District Court New South Wales Medium Neutral Citation: Andrew William McDonald v Centennial Newstan Pty Limited [2012] NSWDC 218 Hearing dates: 5, 9, 10 and 24/10/2012 Decision date: 29 November 2012 Jurisdiction: Civil Before: F Marks ADCJ Decision: Judgment for the Plaintiff, judgment for the cross defendant Longwall Advantage Pty Limited against first defendant, judgment for the cross claimant against GIO, costs reserved [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: TORTS - plaintiff working at coal mine under labour hire agreement when injured - apportionment of liability - claim for indemnity under agreement between mine operator and associate of labour hire employer - held no breach and no causal nexus with plaintiff's injuries - indemnity refused - company effected liability insurance with insurer - held insurer liable to indemnify mine operator under policy Legislation Cited: Law Reform (Miscellaneous Provisions) Act 1946 Cases Cited: Forstaff Blacktown Limited v Brimac Pty Ltd [2005] NSWCA 423 J Blackwood and Son v Skilled Engineering [2008] NSWCA 142 TNT Australia Pty Ltd v Christie [2003] NSWCA 47 Podrebersek v Australian Iron and Steel Pty Ltd [1985] HCA 34 Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 Chappel v Hart (1998) 195 CLR 232 Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114 Category: Principal judgment Parties: Andrew William McDonald - Plaintiff Centennial Newstan Pty Limited - First Defendant and Cross Claimant Longwall Advantage Pty Limited - Second Defendant Longwall Labour Force Pty Limited - Third Defendant GIO - Cross Defendant Representation: B Dooley SC with P O'Rourke - Plaintiff A J McInerney SC - First Defendant and Cross Claimant M J Windsor SC with L Reid - Second Defendant L Reid - Third Defendant and Cross Defendant Whitelaw McDonald - Plaintiff Winter HilditchFotheringham - First Defendant and Cross Claimant DLA Piper Australia - Third Defendant Kennedys - Second Defendant and Cross Defendant File Number(s): 2011/00042451 Publication restriction: Nil Judgment 1These proceedings are constituted by an Amended Statement of Claim filed 7 September 2011. The plaintiff is Andrew William McDonald. The first defendant is Centennial Newstan Pty Ltd (Centennial), the second defendant is Longwall Labourforce Pty Ltd (Labourforce) and the third defendant Longwall Advantage Pty Ltd (Advantage). The plaintiff was employed by Labourforce. By arrangement between Labourforce and Advantage his services were provided to Centennial to perform work as a fitter and turner at a coal mine operated by Centennial. He was injured on 10 September 2008 while performing this work. He claims as against each of the three defendants a breach of duty of care and seeks damages as a result of alleged negligence. 2Each of the three defendants filed a defence. The defence by Labourforce was filed on 25 October 2011 and DLA Piper Australia were its solicitors. The defence by Advantage was filed on 2 April 2012. Its solicitors were Kennedys. 3By second cross-claim filed 16 December 2011 Advantage joined GIO General Limited (GIO) into the proceedings as a cross defendant. Solicitors then acting for Advantage were Bilbie Dan. Short minutes of order filed on 3February 2012 resolved the second cross-claim. In general terms GIO accepted that it would indemnify Advantage against any liability for breach of a duty of care it owed to the plaintiff .The short minutes of order were signed on 2 February 2012 by Sharon Armstrong in her asserted capacity as special counsel for GIO. 4On 7 February 2012, Bilby Dan filed a notice of ceasing to act for Advantage. 5On 24 May 2012 Centennial filed an amended first cross-claim against Labourforce and Advantage respectively as first and second cross defendants. On the same day Centennial filed a third cross-claim against GIO. As against Labourforce and Advantage, Centennial sought contribution and/or indemnity. It relied in part on a contract which it entered into with Advantage by which certain indemnities were alleged to have been created and by which Advantage assumed certain obligations. It alleged certain breaches by Advantage of its contractual obligations, and claimed damages accordingly. As against GIO Centennial alleged it had the benefit of an insurance policy effected by Advantage with it as an insurer. 6Orders were made by the Court on 15 May 2012 for the defences to both cross-claims to be filed by 22 June 2012. Leave To File Defences To Cross Claims Out Of Time 7No pleading in answer to the cross-claims against Labourforce, Advantage, or GIO had been filed in these proceedings. On 18 May 2012 the proceedings were set down for hearing in the Newcastle sittings of this court commencing 2 October 2012. On that day they were fixed for a hearing commencing 5 October. 8At the commencement of the hearing Mr L Reid of counsel announced his appearance for Labourforce, Advantage and the GIO. Mr Reid indicated that he wished to seek leave to file defences to the cross claims initiated by Centennial. This was opposed by Mr AJ McInerney, senior counsel for Centennial. It was the position of Centennial that the failure to file defences to the cross claims constituted admissions of allegations of fact because no pleading in response had been filed. Mr McInerney relied inter-alia on rule 14.26 of the Uniform Civil Procedure Rules (UCPR). 9In written submissions Mr McInerney asserted that after 2 pm on 4 October 2012,for the first time, GIO served upon Centennial a proposed defence to the cross-claim and that Advantage served a proposed defence later the same afternoon. The hearing on this interlocutory point proceeded on the basis that the first time that Centennial became aware of the content of any proposed defences to the cross claims was the afternoon of 4 October 2012. It is possible that Centennial may have been aware on 2 October 2012 that there was an intention to file the defences. 10In support of the application for leave to file the defences to the cross claims oral evidence was given by Sharon Armstrong, a solicitor with the law firm Kennedys who has carriage of these proceedings on behalf of both Advantage and the GIO. It was her evidence that the defences were not filed as required by the court orders because she had difficulty in obtaining specific information from a Mr Austin of Advantage about the precise nature of its business and reconciling that information with the provisions of the policy of insurance with GIO. This information was necessary to determine whether any policy exclusions applied. 11In cross-examination Ms Armstrong said that Kennedys were retained some 6 to 8 weeks before 24 May 2012. She said that she was not allowed to speak to Mr Austin who at that stage had separate solicitors. She first spoke to him at a mediation conference and was then permitted to speak to him after that. In all she had spoken to Mr Austin since then some 3 to 4 times. She said that any problems relating to the application of the policy were resolved on the Friday before the hearing was due to commence. At that stage she said she organised and participated in a telephone conference with counsel and obtained certain instructions from Mr Austin. 12In cross-examination Ms Armstrong referred to having received inconsistent and conflicting instructions from Mr Austin. She said she had never taken a statement from him and that the most time that she had spent with him had been 15 to 20 minutes on any one occasion. However, in the week before the hearing Mr Austin had participated in a lengthy telephone conference with counsel which extended somewhere between 40 minutes and an hour. 13Ms Armstrong did not give any evidence in explanation why she did not proceed sooner to endeavour to meet the 22 June deadline fixed by the court, or to seek to have that deadline extended, or to make contact with the other parties in the proceedings to appraise them of the difficulties and to seek some form of indulgence. I can only conclude that, in the circumstances, Ms Armstrong proceeded to do what she did without any due regard to the date fixed by the Court for the filing of the defences or the circumstances of the other parties created by the failure to file any defences. 