Allianz Australia Limited v Wentworthville Real Estate Pty Limited

LOWER COURT District Court JURISDICTION : LOWER COURT 4011/99 FILE NUMBER(S) : LOWER COURT Walmsley DCJ JUDICIAL OFFICER :

• 1 - CA: 40486/03 DC: 4011/99

HANDLEY JA HODGSON JA M.W. CAMPBELL AJA

16 July 2004 NATIONAL VULCAN ENGINEERING INSURANCE GROUP LTD. V. PENTAX PTY. LIMITED T/AS LIF-RIG & ANOR Judgment 1 HANDLEY JA: I agree with the reasons for judgment of Hodgson JA and M W Campbell AJA.

2 HODGSON JA: I agree with the order proposed by M.W. Campbell AJA, and substantially with his reasons. 3 The circumstances that gave rise to the proceedings under appeal were as follows. A worker employed by the first respondent (Pentax) was injured while working on a building site on which was being conducted a building project by the second respondent (Multiplex). The appellant (Vulcan) had issued an insurance policy in respect of the project insuring contractors and subcontractors (including Multiplex and Pentax) in respect of certain legal liabilities. 4 The worker sued Pentax and Multiplex. Multiplex cross-claimed against Pentax seeking an indemnity against its liability to the worker. Pentax cross-claimed against Vulcan, claiming indemnity in respect of any liability it had to Multiplex. The worker's claim against Pentax and Multiplex was settled on the basis that he should have a verdict against Pentax for $197,500.00 (to be adjusted by reason of workers compensation payments) and against Multiplex for a further $197,500.00. 5 Under cl.7(a) of Pentax's subcontract with Multiplex, Pentax agreed to indemnify Multiplex against "all loss, damages, claims, liens, actions, liabilities or proceedings whatsoever arising under any statute or at common law including claims in respect of personal injury to or death of any person … arising out of or in the course of or caused by breach of performance of this Agreement or by the execution of the Works". 6 Vulcan's submission was that this clause did not entitle Multiplex to an indemnity for liability based on Multiplex's own negligence. I agree with the submission on behalf of Multiplex that cl.7(a) presupposes that Multiplex might be liable for its own fault; and effectively passes on that liability to its subcontractor, where it arises out of the performance of the subcontract. 7 Accordingly, Pentax was liable to indemnify Multiplex in respect of the $195,000.00 for which Multiplex was liable to the worker. The question was then whether Vulcan was liable to indemnify Pentax in respect of this liability. 8 The relevant insuring clause relevantly obliged Vulcan to indemnify Pentax in respect of sums which Pentax "shall become legally obligated to pay for or in respect of … personal injury … suffered … by any person … caused by … an Occurrence … in connection with" the project. 9 There was in the insurance policy a relevant exclusion of "liability … for personal injury sustained by any person arising out of and in the course of his/her employment by the Insured … where claims for such personal injury are brought directly against the Insured by an employee of that Insured". 10 As noted earlier, a claim for personal injury had been brought by the worker as employee directly against Pentax, and had been successful to the extent of $195,000.00; but the liability for which Pentax sought indemnity was one arising from a claim brought by the worker against Multiplex, for which Multiplex had sought indemnity from Pentax. This gave rise to the question, barely touched on in argument, whether the fact that the employee had made a claim for the personal injury directly against Pentax was sufficient to engage the exclusion so as to exclude the current claim. 11 Before returning to that question, I note that Vulcan's main argument was that Pentax's liability to Multiplex was not a sum which Pentax became legally obligated to pay for or in respect of personal injury, because Pentax's liability to Multiplex was pursuant to a contractual indemnity. In my opinion, this liability was a sum which Pentax was legally obligated to pay "for or in respect of" personal injury; but this was so only because the width of the words "in respect of". Had the indemnity been limited to sums which Pentax was legally obligated to pay "for" personal injury, this wording would not in my opinion have extended to a contractual liability to indemnify Multiplex for its liability for the worker's personal injury. 12 Consistently with this view, in my opinion the exclusion does not apply because Pentax's liability is not for personal injury, and the fact that a claim for personal injury had been brought directly against it is not of itself sufficient to engage the exclusion. 13 If the worker had not recovered money from Multiplex, perhaps because he obtained and collected a verdict for his full damages from Pentax, Vulcan would not have been liable to Pentax. But once Multiplex was obliged to pay and did pay some damages to the worker, and obtained an indemnity for this from Pentax, then Pentax became legally liable to pay a sum to Multiplex in respect of personal injury to the worker (so the insuring clause was engaged). However, this was not a liability of Pentax for personal injury, for which a personal injury claim had been brought directly against Pentax by the worker (so the exclusion was not engaged). 14 M.W. CAMPBELL AJA:

This is an appeal against a verdict and judgment of Judge Walmsley SC of the District Court which, leaving aside consequential costs orders, appeared from the minutes of judgment as follows: "1. … 2. Verdict in favour of Multiplex Constructions (NSW) Pty Ltd ("Multiplex") in its capacity as the First Cross-Claimant as against Pentax Pty Limited t/as Lif-Rig ("Pentax") in its capacity as the First Cross-Defendant, in the sum of $197,500 which was paid to the plaintiff by Multiplex, plus interest of $32,785. 3. … 4. Verdict and judgment for $230,285 in favour of Pentax in its capacity as the Second Cross-Claimant, as against National Vulcan Engineering Insurance Group Limited, the Second Cross-Defendant to the Second Cross-Claim." 15 This judgment was the culmination, at least at first instance, of litigation which had largely been resolved by compromise. 16 Richard Burke was employed as a rigger by Pentax Pty Limited ("Pentax") at the Grace Bros redevelopment site at Broadway in Sydney. Multiplex Constructions (NSW) Pty Ltd ("Multiplex") was the head contractor on the site and the occupier of the premises. Pentax was a subcontractor to Multiplex. 17 On his first day at work, 22 November 1996, Mr Burke was injured while leaving the premises at the end of the working day. He alleged that neither defendant had provided a proper means of egress and that he was injured jumping from a fence. 18 Mr Burke's claim for damages for breach of Pentax's duty as his employer and Multiplex's as occupier was settled on 9 November 2001. Amongst other things the terms provided for a verdict for Mr Burke against Pentax in the sum of $197,500 and against Multiplex in the sum of $197,500. These terms are somewhat differently recounted in Judge Walmsley SC's judgment, however nothing turns on this. 19 The terms left outstanding two cross claims. The first, by Multiplex against Pentax, claimed, inter alia, damages for breach of contract for not indemnifying it, as it is said to have promised to do, under the terms of the contract between them. 20 The other cross claim, by Pentax against National Vulcan Engineering Insurance Group Limited ("Vulcan"), sought a declaration, or, alternatively, damages, on the basis that Pentax was entitled to be indemnified by Vulcan in respect of any liability it was found to have to Multiplex. 21 Mr Garling, Senior Counsel, and Mr Miller of Counsel appeared for Vulcan. Mr Marshall, Senior Counsel, and Mr Weinberger of Counsel appeared for Multiplex. There was no appearance for Pentax, although Mr Weinberger did sign the written submissions as being for the respondents. 22 If the appeal in respect of the first cross claim succeeds, then the second cross claim falls with it. If the appeal in respect of the second cross claim only succeeds, then Vulcan will not be liable to indemnify Pentax. 23 At Mr Garling SC's suggestion, the first cross claim was referred to during submissions as the "contractual indemnity claim". I shall use that name. His suggested "policy point" or "insurance point" was used less generally for the other cross claim. I shall refer to it as the "insurance claim".

