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- Royston v McCallum[2006] QSC 193
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Royston v McCallum[2006] QSC 193
Royston v McCallum[2006] QSC 193
SUPREME COURT OF QUEENSLAND
CITATION: | Royston v McCallum & Ors [2006] QSC 193 |
PARTIES: | DAVID KENNETH ROYSTON |
FILE NO: | BS 11486 of 2002 |
DIVISION: | Trial |
PROCEEDING: | Trial |
ORIGINATING COURT: | Supreme Court of Queensland |
DELIVERED ON: | 11 August 2006 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 5-7 June 2006 |
JUDGE: | Chesterman J |
ORDER: | 1.The claim by the second defendant against the third defendant, is dismissed and there should be judgment on that claim for the third defendant. 2.The counter-claim by the third defendant against the second defendant for payment of an amount equal to the amount for which the third defendant was found liable to pay the second defendant is dismissed. 3.The third defendant’s claim against the fourth defendant for a declaration that it indemnify the third defendant against the second defendant’s claim and for payment of an amount equal to any amount which the second defendant recovers against the third defendant is dismissed. 4.The counter-claim by the third party against the second defendant for an indemnity pursuant to s 6(c) of the Law Reform Act 1995 against the third defendant’s claim against the third party, and for declarations that the second defendant’s action against the third defendant is not maintainable, is dismissed. 5.The claim by the third defendant against the third party is dismissed and judgment is given for the third party in that proceeding. 6.The third party’s counterclaim against the third defendant for indemnity pursuant to the Law Reform Act, and for declarations that the third defendant’s proceeding against the third party is not maintainable, is dismissed. 7.The third party’s claim against the fourth defendant for an order that it indemnify the third party against its liability to the third defendant, and for declarations that the second defendant’s claim against the third defendant was not maintainable, is dismissed. 8.The third party’s claim against the fourth party for indemnity pursuant to the policy of insurance issued by the fourth party be dismissed and there be judgment for the fourth party on that proceeding. |
CATCHWORDS: | INSURANCE – THIRD-PARTY LIABILITY INSURANCE – MOTOR VEHICLES – COMPULSORY INSURANCE LEGISLATION – RISKS INSURED – OTHER CASES – plaintiff employee injured and claimed against inter alios second defendant employer for injuries sustained from accident caused by employer’s articulated vehicle – vehicle insured by fourth defendant insurer under the Motor Accident Insurance Act 1994 – jinker supplied by third defendant hirer formed part of the vehicle – hirer an insured person under the statutory policy – claim by employer and insurer against hirer for breach of contract and negligence alleging inter alia that jinker was defective – whether hirer entitled to indemnity from insurer under the statutory policy – whether hirer’s liability was liability ‘for personal injury’ INSURANCE – THIRD-PARTY LIABILITY INSURANCE – OTHER THIRD-PARTY LIABILITY INSURANCE – OTHER CASES – third party owner of jinker joined to action by hirer – owner maintained product liability insurance and joined its product liability insurer as fourth party – scope of policy – policy provided coverage for liability to pay compensation for ‘bodily injury’ – whether owner entitled to indemnity under policy for any liability to hirer including costs of defending action – whether third party’s liability to hirer is liability for bodily injury PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – PREVENTION OF CIRCUITY OF ACTION – where hirer has right to indemnity from insurer in respect of insurer’s claim against it – whether circuity of action arises to defeat insurer’s claim STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – RULES OF CONSTRUCTION – PRESUMPTIONS AS TO LEGISLATIVE INTENTION – OTHER PRESUMPTIONS – insurer purported to exercise right of subrogation to employer to join hirer – effect of statutory insurance scheme – whether by specifying circumstances of insurer’s recourse against its insured the Motor Accident Insurance Act 1994 impliedly excludes other rights – subrogation – whether under the Act an insurer is entitled to be subrogated to its insured’s rights Motor Accident Insurance Act 1994 (Qld), s 52, s 58 Aktieselskabet Ocean v B Harding & Sons Ltd [1928] 2 KB 321, considered Allianz Australia Ltd v Wentworthville Real Estate Pty Ltd [2004] NSWCA 100, distinguished Baker v Campbell (1983) 153 CLR 52, cited Beaman v A.R.T.S. Ltd [1949] 1 KB 550, considered De Innocentis v Brisbane City Council [2000] 2 Qd R 349, considered Eastern Extension Australasia & China Telegraph Co Ltd v Federal Commissioner of Taxation (1923) 33 CLR 426, considered Fire & All Risks Insurance Co Ltd v Nominal Defendant (Qld) [1998] 1 Qd R 113, cited Genders v Government Insurance Office of New South Wales (1959) 102 CLR 363, followed Johns v Johns [1988] 1 Qd R 138, cited Kazmaier v Spannagle (No. 2) [2001] 2 Qd R 292, cited Lord Napier and Ettrick v Hunter & Ors [1993] AC 713, cited Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, applied Melbourne Corporation v Barry (1922) 31 CLR 174, cited National Vulcan Engineering Insurance Group Ltd v Pentax Pty Ltd [2004] NSWCA 218, distinguished Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328, cited Regal Pearl Pty Ltd v Zurich Australian Insurance Ltd [2005] NSWSC 1055, distinguished Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Co Pty Ltd (2001) 53 NSWLR 626, distinguished Sargood Brothers v Commonwealth (1910) 11 CLR 258, considered Scagliotti v Boyd [1962] Qd R 481, considered State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd (1969) 1234 CLR 228, considered State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412, applied Suncorp Insurance & Finance v Ploner [1991] 1 Qd R 69, considered Townsville Trade Waste Pty Ltd v Commercial Union Assurance Co of Australia Ltd [2000] 2 Qd R 682, cited Unsworth v Commissioner for Railways (1958) 101 CLR 73, followed Woodside Petroleum Development Pty Ltd v H & R - E & W Pty Ltd (1999) 20 WAR 380, considered |
COUNSEL: | No appearance for the plaintiff or first defendant M Stewart SC with him R B Dickson for the second and fourth defendants M Grant-Taylor SC for the third defendant K D Dorney QC with him K F Holyoak for the third party R S Ashton for the first fourth party |
SOLICITORS: | No appearance for the plaintiff or first defendant Cooper Grace & Ward for the second and fourth defendants McCullough Robertson for the third defendant Gilshenan & Luton as town agents for Cragg Bray & Thornton for the third party Minter Ellison for the fourth party |
- The plaintiff David Royston was terribly injured on 27 March 2000. He was crushed by the wheels of a jinker trailer which was being towed behind a Kenworth prime mover owned by the second defendant (‘Concept’) which employed both the plaintiff and the first defendant who was the driver of the prime mover. The jinker was owned by the third party (‘Rex Andrews’) but had been hired to the third defendant (‘Gunnings’). The prime mover was insured pursuant to a policy of insurance issued by the fourth defendant (‘RACQ’) in accordance with the provisions of the Motor Accident Insurance Act 1994 (‘the Act’). There was no such policy of insurance issued in respect of the jinker but it formed part of an articulated vehicle for which the prime mover was the locomotive force. Accordingly the jinker as well as the prime mover was covered by the RACQ policy: see s 31(3) of the Act.
