Supreme Court New South Wales Medium Neutral Citation: PRITCHARD v TRIUS CONSTRUCTIONS PTY LIMITED & Ors [2011] NSWSC 749 Hearing dates: 4/7/2011, 5/7/2011, 6/7/ 2011, 7/7/ 2011 Decision date: 20 July 2011 Before: HOEBEN J Decision: Liability in tort apportioned 60 percent against Trius and 40 percent against Oceanic. Oceanic's claim in contract against Trius fails. Catchwords: TORT - negligence - workplace injury - employee of sub-contractor injured at colliery - responsibility of employer - responsibility of owner of colliery - apportionment of liability - CONTRACT - identifying terms of contract - what terms were implied in contract - whether implied terms breached - if breach of implied term whether damage too remote - whether standard terms and conditions of colliery owner formed part of contract - incorporation of terms in unsigned contract - indemnity clauses - whether sub-contractor required to indemnify owner of colliery - meaning of indemnity clauses. Legislation Cited: Law Reform (Miscellaneous Provisions) Act 1946 Workers Compensation Act 1987 Cases Cited: Andar Transport Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424 at [17] - [23] Atkinson v Gameco (NSW) Pty Limited [2005] NSWCA 338 at [19] Barrymores Pty Ltd v Harris Scarfe Ltd (Administrators Appointed) (Receivers and Managers Appointed) & Ors [2001] WASC 210 BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 Burke v Hassett & Ors (1999) 1VR 189 at [41] - [42] Byrne v Australian Airlines Limited (1995) HCA 24; (1995) 185 CLR 410 at 422 Chattis Nominees Pty Ltd v Norman Ross Homeworks Pty Ltd (Receiver Appointed) (in Liq) (NSWSC, unreported, Cohen J, 3 August 1992) Climax Management v Scansash [2002] NSWCA 167 Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 79 ALJR 839 at [12] Hardwick Game Farms v S.A.P.P.A. (1969) 2 AC 31 Eggleston v Marley Engineers Pty Limited and BK and JG Mewett (1970) 21 SASR 51 Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114 Florida Hotels Pty Limited v Mayo (1965) 113 CLR 588 at 598 Hawkins v Clayton (1988) HCA 15; (1988) 164 CLR 539 at 573 Hays Personnel Services (Australia) P/L v Motorline P/L [2008] QCA 375 Leighton Contractors Pty Limited v Fox [2009] HCA 35; (2009) 240 CLR 1 at [48] Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 said at 228-229 O'Connor v Commissioner of Government Transport (1965) 100 CLR 225 at 229-230 Oxley County Council v MacDonald & Ors; Brambles Holdings Limited v MacDonald & Ors [1999] NSWCA 126 Podrebersek v Australian Iron & Steel (1985) 59 ALJR 492 at [494] Remath Investments No 6 Pty Ltd v Chanel (Australia) Pty Ltd [1992] NSWCA 208 Sinclair v William Arnott Pty Limited (No 2) (1953) 64 SR (NSW) 88 at 91-2 per Walsh J Smith and Ors v South Wales Switchgear Limited [1978] 1 All ER 18 State of New South Wales v Tempo Services Ltd [2004] NSWCA 4 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52, (2004) 219 CLR 165 Wilson v Tyneside Window Cleaning Co (1958) 2 QC 110 at 121-2 per Pearce LJ Category: Principal judgment Parties: Terrence Stephen Pritchard - Plaintiff Trius Constructions Pty Limited - First Defendant Oceanic Coal Australia Pty Ltd - Second Defendant Oceanic Coal Australia Pty Ltd - Cross-Claimant Trius Constructions Pty Limited - Cross-Defendant Representation: Mr J Sleight - Cross-Claimant Mr D Lloyd - Cross-Defendant MRM Lawyers - Cross-Claimant Wotton & Kearney - Cross Defendant File Number(s): 2010/00064178 Judgment 1HIS HONOUR: Nature of proceedings The second defendant, Oceanic Coal Australia Pty Limited (Oceanic) owned and operated "The Macquarie Coal Preparation Plant" (MCPP) at Teralba in New South Wales. The plaintiff brought proceedings against Oceanic in negligence alleging that on 4 January 2007 he suffered injuries when a forklift controlled by an employee of Oceanic drove over his left leg. At the time the plaintiff was an employee of the first defendant, Trius Constructions Pty Limited (Trius). 2The claim by the plaintiff against Oceanic was settled. The plaintiff discontinued his proceedings against Trius. 3Oceanic brought a cross-claim against Trius. The cross-claim seeks contribution up to a full indemnity pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 and a contractual indemnity. The contractual indemnity is based on an implied term in the contract between them or alternatively, on an express term in the contract in the nature of an indemnity. 4Trius accepts that it has an obligation to contribute pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 but denies that it has any obligation in contract. It is common ground that any contribution by Trius, pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 is limited by s151Z of the Workers Compensation Act 1987. 5The matter before the Court is Oceanic's cross-claim against Trius. Factual background 6Except as otherwise indicated, I find the facts to be as follows: 7Oceanic conducted coal mines in the Newcastle area and was engaged in the mining and export of coal. It owned and operated the MCPP site at Teralba in New South Wales. 8Trius was a company primarily involved in the fabrication, construction and installation of steel products in the mining industry. It employed between 35 and 60 people, depending on the workload. Trius had had a commercial relationship with Oceanic since December 1997. Mr Brittain was a director of Trius and had been in that position since Trius was incorporated. 9In June 2006 George Muller, the engineering manager at Oceanic, telephoned Mr Brittain inviting him to quote for the replacement of a number of metal floor beams that had been rusted out at the Teralba plant. Mr Brittain inspected the work that was required to be done and quoted for it. He later typed up the quote and sent it to Mr Muller by email. Shortly after that Mr Muller telephoned and told him that Trius had the job. 10Mr Brittain provided a statement and gave evidence in the proceedings. While he could not remember the precise terms of the conversations which he had with Mr Muller, he said that he was given to understand that having been advised that Trius had the job, it was expected that Trius would commence work on the fabrication of the metal floor beams, even though their installation might not take place for some time. 11Mr Brittain could not remember exactly when Trius received a purchase order for that job from Oceanic but said that it usually took three or four days after notification for such a purchase order to arrive. He did, however, have a clear recollection that work had already commenced on the fabrication of the floor beams at the time when the purchase order arrived. 12There was an issue in the proceedings as to exactly how contracts were entered into between Oceanic and Trius. On that issue, Steven Claridge gave evidence. The evidence was in the form of a statement, which Mr Claridge adopted in the witness box. He was not cross-examined. Mr Claridge at the time he gave the statement was a commercial manager in the employ of Oceanic and had been employed in that capacity since October 1999. 13Mr Claridge's responsibility in Oceanic was for contracts and methods of contracting with contractors and subcontractors. In respect of large value contracts, Oceanic generated or negotiated a specific written contract. These were usually lengthy and complex documents and an example was annexed to his statement. 14In respect of "small contracts" Mr Claridge's evidence was as follows:- "5. For all small contracts and procurements, Oceanic Coal operates a purchase order system known as PULSE. Each purchase order details the name of the contractor, the services or goods to be procured, the purchase order number and (if necessary) the due date for delivery. 6. Each purchase order is then provided to the relevant contractor or subcontractor before work is commenced. The contractor or subcontractor then provides Oceanic Coal with a tax invoice for payment. The purchase order number is vital to the procurement and payment system of Oceanic Coal as it allows Oceanic Coal to track accounts and pay such accounts in a timely manner. It is Oceanic Coal's general practice not to pay invoices without a purchase order. 8. Since its inception in or about 2001, all purchase orders generated by Oceanic Coal using this system have contained a reference to terms and conditions in the bottom left hand corner. 9. The records maintained for the purpose of Oceanic Coal's business record that on about 21 June 2006 a purchase order was generated and issued to the first defendant for the fabrication and installation of L3CD67 metal beams at the Macquarie Coal Preparation Plant at Oceanic Coal. The purchase order number was PP319522. Attached and marked "B" is a true copy of that purchase order. 10. The records maintained for the purpose of Oceanic Coal's business record that this purchase order was generated in relation to certain shutdown maintenance operations being conducted by the first defendant at and around the preparation plant. 11. For the purposes of purchase orders Oceanic Coal and Xstrata Coal Australia Pty Limited (and its other subsidiaries) had developed general purchase order standard terms and conditions. 12. Attached and marked "C" is a true copy of the general purchase order standard terms and conditions in effect as at 21 June 2006. These general purchase order standard terms and conditions were also in effect as at 4 January 2007. 13. A copy of the general purchase order standard terms and conditions is available on request to contractors ... 16. The records maintained for the purpose of Oceanic Coal's business record that Trius had been receiving purchase orders from at least 23 June 2003. 17. Attached and marked "D" are true copies of all purchase orders sent to the first defendant since 23 June 2003 to 21 June 2006. ... 20. The terms and conditions in effect as at 21 June 2006 and 4 January 2007 were first introduced in 2003 and remained unchanged until 24 November 2008 when new terms and conditions were drafted." 15It was common ground that the following was set out in the bottom left hand corner of purchase order PP319533: " Terms and Conditions 1. Payment 30 days from the end of the month following invoice. 2. The above goods are supplied subject to the terms and conditions of Oceanic Coal Australia." This notation was in small print and did not occupy a prominent position on the purchase order. This can be seen from a copy of purchase order PP319533, which is annexed to this judgment. The purchase order which was received by Trius was signed by Mr Mitchell on behalf of Oceanic. 