14Whilst there is correspondence between the solicitors for the parties in evidence, there is no evidence of any communication by Ms Armstrong or anyone else on behalf of her clients with any of the other parties to the proceedings between May 2012 and 2 October 2012. 15I commenced to hear the application for leave to file the defences to the cross claims mid-morning on 9 October 2012. When the matter resumed the following day Mr MJ Windsor SC appeared for the cross defendants, and Mr Reid with him. Mr Windsor informed the court that, in effect, all of the factual matters alleged in the cross-claims against his clients would be admitted. That left the only matters that were to be contested as: (1) The extent of cover provided by an insurance policy effected by Advantage with GIO in terms of insuring Centennial. (2) Whether Advantage was in breach of its contract with Centennial and if so whether the breach caused any loss or damage, and (3) Whether Centennial was entitled to contribution from Advantage or Labourforce pursuant to section 5 of the Law Reform (Miscellaneous Provisions) Act 1946. 16There was a great deal of disagreement between Mr McInerney and Mr Windsor about the application of rule 14.26 of the UCPR. Mr McInerney asserted that if a party failed to file a pleading in the nature of a defence this would constitute an admission of facts contained in the initiating process. Mr Windsor submitted that rule 14.26 can only apply in circumstances where a pleading in the nature of a defence has been filed. Although this is an interesting point and one which will need to be determined at an appropriate time, because of the view which I have taken about the disposition of this interlocutory application, it is not necessary to determine it. This is particularly so as I precluded Mr McInerney from fully developing his submissions in reply. 17During the course of the hearing I determined to grant leave and I made certain consequential costs orders. The material which follows constitutes my reasons for the grant of leave. In doing so I am conscious that leave is to be determined in light of all the circumstances which apply to these proceedings. On the one hand, the cross defendants knew or ought to have known about 15 May 2012 that the defences had to be filed by 22 June 2012. The failure to comply with the orders of the Court extended over a comparatively long period of time. Furthermore, Ms Armstrong took no step to approach the Court to seek relief from compliance with the court orders. This is a step which I would expect a responsible legal practitioner to take as a matter of course, particularly having regard to her duty to the Court under sec 56 of the Civil Procedure Act. Furthermore, no satisfactory explanation has been given which would create any arguable justification or excuse for the delay. 18Having regard to the onus which these parties bear in persuading the court that discretion to grant leave should be exercised in their favour, I was initially inclined to refuse leave. However, I was persuaded to grant leave because this allowed the significant issues in the proceedings to be litigated, I anticipated that no delay would be occasioned to the disposal of the proceedings if leave was granted, and the factual admissions accompanied by the elucidation of a number of distinct issues would not have expanded the matters in dispute, but resulted in their crystallisation. Furthermore, the additional costs incurred by the plaintiff and Centennial are to be met by a costs order in their favour, although there remains an outstanding issue as to whether these are to be awarded on an indemnity basis. The Incident 19Evidence about the incident was given by the plaintiff and an expert report of Professor L J Thomas a consulting mining engineer was admitted into evidence without objection. This is the only evidence given in the proceedings which touches upon the circumstances in which the plaintiff was injured. 20The plaintiff was born on 18 August 1944. He had been employed as a fitter since 1980 by Centennial, and was forced to retire on his 60th birthday. The chief engineer of Centennial told the plaintiff that he would arrange for somebody to employ him so he could continue to work there. The plaintiff signed some papers with "Longwall", which had been arranged through Centennial and he continued to work at a coal mine operated by it at Fassifern. This work was allocated to the plaintiff by the Centennial engineer, Neville Bunn. He was assigned to work with a mine deputy and his crew. Generally, the plaintiff did such work as was allocated to him from time to time by the engineer. If he required manual help, this would be provided by Centennial. 21At the time of the incident the plaintiff was working on a longwall installation. In order to support the roof of a mine a number of chocks are installed which provide protection against material falling on or near areas where a shearer operates to extract coal from the coalface. The protection is provided inter alia by canopies that project over an armoured face conveyor (AFC). The canopies are raised and lowered hydraulically by means of support legs. A leg is made of metal and cylindrical in shape. It was described as weighing about 1500 kg and being about the size of a human body. Each chock has 4 legs. A chock is described as being about 1.5 m wide and 5.5 m high. The base on which the chock rests on the ground protrudes out some distance and the part which protrudes is called a toe. During the course of the installation of a longwall many chocks are positioned side-by-side to form a continuous canopy. The toes which are adjacent to each other form a continuous surface. 22On the other side of the chocks, at the extreme of the canopies, is the coalface which is to be mined. The coal is extracted by a shearer. Adjacent to the coalface the AFC carries the coal away. The AFC operates by a powered chain system. At the time of this incident the chain had not been installed and was not operational. 23On the day of the incident the plaintiff had seen a chock leg being dropped off onto the ground by use of a vehicle, at the end of a line consisting of about 40 chocks in all. He said that he later saw a deputy use a chain block to put the leg on the toes of some chocks. The leg had to be installed in a chock some 3 to 4 chocks along from the chock on which it was placed by the deputy. Because the AFC had not yet been installed there were no powered facilities available to move the leg along the 3 to 4 chocks so that it could be installed. 