- Gunnings had won a contract to transport a number of concrete beams from their place of manufacture to where they were to be installed as supports for the elevated part of the railway line to the airport. Each beam was 35 metres in length and weighed 67 tonnes. They were transported separately. For that purpose they were placed by crane onto a dolly attached to the prime mover and a jinker. The jinker was necessarily some 35 metres behind the dolly but was connected to it by the weight and rigidity of the beam.
- Gunnings subcontracted part of the work of transporting the beams to Concept which, as I mentioned, owned the prime mover and employed the plaintiff and the first defendant. The jinker was a platform supported by 24 wheels on three axles to each of which were attached eight wheels. Because of the length of the beams, the jinker, which was at the rear of the beam as it was towed, had to be separately steered. For that purpose there were a number of hydraulic rams which when activated by a lever would push the wheels left or right to allow the jinker to turn and follow the path of the prime mover and dolly. Hydraulic pressure to operate the rams was provided by a four stroke petrol engine affixed to the chassis of the jinker. The rams were operated by the ‘rear steer operator’ who sat on a chair rather precariously attached to the rear of the jinker.
- The plaintiff was the rear steer operator for the jinker in question. Gunnings, which had hired the jinker from Rex Andrews, supplied it to Concept to enable that company to perform its subcontract work of transporting the beams to the construction site. Gunnings also supplied a two-way radio, headsets and microphones to enable the driver of the prime mover, the first defendant, and the rear steer operator, the plaintiff, to communicate with each other.
- The first defendant drove the prime mover forward when the plaintiff was inside the chassis of the jinker and in front of the second set of wheels attempting to start the petrol engine so as to have hydraulic power for the steering rams.
- The plaintiff sued the first defendant, Concept and Gunnings. RACQ was joined as a defendant pursuant to s 52(1) of the Act. On 11 July 2003 RACQ compromised the plaintiff’s claim by paying him $1,506,608.20. The payment was made to discharge its liability and that of Concept. The proceedings had not been prosecuted against Gunnings.
- All parties to the proceedings accept that the compromise was reasonable.
- RACQ has purported to exercise its right of subrogation and has caused Concept to bring this action against Gunnings to recover the amount it paid Mr Royston. It claims damages for breach of the contract of hire, and for negligence. It is said that the jinker and the radio communication devices which Gunnings supplied to Concept were defective. In short it is said that:
(i)the radio did not allow the plaintiff to communicate with the first defendant to tell him that he was in front of the wheels in the chassis of the jinker; and
- it was a defect of design of the jinker that he was required to stand in that position to start the motor.
- The driver of the prime mover could not see the rear steer operator from the cabin of the truck.
- It is to be noted that Concept does not seek relief against Gunnings pursuant to the contribution provisions of the Law Reform Act 1995.
- Gunnings has joined Rex Andrews as a third party claiming indemnity from it in the event that it is found liable to pay damages to Concept. Gunnings replicates the allegations of defective equipment which Concept makes against it.
- In turn Rex Andrews has joined the first fourth party (‘Allianz’) claiming an indemnity against it pursuant to a policy of product liability insurance which it issued and which was in force when the claim was brought against Rex Andrews.
- Both Gunnings and Rex Andrews defend the claim brought against Gunnings on the ground that Gunnings was an insured person under the policy issued in respect of the prime mover (and therefore the jinker) and that RACQ will be obliged to indemnify Gunnings against the very claim which it has caused Concept to prosecute. Rex Andrews separately claims that it is an insured person under the same policy with the same consequence. In the event that those contentions fail Rex Andrews seeks indemnity from Allianz against Gunnings’ claims. Allianz disputes its liability to indemnify Rex Andrews and, as a preliminary objection, complains that RACQ has no right of subrogation and that the claim brought by Concept must fail for that reason.
- Put shortly the argument advanced by Concept and RACQ is that their claim for damages for breach of contract and/or negligence against Gunnings is a claim for economic loss, and the statutory policy of insurance which inures to provide indemnity to insured persons does not extend beyond providing an indemnity against claims ‘for personal injury’ so that the policy does not protect Gunnings, or Rex Andrews, against this particular claim which is for economic loss. Concept concedes that if this point is determined against it and that the RACQ policy does indeed indemnify Gunnings and/or Rex Andrews against Concept’s claim, then that claim must fail. There would be an entire circuity of action: RACQ having to indemnify Gunnings and/or Rex Andrews against the very liability which is the subject of its claim.
- The question is really a short one and turns upon the proper construction of the statutory policy of insurance, and the provisions of the Act.
- Before dealing with that fundamental point I will address some questions of fact because the claim brought by Gunnings against Rex Andrews is properly decided as a matter of fact and because the facts more generally may become relevant if my opinion on the policy and the Act does not prevail. I will discuss them briefly because I think the law is clear and the rights of the parties (save for the claim against Rex Andrews by Gunnings) do not depend upon questions of fact.
- The jinker was delivered to Gunnings on 7 October 1999. At that time the engine had attached to it a cowling which protected the end of the crank shaft. It had a retractable spring-loaded rope with a rubber handle which one pulled to turn the crank shaft and start the engine. When released the rope and handle retracted until the handle rested against the cowling. The cowling had four circular apertures through one of which the starter rope fed as it was pulled. The engine was located under the front edge of the platform on which the operator stood to steer the jinker. The cowling was aligned so that the starter rope was accessed from behind the platform, i.e. to the rear of the jinker. One would reach in through a rectangular aperture in the steel framework of the platform, grasp the rope and pull it backwards, i.e. to the rear of the jinker. The manoeuvre was difficult because the number plate of the jinker and the steel ladder provided to give access to the platform restricted the aperture.
- Concept was engaged by Gunnings in about March 2000. Mr Neville McCallum, the managing director of Concept, was shown how to operate the jinker by Mr Gunnings, the managing director of Gunnings, or by one of his employees in his presence. The instruction extended to starting the engine. It was done by the employee standing, not to the rear of the jinker, but within its structure and in front of the second row of wheels and behind the first row, within the perimeter of the chassis and to the front of the platform. The starting rope was pulled vertically upwards.
- The findings described in the preceding paragraph were opposed by Gunnings and Rex Andrews. The case for Rex Andrews was that the jinker was designed and built so that the engine would be started by an operator standing to the rear of the jinker and out of harm’s way should it move forward. This was the method of operation demonstrated to Gunnings’ employees when the jinker was delivered in October 1999 by Mr Carl Andrews.
- Gunnings opposes the findings on the basis that Mr Neville McCallum was diffident in the expression of his recollections and could not be definite that the manner I have described was that demonstrated.