16Annexure "C" to the statement of Mr Claridge was headed: "Oceanic Coal Australia Limited General Purchase Order Terms and Conditions for West Wallsend Colliery Killingworth NSW Regional Office Killingworth NSW Westside Mine Killingworth NSW Macquarie Coal Prep Plant Teralba NSW Teralba Colliery Teralba NSW" 17The General Purchase Order Terms and Conditions comprised just over four pages of small type with the following headings: "1. Supply of goods and/or services 2. Conditions as to quality and description of goods and/or services 3. Delivery 4. Inspection and acceptance 5. Performance of the services 6. Title and risk 7. Price 8. Invoicing and payment 9. Termination 10. Independent contractor 11. Warranties 12. Insurance 13. Liability and indemnities 14. Confidentiality 15. Taxes 16. Assignment and subcontracting 17. These terms are exclusive 18. Other matters 19. Governing law" Thereafter words and phrases, used in the document, were defined. Each of the headings had a number of subparagraphs set out beneath it. 18The following parts of that document were relied upon by Oceanic in the proceedings as express terms incorporated into the agreement between it and Trius. "2.5 The services must be performed by appropriately qualified and trained personnel and must be rendered with due care and skill. ... 5.1 You must, in performing the services: ... (b) comply with, and ensure that your employees, agents, contractors and subcontractors comply with: ... (ii) all safety, health environment guidelines, rules and procedures provided to you by us; and (iii) all directions and orders given by our representatives; ... 13.1 We will not be liable to you (whether in tort or in contract) for or in respect of any loss or damage of any kind whatsoever arising directly or indirectly from any act or omission (whether negligent or otherwise) on our part or on the part of any of our employees, agents, contractors and/or subcontractors in connection with or relating to this agreement. 13.2 You acknowledge that if you enter our premises, you do so at your own risk. You must ensure that your employees, agents, contractors and subcontractors are also aware that they enter our premises at their own risk. 13.3 You will be liable for and will indemnify us and keep us indemnified from and against any liability and/or any loss or damage of any kind whatsoever, arising directly or indirectly from: (a) any breach of any warranty or any of the terms and conditions of this agreement by you; (b) the illness, injury or death of any of your employees, agents, contractors and/or subcontractors arising out of or in connection with this agreement; (c) any loss or damage arising out of, or in connection with, any personal injury, illness or death to any person or damage to any property or any other loss or damage of any kind whatsoever caused or contributed to by: (i) the goods and/or services; and/or (ii) the entry onto, and the activities undertaken on and in, our premises by you and/or your employees, agents, contractors and/or subcontractors; (d) any negligence or wilful act or omission by you and/or any of your employees, agents, contractors and/or subcontractors in connection with this agreement; (e) any claim made against us by any of your employees, agents, contractors and/or subcontractors in respect of any relevant legislation concerning income tax, workers compensation, annual leave, long service leave, superannuation or any applicable award, determination or agreement of a competent industrial tribunal; (f) any penalty imposed for breach of an applicable law in connection with the supply of the goods and/or performance of the services by you; (g) loss of damage to any plant, equipment, tools, appliances or other property owned, rented or hired by you and used in relation to this agreement; and (h) any claim that the goods, the services or the results of the services, anything you do in supplying us with the goods and/or the services, or our use of the goods or the results of the services infringes or allegedly infringes the intellectual property rights of any person." 19Mr Brittain's description of how contractual arrangements were actually entered into between Trius and Oceanic differed somewhat from the description given by Mr Claridge. "Q. ... Now, as I understand it the evidence will be that before this quote was given, before you gave this quote in June 2006 in the previous year you did about 150 jobs. I'm sorry, since 2004 up until the quote in June 2006 you did approximately 150 jobs for Oceanic, does that sound about right? A. That could be the count. Some jobs are as little as $200, some are as big as 500,000. We did a range of jobs, ranging from two to $300 to $500,000 and there could have been on any given day, like on a shut down day we might have done 15 jobs on that day all worth about, you know, about $500, but that is classed as 15 different jobs. So that is how you get 150 jobs. Q. And in respect of the system or the procedure adopted for the documentary procedure in each case would you give a written quote or would you give a quote - A. A lot of the times on smaller jobs we would probably do the work before we give him a quote and then we would give him the price of the job then he would give us a purchase order afterwards so we could claim it. That doesn't happen any more. They have stopped all that. You need a purchase order before you do any work there now." (T.20.4) "Q. When you received this purchase order, it was then you went ahead and fabricated the beams; is that correct? A. We actually started fabricating before we had the purchase order. ... Q. ... How did you know you commenced the fabrication of these beams before you got the purchase order? A. Because we started the day he rang us. He rang me in the morning and said, "You've got the job", and we started it because it was a job that had to be done and we wanted to do it in the next shutdown period." (T.30.1) ... "A. Well, what had happened, we were already doing beams around this same area. He sent me a drawing to say we've just decided we need to do these beams as well because they're rusted as well, how much are they going to be, and I'll get them started on it. So I did a quote, sent it back to him. Later on that afternoon he said, "Go ahead with it." ... "Q. You can't remember whether you received the purchase order before or after you commenced fabrication of the beams? A. No, I know for a fact I would have started fabricating before because I if started fabricating the day after the quote, and purchase orders take at least three to four days to come. " (T.31.14) 20In relation to the terms and conditions of the contract, Mr Brittain's evidence is to be found in his statement and in his evidence in cross-examination. "14. When I received Oceanic's purchase order for the work in June 2006 the only terms and conditions on the purchase order were listed in the bottom left hand corner. I was not aware when Trius agreed to undertake the work that there were any other terms and conditions apart from those printed on the purchase order. Further, no-one at Oceanic ever mentioned to me or, as far as I am aware, to anyone else at Trius the existence of terms and conditions in addition to those printed on the purchase order when Trius agreed to undertake the work. Similarly no-one at Oceanic ever took any steps to bring any terms and conditions in addition to those printed on the purchase order to the attention of me or, as far as I am aware, of anyone else at Trius when Trius agreed to undertake the work. ... 16. If I had known of the existence of the terms and conditions that Oceanic now allege form part of the purchase order when Trius agreed to undertake the work at the MCPP, I would have taken those terms and conditions to our usual solicitors in order to review and advise on. This was Trius's usual practice when undertaking work pursuant to a written contract and it was done with a view to ensuring that all necessary insurance was put in place before undertaking the work." "Q. And in that case when they gave you, they gave you a document which included the scope of work that had to be done, is that right? A. Yes, correct. Q. Did that have any terms and conditions contained in it? A. Off the top of my head I can't remember, that was a few years ago. But if there were any terms and conditions in the written contract we would have given that to our solicitors to advise us on anything that we needed to seek changing or any further insurances we needed." (T.19.34) ... "Q. And subsequent to that you say a purchase order was faxed to you. Is that correct? A. After the quote, yeah. Q. Do you remember seeing the purchase order? A. Probably would have went straight into the job file. Q. So the answer to my question is no, you don't remember seeing a purchase order? A. That's correct. Q. When you look at the purchase order now, it's similar to hundreds of purchase orders you've previously received, isn't it? A. Yes. Q. And when you have received previous purchase orders have you ever read what's on the purchase order, apart from just checking the items and the price? A. No, not really, not that I can remember. Q. So all you really do when you receive a purchase order is to check the items and the price and file it away? A. Yeah. Well, I usually start the job and then we get the purchase order. When the purchase order arrives the secretary usually puts it in the job file." (T.31.20) "Q. Do you remember you were asked about whether in relation to any prior tenders with Oceanic Coal you had ever been given terms and conditions? Do you remember that question being asked of you? A. I do, yes. Q. And do you remember saying to his Honour that you don't remember, but if you had received terms and conditions in that way you would have given them to your solicitor? A. Correct. Q. Do you have any recollection of ever giving terms and conditions to your solicitor? A. I don't have any recollections before the incident, no, not from Oceanic. I may have, I don't know. I just cannot remember." (T.33.23) 21I found Mr Brittain to be a truthful and reliable witness who was doing his best to assist the Court. I found his evidence more helpful as to how small contracts were negotiated with Oceanic than the rather theoretical process described by Mr Claridge. I find that the small contracts between Trius and Oceanic were negotiated in the way described by Mr Brittain with the purchase order often arriving after work had been commenced and on occasions after the job had been completed. 22Mr Brittain explained that some delay occurred before the metal beams could be placed into position. "A. Because we were trying to do it a lot earlier than we did the job on site. He wanted us to get under way and get the fabrication started so we could get it in on the next plant shutdown, which didn't happen because they had to shut down a couple of days beforehand because they ran out of coal, so it got put off for a couple of months. " (T.30.11) In fact the installation of the beams did not commence until the day of the accident on 4 January 2007 which was an occasion when the MCPP was being shut down. 23On the day of the accident there were two Trius employees at the MCPP, Mr Barnes and the plaintiff. Mr Barnes had been employed by Trius as a supervisor for about 12 months. He was a qualified boilermaker, had a licence to operate a forklift and had a certificate to work as a dogman. By 4 January 2007 he had been working at the MCPP continuously for about six months. The plaintiff was also a qualified boilermaker and had been employed by Trius since August 1999. He had worked at the MCPP on many previous occasions. This, however, was his first day back at the MCPP after an absence. Both men had completed the Oceanic safety induction course. 