24The plaintiff took it upon himself to move the leg into position as part of his general duties. He had never been given directions as to how he should undertake the task of moving the leg along the chocks. He had performed this operation 4 to 5 times altogether in his career. The only equipment available to him on this occasion was a chain block. There was a slight downward gradient in the direction in which the plaintiff was required to move the leg. One of the chocks had been incorrectly installed and its toe protruded about 500 mm in advance of the line of chock legs. 25The only way of moving the leg to the chock in which it was to be installed was by sliding it along the toes. That is, the metal leg had to be moved along the metal surface of the chock toes. The leg which the plaintiff was required to move had two lugs welded onto it on either side. One was a positioning lug and the other, which enabled chains and ropes to be tied to it, was called a rud lug. 26Normally, any legs are delivered to the area in a cradle which is placed on the powered AFC chain and moved to the position where it is to be installed by using the chain. From there it is lifted off using a chain block and installed into the chock. Sometimes, if the AFC chain is not used, the legs are moved along the toes by snigging them. This is done by attaching a wire rope and using a chain block to pull the leg along. The chains are attached to the leg through the rud lug. I should emphasise that the rud lug and the positioning lug are placed so that they are diametrically opposed to each other. 27At the time of the incident the plaintiff said that there were no safe work practice statements or instructions for the snigging of legs along the toes of chocks. He said that when he decided to move the leg some 3 to 4 chocks down to where it was to be installed he filled in a safe work operating procedure form. In this form he incorrectly stated that he had a written procedure to perform the work. In fact there were no written procedures that he had ever seen. 28The plaintiff described the process which he performed as follows; he hooked the chain block onto a lug on the canopy of the chock and attached the other end to the rud lug on the leg. He then attached the remaining part of the chain block to a chock two positions in advance of where the leg was to be moved. He then raised the front of the leg slightly off the toes so that it could slide easily along the metal surface of the toes. As he was doing this, the leg became stuck on the toes. The plaintiff said it became caught on the protruding positioning lug. When this happened the plaintiff lowered the chain about 50 mm to stop the leg sliding any more and he thought it was then secure. The leg had stopped at the place where the toe of the protruding chock was located. 29The plaintiff then stepped out from behind the adjoining chock through the gap created by the protruding chock to check what was catching the leg. He was standing in front of the leg in advance of the position to which it was to be moved. As the plaintiff stepped in front of the leg it suddenly moved and crushed him. The leg was only a short distance from where it was to be positioned when the incident occurred. 30The only other evidence in the proceedings which touched upon the allegations of negligence made by the plaintiff consisted of the report of Professor Leon J Thomas which was tendered into evidence without objection. Professor Thomas was not called to give evidence. He is an undoubted expert, having worked for many years as an engineer in coalmining operations and possessing exemplary academic qualifications. 31Because Prof Thomas's opinion is uncontroversial it is not necessary to discuss it in any great detail. In summary, Prof Thomas said: (1) A chain block should not have been used. It is designed for a straight lift and is not designed for lateral pulling. (2) More appropriately, the plaintiff should have been provided with a correct lifting aid such as a creeper winch which could have been used in conjunction with a chain block. The latter would lift the leg and the former would move it along. (3) This task should have been properly planned and not left to the plaintiff alone. Furthermore, an appropriate risk assessment should have been carried out. (4) "The risk from snigging the leg over the toes of several chocks could have been eliminated by delaying the installation of the replacement chock leg until the chain had been installed on the AFC...." (5) A transport cradle or pallet could have been provided for the replacement leg so that any protrusion on the legs would not catch unpredictably and the leg could be easily lifted or pulled under control. Factual Findings 32I find that in the circumstances in which the plaintiff sustained his injuries there was a failure to have afforded him any of the equipment or systems that Prof Thomas said should have been made available to him, and he was provided with equipment which was not suitable for the task that he was performing. That is, I accept in its entirety the opinion of Prof Thomas as summarised in [31] above. 33I find also that these circumstances created a risk of injury which was foreseeable by Centennial, that the risk was not insignificant, and that in the circumstances a reasonable person in the position of Centennial would have taken precautions of the kind referred to in the opinion of Professor Thomas. In so finding I have taken into account the probability that the plaintiff would sustain an injury if these precautions were not taken, as occurred, and given the circumstances the injuries were likely to be serious, as occurred. Furthermore, the totality of the operation of the mine, on the evidence, vested in Centennial, supervision was provided by Centennial, and the equipment available and used was provided by Centennial. Accordingly, the burden of taking precautions to avoid the risk of injury rested on Centennial. 34I further find that the failures of Centennial which I have identified above constituted a necessary condition of the injuries sustained by the plaintiff. That is, if these failures had not occurred, the plaintiff would not have been injured in the incident which occurred. 35I apprehend that the circumstances of the incident were not in serious dispute. There was no case advanced by any defendant that the plaintiff should not receive a verdict in his favour, and the only serious concern of the defendants was apportionment and the several cross claims to which I have referred. The Circumstances of The Engagement of The Plaintiff to Work at the Mine 36I have already described the evidence given by the plaintiff as to how he came to be working at the mine after his 60th birthday and he could no longer be employed by Centennial. In evidence the plaintiff said that he had signed some documentation at Centennial by which he came to be employed by Labourforce. He saw a Mr Lindsay Austin from Labourforce a couple of months after he signed the documents but he did not have any real discussion with him. He was provided with clothing and boots by Advantage. However he did not receive any induction from Advantage; this was undertaken by Centennial. All paperwork that the plaintiff signed seems to have emanated from Centennial. 37It was the plaintiff's evidence that he did not have any interaction with anyone from Labourforce or Advantage concerning his work. 38The plaintiff said that he completed a time sheet at the end of each week and forwarded it by facsimile transmission to the Morissett office of Labourforce. At no time prior to the incident was the plaintiff aware that there were in fact two Longwall companies, Advantage and Labourforce. When giving evidence the plaintiff said that he now understood that his employer was Labourforce. During the four years that he continued to work at Centennial, the plaintiff continued to receive clothing from Advantage. To obtain this he telephoned the secretary at the Advantage office and asked her to forward it to him. 39There was tendered into evidence an agreement between Centennial and Advantage for the supply of labour. The agreement does not appear to contain a date of operation, but it was signed by each of the parties in July and April 2008 respectively. 40The agreement provided, inter alia, for the terms and conditions upon which Advantage would supply labour from time to time to Centennial. 