- I am prepared to accept Mr Neville McCallum’s evidence. I thought he was candid and forthright. He was mistaken about some details and was properly reticent in the expression of his recollection of events six years old. He was not prepared to be dogmatic but had a recollection of events which was clear enough. It is significant that counsel for Concept was not prepared to venture beyond criticising Mr McCallum’s testimony by calling Mr Gunnings, or Gunnings’ employees, to contradict what Mr McCallum had to say.
- I make the findings of fact I have with more confidence because there is no doubt that Mr McCallum himself and Mr Royston both started the motor in the manner described: by standing within the chassis and in front of the wheels. To do so required clambering over the structure of the jinker and standing in a confined space exposed to an obvious danger. These were sensible and practical men. I do not believe that they would have adopted that procedure if it were not the only practicable means of gaining access to the engine so as to start it.
- Counsel for Gunnings was critical of Concept for not directing the plaintiff to start the engine by standing to the rear of the jinker and reaching in through the steel framework of the platform. It was, he said, the ‘blindingly obvious’ way to proceed. So it was when the jinker was in the condition observed by Dr Grigg and described in his report.
- It was not so obvious that the engine should be started from behind the jinker in March 2000 as it was on 12 April 2006 when Dr Grigg inspected it at Rex Andrews’ premises. On that occasion the number plate had been moved sideways so widening the aperture through which one put one’s arm to reach the starting rope, and a new platform had been put in place which had a shorter access ladder. This also had the effect of increasing the size of the aperture. I have no doubt these changes were made for the purpose of Dr Griggs’ inspection. Mr Rex Andrews was a hard-edged man and some of his edges were sharp.
- The inference is clear. Between October 1999 when the jinker was delivered to Gunnings and March 2000 when Gunnings supplied it to Concept the cowling had been removed and repositioned so that the entry port for the starter rope did not align backwards but upwards. It would have been so awkward to pull the starter rope upwards if the entry port were aligned backwards that I do not believe it would have been attempted.
- It is clear on the evidence that the starter rope broke frequently and had to be replaced. This would necessitate the removal of the cowling and its replacement. It is likely that on one such occasion the cowling was reattached with the rope through the ‘upwards’ portal.
- The evidence established that on the day of the plaintiff’s accident the starter rope had broken and the cowling had been detached. The engine had to be started by winding a length of rope around the exposed end of the crank shaft, knotting the end of the rope into a notch cut in the crank shaft, and pulling on the rope. That condition of the motor meant that it could not be started except by a man standing in front of the motor within the chassis and between the two rows of wheels. That condition of the engine was something for which Gunnings was responsible. It had possession of the jinker pursuant to its contract of hire with Rex Andrews. It supplied the jinker to Concept Transport on the occasions when that company was requested to transport a beam. The condition of the motor bespeaks criticism of Gunnings’ maintenance of the jinker, or at least its engine.
- The two-way radios which Gunnings supplied to Concept, and therefore the plaintiff and the first defendant, had two defects. They had no dedicated channel to allow the rear steer operator and the driver of the prime mover to speak to each other without interference. Rather they had to utilise a CB channel which was also the means of communication between numerous members of the public. There was scope for the plaintiff and first defendant to hear the conversation of strangers when they wished to talk to each other. Gunnings protested that a dedicated channel would have been inappropriate because the truck driver, and perhaps the rear steer operator, might have had occasion to speak to other Transfield contractors or employees and the CB channel was necessary for that purpose. It does not seem right that the radio could not have been fitted with more than one channel: one for exclusive communication between truck driver and rear steer operator and another for more general communications. No doubt the provision of such a facility would have been expensive. The evidence was that the radios were of a type cheaply acquired from electrical retailers.
- The second defect was that a lack of quality in the radios, or lack of maintenance, meant that the ‘hands-free’ microphone with which the plaintiff was supplied, did not work. Instead he had to hold the radio in his hand to speak to the first defendant. He could not do that when he was engaged in the task of starting the engine. The consequence was that when the first defendant commenced driving the prime mover forward crushing the plaintiff under the wheels of the jinker he could not communicate his predicament to Mr McCallum. The radio was in his pocket.
- The plaintiff was injured just after the morning break. He and Mr McCallum walked from where they had taken their refreshment to the prime mover. Mr McCallum climbed into the cabin and the plaintiff walked to the jinker. He was to start its engine, as Mr McCallum knew. Mr McCallum could not see the jinker or Mr Royston in the rear vision mirrors of the prime mover because of the angle of the beam to the prime mover. Mr McCallum started the prime mover and, a little later, heard a voice say ‘Righto’ over the radio. He thought it was Mr Royston whose practice had been so say ‘Righto’ when he had got himself safely onto the platform of the jinker and was ready to steer it. In fact the plaintiff had not said ‘Righto’ or given any indication that he was on the platform. He was still within the chassis of the jinker and in front of a set of wheels when Mr McCallum drove off.
- On 5 April 2000, less than two weeks after the plaintiff’s injury, Mr McCallum gave a statement to an officer of the Department of Workplace Health and Safety. In it he said:
‘I recall that I started the truck … before Royston started the motor on the jinker. … From inside the truck you cannot see the motor of the jinker or where the operator would stand … to start the motor. I recall seeing Royston hop up onto the jinker. I did not see Royston start the motor on the jinker. I could not hear the motor on the jinker start because of the noise of the truck and the distance of the jinker from the truck.
So I was in the truck listening to the two-way expecting an instruction from Royston to inform me that I could begin movement of the truck.
… I would not commence moving the truck until I got the go ahead from the jinker operator. Just before I started the truck moving I recall hearing, above the rest of the interference, a call of ‘Righto’. This call … was a normal expression given by Royston … to indicate … that everything was right to move the truck. The sequence I can recall … was that I looked in the rear vision mirror and observed that Royston had stood up from where the motor was located. I then let the brakes off … Prior to letting the brakes off … and seeing Royston stand up, I recall hearing the ‘Righto’ call … The truck moved … no more than half a metre. I looked in my rear vision. I observed Royston standing with his back to me. It looked as though he may have been standing on the chassis to hop up over the rails of the … platform.’
- Counsel for Gunnings was rightly critical of Mr McCallum’s testimony. He submitted his evidence at trial should be disregarded and that I should find, in accordance with his statement, that he put the prime mover in motion knowing that the plaintiff was standing in front of the jinker wheels. The consequence is submitted to be that, as a matter of fact, liability for the plaintiff’s injuries must rest solely with the first defendant and its employer, Concept, because any failure on the part of Gunnings in supplying defective radios and failing to maintain the engine so that it could only be started by the operator standing in front of the wheels was of no consequence. That negligence was overwhelmed, and overtaken, by Mr McCallum’s gross negligence.
- I do not accept the submissions. I do not think Mr McCallum’s statement can be taken at face value. Whatever the explanation for its contents it is internally inconsistent. It contains a statement to the effect that Mr McCallum could not see the plaintiff from the truck cabin but also a statement that he saw him standing near the engine. It says that he saw him standing near the motor, but also says he saw him climbing onto the platform engine, which means Mr Royston would have been clear of the wheels.