24Because no specific work had been allocated to them, Mr Barnes decided that it would be opportune to move the fabricated metal floor beams to where they could be placed in position. As Mr Barnes put it: "A. Oh, it was probably just a job that we could do if we had nothing else to do." (T.44.16) 25There was some dispute as to the dimensions of the beams. Mr Barnes described them as being 5 metres in length and weighing 200 kgs. The plaintiff said they were between 3.5 and 4 metres in length and weighed about 50 kgs. 26The beams had been stored at the MCPP for some time. It was necessary for them to be transported to a lifting bay so that an overhead crane could then take them to where they were to be installed. The lifting bay was inside the washery and it was necessary for the beams to be transported through a doorway into the washery so that they could be positioned in the lifting bay. 27Because there was no other suitable lifting equipment available, Mr Barnes decided to use a forklift in order to transport the metal beams through the door of the washery and into the lifting bay. The forklift was owned by Oceanic and operated by an employee of Oceanic. Trius employees were not allowed to operate any of the forklifts on site. 28Mr Barnes requested from Oceanic the use of a forklift and driver and these were provided to him. He did not explain to Oceanic the purpose for which he required the forklift. The forklift which he obtained was an industrial forklift, capable of lifting about 5 tonnes. It had six wheels, two on each side at the front, and one on each side at the back. The driver sat to the left hand side of the forklift in an enclosed cabin. A photograph (page 62 of exhibit 3) was tendered and it is clear that the forklift was a large piece of plant and should not be confused with the small forklifts one conventionally sees in warehouses. 29In his statement, Mr Barnes described the system which he devised for the movement of the beams as follows: "9. ... Neil Buckley was driving the forklift for me and I was slinging the load. Terry was away cleaning the hut. Neil and I were carrying beams from the yard into the washery to the crane bay. The beams were about 5 metres long and would have weighed about 200 kilos. We moved 3 beams into the crane bay and I was about to sling the fourth one with a web sling across the one tyne and in the middle of the beam. The beams were slung this way because it was wider than the doorway into the washery. Once it was lifted up by the forklift and was off the ground I was able to turn it manually to face longways so it would go through the doorway and it was slung so it hung out the front of the forklift and on an angle down the right hand side of the forklift ending at about the front of the forklift. The distance from where the beams were being picked up to the entrance to the washery was about 15 metres. 10. The beams were stacked under the gantry and after they were picked up the fork backed across the road and then turned onto the road and drove up the road very slowly. I turned the beam longways and Neil drove towards the doorway at the end of the washery. We had as I said moved three beams in this manner with no problems. I had been walking at the front of the beam and in plain sight of Neil as he was driving." 30In his oral evidence, Mr Barnes described the process in this way: "Q. So you decided it would be easier to sling it under the left-hand tine? A. Yes. Q. And you showed me with your hand that you could control it then if you slung it in the middle, is that right? A. That's correct. Q. If you slung it under the left-hand fork of the tine, which end of the beam did you control? A. The one furthest from the machine. Q. Which is the left-hand side, is that right? A. Yes, it would be. Q. Why the one furthest from the machine? A. Because that's what you're taught to do, stay away from the machine. Q. That's what you are always - A. Taught to do. Q. Who taught you to do that? A. Just everybody wherever you do training, blokes on the job. Q. Training as a dogman? A. Rigger, dogman, whatever, stay away from the machine. You always go from the furthest point from the machine as possible." (T.50.41) 31Mr Barnes used hand signals to direct Mr Buckley, who was the driver of the forklift. At all times he could see the driver and the driver could see him. When the beam reached the lifting bay, it was lowered onto dunnage to make it easier to place another sling onto it so that it could be raised in due course by the overhead crane. 32When the plaintiff arrived at the plant, Mr Barnes directed him to clean up the Trius lunch/staffroom which was on the Oceanic site. This was his first job of the day. When that job was finished, he was directed to set out the Trius equipment so it could be inspected by a fitter employed by Oceanic. One of the Oceanic protocols was that the equipment of subcontractors had to be inspected and tagged every three months. 33As the plaintiff was completing this task, Mr Barnes called out to him and requested that he assist in placing some dunnage under the fourth metal beam. 34In his statement, the plaintiff described what happened thereafter as follows: "17. I saw that Warren was in the process of lifting one of the metal unibeams so that he could run a cloth sling under it that was suspended from a single tyne of a forklift truck. Each unibeam is about 3.5 to 4 metres long and weighs about 50 kgs. I could see that a number of the beams had already been moved into the plant. The beams were placed in a row outside the preparation plant near trestles which supported the coal conveyer belt. The beams had to be transported through the plant to a crane which was fixed in position to lift them into the plant. The crane could only pick up the beams from that location because of the location of a mezzanine level in the plant. 18. I inserted the dunnage under the beam and Warren then wrapped the sling around the beam. I started to help Warren tie the sling up when Warren's phone rang. Warren answered the phone and walked away from the forklift truck. I was not given any instruction from Warren or anyone else as to what to do next. 19. The forklift driver reversed the truck backwards turning to the right so that he could drive around the trestles (which were on his right hand side) and towards the door to the preparation plant. I walked through the trestles and met the forklift at the preparation plant door. 20. The door was only about three metres wide so one end of the beam had to be swung into the middle so it would fit through. I stood at the right hand side of the forklift and pushed the rear end of the beam into the middle lightly so it would swing into the centre allowing the forklift truck driver to move through the door. The beam was carried by the forklift at approximately waist height. There was no dogging line attached to the beam and so I had to move it by hand. 21. I was given no instruction on what to do. 22. I walked along the side of the forklift as it drove the beam through the doors. The forklift truck driver sits on the left hand side of the truck. I couldn't see the driver from the position that I was in. The beam then swung back out a little and I had to push it in again to avoid some barrels that were on the left hand side of the plant. I only used a little push at a time. 23. Something grabbed the back of my left foot. I was pulled under the forklift. I ended up directly in front of the forklift facing back looking at the front right wheels seeing my left leg under the wheels, screaming in pain and for the forklift driver to stop the forklift as I was directly in the path of the forklift." 35Mr Barnes in his statement described what happened as follows: "11. As I came back to sling the fourth beam my mobile rang and I can't remember who slung the beam Terry or me but I'm pretty sure it was Terry. I walked away from the forklift so I could hear what was being said on my phone. I did not see what Terry did after that and I don't know which end of the beam he was at or what he was doing. When I finished talking on the phone I walked to my "gang box" which is located at the side of the washery outside the doorway. Mick Allibon was there and I was speaking to him about what was going to be happening the next day. He is responsible for tagging equipment brought onto site. 12. While I was speaking to him I heard a scream ...". 36Under cross-examination the evidence of Mr Barnes was: "Q. In any event, he was there helping you and then your phone rang; is that right? A. Yes. Q. And at that stage when your phone rang you knew that he hadn't seen what you had been doing previously, had he? A. Don't know. Q. As far as you were aware you hadn't taken him around on a previous run of dropping these beams off, had you? A. No, but it's an ongoing task. We had done it before. Q. I appreciate that, but you hadn't been showing him what you had been doing? A. On that day I hadn't shown him, no. Q. When your phone rang on this fourth occasion had you actually slung the beam or not? A. Not sure. Q. You could have done, you might not have done? A. May have done, may not have. Q. At the time you were slinging the beam your phone rang? A. Yes. Q. And you went off to answer it? A. Yes. Q. Did you tell Mr Pritchard to stop the job and wait for you to come back? A. No. Q. You just went off and answered your phone; is that correct? A. That's correct. Q. And as far as you're aware the job carried on whilst you were talking on the phone? A. Yes. " (T.53.47) 37The plaintiff suffered a serious injury to his left leg. As a result of that injury, it was amputated below the knee on 8 February 2007. The plaintiff has been unable to work since that date. He was aged 61 at the time of the accident. 38The claim by the plaintiff against Oceanic was settled for $850,000 inclusive of costs. The Court was not told how much of that figure comprised costs. As between the parties it was agreed that had the plaintiff's damages been assessed pursuant to Part 5 of the Workers Compensation Act 1987 they would have amounted to $130,000. It was necessary for the parties to agree on that figure so that in due course the calculation under s151Z of that Act could be made. 39At page 90 of exhibit 3 there is a handwritten statement from the forklift driver, Mr Buckley. It does not provide any further information as to how the accident occurred. 40Following the accident, Oceanic commissioned a report from Forkpro, an organisation with experience and expertise in the movement and control of industrial equipment such as forklifts on work sites. The purpose of the investigation was described in the following terms: "Forkpro Australia was requested by RED Australia Newcastle Branch to undertake a review of Industrial Traffic Management and other Mobile Plant Equipment activities at the West Wallsend Colliery at Boundary Road, West Wallsend NSW. The review was to examine practices mainly surrounding the use of forklift lifting attachments. The request was as a result of an accident which occurred on 4.1.07." 