41Documentary evidence in the nature of the plaintiff's tax returns, tax invoices from Labourforce to Advantage and from Advantage to Centennial establish the following matters, which I find as a matter of fact: (1) That at all material times the plaintiff was employed by Labourforce. (2) That at all material times the services of the plaintiff were made available to Centennial by Advantage pursuant to the provisions of a written agreement between them. (3) That Labourforce had an arrangement with Advantage whereby Advantage could make the plaintiff's services available to Centennial. 42None of these matters were the subject of contention by the parties. The Liability and Negligence of Each of The Defendants 43It is uncontroversial that, although the plaintiff was performing work at the Centennial mine because his services had been made available through a Longwall Company, nevertheless Centennial owed the plaintiff a duty to take reasonable care for his safety. The plaintiff was working at Centennial's mine full-time, he received his instructions on a daily basis from Centennial personnel, used its equipment and generally followed its procedures. It may be deduced in general terms that Centennial treated the plaintiff as if he were an employee. In such a case it is appropriate to regard Centennial as having a duty to take reasonable care to avoid the risk of injury to the plaintiff akin to that of an employer. (See Forstaff Blacktown Limited v Brimac Pty Ltd [2005] NSWCA 423 and J Blackwood and Son v Skilled Engineering [2008] NSWCA 142). 44By reason of the matters to which I have earlier referred, I find that Centennial breached this duty to take reasonable care for the safety of the plaintiff. 45The plaintiff's employer Labourforce owed a non delegable duty to take reasonable care for the safety of the plaintiff. That duty of care cannot be avoided by entrusting the safety of the plaintiff to someone else, such as Centennial in this case. This is because the duty to take reasonable care in the case of an employer involves, in effect, the imposition of strict liability. This matter is well established by authority and needs no further embellishment. (See, as an example, the judgement of Mason P in TNT Australia Pty Ltd v Christie [2003] NSWCA 47 at [44] and following). It follows that Labourforce as employer has breached its duty to take reasonable care for the plaintiff by reason of the conduct and omissions of Centennial which I have earlier identified. 46In that Advantage had an arrangement with Labourforce that Labourforce would make the plaintiff's services available to Centennial pursuant to the contractual arrangement that Advantage had with Centennial, and even though I am unaware of the precise nature of that arrangement, I would conclude that in these circumstances the plaintiff was in the nature of an employee of Advantage. In these circumstances Advantage had a duty of the same kind as the plaintiff's employer Labourforce to take reasonable care for his safety. This duty is analogous to the non delegable duty owed by Labourforce to the plaintiff and is in the nature of a strict duty. Accordingly, the breach by Centennial of its duty of care to the plaintiff would also constitute a breach by Advantage of its duty to the plaintiff to take reasonable care for his safety. 47The plaintiff is entitled to a verdict in his favour accordingly, against each of the defendants. Other Issues 48The bulk of the proceedings were taken up with issues which arose between the defendant Centennial, the two other defendants being part of the Longwall group, and GIO. I have referred briefly to the labour supply contract between Centennial and Advantage. As will be seen, that contract obliged Advantage to effect certain insurance for the benefit of Centennial. Advantage took out a policy of insurance with GIO. One of the issues is whether that policy responds to the liability of Centennial to pay damages to the plaintiff by reason of the breach of its tortious duty. The labour supply contract obliged Advantage to do certain things. Centennial claims that the contract had been breached by Advantage and pursuant to its terms it is entitled to be indemnified by Advantage against any liability to pay damages to the plaintiff. There is also the question of contribution by each of the defendants to the verdict to which the plaintiff is entitled against each of them. 49The parties prepared a statement of issues between the first defendant and cross defendants. They are: (1) Whether GIO is obliged to indemnify Centennial in the terms sought by Centennial. (2) Whether GIO breached any obligation it owes to Centennial under the insurance contract. (3) Whether indemnification (if any) by GIO is limited to that contained in clause 8.1 of the labour supply contract and such indemnity does not extend to any direct liability of Centennial to the plaintiff arising from its own obligations. (4) Whether Advantage breached the Longwall Advantage agreement and if so whether any breach caused loss or damage. (5) Whether Centennial is entitled to contribution from Advantage or Labourforce pursuant to Sec 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946. 50I shall deal with each of these issues in turn, but it is convenient to commence by considering issue number 5. Contribution Under S 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 51The task in assessing contribution is to have regard to the extent of the responsibility of each of the defendants for the damage sustained by the plaintiff and to make such assessment as is just and equitable in all the circumstances. To adopt by analogy the approach of the High Court of Australia in Podrebersek v Australian Iron and Steel Pty Ltd [1985] HCA 34 at [10], there is a need to apportion between the defendants their respective shares in the responsibility for the damage, and compare both culpability and the degree of departure from the standard care of the reasonable man, and to assess the relative importance of the acts of the parties in causing the damage. "It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case...." This analogy is accepted as applying to apportionment. (See J Blackwood and Son v Skilled Engineering [2008] NSWCA142 at [94]). 52The only evidence concerning the circumstances in which the plaintiff continued to work at the Centennial mine after he had retired from its employment, and the work environment thereafter was given by the plaintiff. The particular task upon which he was engaged had been undertaken by him four or five times only throughout his long career as an employee of Centennial and thereafter. Furthermore, the circumstances in which the plaintiff was working at the time of the incident were wholly created by and under the control of Centennial. The work was allocated to the plaintiff by Centennial only, he was supervised only by Centennial personnel, the system of work and the equipment provided was solely that created by Centennial, and Centennial undertook all of the safety discussions with the plaintiff. It was the plaintiff's evidence that if he had any concerns about a safety issue he would raise it with his supervisor, an employee of Centennial. It was Centennial which mandated the creation and use of a written system of work for each task. All of this is consistent with the understanding of the plaintiff as given to him by a representative of Centennial that Centennial would arrange for him to be employed by someone else and his services would continue to be made available to Centennial after his retirement. I repeat this is the sole evidence concerning the circumstances in which the plaintiff continued to work at the mine. 53Accordingly, the defendants Labourforce and Advantage had no involvement in the operation of the mine. On the evidence there was no supervisor on site, and they had no involvement in the plaintiff's day-to-day work activities. 