- Common to the accounts Mr McCallum gave in evidence and in the statement is the assertion that he heard someone, whom he thought was Mr Royston, say ‘Righto’ over the radio. I think this is probably what happened. I cannot believe that Mr McCallum would drive off unless he believed the plaintiff was safe on the platform. I cannot accept that he would put the truck into motion if he knew that Mr Royston was standing in front of the jinker wheels. I think the likelihood is that Mr McCallum could not see the plaintiff at the jinker and drove off when he heard someone say ‘Righto’, or something like it, over the radio. Mr Royston did not hear the call, but that is not significant. The radio was in his pocket and he was attending to the task of starting the engine.
- The findings of fact lead me to conclude that, if it mattered, liability should be apportioned between Concept and Gunnings on the basis that Concept was responsible for sixty per cent of the plaintiff’s injuries and Gunnings forty per cent.
- Gunnings’ negligence lay in providing an engine that could not be started from the rear of the jinker but which required the operator to stand inside the chassis and in front of the wheels; and in supplying radio communication that was defective in not having a dedicated channel nor hands-free operation. Given the fact that the operator would often be out of the prime mover driver’s sight the need for reliable radio communication was essential.
- Concept’s negligence lay in the driver putting the prime mover into motion without ascertaining that the plaintiff was safe. Mr McCallum knew that the plaintiff had to stand in front of the wheels to start the motor and he knew that he could not see him. He knew that there was no dedicated radio channel, that there was interference on the CB channel, and that the hands-free microphone did not work. Given those constraints on safety it was imperative that he be absolutely sure that the plaintiff was safe before driving off. He should have got out of the truck and looked to see where Royston was, or made sure by a longer conversation that it was indeed Royston who had said ‘Righto’.
- Gunnings may have supplied an unsafe system of work but Mr McCallum knew it was unsafe and that the rear steer operator was in a position of danger when he started the motor. The dangerous system required Mr McCallum to be certain that the rear steer operator was out of harm’s way before driving off. He could have done so without difficulty. He knew the system was dangerous and had the means of making it operate safely.
- Gunnings’ claim against Rex Andrews fails on the facts. The jinker which the latter hired was not relevantly defective. The motor could be started safely, if perhaps a little awkwardly, by an operator standing behind the jinker. That was the method of operation which Mr Carl Andrews demonstrated to Gunnings. Despite my observation about Mr Rex Andrews there is no reason to disbelieve his testimony about the design and manufacture of the jinker and its engine, and no reason to disbelieve Mr Carl Andrews as to the method by which he started the motor in front of Gunnings. There was no breach of any duty, contractual or tortious, to supply a jinker which was safe to use.
- Before considering the claim brought by Concept against Gunnings it is necessary to address a preliminary objection to that claim made by Allianz, and supported by Gunnings and Rex Andrews.
- The argument is that a policy of insurance issued under the provisions of the Act is sui generis, and is a creation of the statute which obliges motorists to effect policies of liability insurance in the terms prescribed by the Act. It is not a contract of insurance in the ordinary sense and the incidents of such contracts which the common law, and the doctrines of equity, have attributed to them, do not attach. In particular the rights of an insurer to be subrogated to the rights of its insured do not exist. The rights of insurers who issue policies in accordance with the Act are limited to those found in the Act itself.
- There is no authority to which I was referred which deals directly with this point. The Act itself has nothing express to say about it. It is no doubt true, as was noted in Fire & All Risks Insurance Co Ltd v Nominal Defendant (Qld) [1988] 1 Qd R 113 at 118, and in Kazmaier v Spannagle (No. 2) [2001] 2 Qd R 292 at 294 ‘that many of the general principles of insurance law are irrelevant’ in the statutory scheme of motor vehicle insurance. The present question is whether the Act by necessary implication has removed from an insurer who issues a statutory policy the right of subrogation or, to put it differently, whether the Act has made that aspect of insurance law ‘irrelevant’.
- Particular reliance is placed upon s 58 of the Act which deals with the ‘Insurer’s rights of recourse’. Subsection 1 provides that if personal injury arises out of a motor vehicle accident and the insured person was at the time using the vehicle without the owner’s authority the insurer may recover, as a debt, any costs reasonably incurred by the insurer on the claim. Subsection 2 deals with the case where personal injury arises out of a motor vehicle accident but the insured person inflicted the injuries intentionally. In that case too the insurer may recover, as a debt, from the insured person the costs incurred on the claim. Subsection 3 provides a similar right of recovery where the insured person was unable to exercise effective control over the vehicle because of the ingestion of alcohol and/or drugs. Subsection 4 deals with a case where injury is caused because of a defect in the motor vehicle and the defect arose from the wrongful act or omission of a manufacturer or repairer. In such cases the insurer may recover as a debt from the manufacturer or repairer that proportion of the costs incurred on the claim which reasonably reflects the degree of the manufacturer’s or repairer’s responsibility for the accident.
- The submission is that by specifying the circumstances in which an insurer may have recourse against its insured the Act is impliedly excluding any other rights. It may be noted, however, that s 58 is concerned with conferring rights on an insurer against its insured whom it has been obliged to indemnify against a claim made by a third party in circumstances where, under the general law, the insurer could have refused indemnity. The Act requires the injured third party to be compensated by recourse to the policy of insurance but, as between insurer and insured, allows the insurer a right of recoupment. By contrast the right of subrogation exists where an insurer indemnifies an insured in accordance with the policy and then stands in the shoes of the insured to exercise the insured’s rights against a third party, or recovers from the insured any recompense it has been paid from the wrongdoer. The section says nothing about subrogation and is concerned with a different topic.
- Next it is pointed out that by s 52 an action for personal injuries must be brought against the insured person and the insurer as joint defendants, and judgment must be given against the insurer only. From this it is said that if an insurer satisfies a claim for damages for personal injury, the liability will be that of the insurer and not that of the insured. In making payment the insurer will satisfy its own liability not its insured’s so that the essential precondition for the existence of a right of subrogation will not exist.
- The submission overlooks the exposition of the operation of s 52 found in De Innocentis v Brisbane City Council [2000] 2 Qd R 349 at [20], [21] and [28]. The point is that:
‘Section 52 does not effect a substitution of the insurer for the tortfeasor. It requires the insurer to be made a party in addition to the insured person, and directs judgment to be given against the insurer rather than the person who would be made liable but for s 52(4) … There is … a statutory cause of action but it depends only upon proof of the insurance policy. It is not a cause of action for negligence or breach of duty. There is no warrant for reading s 52 as creating a cause of action in favour of an injured plaintiff against an insurer who is deemed to have acted … negligently.’
- The result is that in proceedings for damages for personal injury for which the defendant is insured under a policy issued in compliance with the Act there are two causes of action: one for damages for negligence against the insured person and the statutory cause of action against the insurer. Judgment may be entered only against the insurer but only after the cause of action against the insured has been proved. There is no doubt that judgment against the insurer will extinguish both causes of action and that payment by the insurer will discharge the insured’s liability.