41One recommendation made in the report was that there be pedestrian exclusion zones around large pieces of plant such as industrial forklifts. The report concluded that physical separation was the most effective way of reducing the possibility of a collision. The report also recommended that an Industrial Traffic Management plan be developed which would set out precautions to be observed by forklift drivers when operating near to pedestrians. 42The report identified the position of the injured person as contributing to the accident. The report emphasised that the injured party should not have been in a location close to the wheel of the forklift. 43Even before the report from Forkpro, Oceanic had implemented the following additional precautions following the accident: * Safe zone of 3 metres to be maintained at all times when a forklift is in motion, i.e. the body of the forklift must not be moved if any employees are within 3 metres. * The forklift operator is responsible for the enforcement of the "safety zone". * When working as a spotter you must where possible remain on the driver's side of the forklift (exhibit 3, p 108). Submissions and consideration Whether Oceanic and Trius were joint tortfeasors and if so how should their liability be apportioned. 44Each party sought to apportion most of the tortious liability against the other. Implicit in the submissions was that each party through its negligence had contributed to the plaintiff's injuries. 45The liability of Trius is clear. It was the plaintiff's employer. It had an obligation to exercise reasonable care for the safety of the plaintiff while he was carrying out the work allocated to him. That obligation included warning him of unusual or unexpected risks and instructing him in the performance of his work where instructions might reasonably be thought to be required to secure him from danger of injury ( O'Connor v Commissioner of Government Transport (1965) 100 CLR 225 at 229-230). That duty was non delegable and could not be passed on to Oceanic. 46The fact that the plaintiff was performing work at premises controlled by Oceanic did not relieve Trius of its obligations to him. In Burke v Hassett & Ors (1999) 1VR 189 at [41] - [42], a passage approved by the NSW Court of Appeal in Atkinson v Gameco (NSW) Pty Limited [2005] NSWCA 338 at [19] the Court said: "41 ... True it is that, where an employer sends his employee to work at or in premises occupied or controlled by another ... occupation and control by another person may be a relevant fact in considering whether the employer has been in breach of his own independent duty to the employee. But the fact that the employee's work is required to be done on premises of another does not absolve the employer of his duty. Its impact upon whether he has breached his duty will depend upon all the circumstances. As Lord Denning said in Smith v Austin Lifts Limited (1959) 1WLR 100: "Notwithstanding what was said in Taylor v Simms and Simms (1942) 167 LT 414, it has been held, I think rightly, that employers who send their workmen to work on the premises of others cannot renounce all responsibility for their safety. The employer still has an overriding duty to take reasonable care not to expose their men to unnecessary risks. They must, for instance, take reasonable care to devise a safe system of work. ... and, if they know or ought to know of a danger on the premises to which they send their men, they ought to take reasonable care to safeguard them from it. What is reasonable care depends of course on the circumstances ..."" (See also Wilson v Tyneside Window Cleaning Co (1958) 2 QC 110 at 121-2 per Pearce LJ; Sinclair v William Arnott Pty Limited (No 2) (1953) 64 SR (NSW) 88 at 91-2 per Walsh J.) "42 One can conceive of a multitude of circumstances where workmen are sent to work upon premises controlled by others in which the impact upon the discharge of the employer's duty will vary. It will depend no doubt upon such matters as the employer's opportunity to inspect the premises, the length of time the employer has put his employees to work on the premises, the awareness of the employer of the danger, his capacity to shield his employees from the danger and various other factors." 47Similarly, in Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 79 ALJR 839 at [12] the Court said: "12 ... An employer owes a non-delegable duty of care to its employees to take reasonable care to avoid exposing them to unnecessary risks of injury. If there is a real risk of an injury to an employee in the performance of a task in a workplace, the employer must take reasonable care to avoid the risk by devising a method of operation for the performance of the task that eliminates the risk, or by the provision of adequate safeguards. The employer must take into account the possibility of thoughtlessness, or inadvertence, or carelessness, particularly in a case of repetitive work. ... 14 ... The case for the appellant was not that he should have been warned by his employer that if he fell off the truck he might suffer injury, or that if he stepped off the back of the truck into space he would fall. It was not a question of warning the appellant of a risk. It was a question of creating a risk by failing to adopt a safe system of work. 15 There should have been in place a system of work designed to avoid the risk that a person required to step backwards and forwards on and from a moveable platform might do so without first looking behind him. The system of work necessarily had also to take into account that the task was a repetitive one to be performed in a diminishing space. Proper account of these matters was not taken by the respondent. It did no more than require that the appellant and Mr Fendick load the truck." 48Those same principles apply in relation to the conduct of Trius through its supervisor Mr Barnes. Mr Barnes set up the system of work. While the system of work may have been safe for Mr Barnes, who had worked as a dogman and who had implemented the system on three previous occasions when metal beams were moved into position, it was not necessarily so for the plaintiff. He had not worked as a dogman and his evidence made it clear that he had not worked with a forklift being used as a crane on a previous occasion. He had not observed Mr Barnes when the three metal beams had previously been moved. 49At the very least, Mr Barnes should have explained the system of work which he had devised and should have pointed out the need to position himself as far away from the forklift as he could, i.e. at the far end of the beam being transported. 50The vicarious liability of Trius for the conduct of Mr Barnes goes further. Rather than arranging for an orderly handover of his function in walking in front of the forklift and guiding the beam, Mr Barnes simply walked away to answer his phone. There was no attempt to co-ordinate the activities of the plaintiff with those of the forklift driver. What the plaintiff was obliged to do was unexpectedly, without any instruction, without having seen the way in which Mr Barnes had previously carried out the task, do his best to manoeuvre the beam through the door. The liability of Trius for the conduct of Mr Barnes is clear. The culpability of Mr Barnes in the circumstances of this case was high and his negligence made a significant contribution to the occurrence of the accident. 51This is not to say that the liability of Oceanic for this accident was insignificant. It was not. Oceanic's liability was twofold. It was vicariously liable for the actions of Mr Buckley, the driver of the forklift, who was its employee. It also had a liability based on its own responsibility to set up a system of work whereby industrial forklifts of this kind could operate safely with other workmen who were pedestrians. In that regard, it is trite law that Oceanic as the occupier of the site owed a duty to persons coming onto it to use reasonable care to avoid physical injury to them ( Leighton Contractors Pty Limited v Fox [2009] HCA 35; (2009) 240 CLR 1 at [48]). 52Mr Buckley was operating a large piece of equipment in circumstances where his view to his right was obscured because his cabin was located on the left side of the vehicle. From the fact that the plaintiff was unable to see Mr Buckley when he was walking next to the forklift on its right side at the rear of the beam, I can readily infer that Mr Buckley could not see the plaintiff. It is clear that Mr Buckley should not have continued to operate the forklift in circumstances where he could not see the plaintiff, yet knew that the plaintiff must be positioned close to the forklift because the plaintiff had moved the beam in such a way as to enable it to pass through the door. By way of contrast, when Mr Barnes was acting as dogman, he had been positioned to the left front of the forklift at the far end of the beam in the clear sight of Mr Buckley. 53What is also clear from the actions of Mr Buckley and from the post-accident steps taken by Oceanic, was that before the accident Oceanic did not have in place any protocol or procedures for the safe operation of these large forklifts when working with persons who were on foot. This is not an assessment made in hindsight. Placing oneself in the position of Oceanic, and carrying out a risk assessment, as was the usual practice before undertaking a work task at the MCPP, it should have been clear to Oceanic that some protocols needed to be in place when large forklifts worked with persons who were on foot and that in such circumstances it needed to be made clear who was in charge, i.e. the operator of the forklift or a workman on foot. 54Both these failures contributed to the occurrence of the accident. Both failures involved a significant level of culpability. 55In apportioning liability between Oceanic and Trius, I have to make an assessment in accordance with the guidance of the High Court in Podrebersek v Australian Iron & Steel (1985) 59 ALJR 492 at [494] where their Honours said: "The making of an apportionment is between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie the degree of departure from the standard of care of the reasonable man ( Pennington v Norris (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Limited (1953) AC 633 at 682; Smith v McIntyre (1958) Tas SR 36 at 42-49 and Broadhurst v Millman (1976) VR 208 at 219 and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination." 56Applying those principles, it seems to me that the level of culpability and causal contribution on the part of Trius as the plaintiff's employer was greater than that of Oceanic as the occupier and controller of the forklift. I would apportion liability as to 60 percent against Trius and as to 40 percent against Oceanic. THE CONTRACT BETWEEN TRIUS and OCEANIC Implied terms 57Oceanic sought to rely upon 14 implied terms which were set out in its Amended Cross-Claim. It pleaded that these terms were to be implied in the contract with Trius to give it reasonable or effective operation. 