54I have earlier identified the specific acts and omissions which caused the incident in which the plaintiff was injured. Each and every one of those acts and omissions was the sole responsibility of Centennial. In these circumstances I cannot see any justification for determining that there should be any contribution by any of the defendants other than Centennial. There was a submission that some small contribution should be made by these other defendants to reflect the strict nature of their duties to take reasonable care for the safety of the plaintiff, and their breaches of this duty as I have found. Whilst there might be a temptation to order a notional contribution of around 5% to 10%, I am unable to see any basis for doing so which would reflect the evidence in the proceedings and the findings which I have made. I decline to make any order for contribution against the defendants Labourforce and Advantage in favour of Centennial. In the result, I shall make an order that the amount of damages awarded in favour of the plaintiff shall be the sole responsibility of Centennial. 55I should add for completeness that the parties have sensibly agreed that the plaintiff's overall entitlement is to a verdict in his favour of $550,000 together with costs. Whether Advantage Breached the Labour Supply Contract and if so Whether any Breach Caused Loss or Damage 56The labour supply contract was admitted into evidence. By the agreement Advantage agreed to carry out and complete "the Goods" in accordance with the contract. "Goods" is defined to mean "the goods (if any) required under the contract." Both parties also agreed to perform "all their other obligations under the contract." 57The contract was said to incorporate a number of documents including Centennial Standard Conditions of Contract, Scope of Work, Schedules, and certain attachments. These attachments included the Centennial Standard Contractors Site Regulations, Centennial Coal Policies and Contractor's Insurance Details. 58The only evidence given in the proceedings about what Advantage did under this contract was confined to the provision of the plaintiff's services to Centennial, and also the provision of the services of one other person who performed maintenance work at the mine. 59The contract itself, in the manner in which it is framed, seems directed principally to the supply of goods and the carrying out of works at the mine. For example there is a definition of "supply" which reads "includes the supply and delivery of Goods in accordance with this contract". "Work" is defined to mean "the work or services required under the contract including the supply of Goods." The contractor is required to carry out and complete the Work in accordance with the contract by the date specified in the purchase order. There are detailed provisions about the passing of the risk in goods, their delivery and the like. 60In the same vein, there is a requirement by the contractor to comply with all laws and all occupational health safety and environmental and rehabilitation requirements of Centennial relating to the contract, compliance with site regulations and Centennial policies whilst on site, a requirement to obtain a copy of the site regulations before commencing work and to make personnel aware of them, to provide all safety devices and warnings which may be necessary or desirable for ensuring the protection of persons, a prohibition against interfering with or disrupting the work of Centennial staff, a requirement to avoid damage to property, a warranty that the site has been fully inspected and that provision has been made for "all reasonable contingencies that may arise while you are performing the contract at the Centennial sites." Provisions of this kind are more appropriate to circumstances where a contractor enters a site to perform a work project, rather than making persons available to perform work in the circumstances which apply to the plaintiff. 61Notwithstanding this, portions of the contract are clearly able to be applied to the supply of the plaintiff's labour by Advantage to Centennial. This is because a schedule to the contract describes the scope of the supply of work and services as confined to "labour for Longwall maintenance" and "labour on maintenance days...." There is included a schedule of rates on an hourly basis, calculated by reference to the shift which is worked. There is a special insurance requirement for public liability cover of $5 million. The commencement date is said to be 1 July 2008 and the completion date 30 June 2009. 62The only evidence about payment to Advantage by Centennial under the contract is that of an hourly rate paid for time worked by each of these two persons. 63In support of its claim for breach of contract, Centennial relied on certain provisions of the site regulations which were incorporated into the contract. In particular Centennial relied on the provisions of clause 6, entitled "Safety." Cl 6.1 required in general terms that all site work be carried out so as to minimise the risk of injury to people and damage to equipment. Centennial submitted that Advantage had breached this condition because the work which was being carried out by the plaintiff was not done so as to minimise the risk of injury to him. This submission is typical of some of the other breaches alleged against Advantage. 64Clause 6.2 states that Centennial: "Requires risk assessments and regular reviews of these assessments to be conducted of all operations carried out on site together with regular meetings between supervisors, employees and contractors, employees and subcontractors to specifically address safety issues." Furthermore, clause 6.3 provides that consistent with this policy and "prior to commencing site works", the contractor is to document work activities and the system of work and of safety precautions, conduct a risk review on site involving the contractor and their appropriate employees who are going to undertake the site works, and provide Centennial with a formal copy of the risk review and supporting documentation. By clause 6.3.3 the contractor is to conduct regular site inspections to identify assess and eliminate or control risks, discontinue site works where there are uncontrolled hazards, hold regular meetings with all site employees to review safety aspects of the job, promptly report all accidents or incidents, and document the results of safety inspections and key issues arising from safety meetings with employees. Furthermore, regular site inspections are to be conducted "at least once per day, prior to the commencement of work on site, and as directed or deemed necessary" by Centennial. There is also provision for regular safety meetings to be conducted each month during work on site with 15 named matters to be considered. 65It was submitted by Centennial that all of these provisions had been breached by Advantage. During the course of oral submissions I discussed with Mr McInerney whether in reality the contract should be read and applied so that provisions of this kind would be imposed on Advantage, given the limited nature of its subject matter. Notwithstanding that the contract applied, on the evidence, to the provision of the services of the plaintiff and one other maintenance person only, Mr McInerney asserted that these clauses operated and should be applied to their full effect. Accordingly, said Mr McInerney, the principal of Advantage or some other person would be required to attend the site at least once on each day that the plaintiff performed work there for the purpose of ensuring that all of the work activities, (presumably confined to those which the plaintiff would undertake during the course of that day) would be carried out safely and in compliance with all of the requirements outlined above. Given the subject matter of the contract, this would seem to create a situation which, when combined with the other provisions of clause 6.3 can only be described as bizarre. The commencing words of clause 6.3.1 are "prior to commencing site works." Notwithstanding the submissions made on behalf of Centennial, I would not be prepared to apply the provisions of this contract to the supply of two individual persons to perform labour as falling within the commencement of site works. The thrust of this provision is that it is intended to apply to circumstances where a contractor comes onto a Centennial site and carries out a particular project there. 