- There is a fundamental objection to Mr Ashton’s submissions. It is that the right of subrogation is a valuable right of property and:
‘It is a well recognized rule in the interpretation of Statutes that an Act will never be construed as taking away an existing right unless its language is reasonably capable of no other construction’,
per O'Connor J in Sargood Brothers v Commonwealth (1910) 11 CLR 258 at 279. The point had been repeated on numerous occasions: see Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 341; Melbourne Corporation v Barry (1922) 31 CLR 174 at 206; and Baker v Campbell (1983) 153 CLR 52 at 123.
- An insurer’s right to subrogation, to recover moneys from an insured who has been compensated by the proceeds of the policy and by damages from a wrongdoer, or to proceed in the name of the insured against the wrongdoer to vindicate the insured’s rights is an important and valuable right of property and equity. In the former type of case payment received by an insured from the wrongdoer is, in equity, regarded as the property of the insurer: see the discussion in Lord Napier and Ettrick v Hunter & Ors [1993] AC 713 per Lord Templemen at 732-736 and Lord Goff at 740-743.
- In my opinion the Act should not be construed too readily to give rise to the conclusion that such valuable rights of property and contract should have been confiscated from insurers who operate under the Act. There are no express words to that effect. Unless, therefore, the scheme of statutory insurance is inconsistent with the continued existence of a right of subrogation, or unless the operation of the statutory scheme will be inhibited by the existence of such a right, one should not conclude that the right has been affected. Apart from the provisions of s 52 and s 58 nothing is pointed to as being inimical to the existence of the right of subrogation. Those provisions are, as I have endeavoured to explain, not incompatible with the existence of the right.
- I note that in State Government Insurance Office (Qld) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228 Barwick CJ reaffirmed the existence of an insurer’s right of subrogation in the statutory policy of workers’ compensation. His Honour said (at 241-2):
‘The policy of insurance … was statutory not merely in the sense that the respondent was bound by statute to enter into such a policy, or that its terms were fixed by statute, but in the less usual sense that the insurer was bound to issue the policy in such terms at the request of the respondent and at a premium set by … the statute. These circumstances and the further fact that the provisions with respect to the policy form part of a statutory scheme of protection for workmen against the possibility of an employer being unable to pay for the consequences of injury … would make it impossible … for the insurer to refuse to perform the promise to indemnify … because of some action on the part of the insured which reduced the benefit to the insurer of the right of subrogation … But these statutory features do not … render inappropriate the general law as to the right of subrogation …’.
- Likewise the right of subrogation was not thought to be inimicable to the statutory scheme of insurance created by the Motor Vehicles (Third Party Insurance) Act 1942 (NSW) nor to have been abrogated by that act. In Genders v Government Insurance Office of New South Wales (1959) 102 CLR 363 Dixon CJ, McTiernan, Taylor and Windeyer JJ said in the course of discussing the operation of legislation allowing for contribution to be made between tortfeasors (at 379):
‘[T]his is a procedural method of working out a … rule … imposing … an ultimate responsibility for a due proportion so that he bears no more. It is this ultimate responsibility which his insurer must bear in order to indemnify him. If he is called upon to pay the full amount in the first instance, his insurer will of course meet it, but the insurer will be subrogated to his right of contribution and will be left ultimately only bearing his due proportion.’
- For these reasons I do not think there is substance in the preliminary objection to Concept’s claim.
- I turn then to consider Concept’s claim. It is admitted in the pleadings between Concept and Gunnings that the contract between them for the transport of the concrete beams contained a term that Gunnings would exercise reasonable care to provide jinkers and communication devices for the use of Concept which:
(1)were fit and suitable for their intended use;
(2)were free from defects; and
(3)were safe to use such as their use would not expose employees and contractors of Concept to the risk of personal injury while carrying out their work under the contract.
Further it is admitted by Gunnings that it owed Concept a duty to take reasonable care that the jinkers and communication devices it supplied had the qualities just defined.
- It follows from my observations on the facts that neither the jinker nor the radios were fit and suitable for their intended use or were free from defects. Their use did expose the plaintiff to the risk of personal injury.
- Concept claims damages for breach of these duties. The amount sought is that which RACQ paid to satisfy the plaintiff’s claim against Concept pursuant to the compromise. The damages claimed are, rightly, categorised by Concept as damages for economic loss being the loss it suffered (for which RACQ indemnified it) as a consequence of Gunnings’ breach of contract and breach of tortious duty.
- The question is whether the sum claimed by Concept is one for which RACQ promised to indemnify Gunnings pursuant to the policy of motor vehicle insurance it issued. If it is, it is conceded, again rightly, that Concept’s claim cannot succeed. This is for the reason that there would be, in the circumstance just described, a ‘circuity of action’. The claim (brought by RACQ exercising its rights of subrogation to compel Concept to bring the action) would be met by an action by Gunnings against RACQ seeking indemnity under the same policy for the very amount which it would be liable to pay Concept.
- Sankey LJ described the doctrine in Aktieselskabet Ocean v B Harding & Sons Ltd [1928] 2 KB 321 at 391:
‘Since the Judicature Acts gave facilities for counterclaim and third party procedure, the doctrine of circuity of action has neither been as necessary nor as frequently resorted to as in former years … In the third edition of Bullen and Leake’s Precedents of Pleadings … the law is … accurately stated as follows: “Wherever the rights of the litigant parties are such that the defendant would be entitled to recover back from the plaintiff the same amount of damages which the plaintiff seeks to recover, the defendant may plead the facts which constitute such right as a defence, for the purpose of avoiding circuity of action …” … It must clearly be shown that the same sum which the plaintiff sues for can in turn be recovered from him.’
- In Eastern Extension Australasia & China Telegraph Co Ltd v Federal Commissioner of Taxation (1923) 33 CLR 426 Isaacs and Rich JJ said this of the doctrine (at 441):
‘There has been for centuries deeply embedded in the common law of England, a principle known as preventing circuity and multiplicity of suits. It is a principle which we are persuaded cannot properly be ignored … Lord Denman C.J. speaks of the “principle … of avoiding circuity of action, i.e., the scandal and absurdity of allowing A to recover against B, in one action, the identical sum which B has a right to recover in another against A. The law, when it clearly detects the possibility of such a waste of the suitor’s money and its own process, as well as of the public time, will interpose to prevent its happening.” … We see no reason why, in the determination of this case, we are not bound to adhere to the high considerations which are at the root of this principle of the common law, and which are so powerfully expressed by Lord Denman.’
- In Woodside Petroleum Development Pty Ltd v H & R – E & W Pty Ltd (1999) 20 WAR 380 at 402 Ipp J (with whom Malcolm CJ and Pidgeon J agreed) adopted with approval the words of Brownie J in his article entitled Co-Insurance and Subrogation (1990) 3 ILJ 48 at 53:
‘The defence [of circuity of action] is available whenever the rights of the competing litigants are such that the defendant would be entitled to recover back from the plaintiff the same amount which the plaintiff seeks to recover from the defendant, whether those sums are categorised as debts, or damages.’