58In submissions, however, Oceanic reduced the implied terms upon which it sought to rely to the following: (i) That Trius would adopt a safe system of work for its own employees. (ii) That Trius would only undertake the contracted task with qualified personnel. (iii) That Trius would discharge its contractual obligations with reasonable care and skill when on the property of Oceanic. 59Oceanic put the proposition in its written submissions as follows: "55 In the case of the contractor on site who implements a system of work incorporating the actions of the occupier's employees, the contractor has an implied contractual obligation to ensure that a safe system of work is adopted. This includes the adequate instruction of its employees or the provision of employees with adequate experience and/or training or direction so as to ensure that those employees are competent to complete the required tasks in a safe manner. 56 It is within the contemplation of the parties in such a combined effort that the failure to implement such a safe system may expose all workers to injury particularly from the casual act of negligence of a worker for whose negligence the employer of the worker will be liable." 60Oceanic submitted that these propositions flowed naturally from the reasoning in Florida Hotels Pty Limited v Mayo (1965) 113 CLR 588 at 598 and Climax Management v Scansash [2002] NSWCA 167. 61On the facts of this case it is correct to characterise Trius as the service provider and Oceanic as the recipient of those services. In those circumstances, I would accept that Trius had an implied obligation in contract to carry out its contractual obligations with reasonable care and skill. Included in the fulfilment of that implied term would be the adoption of a safe system of work. If in the discharge of its contractual obligations, by using an unsafe system of work, damage were caused to property of Oceanic or injury to an employee of Oceanic, I would accept that the implied term had been breached. 62Where I have difficulty is in extending the obligations in the implied term to the provision of a safe system of work by Trius for its own employees. I have difficulty in finding as a matter of fact that the parties' intentions as manifested by the contract, taken in its surrounding circumstances, support the implication of such a term. In that regard, the tests set out in BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 at 282-3 are apposite. "... for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 63A similar test is that proposed by Deane J in Hawkins v Clayton (1988) HCA 15; (1988) 164 CLR 539 at 573 which was endorsed by the majority in Byrne v Australian Airlines Limited (1995) HCA 24; (1995) 185 CLR 410 at 422: "In a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties." 64Applying those tests to this case, I do not think it can be said that the implication of such a term was required for the "reasonable or effective operation" of the contract. The substance of the agreement was the fabrication of the steel beams and their installation at Oceanic's premises. It could be carried out perfectly well in the absence of any term requiring Trius to take care for the safety of its own workmen. Conceptually, the fact that Trius had a non-delegable duty to exercise reasonable care for the safety of the plaintiff imposed by operation of law is a different matter to the implication of a contractual term to that effect in a commercial agreement between it and Oceanic for the performance of work by it on Oceanic's premises. 65Put another way, the term sought to be implied by Oceanic fails the test of obviousness. If one asked whether, had Trius directed its mind to the question, it would have consented to the inclusion of such a term, the response would have been in the negative. Trius as the employer of the plaintiff may in that capacity have expected to take reasonable care for his safety while he was on Oceanic's premises, but it does not follow that it would have expected to be contractually bound to Oceanic to take that care. I have concluded that such a term, i.e. that Trius would discharge its contractual obligations with reasonable care and skill, which included the obligation to adopt a safe system of work for its own employees, should not be implied into the agreement between it and Oceanic. 66If I am wrong in that conclusion, it is clear from the analysis of Sheller JA (with whom Priestley and Powell JJA agreed) in Oxley County Council v MacDonald & Ors; Brambles Holdings Limited v MacDonald & Ors [1999] NSWCA 126 that any damages flowing from the breach of such an implied term are too remote to be recovered by Oceanic. 67In that case, Oxley County Council (Oxley) and Brambles Holdings Limited (Brambles) were found to be jointly liable in tort to an employee of Oxley who was injured when he was assisting to unload a truck. Oxley had contracted with Brambles for Brambles to transport equipment to the place where the employee assisted in its unloading. The Court found that the contract for carriage between Oxley and Brambles contained an implied term that Brambles would load, secure and transport the goods with reasonable care and skill so that the goods could be unloaded in a safe and proper manner without presenting a risk of injury to the employees who were to assist in the unloading. 68On Bramble's contractual obligations to Oxley and with respect to any contractual obligation owed by Oxley to Brambles, the Court said: "67 ... Brambles' obligation to Oxley flowed from a promise voluntarily made for good consideration. In the absence of some contractual stipulation to the contrary, there is no reason of justice or sound legal policy which should prevent Oxley recovering for all the damage that is causally connected to Brambles' breach of contract even though Oxley's conduct contributed to the damage which it suffered. By its own voluntary act, Brambles accepted an obligation to load and secure the goods with reasonable care and skill so that they could be unloaded in a safe and proper manner at the Oxley depot, without presenting a risk of injury to Oxley's employees there to assist in the unloading, and to pay damages for any loss or damage flowing from a breach of that obligation. ( Astley v Austrust 73 ALJR at 423 para 86; (1999) 197 CLR 1 at [86]). ... 69 Brambles' claim in contract is not so clear. It was obliged to carry the goods to the Oxley depot and there deliver them on its truck. Oxley had the obligation of unloading. No doubt it was contractually obliged to do so so as not to damage Brambles' property or injure Brambles' employee or contractor. But the damages for breach of the contract which Brambles now claims to recover, being the amount of its liability to the plaintiff, were, in my opinion, too remote. I say this for the following reasons. The degree of probability that Oxley's breach of the contract would cause Brambles to suffer loss as the result of a claim against it by an employee of Oxley for injuries suffered was such as to make the loss wholly unpredictable; see generally Greig & Davis, The Law of Contract, at 1376. In my opinion, damages for the loss which Oxley suffered as a result of the injury to its employee and its liability as employer to that employee could fairly and reasonably be considered to arise according to the usual course of things from Brambles' breach of its contractual obligation to load and secure the goods with reasonable care and skill. However, I do not think that the possibility of Brambles' liability to Oxley's employee flowing from the consequence of Oxley's failure to unload the goods with reasonable care and skill could fairly and reasonably be considered to arise according to the usual course of things; compare Florida Hotels v Mayo at 598. Nor do I think such damages could reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as not unlikely to occur; compare Hadley v Baxendale (1854) 9 Ex 341 at 355; 156 ER 145 at 151; Koufos v C Czarnikow Limited [1969] 1 AC 350 at 388; Alexander v Cambridge Credit Corporation (1987) 9 NSWLR 310 at 363 and following per McHugh JA." 69It follows from that analysis that even if such a term were to be implied in the contract between Oceanic and Trius, Oceanic's entitlement to damages on the basis of the Oxley County Council case would be regarded as too remote. 70In relation to the term sought to be implied that Trius would only undertake the task with qualified personnel, the facts do not support a breach of any such term. Mr Barnes and the plaintiff were qualified to carry out the contracted task. The injury occurred not because of lack of qualification but because of a failure to properly supervise and the implementation of an unsafe system of work. Incorporation of terms by reference and the course of dealing 71Oceanic submits that either by reference to the notation on the purchase order (see [15] hereof), and/or by reference to the course of dealing between it and Trius since 2001, the terms and conditions in annexure C to the statement of Mr Claridge became express terms in the contract for the fabrication and supply of the metal beams. Oceanic carries the burden of establishing that fact. 72In order to consider that submission, it is necessary to revisit the evidence relating to the formation of the contract. 73The evidence of Mr Brittain that Trius had been performing work for Oceanic since 1997 was unchallenged. I have already found that Mr Brittain's evidence as to how contracts were entered into between Trius and Oceanic is to be preferred to that of Mr Claridge, i.e. that in many cases work was commenced before the receipt of a purchase order and in some cases, work was completed before such a document arrived. Mr Claridge had been responsible for the letting of contracts by Oceanic since October 1999. His evidence was that from 2001 in relation to small contracts and procurements the PULSE system was used. As part of the PULSE system the notation referring to "terms and conditions of Oceanic" was set out in the bottom left hand corner of purchase orders. 74Mr Claridge's evidence is important for the matters which it does not cover. There is no evidence about how small contracts and procurements were entered into before 2001. I find it inconceivable that a company such as Oceanic would not have used documents in the nature of a purchase order between 1997 and 2001, although one can infer from the implementation of the PULSE system that there may not have been standardisation in relation to such purchase orders. I have concluded that, although the PULSE system was not in operation before 2001, documents in the nature of a purchase order were used before 2001 in respect of small contracts and procurements by Oceanic. 