66In taking this approach to construction of the provisions of the contract I acknowledge that consenting contractual parties engaged in commerce must not be protected from an unfavourable bargain. But this is far removed from applying terms and conditions in a manner which clearly are irrelevant to the particular circumstances of the contract. The form of the contract is one which is clearly intended to be capable of being applied to a variety of situations, especially the supply of goods and the carrying out of specific site works. To attempt to apply all of the provisions to every situation is an inappropriate exercise. 67That is not to say, however, that certain of the provisions of the contract referable to safety matters and the carrying out of work by the plaintiff cannot be said to apply; but in the case of these proceedings they need to be read down so that they are relevant to the supply of labour simpliciter. Mr McInerney did not suggest that those provisions of the contract which clearly related to the supply of goods should apply to Advantage, because clearly Advantage was not supplying goods under the contract. Accordingly, if Advantage is not engaging in site works as part of some discrete project why should the contract be construed so as to apply provisions which are clearly intended to cover site works of this kind, to the bare supply of labour? In my opinion the contract should be construed so as to be consistent with the fact that its provisions clearly cover and anticipate a variety of activities and circumstances. The provisions which are to be applied should be limited to those which are consistent with those activities and those circumstances which are the subject of the contract, so as to give efficacy to it. 68I conclude that the clauses relied upon by Centennial as having been breached by Advantage do not apply to the contract between them. Accordingly, no question of breach can arise. 69Assuming, however, that the conclusion which I have reached is incorrect, and the provisions of clause 6 apply to the agreement, it would be necessary to consider the consequences of any breach. There is no evidence that Advantage undertook any of the obligations imposed upon it under clause 6. On the contrary, the plaintiff in cross-examination said that Advantage did not participate at all and was not active in any way concerning the work which he performed for Centennial. In particular, to his knowledge, Advantage did not conduct any risk review, daily site inspections, monthly safety meetings and the like. 70It was the position of Centennial that by reason of these breaches, Advantage was required to pay it by way of damages any sum which it was ordered to pay to the plaintiff together with its own costs. 71Even if I were to read these provisions as extending to the obligations of Advantage in the context of this labour supply agreement, I am of the opinion that Centennial has not established the necessary causal nexus between the breach and the liability of Centennial to pay damages to the plaintiff. It is a trite observation, and well established on the authorities that in order to recover damages for breach of contract, there must be a causal connection between the breach and the loss which has been suffered. In Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310, McHugh JA (as his Honour then was) said: ".....to establish a causal connection between a breach of contract and the damage which the plaintiff has suffered, he needs only to show that the breach was a cause of the loss. This is to be decided by the application of common sense principles. In general, the application of the "but for" test would be sufficient to prove the necessary causal connection. But that test is only a guide. The ultimate question is whether, as a matter of common sense, the relevant act or omission was a cause." (at 358). 72Centennial submitted that the "evidential onus shifted to Advantage to demonstrate that no causal connection existed (examples could have included evidence which indicated that the plaintiff would not have acted on the warning because of lack of choice or personal inclination; or evidence that no alternative course of action would have eliminated or reduced the risk of injury)." In support of this submission Mr McInerney relied on observations of McHugh J in Chappel v Hart (1998) 195 CLR 232 at 247. I observe firstly that his Honour was in dissent. Secondly, any such comment needs to be read in the context of the overall discussion in which His Honour was engaging relating to theories of causation. I do not discern anything in his Honour's judgment which would avoid the imposition of the usual burden of proof in claims based on breach of contract. It is part and parcel of such a claim that the appropriate causal connection be established by the party asserting entitlement to a remedy consequent upon breach. 73It will be remembered that the plaintiff had only undertaken this particular task before the installation of the AFC on four or five occasions in a career extending back to 1980. Accordingly, it was not a task which he encountered often. Furthermore, on the evidence, the incident occurred at about 2 pm during a shift which was due to finish at 4 pm. The task was unplanned in the sense that the plaintiff undertook it on his own initiative, without having been directed by anyone to do it, and, on the evidence, the need to do so was unusual. The plaintiff had never encountered a deputy dropping off a leg previously, and he had no previous knowledge that it was to occur. I infer that the circumstances leading up to the incident occurred as part of the process of operating a coalmine, and in general terms the plaintiff was expected to do what was necessary as and when he had to. Centennial submitted that each of the breaches was a distinct cause of the plaintiff's injuries. It was said that each breach was a particular act or condition which was one of the conditions or relations necessary to complete the set of conditions which represent the total cause, relying on the judgement of McHugh JA in Alexander v Cambridge Credit. Centennial further submitted that as a matter of practical commonsense but for each breach it was likely on the balance of probabilities that the plaintiff would not have suffered his injury. 74I reject these submissions. As a matter of commonsense, as I pointed out above, the work task which the plaintiff was to carry out was highly unusual in his experience, and not part of any planned work activity on his part. In these circumstances I am unable to conclude that if a risk assessment had been conducted before the commencement of the shift, or if a daily site inspection had been conducted before the plaintiff commenced work that day or if monthly safety meetings had been held, that the plaintiff would not have been confronted with the particular task towards the end of the shift that day, would not have attempted it in the manner in which he did, and would not have been injured. As a matter of commonsense, there is no relevant causal connection between any of these breaches as asserted by Centennial and the particular injury sustained that day by the plaintiff. The plaintiff's injuries were sustained because he was not appropriately instructed or supervised in carrying out the particular task which he attempted, and because he did not have available to him appropriate equipment with which to do it. In the circumstances of the plaintiff's employment, these were all matters within the control of Centennial, and unrelated to any obligations imposed on Advantage by clause 6. 