- An alternative formulation of the reason why an insurer may not bring an action in its insured’s name against another insured who would be entitled to indemnity from the insurer under the same policy against the claim brought in a subrogated action is that, in such circumstances, equity deprives the insurer of its right of subrogation. See the discussion in Derham, Subrogation in Insurance Law at 75-81.
- The statutory policy of insurance issued by RACQ provided:
‘1Extent of insurance cover
(1)This policy insures against liability for personal injury caused by, through or in connection with the insured motor vehicle anywhere in Australia.
(2)This policy extends to liability for personal injury caused by, through or in connection with a trailer attached to the insured motor vehicle …
(3)The liability mentioned in subsection (1) or (2) –
(a)is a liability for personal injury to which the Motor Accident Insurance Act 1994 applies; and
(b)includes the liability of a tort feasor to make a contribution to another tort feasor who is also liable for the personal injury.
(4)…
2Insured Person
The person insured by this policy is the owner, driver, passenger or other person whose wrongful act or omission in respect of the insured motor vehicle causes the injury to someone else and any person who is vicariously liable for the wrongful act or omission.’
- Gunnings was an insured person under the policy. It was a person whose wrongful act or omission in respect of the jinker caused the plaintiff’s injury. For that matter Rex Andrews was an insured person, but the claim against it need not be considered because it committed no wrongful act or omission in respect to the jinker which injured the plaintiff. Gunnings is therefore entitled to indemnity from RACQ against Concept’s claim if that claim is properly described as ‘liability for personal injury’. It was really common ground between the parties that Concept’s claim is not one which seeks to establish liability ‘for personal injury’ but one for economic loss. The phrase ‘for personal injury’ is, I think, to be understood as meaning a claim for compensation for personal injuries suffered by the person making the claim.
- Gunnings’ answer to the accepted contention that the claim against it is not for personal injury is that the word ‘for’ is to be understood as meaning ‘in respect of’ which amplifies the extent of the insuring clause. Concept’s claim is ‘in respect of personal injury’ but is not ‘for personal injury’. Again Concept and RACQ rightly concede that if the amplified meaning is the appropriate one then its policy does extend to indemnify Gunnings against its own claim.
- The short point is therefore whether ‘for’ means ‘in respect of’ in cl 1 of the policy.
- The question was answered affirmatively when it arose in connection with the same phrase in policies issued under the Motor Vehicles Insurance Act 1936 (‘MVIA’), the predecessor to the Act. In State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 the High Court had to construe s 3(1) of the MVIA which required the owner of every motor vehicle to insure himself against ‘all sums for which he … shall become legally liable by way of damages in respect of such motor vehicle for accidental bodily injury …’. As a result of a motor car collision a claim was made against the insured under such a policy for loss of consortium brought by a man whose wife had been injured by Crittenden’s negligence. The claim was not for ‘damages … for accidental bodily injury’. It was for the diminished value of his wife’s society brought about by the injuries she suffered.
- The High Court held that the policy extended to indemnify the insured against that claim. McTiernan ACJ said (at 414):
‘The word “for” has a sense identical and co-extensive with “on account of” … The action for loss of service or consortium extends to cases of negligent driving … occasioning such deprivation … the damages recoverable for such loss are “on account of” the injury caused by the negligent driving.’
- Taylor J, in whose judgment Menzies and Windeyer JJ expressed concurrence said (at 415-416):
‘The question … is one of construction and requires us to decide whether the words of the policy “for accidental bodily injury” limit the liability of the insurer to the damages payable to a person who has, himself, suffered bodily injury or whether the relevant words are descriptive of a somewhat broader connexion between the damages recoverable and some “accidental bodily injury” to any person. The use of the word “for” … would favour the resolution of the question by acceptance of the first-stated proposition. However whether it should be given a narrow literal significance is the initial question. … The Act, itself, is expressed to be an Act to require the owners of motor vehicles to insure against their liability to pay compensation on account of injuries to persons caused by, through, or in connexion with such motor vehicles and the provisions of s. 4A, 4B and 4F … use the expression in respect of accidental bodily injury as if it were interchangeable with the expression used in the policy and I think that it is impossible to give to the word “for” any narrower meaning than would be indicated by the expression “in respect of” … According to Mann C.J. … “The words ‘in respect of’ are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connexion or relation between the two subject-matters to which the words refer”.’
- His Honour concluded (at 419):
‘[T]he terms of the policy cover the insured against all legal liability for damages in respect of accidental bodily injury to any person whether the claim is asserted by the injured person or by any other person whose rights have been infringed as a direct result or consequence of the injury.’
- Counsel for Concept sought to distinguish Crittenden by comparing the different provisions of the MVIA and the Act with a view to showing that the contextual reasoning which led to the result in Crittenden has no application to the Act which replaced the MVIA.
- However the High Court in Crittenden authoritatively determined what the phrase ‘for personal injuries’ meant in policies of compulsory third party insurance issued under the MVIA. When that Act was repealed and replaced by the Act in 1994 Parliament expressly declared that one of the objects of the new Act was:
‘… to continue and improve the system of compulsory third party motor vehicle insurance … operating in Queensland …’
- When the new Act provided that upon the registration of a motor vehicle a policy of insurance in terms of the schedule would come into force in respect of the motor vehicle the draftsman would have understood that the phrase ‘for personal injury’ which appears in the policy had been construed by the High Court to mean ‘in respect of personal injury’. There is every reason to think that when that phrase, interpreted as it had been without criticism for 30 years, was employed that Parliament intended it to have its established meaning. As Somervell LJ said in Beaman v A.R.T.S. Ltd [1949] 1 KB 550 at 567:
‘Where a word has been construed judicially in a certain legal area, it is, I think, right to give it the same meaning if it occurs in a statute dealing with the same general subject-matter unless the context makes it clear that the word must have a different construction.’
To the same effect was the remark by Stanley J in Scagliotti v Boyd [1962] Qd R 481 (at 490) that:
‘Prima facie the legislature intended the same construction, having re-enacted the words in cognate legislation with presumed knowledge of that interpretation.’
That course of construction was approved by the Full Court in Johns v Johns [1988] 1 Qd R 138 at 141.
- This consideration is a powerful indication that the statutory policy should not be given the restrictive operation contended for by Concept. It is not right that the High Court reached its conclusion in Crittenden by reference only to the particular statutory context. The court recognised, as Menzies J put it (at 421) that the Act was intended ‘… to meet a well recognised social and economic problem’ so that the Act ‘should [not] be construed so narrowly as to reduce it to but a partial solution of that problem …’.