75If that is so, there is nothing in the evidence of Mr Claridge about what happened when the PULSE system was introduced in relation to purchase orders. Specifically, there is no evidence that service providers such as Trius were advised that there was to be a change in the contract process and that thereafter all contracts were to include the "terms and conditions of Oceanic". I infer that as part of the implementation of the PULSE system, the notation concerning terms and conditions was placed on purchase orders but other than that, no notification was given to service providers and specifically, no notification was given to Trius. That accords with Mr Brittain's lack of recollection of any such notification or as to the existence of such terms and conditions governing agreements between Trius and Oceanic and his lack of recollection of ever having referred such terms and conditions to solicitors for comments. 76In the absence of any evidence from Oceanic as to notification, other than the notation being placed on purchase orders from some date in 2001, and by reference to the evidence of Mr Brittain, I find that there was no other notification to Trius of any change in the terms of small contracts entered into between it and Oceanic. Significantly, there was no evidence from Oceanic that the General Purchase Order Terms and Conditions were ever provided to Trius at any stage in their commercial relationship before the accident in January 2007. 77I am fortified in reaching that conclusion by the fact that there was a change in the "General Purchase Order Terms and Conditions" of Oceanic between 2001 and 2003. This is clear by reference to paragraphs 8 and 20 in the statement of Mr Claridge. In the absence of any evidence to the contrary from Mr Claridge, who was in the best position to give such evidence, and by reference to the evidence of Mr Brittain, I infer that when this change to the "General Purchase Order Terms and Conditions" of Oceanic was made, no notification was given to service providers and specifically, no notification was given to Trius. 78I appreciate that the evidence on these issues is sparse. Oceanic was in the best position to give further evidence on these matters but it chose not to do so. I infer that such further evidence would not have assisted its position. 79Doing the best I can, despite the paucity of evidence, I find that as between Trius and Oceanic the situation in respect of contracts was as follows. Between 1997 and 2001 Trius was performing steel fabrication work and installation work for Oceanic. Those contracts were partly oral and partly in writing by the use of some form of purchase order. In 2001 the PULSE system was implemented by Oceanic and as part of that system, a notation was made in the bottom left hand corner of purchase orders issued to Trius "the above goods are supplied subject to the terms and conditions of Oceanic Coal Australia". No notification was given to Trius concerning that change in procedure and Trius was not provided with a copy of the terms and conditions of Oceanic Coal Australia to which reference was made. 80In 2003 Oceanic's terms and conditions were changed in some way but again, no notification was given to Trius of that change and no copy of the altered terms and conditions was provided by Oceanic to Trius. As already indicated, I accept the evidence of Mr Brittain that throughout his dealings with Oceanic, between 1997 and January 2007 when this accident occurred, the existence of these terms and conditions had not been brought to his attention, that he was unaware of their existence and that he did not understand them to form a part of any agreement entered into between Trius and Oceanic during that period. 81It is against that factual background that the submissions of the parties on this issue need to be considered. 82Oceanic submitted as follows: "57. Purchase orders in the form of PP319522 had been sent on many previous occasions. On the present occasion it was sent in response to a quote sent by Trius. Any prior conversation advising that "Trius had got the job" can be ignored for contractual purposes. Trius knew that such a phone call was not intended to create legal relations and that it was not bound to do the job at that stage. The call from Oceanic was merely indicating, as a courtesy, that Oceanic would send an offer in the usual form of a purchase order based on the Trius quote. It was the evidence of Brittain that a purchase order would always be sent for every job to be done by Trius at Oceanic. 58. If Trius accepted the purchase order it would then provide the goods and services that had been ordered. It is not precisely clear when the purchase order was accepted in the present case but it must have been by the time Trius commenced work at the washery. In any event, Trius does not dispute that it entered into a contract with Oceanic based on PP319552." 83As already indicated, that analysis is not only artificial, it fails to have regard to the evidence as to the relationship between Oceanic and Trius leading up to the performance of this contract. An agreement had been reached between Mr Brittain and Mr Muller confirming the fabrication and installation of the metal beams and that agreement had been partially performed by Trius when PP319522 arrived. If this were the only transaction between Oceanic and Trius, it is difficult to see how in those circumstances PP319522 could have formed any part of the contract. 84Such, however, is not the case. Trius and Oceanic had been dealing with each other for almost 10 years. Since the adoption by Oceanic of the PULSE system in 2001, purchase orders had always been sent by Oceanic in respect of contracts performed by Trius, even when the work referred to in those contracts had been completed before the purchase order was sent. Clearly, therefore, the provision and existence of the purchase order PP319552 in this case was an important part of the contract between them. This is so because of the part played by purchase orders in their course of dealing since 2001. 85That being so, the question is what effect is to be given to the notation in the bottom left hand corner under the heading "Terms and Conditions"? 86On this issue, Oceanic submits that the notation can only refer to the "Oceanic Coal Australia Limited General Purchase Order Terms and Conditions" which are contained in annexure "C" to the statement of Mr Claridge (see [16] - [18]). It submits that this notation has appeared on purchase orders on so many occasions, including this occasion, that those General Purchase Order Terms and Conditions must be regarded as having been incorporated into the contract between Trius and Oceanic on this occasion. Oceanic relies upon Smith and Ors v South Wales Switchgear Limited [1978] 1 All ER 18 where the House of Lords held the reference in a purchase order to "General Conditions of Contract 2401 obtainable on request" was sufficient to incorporate those general conditions of contract into the contract. 87To the extent that the purchase order was received after work on the contract had been commenced, Oceanic submits that a term can be incorporated into a contract by a course of dealing, even where the term is received after the oral contract. It submits that although actual knowledge of the term needs to be shown, it is sufficient simply to refer to the existence of the term. It relies upon Hardwick Game Farms v S.A.P.P.A. (1969) 2 AC 31 at 90 and 104E-105B to support that proposition. 88The parties accepted that a term can be incorporated into a contract by a course of dealing. However, there is an initial difficulty with the wording of the notation as to terms and conditions on purchase order PP319522. The notation refers to the supply of goods and not to the supply of services. That creates a real ambiguity and to that extent, should be read against Oceanic. Although there is no reference to where or how the "terms and conditions of Oceanic" can be accessed, I accept that had Trius wished to, it could have requested a copy of the terms and conditions then in force and in accordance with the evidence of Mr Claridge, a copy of those terms and conditions would have been provided. 89I do not consider that the two cases upon which Oceanic sought to rely are decisive in determining whether the Oceanic General Purchase Order Terms and Conditions were a part of the contract entered into with Trius for the fabrication and installation of the metal beams. The facts of the two cases are significantly different. 90In Smith , there was a formal offer and acceptance. South Wales Switchgear sought from Smith the supply of goods and services and specified that the provision of those goods and services was to be subject to its "general conditions contract 24001, obtainable on request". Smith accepted that proposal but did not request a copy of the general conditions, nor did it examine one. The House of Lords held that in those circumstances, the general conditions were part of the agreement between the parties. 91In Hardwick Game Farm v S.A.P.P.A. there was a course of dealing between the parties, which included the sending to S.A.P.P.A. of a contract note on the day the oral contract was entered or on the day following. S.A.P.P.A. would expect to receive such a contract note because it was routine practice between the parties. On the back of the contract note there were certain terms and conditions printed. S.A.P.P.A.'s representative knew that there were such conditions but he had not read them. The court held that S.A.P.P.A. knew that, when they entered into agreements with the other party, they did so on the terms on the back of the contract note which had been continuously made known to it. The House of Lords held that it was reasonable in those circumstances to hold that the terms and conditions on the back of the contract notes formed part of the agreement. 92The facts here are quite different. Oceanic's General Purchase Order Terms and Conditions were not at any time sent to Trius and the insertion of the notation concerning terms and conditions onto the purchase order appears to have taken place without prior notification to Trius. There was no evidence of any knowledge on the part of anyone from Trius of the content of the "terms and conditions of Oceanic". There was no evidence of any attempt by anyone from Oceanic to communicate the content of those terms and conditions to Trius. 93The principle which appears to emerge from the decided cases, particularly in Australia, is that where there is no signed contract, terms appearing on documents that are not attached to the contract documents, are only incorporated in the contract if reasonable notice has been given of them. This was the basis for the decision of the Queensland Court of Appeal in Hays Personnel Services (Australia) P/L v Motorline P/L [2008] QCA 375 at [10], [14] and [17]. 