will be judgment for the plaintiff in that sum. I will hear the parties as to further orders.