- The remedial and beneficial effect of the Act, and its predecessor, has frequently been recognised. Examples may be found in Townville Trade Waste Pty Ltd v Commercial Union Assurance Co of Australia Ltd [2000] 2 Qd R 682 per McMurdo P and Suncorp Insurance & Finance v Ploner [1991] 1 Qd R 69 at 80 per Byrne J who adopted with approval Menzies J’s observations in Crittenden (at 420) that:
‘There is little doubt that compulsory third party insurance is intended broadly to afford protection to users of motor vehicles who become subject to liability because of bodily injury caused to others by the use of their motor vehicles, and to persons who become entitled to damages by reason of the bodily injury so caused.’
- The remedial effect of the legislation would be considerably reduced if Concept’s submissions were accepted. In my opinion the phrase ‘for personal injuries’ where it appears in the statutory policy of insurance, should be given the meaning which that phrase had, and was understood to have, when the Act was enacted in 1994. It is clear that the draftsman of the Act did not intend it to be any less efficacious or beneficial in meeting the social and economic problems which the MVIA addressed than that Act had been.
- Counsel for Concept sought support in the decision of Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Co Pty Ltd (2001) 53 NSWLR 626 in which the court was concerned inter alia with a claim for damages for economic loss suffered by reason of a breach of contract which had exposed the plaintiff to judgment in favour of a third party who sued for personal injuries. The court held that the claim for damages for breach of contract which was to recover the amount paid to the injured person was not a claim for ‘damages for personal injury’, so that a limitation period could not be extended as provided for by s 60G of the Limitation Act (NSW) 1969.
- The case is of no assistance. It deals with a different problem arising under a different statute. As Stein JA said (at 636):
‘Genders and State Government Insurance v Crittenden on the other hand are concerned with when “for” may be read as equivalent to “in respect of” accidental bodily injury. I do not see that these authorities assist in the present context. Section 60G is concerned with claims for damages “for” personal injury not “in respect of” personal injury.’
- I was also referred to Allianz Australia Ltd v Wentworthville Real Estate Pty Ltd [2004] NSWCA 100. In that case the first respondent managed a rental property owned by K. A tenant of the property sued K in negligence after he fell in the shower and cut himself on a glass screen. K joined the first respondent and the plaintiff’s claim was settled on the basis that K and the first respondent each paid half of the agreed damages. The first respondent then sought indemnity against its insurer, Allianz, which denied liability on the basis of an exclusion in the policy which stated that it would not indemnify the first respondent against claims for any actual bodily injury. It was held that the claim by the first respondent was one for indemnity against economic loss which had been suffered when it had settled K’s claim against it for contribution. The plaintiff’s claim against K was for bodily injury but K’s claim against the first respondent was not.
- The case, as far as it goes, assists Concept but the court’s approach to construing exclusion clauses in policies of insurance is well known. The decision which limited the effect of the exclusion does not assist in the construction of the admittedly identical phrase in the insuring clause of the statutory policy which has its particular legislative history.
- I was also referred to Regal Pearl Pty Ltd v Zurich Australian Insurance Ltd [2005] NSWSC 1055 and National Vulcan Engineering Insurance Group Ltd v Pentax Pty Ltd [2004] NSWCA 218 both of which concern the construction of policies of insurance containing promises of indemnity where a claim was made against an insured for personal injuries. The cases illustrate the usual difficulties in construing insurance policies and the textual considerations which, in a particular policy, will determine the meaning of a particular clause. They do not affect my conclusion as to the meaning of the statutory policy of motor vehicle insurance which has been settled for 40 years and which was arrived at in consequence of particular social and economic problems which the policy was meant to address.
- In the latter case Campbell AJA pointed out that cases which decide the meaning of a particular word or phrase in a particular contract are of little assistance in determining similar or even identical expressions in different contracts or statutes. The same point had been made by Lord Wright in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 130:
‘I deprecate in general the attempt to enunciate decisions on the construction of agreements as if they embodies rules of law. To some extent decisions on one contract may help by way of analogy and illustration in a decision of another contract. But however similar the contracts may appear, the decision as to each must depend on the consideration of the language of the particular contract, read in the light of the material circumstances of the parties in view of which the contract is made.’
- Accordingly I would construe the word ‘for’ where it appears in the policy as meaning ‘in respect of’. As I mentioned counsel for Concept accepted that if the policy bore that construction its claim against Gunnings would be one against which its own policy indemnified Gunnings. I accept the correctness of the concession. It appears to be supported by Genders and Brisbane Stevedoring. In Genders Menzies J said (387):
‘… While in some cases there may be good reason for confining the meaning of the general words “in respect of”, there is no reason for restricting their amplitude in a statutory provision that is clearly enough intended to secure comprehensive protection to drivers of motor vehicles, not only for their own good but for the benefit of those who are affected by the use of such vehicles.’
- It is worth pointing out that to achieve its desired result Concept had to choose the cause of action it pleaded against Gunnings with particular care. Had it claimed, as it might well have done, contribution under the provisions of the Law Reform Act 1995, as it could have without the inclusion of any further allegation of fact, its claim would have foundered because of the terms of cl 1(3)(b) of the policy. That makes a claim for contribution a claim to which the policy extends. Concept was obliged to find a cause of action to which the policy did not obviously extend. There is, I think, a degree of artifice in the manner in which Concept has framed its case. Moreover it is obvious that had the plaintiff prosecuted his action against Gunnings and/or if he had made Rex Andrews a defendant his claims against both, had they succeeded, would have been ones in respect of which both parties would have the benefit of the indemnity under RACQ’s statutory policy. They would both have been insured persons whose wrongful acts or omission gave rise to the plaintiff’s claim against them ‘for personal injuries’. Having indemnified them under its policy RACQ could not have exercised any rights of subrogation.
- Neither the Act nor the statutory policy should be construed in such a manner as to encourage such subtleties of pleading or to produce a result which depends in a particular case upon what parties a plaintiff chose to sue to judgment.
- One further claim must be considered. Rex Andrews sought indemnity from Allianz against any liability that might have been found against it on the claim by Gunnings, in the event that Gunnings had been found liable to Concept. There is no such liability and no need for Rex Andrews to seek indemnity in respect of it from Allianz. Nevertheless a residue of the claim survives. Rex Andrews points out that the success which my judgment has given it in the action will nevertheless have occasioned it a loss, being the difference between the costs it incurred in defending the third party proceedings and the costs it will recover assessed on the standard basis. Rex Andrews seeks to recover that amount pursuant to the policy of insurance issued by Allianz.
- The relevant part of the policy is found in Section 6 which provided ‘cover for (Rex Andrews) Public and Products liability’ and ‘includes defence costs in addition to indemnity.’ Section 6 of the policy was in two parts: one dealt with public liability and the other products liability. Rex Andrews relied only upon the indemnity given against products liability. One finds the terms of the indemnity in the ‘operative clause’ together with the ‘indemnity provision’ in s 6(2), and the definition of ‘products liability’. Reading these together one finds this formulation of the indemnity:
‘Allianz will indemnify Rex Andrews against its legal liability to pay compensation for injury neither expected nor intended from Rex Andrews’ standpoint, occurring during the period of insurance and within the territorial limits arising out of or in connection with Rex Andrews’ products or reliance upon a representation or warranty made at any time with respect thereto, but only if such injury occurs after physical possession by Rex Andrews of such products has been relinquished to others.’