94Brennan J in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 said at 228-229: "But where an exemption clause is contained in a ticket or other document intended by the carrier to contain the terms of carriage, yet the other party is not in fact aware when the contract is made that an exemption clause is intended to be a term of the contract, the carrier cannot rely on that clause unless, at the time of the contract, the carrier had done all that was reasonably necessary to bring the exemption clause to the passenger's notice. ... In differing circumstances, different steps may be needed to bring an exemption clause to a passenger's notice, especially if the clause is an unusual one. In the present case, the only step which the defendant took to bring the exclusive foreign jurisdiction clause to the plaintiff's notice before the fare was paid was the note in the brochure that the conditions of carriage were printed in the (unavailable) Passenger Ticket Contract. In Hollingworth v Southern Ferries Ltd (The "Eagle"), it was held that a mere statement in a carrier's brochure that the carrier contracted on its conditions of carriage was not enough to make those conditions terms of a contract of carriage subsequently made with an intending passenger who had read the brochure." 95Implicit approval of the approach of Brennan J was given by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52, (2004) 219 CLR 165 at [54] - [55] when the court was drawing a distinction between signed contracts and those where a document had not been signed but purported to incorporate other terms not forming part of it, into a contract. There the court said: "54 It appears from the reasoning of the primary judge and the Court of Appeal that the proposition was given a narrower focus, and was limited to exclusion clauses, or, perhaps, exclusion clauses which are regarded by a court as unusual and onerous. The present happens to be a case about exclusion clauses, but there is no apparent reason why the principle, if it exists, should apply only to them. Nor is the criterion by which a court might declare a contractual provision to be unusual or onerous always easy to identify. The origin of the proposition, clearly enough, is in the principles that apply to cases, such as ticket cases, in which one party has endeavoured to incorporate in a contract terms and conditions appearing in a notice or an unsigned document. When an attempt is made to introduce the concept of sufficient notice into the field of signed contracts, there is a danger of subverting fundamental principle based on sound legal policy. ... 55. In L'Estrange v Graucob Scrutton LJ said that the problem in that case was different from what he described as "the railway passenger and cloak-room ticket cases, such as Richardson, Spence & Co v Rowntree , where "there is no signature to the contractual document, the document being simply handed by the one party to the other." His Lordship said: "In cases in which the contract is contained in a railway ticket or other unsigned document, it is necessary to prove that an alleged party was aware, or ought to have been aware, of its terms and conditions. These cases have no application when the document has been signed."" 96In Toll the High Court referred without disapproval to the Court of Appeal decision in Remath Investments No 6 Pty Ltd v Chanel (Australia) Pty Ltd [1992] NSWCA 208. There the Court (Kirby P, Handley and Cripps JJA) was considering submissions by a bailee to the effect that the bailor was bound by its "conditions of contract, copies of which are available on request". The bailee sought to argue that this notation on its invoices incorporated into the agreement between it and the bailor those "conditions of contract". The bailee relied upon that statement at the foot of its invoices because it had come to the notice of the bailor in the course of previous dealings between them. 97In relation to the question of incorporation of those terms into the contract the Court said: "In the light of this evidence Remath is left only with the statement on the foot of its invoices. It was not suggested that either Mr Hewett or Mr Valentine were aware or should have been aware of this statement prior to the burglary. Mr Borwick who initiated all but two of the bond storage contracts between July 1987 and August 1988 was aware at the time of the presence of this statement. He processed all incoming invoices from Remath, not only for bond rent, but also for customs and forwarding agents' services and cartage. All contained the statement relied upon by Remath. These invoices were received well after the contracts had been made and after performance had commenced and in some cases after they had been completed. However Mr Borwick was not aware of the existence or content of "the conditions of contract" relating to storage in Remath's bond. He was never given them, never told about them, didn't see them, and never asked for them. ... The principles of law which this Court must apply in the present case were considered in Liaweena (NSW) Pty Ltd v McWilliams Wines (1991) ASC 56 616. Both parties accepted that the test was whether the appellant "did what was reasonably sufficient to give the plaintiff notice of the condition". See at 56 622. As we understand the principle this obligation applies not merely to the existence but also to the content of the condition. Remath made no attempt to introduce the storage conditions into any contract with Chanel at or about the time the contract was made. Mr Borwick's letters and phone calls and the phone calls from Mr Valentine never once elicited a reference by Remath to the existence of its storage conditions. The invoices for bond rent which Remath relies upon arrived at Chanel after the storage contracts had been made and wholly or partly performed. Why should Mr Borwick at that stage be expected or required to do anything to find out more about Remath's conditions of contract? Why should he do what Remath itself could not be bothered doing? In particular why should the law allow Remath to introduce restrictive conditions by stealth when it had made no attempt to introduce them openly and directly at the time the contracts were made. In our opinion in the circumstances of this case there was no onus whatever on Mr Borwick to make any inquiry of Remath simply because he had received and read invoices in this form." 98There are a number of important factual similarities between the circumstances considered by the Court of Appeal in Remath and those in this case. Specifically, there is no evidence from Oceanic that, at any time between 2001 and January 2007 in negotiations with Trius in respect of small contracts and procurements, any mention was made by anyone from Oceanic of the terms and conditions now sought to be relied upon. The evidence of Mr Brittain is that so far as he was aware, no-one from Oceanic said anything about such terms and conditions to him or anyone else at Trius. That being so, the Court of Appeal's observations, set out immediately above, would seem to be particularly apposite. 99In relation to the question of what is required to provide reasonable notice in the case of incorporation of contract terms, the court said: "In the light of these authorities we do not accept the appellant's submission that the mere statement on the bottom of its invoices was, in the circumstances, reasonably sufficient to incorporate the storage conditions into the relevant contracts. The question of reasonableness may be tested in this way. If in late June 1987 when Mr Borwick first spoke or wrote to Mr Street about the possibility of Chanel making use of Remath's bond storage facilities, or at any time thereafter before the burglary, Mr Street had told Mr Borwick of the storage conditions and their effect, or sent him a copy by mail or by facsimile several courses of action would have been open to Chanel. It might have inspected Remath's bond store, or at least inquired as to the security arrangements. It might have accepted Remath's storage conditions and arranged insurance. It might have shopped around the other bond stores for better terms or better security. It could have delayed its shipments from Britain and if there was space in its own warehouse it may have elected to pay the duty and tax and cleared sufficient goods from its bond store into its warehouse. In our opinion it cannot be said that Chanel was ever given "a fair opportunity" of considering these alternatives. This is only another way of saying that it was never given a fair opportunity of considering Remath's storage conditions before the contracts were made." 100There are a number of first instance decisions which are consistent with the approach of the Court of Appeal in Remath . In Eggleston v Marley Engineers Pty Limited and BK and JG Mewett (1970) 21 SASR 51, the facts were similar. A firm hired a mobile crane and driver and was given an invoice at the end of the job. The invoice contained an indemnity clause on its back. The firm had been given such invoices on earlier occasions. Hogarth J held at 66 that the firm was aware there were conditions on the back of the invoice, but was unaware of the indemnity clause because notice had not been given as to the existence of the clause, nor had any effort been made to bring it to the attention of the firm, other than the fact that it was contained on the back of the invoice. 101Chattis Nominees Pty Ltd v Norman Ross Homeworks Pty Ltd (Receiver Appointed) (in Liq) (NSWSC, unreported, Cohen J, 3 August 1992) is useful in a number of respects. Each of the parties was seeking to incorporate into the contract between them their own standard terms and conditions. The attempt by Norman Ross was rejected by his Honour because he was not satisfied that it had ever sent a copy of its standard terms and conditions to Chattis. To the extent that it sought to rely upon a term in its order form, under the heading "Delivery Instructions" to the effect "6.Deliveries are made under Norman Ross Homeworks Condition of Purchase", his Honour held that the term was ambiguous. It could have been referring back to the preceding paragraphs 1 - 5 which specifically dealt with delivery, or to some other condition. In that regard his Honour said: "In either case the plaintiff would have had no notice of any further condition which the defendant was seeking to incorporate into the agreement by including it in its order form. The plaintiff was not required to seek out whether there was a condition of the contract of which it had not been made aware. If a party seeks to incorporate into a contract particular terms it must do so in such a way as to make it clear what the term is to be and in my opinion the defendant failed to do that in respect of sales to the plaintiff." 102In contrast his Honour held that Chattis had made it sufficiently clear to Norman Ross that a certain term was to be included in their agreement because it had, over a period of time, included that term on the back of its invoices. In that regard his Honour said: "The regularity of those dealings indicates that in the absence of objection the condition must be taken to have been accepted as being incorporated into the contracts which were entered into throughout 1991." 