75In summary I decline to find that there was a breach by advantage of its obligations under clause 6 of the contract in the manner contended for by Centennial. Furthermore I conclude that if there were any such breach that there does not exist the necessary causal connection with the plaintiff's injuries to found any entitlement to claim damages for breach from Advantage. 76Centennial also relied upon two indemnity provisions contained within its Standard Conditions of Contract. 77Clause 8 is entitled "Indemnities and Insurance". Relevantly, clause 8.1 provided that Advantage must indemnify Centennial and agree to hold and save Centennial harmless from all claims for: "(a) Injury to or death of any of your personnel, except to the extent that a claim for such injury or death arises as a result of the negligence of Centennial or a breach of this contract by Centennial. (e) Without limiting clauses 8.1(a)..... Breach by you or your personnel of any of your obligations under the contract or any negligent act or omission by you or your personnel relating to the performance of the contract." 78Centennial conceded that if I found, as I have, that the plaintiff's injury arose as a result of the negligence of Centennial, that clause 8.1 (a) would not apply. 79It is only necessary to consider the provisions of clause 8.1 (e). Assuming, for the purpose of discussion, that Advantage has breached clause 6 of the conditions, the indemnity extends to claims brought by someone other than Centennial arising from breach under the contract or any negligent act or omission relating to the performance of the contract. Having concluded that any such breach lacked the necessary causal connection with the plaintiff's injuries I am of the opinion that the provisions of clause 8.1 (e) can have no application so as to afford Centennial the benefit of any indemnity. The plaintiff's claim does not relevantly arise out of any breach by Advantage or any of its personnel of the obligations of Advantage under the contract. Nor does it arise out of any negligent act or omission by Advantage or its personnel relating to its performance of the contract. This claim must also fail. 80Finally, Centennial relied on the provisions of clause 43 of the Standard Contract which required Advantage to effect certain insurances. "Clause 43.1 The contractor must have insurances referred to in the contract whenever performing its obligations under the contract and for the period (if any) set out in the contract after the contractor has performed all of its obligations under the contract. Clause 43.2 43.2.1 All insurance policies must be with insurers which are subject to the Prudential supervision of APRA 43.2.2 Unless otherwise agreed in writing by the Principal, public and product liability policies must note the Principal and all subcontractors as interested parties and must cover the respective liabilities of each of those parties to each other and to third parties. The policy must cover each indemnified party to the same extent as it would if each of the parties had a separate policy of insurance. 43.3 The Contractor must provide evidence of insurances prior to performing any work and whenever requested to do so. 43.4 If the Contractor neglects, fails or refuses to obtain any insurance policies as required by the contract or the Standard Contractors Site Regulations the Contractor must indemnify the Principal for any loss or damage suffered by the Principal arising out of or in connection with the Contractor's failure to obtain the required insurance." 81Advantage effected a policy of insurance with GIO. If that policy complies with its obligations under clause 43.2, then no question of breach of that provision arises. The GIO Policy 82The policy was in evidence. 83The GIO Policy makes clear that: (a) Advantage is the Named Insured under the Policy; (b) Labourforce is a Named Insured under the Policy; (c) Centennial is an Insured under the Policy because of the definition of "You/Your/Insured (where used in this cover section" which means: (i) "(d) every principal in respect of the principal's liability arising out of: (i) the performance by or on behalf of the Named Insured of any contract or agreement for the performance of work for such principal, but only to the extent required by such contract or agreement and in any event only for such coverage and liability as provided by this policy"; (ii) "(i)" every party including joint venture companies and partnerships to whom the Named Insured is obligated by virtue of any contract or agreement to provide insurance such as is afforded by this Policy; but only to the extent required by such contract or agreement and in any event only for such coverage and limits of liability as are provided by this Policy"; (d) The Policy provides an indemnity in the following terms: "We agree (subject to the terms, Claims conditions, General Policy conditions, Exclusions, definitions and Limits of liability incorporated herein) to pay to You or on Your behalf all amounts which You shall become legally liable to pay as Compensation in respect of: 1. Personal Injury; and/or 2. Property Damage; and/or 3. Advertising Injury; happening during the Period of Cover within the Geographical Limits and caused by or arising out of an Occurrence in connection with Your Business. (e) The GIO Policy further provides in relation to Defence Costs and supplementary payments: "With respect to the indemnity provided by this Policy, We will: 2. Pay all charges, expenses and legal costs incurred by Us and/or by You with Our written consent: (a) in the investigation, defence or settlement of such claim or suit, including loss of salaries or wages because of Your attendance at hearings or trials at Our request; or (b) in bringing or defending appeals in connection with such claim or suit. 3. Pay all charges, expenses and legal costs recoverable from or awarded against You in any such claim or suit and all interest accruing on Our portion of any judgment until We have paid, tendered or deposited in court that part of such judgment which does not exceed the limit of Our liability thereon." 84GIO resisted the claim brought by Centennial under the policy on the basis that the insurance cover provided was limited to indemnify a "Principal" of Advantage only to the extent required by any contract or agreement which Advantage had with Centennial. It was submitted that the relevant provisions providing for insurance in the agreement should be construed so that they did not apply to the direct liability of Centennial to pay damages to the plaintiff arising out of its negligent acts and omissions. I have earlier set out the provisions of clause 43.2.2 of the agreement. Prima facie, this clause is framed in wide terms and, in particular having regard to the final sentence, should be read contrary to this submission. 