The contractual indemnity claim 24 It is convenient to deal first with the judgment for Multiplex against Pentax. Mutliplex relied upon a subcontract agreement made between it and Pentax on 27 September 1996 for the provision and maintenance of a man and materials hoist and the fabrication, supply and installation of certain structural steel stub beams for a lump sum of $138,160. 25 The contract, which it was accepted was in a standard form for the development site, contained, inter alia, the following provisions: "7. The Sub-Contractor agrees at its own expense: (a) To protect and fully indemnify the Proprietor and the Contractor, their directors, officers and employees against all loss, damages, claims, liens, actions, liabilities or proceedings whatsoever arising under any statute or at common law including claims in respect of personal injury to or death of any person or any injury or damage to any property, real or personal, arising out of or in the course of or caused by breach or performance of this Agreement or by the execution of the Works, including any costs, legal fees and incidental damage resulting therefrom; to protect and fully indemnify the Proprietor and Contractor, their directors, officers and employees against any loss, damages, claim, suit or action for any alleged violation or infringement of patent rights arising from the Works." (b) To comply with all laws and with all requirements of all authorities in any manner relating to the Works or their execution, whether introduced before or after the date of this Agreement, to adhere to all industry codes or conduct and practice applicable from time to time; to execute the Works safely and to avoid any conduct, activity, operation, practice or condition which may be unsafe or may be regarded as unsafe by any safety committee, law, authority or union; not to assign, charge or sub-let this Agreement or any portion thereof unless with the written consent of the Contractor; to employ labour under conditions satisfactory to the Contractor and to discontinue the employment of any employee or employees or piece-workers or contractors unsatisfactory to the Contractor; to avoid any conduct or omission which might result in industrial unrest or dispute or otherwise disrupt the Contractor's activities on the Site or on any other site; to commence the Works the subject hereof forthwith on notice from the Contractor and to proceed with sufficient labour, materials and equipment in accordance with this Agreement, and in default thereof to permit the Contractor immediately upon notice and demand to take possession of the Works forthwith and complete the same at the Sub-Contractor's cost.

………………………………………………… 9 (a) Without limiting the Sub-Contractor's obligation to provide insurance as contemplated by the Head Contract, the Sub-Contractor shall insure on terms with an insurer acceptable to the Contractor against all public risks and all Contractor's risks and also against any loss, claim, legal liability or proceedings whatsoever, whether arising at common law or by virtue of any statute including Worker's Compensation legislation, to or by it or any person employed or otherwise engaged by it in or about the execution of the Works. Without limiting the generality of the foregoing, the Sub-Contractor shall also maintain professional indemnity insurance on terms and for a sum acceptable to the Contractor to cover its risk of liability to the Contractor and/or the Proprietor in respect if its design and/or design and construction responsibility (where applicable). The Sub-Contractor shall, before commencing the Works, lodge with the Contractor evidence that insurance as required by this Agreement ("the insurance") has been effected and shall thereafter produce evidence of continuing currency when required. Insurance shall be effected as set out in the Second Schedule hereto (without limiting the generality of this clause)." 26 I should observe that Judge Walmsley SC noted as agreed facts: "(a) Pentax was liable in its own right for fifty percent of Mr Burke's verdict of $395,000 against Multiplex (being $197,500);

(b) When Mr Burke was injured Multiplex held in its own name separate insurance cover (different from the terms of the policy) which responded to the circumstances of Mr Burke's claim and which covered Multiplex in the event of loss arising from its own negligence.

For Pentax, Mr Weinberger did not concede the relevance of (b) however".

At that time Mr Weinberger appeared for Pentax for limited purposes.