103In Barrymores Pty Ltd v Harris Scarfe Ltd (Administrators Appointed) (Receivers and Managers Appointed) & Ors [2001] WASC 210 Roberts-Smith J reached a similar conclusion. In that case a supplier of goods over a period of time had included a ROT (Retention Of Title) clause on its invoices, which it sent to a retailer of those goods. No objection to it had been raised at any time by the retailer to the ROT clause. His Honour held that the ROT clause had been incorporated by implied consent in the contracts for supply of goods by the long course of dealing between them and there having been no objection to the clause. 104The common theme in those cases, but which was absent in relation to Norman Ross and in Remath , was that a copy of the terms and conditions sought to be relied upon had been sent to the other party to the contract, and during the course of dealing between them, no objection had been made to those terms and conditions. The significant difference in this case, which makes it very similar to that of Remath , is that a copy of the terms and conditions was never provided by Oceanic to Trius. 105I have concluded that the "General Purchase Order Terms and Conditions" of Oceanic did not form part of the contract between Trius and Oceanic for the fabrication and installation of the beams as set out on purchase order PP319522. I have reached that conclusion for the following reasons: 106The notation on the purchase order upon which Oceanic relies was at best ambiguous. It stated "The above goods are supplied subject to the terms and conditions of Oceanic Coal Australia Limited". There is nothing in that notation which clearly and unambiguously indicates the existence of any standard terms and conditions affecting the installation of goods and the performance of services. However, the conditions upon which Oceanic seeks to rely and which it says are incorporated in the contract all relate to the performance of services, not the supply of goods (see [18] hereof). In those circumstances the notation should be read against Oceanic and is not effective in incorporating terms and conditions relating to installation and the provision of services in the contract with Trius. The observations of Cohen J in Chattis with respect to the ambiguity of the term sought to be relied upon by Norman Ross are apposite (see [101] hereof). 107Additionally, I am not satisfied that reasonable steps were taken by Oceanic to bring the terms and conditions which it says were incorporated in the contract and upon which it seeks to rely, to the attention of Trius. There is no evidence that the terms and conditions were ever provided to Trius before the contract and there is no evidence that Oceanic ever mentioned to Trius the existence of such terms and conditions. Apart from Smith v South Wales Switchgear (which is factually different), the authorities in this area of the law do not support the incorporation of the terms and conditions in the contract. The indemnity clause 108The preceding analysis is sufficient to decide Oceanic's claim in contract. In case I am wrong on the issue of the incorporation of Oceanic's terms and conditions in the contract, it is necessary to construe clause 13 of the General Purchase Order Terms and Conditions upon which Oceanic sought to rely. Clause 13 is set out at [18] hereof. It was common ground that because Oceanic drafted clause 13 any ambiguity in it should be read against Oceanic ( Andar Transport Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424 at [17] - [23]). 109In approaching the construction of clause 13 of Oceanic's General Purchase Order Terms and Conditions, some guidance is provided by Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114. While Giles JA and McClellan CJ at CL were not entirely in agreement as to how to interpret the indemnity clause there under consideration, both agreed on this principle of construction: "5 The operation of any contractual indemnity must be found in the application to the facts of the words of the relevant clause, construed as part of the contract as a whole. Decisions on the operation of contractual indemnities in different words in different contracts are likely to be of limited assistance." (Giles JA) "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." (McClellan CJ at CL) 110Leaving out words which are clearly inapplicable, the clauses under consideration provide as follows: "13.3 You will be liable for and will indemnify us and keep us indemnified from and against any liability and/or any loss or damage of any kind whatsoever, arising directly or indirectly from: (b) The injury of any of your employees arising out of or in connection with this agreement; (c) Any loss or damage arising out of, or in connection with any personal injury to any person caused or contributed to by: (i) The goods and/or services; and/or (ii) The activities undertaken on and in our premises by you and/or your employees;" 111The first point to be made is that the liability to which subparagraphs 13.3(b) and (c) refer, is qualified by words of causation appearing in the chapeau, i.e. "arising directly or indirectly from". While these are very general words of causation, as Erect Safe Scaffolding made clear, they are not unlimited in application and their meaning is "informed by their presence in an indemnity clause" ( Erect Safe Scaffolding at [11], [156] - [157]). 112Sub-clause 13.3(b) makes it clear that the liability must arise from an injury to an employee of Trius. That, however, is not sufficient. Sub-clause 13.3(b) contains further words of limitation. Such "injury" must be one "arising out of or in connection with this agreement". In the terms and conditions "agreement" is defined: "Agreement" means this document and separately, each purchase order." 113In order to give the sub-clause meaning, the words "the performance of" need to be inserted before "this agreement". Even with that addition, however, an ambiguity remains. Is this a reference to the performance of the agreement by both parties, by Trius or by Oceanic? On the basis of what the High Court said in Andar , I have concluded that sub-clause 13.3(b) must be read against Oceanic and refers to performance of the agreement by Trius. 114If the only words of limitation in sub-clause 13.3(b) were "arising out of", I would follow the approach of Giles JA and McClellan CJ at CL in Erect Safe Scaffolding and conclude that it does not provide Oceanic with an indemnity with respect to its liability to the plaintiff. That liability arose out of Oceanic's own conduct and its own direct liability to the plaintiff. 115That, however, does not resolve the matter. The other words of limitation in sub-clause 13.3(b) are "in connection with". These words were considered by the Court of Appeal (Meagher Giles and Hodgson JJA) in State of New South Wales v Tempo Services Ltd [2004] NSWCA 4 in the context of an indemnity clause. There Hodgson JA, with whom Giles JA agreed, said: "20 Furthermore, in my opinion the personal injury to the plaintiff in this case was "in connection with" Tempo's performance of services. The matters referred to by Mr. Walker, namely that the injury occurred at a work place, during working hours, when the plaintiff was there for the purpose of performing services, had signed on, and was going about the performance of services, gives the injury sufficient connection with the provision of services. There is no need in my opinion to consider on whether the Victorian case of Venturoni was correct or not: in my opinion, it is distinguishable, if only because the words "in respect of" can be considered, in this context, as being narrower than the words "in connection with"." 116On the basis of the wide interpretation given to those words in Tempo Services , I am satisfied that sub-clause 13.3(b) is effective to require Trius to indemnify Oceanic in respect of Oceanic's liability to the plaintiff. On my interpretation, the indemnity should read: "You will be liable for and will indemnify us from any liability arising indirectly from the injury of any of your employees in connection with the performance of this agreement by you." 117In relation to sub-clause 13.3(c)(ii) I have concluded that it is not effective to require Trius to indemnify Oceanic for the injury to the plaintiff. I have reached this conclusion because of the use of the words "personal injury to any person" in sub-clause 13.3(c). The reference to "any person" is to be contrasted with the specific reference to "your employees" in sub-clause 13.3(b) and the specific reference to "by you and your employees" in sub-clause 13.3(c)(ii). By reference to the approach in Andar , and by reading the implicit ambiguity against Oceanic, I am not satisfied that the words "injury to any person" encompass an injury to an employee of Trius. They must refer to a person other than an employee of Trius who is carrying out the activity which might cause the injury. 118Although I have found in favour of Oceanic in relation to sub-clause 13(3)(b) of its General Purchase Order Terms and Conditions, this has not altered my overall conclusion in relation to the contract issue. As previously indicated, Oceanic has not satisfied me that its General Purchase Order Terms and Conditions were part of its agreement with Trius for the fabrication and installation of the metal beams at the MCPP, which is referred to in purchase order PP319522. Conclusion 119As indicated to the parties in the course of submissions, I do not propose to make final orders at this stage so as to allow the parties to prepare Short Minutes of Order in accordance with these reasons. 120While both sides conceded that each of them was liable to the plaintiff in tort, the dispute before the Court was the extent of that liability with each party seeking to persuade the Court that the other should bear a higher percentage of that liability. On that issue, Oceanic has been successful. 121Oceanic has, however, failed in its claim in contract against Trius. 122No submissions were made by the parties on the question of costs pending the publication of these reasons. I expect the Short Minutes of Order to include a provision dealing with the making of submissions as to costs. My current inclination, subject to submissions to the contrary, is that the question of costs should be dealt with by way of written submissions with the parties being given the opportunity to briefly respond orally to those written submissions. 123The only order which I make at this stage is that the parties are to prepare Short Minutes of Order in accordance with these reasons, such Short Minutes of Order to be placed before the Court at 9.30am on Friday 29 July 2011. In default of agreement, each party is to prepare its own Short Minutes of Order to be placed before the Court on that occasion. For this purpose the matter is fixed for directions before me at 9.30am on Friday, 29 July 2011. ********** Annexure A - Purchase Order PP319522 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 August 2011