85The submission was founded principally on the decision of the New South Wales Court of Appeal in Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114, 72 NSWLR 1. Those proceedings arose out of injuries sustained by a workman on a building site. One of the matters for decision was the effect of a provision in a subcontract agreement providing for certain indemnities, which was followed immediately by a provision requiring public liability insurance to be effected. The indemnity provision required the subcontractor to indemnify the principal against all damage etc or liability of any nature "suffered or incurred by (the principal) arising out of the performance of the subcontract works and its obligations under the subcontract." The insurance clause which followed required the subcontractor to take out public liability insurance in the joint names of the principal and the subcontractor "to cover them for their respective rights and interests against all liability to third parties for loss of or damage to property and the death of or injury to any person." 86The court held that in the circumstances of those proceedings and in particular by reason of the provisions of the indemnity and insurance clauses, the obligation to insure was confined to one where the principal's liability arose out of the subcontract arrangement, and did not extend to any liability incurred by the principal in its own right by reason of its own negligence independent of the subcontract arrangement. The court pointed to the fact that the insurance clause followed immediately after the indemnity clause, and this gave some weight to its restricted construction. 87In his judgement Giles JA said: "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." (at [5]. The circumstances in these proceedings are relevantly different to those which pertained in Erect Safe Scaffolding. The relevant clauses in these proceedings are not contiguous. More importantly, the insurance provision is quite different. Clause 43.2.2 requires cover for the respective liabilities of both Advantage and Centennial "to each other and to third parties." These words indicate that the cover which is to be effected is to extend to liability of a wide-ranging nature. Furthermore, each party is to be indemnified "to the same extent as it would if each of the parties had a separate policy of insurance." If each of the parties, and in particular Centennial had a separate policy of insurance, then each would be insured with respect to its operations arising out of the provision of labour at the coal mine. There is nothing in the policy cover set out in the policy wording to which I have been referred which seeks to limit indemnity in some way which would deny or restrict cover in the manner contended for by GIO. For the GIO submission to succeed it would be necessary to construe clause 43.2.2 in a manner which restricted it so that cover would not apply if the liability of Centennial arose independently of its position as principal to Advantage under the labour supply contract. In one sense, it may be a difficult exercise to excise liability of Centennial to pay damages to the plaintiff independently of the labour supply contract from liability arising under the contract. This is because the plaintiff only came to be working at the mine because his labour was supplied under that contract. The duty of care which Centennial owed the plaintiff arose because he was present at its mine under the labour supply contract. 88This reasoning supports the conclusion to which I have come, namely that the submissions made by GIO should be rejected. I find that Advantage was required under the contract with Centennial to provide insurance cover, the extent of which would indemnify Centennial against liability to pay damages and costs to the plaintiff arising in the circumstances of the incident whether under the labour supply contract or independently of it. 89Furthermore I find that by reason of the provisions of the insurance policy which I have set out above and based on unchallenged documentary evidence, that Advantage is a named insured under the policy, that Labourforce is a named insured because it is a subsidiary and/or controlled corporation of Advantage, and that Centennial is an insured under the policy because the definition of an insured person includes a principal in respect of the liability of the principal arising out of the performance by or on behalf of Advantage of a contract for the performance of work to such principal. I also find that the labour supply contract by its terms and conditions required Advantage to have effected this insurance for the benefit of Centennial, for the reasons set out above. I apprehend that none of these matters, save for the last finding was seriously contested by GIO. 90No other matter was submitted on behalf of GIO that would preclude me from making an order, the effect of which would require GIO to indemnify Centennial under the policy. I was not directed to any limitation by reason of the business of the named insured or the application of any exclusion clause or any other matter which would relevantly limit cover. In the circumstances Centennial must succeed in its cross-claim against GIO. Costs of the Proceedings for Leave to File Defence to Cross Claim out of Time 91The cross defendants had been ordered to pay the costs of the parties thrown away by reason of the application made for leave to file the cross-claim out of time. An application was made by Centennial that those costs be paid on an indemnity basis. Having reconsidered the circumstances surrounding the failure of GIO to file a defence to the cross-claim within the time limited by the court order without any satisfactory explanation, and without any appropriate action being taken to seek any indulgence from the court or from the parties, and given the time expended in dealing with this discrete issue, I am satisfied that it is arguably appropriate to order that these cross defendants pay the costs of Centennial and the plaintiff thrown away by reason of this application having been made at the commencement of the substantive hearing of the proceedings on an indemnity basis. However, because I have reserved that matter, and I am under the impression it has not been argued to finality, I will refrain from expressing any final concluded view. It remains subject to liberty to apply. 92I make the following orders: (1) Judgment for the plaintiff against each of the defendants in the sum of $550,000 together with costs assessed in default of agreement. (2) Contribution between each of the defendants in respect of their liability to the plaintiff, including the order for costs made in favour of the plaintiff, will be 100 per cent as to Centennial and nil as to the remaining defendants. (3) The cross claim brought by Centennial against each of the defendants, Advantage and Labourforce is dismissed. (4) Judgment in favour of Centennial against GIO. (5) That GIO indemnify Centennial against the damages and costs Centennial is required to pay to the plaintiff, and the costs Centennial has incurred in investigating and defending the proceedings. (6) Direct that Centennial file and serve an affidavit bringing up to date the total amount of costs and disbursements incurred in investigating and defending the proceedings within 14 days. (7) That costs in connection with orders 2, 3 and 4 be reserved with liberty to apply, which should be exercised within one month of this date. (8) The parties are directed to bring into court within 21 days Short Minutes of Order calculating the amount of the judgment to be entered against GIO under order 4 above. (9) Liberty to apply with respect to order 6, which should be exercised within 1 month of this date. (10) The liberty to apply with respect to indemnity costs re the cross-defendants' application for leave to file defences out of time should be exercised within one month of this date. ********** 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: 29 November 2012