- Allianz denies indemnity on the basis that the claim against Rex Andrews, had it succeeded, would not have given rise to a liability ‘to pay compensation for injury’. Injury was defined to mean ‘bodily injury’. The claim in fact made by Gunnings against Rex Andrews was for:
(i)Damages for breach of contract or breach of duty of care in the amount … awarded against Gunnings.
(ii)Indemnity against that liability or contribution pursuant to s 6(c) of the Law Reform Act 1995 in respect of that liability in such amount as the court may think fit.
(iii)Interest.
(iv)Costs.
- The contract was that of hire pursuant to which Rex Andrews supplied the jinker to Gunnings. The duty of care was ‘to take reasonable care in supplying the jinker trailers against risk of injury’. As I mentioned when dealing with Concept’s claims against Gunnings what was sought was damages for breach of contract or the negligent infliction of economic loss. The claim against Rex Andrews was not ‘for personal injury’. It was for economic loss or contribution arising consequentially upon Mr Royston’s injury and his claim against Concept for damages for personal injury. The distinction is recognised in the cases I earlier referred to in these reasons. Unsworth v Commissioner for Railways (1958) 101 CLR 73 decided that an action for contribution or indemnity was not an action for personal injuries.
- Rex Andrews seeks to meet these objections by submitting that the phrase ‘for injury’ means ‘in respect of injury’ and by reliance upon the decision in Regal Pearl.
- The first point can be quickly disposed of. ‘For’ does not usually mean ‘in respect of’. The circumstances which led to the word being given that extended meaning in Crittenden have no application here. Moreover in defining the scope of indemnity given in Section 6(1) of the policy, dealing with public liability, the larger phrase was used. The indemnity was against liability found against Rex Andrews ‘in respect of injury’. The draftsman of the policy has drawn a distinction, which appears to be deliberate, between the ambit of the indemnities. This militates against the wider construction.
- In Regal Pearl a restaurateur settled claims for personal injuries brought by customers who had eaten contaminated prawns. The restaurateur sought damages against the supplier of the prawns for breach of the warranty implied by the Sale of Goods Act that they be fit for consumption. The wholesaler claimed indemnity from its insurer which had issued a products liability policy by which Zurich had agreed to pay amounts which the insured might become ‘legally liable to pay in compensation for … personal injury’. The claim against the wholesaler was not, obviously, one for personal injury but one for damages for breach of contract, the measure of the damage being the amount paid to compensate the nauseated patrons. Nevertheless Cooper AJ thought that the insuring clause had a ‘much wider application than merely … indemnifying the insured only against personal injury …’ because of the circumstance that the indemnity was expressed to be for bodily injury ‘caused by or [arising] out of any of the insured’s products’ or that ‘happens in connection with your products’.
- In my respectful opinion this analysis is wrong. It confuses the circumstances of the event giving rise to a claim for indemnity with the nature of the claim which is the subject of the indemnity.
- The approach taken by Cooper AJ is incompatible with the approach taken by other courts dealing with similar clauses.
- I have already outlined the facts in Wentworthville Real Estate. It was held by the Court of Appeal that the claim against the real estate agent was not ‘for … actual bodily injury’.
- In National Vulcan a workman employed by the respondent (‘Pentax’) was injured on a building site controlled by the builder. The plaintiff had issued an insurance policy covering contractors and subcontractors (including both the builder and Pentax) in respect of defined liabilities. The workman sued both Pentax and the builder which settled the claim by sharing equally in the damages paid. Pentax was found liable to indemnify the builder pursuant to the contract between them. Pentax then sought indemnity from the insurer for the amount it had to pay the builder.
- The relevant insuring clause obliged Vulcan to indemnify Pentax against sums for which Pentax should ‘become legally obligated to pay for or in respect of … personal injury …’.
- Vulcan argued the liability of Pentax to the builder was not a sum which it had become legally liable to pay ‘for or in respect of personal injury’ but was one pursuant to a contractual obligation. Hodgson JA (with whom Handley JA agreed) found that Pentax’s liability for which it sought indemnity from the insurer was not ‘for personal injury’ but was ‘in respect of personal injury’. As the insuring clause included both bases for rendering the insurer liable, the policy extended to the claim.
- The cases show, as one would expect, that ‘for’ does not ordinarily mean ‘in respect of’. The latter phrase is of wider import and extends the ambit of liabilities an insured may suffer for which the insurer must give indemnity. Unless there are particular circumstances attendant upon the policy of insurance compelling that construction ‘for’ will not mean ‘in respect of’. There are no such indications in Allianz’ products liability policy. Indeed the contrast with the relevant clause in the public liability policy reinforces the view that ‘for’ means ‘for’.
- Rex Andrews has not made out its claim for indemnity under this part of the policy. It is common ground section 6(1) has no application. It follows that Rex Andrews has not made out its claim for relief against Allianz.
- Accordingly the claims and counter-claims of the parties should be adjudicated upon in the following manner:
(1)the claim by the second defendant against the third defendant, is dismissed and there should be judgment on that claim for the third defendant;
(2)the counter-claim by the third defendant against the second defendant for payment of an amount equal to the amount for which the third defendant was found liable to pay the second defendant is dismissed;
(3)the third defendant’s claim against the fourth defendant for a declaration that it indemnify the third defendant against the second defendant’s claim and for payment of an amount equal to any amount which the second defendant recovers against the third defendant is dismissed;
(4)the counter-claim by the third party against the second defendant for an indemnity pursuant to s 6(c) of the Law Reform Act 1995 against the third defendant’s claim against the third party, and for declarations that the second defendant’s action against the third defendant is not maintainable, is dismissed;
(5)the claim by the third defendant against the third party is dismissed and judgment is given for the third party in that proceeding;
(6)the third party’s counterclaim against the third defendant for indemnity pursuant to the Law Reform Act, and for declarations that the third defendant’s proceeding against the third party is not maintainable, is dismissed;
(7)the third party’s claim against the fourth defendant for an order that it indemnify the third party against its liability to the third defendant, and for declarations that the second defendant’s claim against the third defendant was not maintainable, is dismissed;
(8)the third party’s claim against the fourth party for indemnity pursuant to the policy of insurance issued by the fourth party be dismissed and there be judgment for the fourth party on that proceeding.
- I have not dealt with the claim made by the third party, which appears in para 19(b)(a) of the Further Amended Statement of Claim by the third party against the fourth defendant of 2 June 2006, which seeks damages for breach of the statutory policy of insurance in the sum of any costs which the third party incurred in the prosecution of its defences and claims in the action which are not met by an order for costs in its favour. The claim was mentioned in submissions but not advanced in detail and not responded to by the fourth defendant. It is best considered when questions of costs are argued.