The judgment 27 Judge Walmsley SC considered Multiplex's liability to Mr Burke as "arising out of" performance of the agreement, or "in the course of" performance of the agreement, or "arising out or the cause of" the execution of the works. He said: "Indeed, it is hard to see what Mr Burke was doing on the site if not to assist Pentax perform work required by the agreement." 28 I, with respect, agree with that observation. It is convenient to say at this point that I do not accept the appellant's written submission that the fact that Mr Burke had completed the day's work meant that his injury did not arise out of and in the course of the performance of the agreement or the execution of the work. 29 Judge Walmsley SC then dealt with a submission that the liability was not caught by cl 7(a) since it arose from alleged negligence and cl 7(a) contains no reference to negligence. He concluded that whether an indemnity covers acts of negligence (no doubt in the absence of express words) "must depend on the context in which it appears". Mr Garling did not contest that proposition, and I do not need to go to the authorities referred to by the Judge. 30 It had been put to the Judge, but was not put to us, that cl 9(a), requiring Pentax to insure, was inconsistent with the construction of cl 7(a) contended for by Multiplex. It is unnecessary to go to the submission. However, Judge Walmsley SC considered the absence of express reference to negligence significant as explained below. 31 In considering that submission, the judge referred to the case of Valkonen & Anor v Jennings Constructions Limited & Ors (1995) 184 LSJS 87 in which the Full Court of the Supreme Court of South Australia said at [34]: "There may be good practical reasons for providing that one party to a contract shall be indemnified by the other against any liability the former might incur to a third party, even if it is caused by his own fault, and where, as commonly happens, the obligation to indemnify is to be secured by insurance there is no sound reason for expecting the contract term to conform with an arbitrary judge-made textual requirement before its provisions will be given their natural operation." 32 Judge Walmsley SC summarised his position as follows: "I am persuaded that the indemnity in cl 7(a) is one to which Multiplex is entitled to have recourse to recover the sum it paid Mr Burke. Firstly, cl 7 is of considerable width, that width being great enough to absorb such a claim. Secondly, though 'negligence' is not referred to, the width is enough to embrace it. Thirdly, cl 9, requiring insurances, does not refer to 'negligence' either. Yet it is hard to see how cl 9 could be read as not covering negligence. So I see the drafter as intending to cover negligence in both cases. Fourthly, the combination of an indemnity and a requirement to be covered for insurance for the subject matter of the indemnity is a well recognised incident of commercial contracts."

The appellant's submissions 33 The written submissions put that the liability sought to be imposed upon Pentax under cl 7(a) was a liability incurred by Multiplex solely by its own fault. It was said: "It is inherently improbable one party would agree to discharge the liability of another party for acts for which the latter was solely responsible." 34 Upon the foundation argument that Mr Burke had completed the day's work and that his injury did not arise out of or in the performance of the agreement or execution of the work, it was put that there was no discernible or rational nexus between Multiplex's liability, Mr Burke's injury and the performance of the agreement and/or execution of the works. 35 The written submissions put, correctly, that the contract was to be read contra proferentum Multiplex. 36 Mr Garling put that the indemnity clause, properly read, did not indemnify Multiplex for the consequences of its own negligence. 37 He submitted that, in particular, the provisions of cl 7(b) pointed to that conclusion. That clause imposed obligations upon the subcontractor to obey safety laws and not engage in unsafe practices and the like. Yet the contract imposed no such obligations upon Multiplex. In these circumstances, there being no express provision for negligence, to read cl 7(a) as encompassing acts of negligence by Multiplex would be, it was submitted, to extend it beyond its proper and reasonable interpretation.

38 Mr Garling gave an example of injury to a Pentax worker arising from use of a Multiplex crane with the whole fault being that of Multiplex. He submitted that it would be "a very curious reading and extension of this clause" for Pentax to be found liable to indemnify Multiplex.

Multiplex's submissions 39 The written submissions, apart from relying upon the judgment, challenge the contention that the liability was one incurred by Multiplex "solely by its own fault" and referred to the apportionment of liability between Multiplex and Pentax. More strictly, having regard to the terms of the settlement and form of the judgment, it was an acceptance of liability by each of them. 40 It was also put that if Vulcan was right as to the construction of cl 7(a) it would be otiose and with no work to do. 41 Mr Marshall put that the wording of cl 7(a) is "extraordinarily wide". He drew attention to the word "damages", which he submitted presupposes that Multiplex might be liable for some sort of fault. 42 Cl 7(a) refers to personal injury and death and Mr Marshall put the rhetorical question as to how Multiplex could be liable for personal injury or death but by fault. It was submitted that if the indemnity was only applied where the sub-contractor was at fault and Mutliplex was not, then the clause would not be needed as Mulitplex would be entitled to an indemnity without it. 43 As an example of the situation where there was a contractual indemnity even where the person entitled to the indemnity was at fault, Mr Marshall cited Davis v Commissioner for Mainroads (1968) 117 CLR 529. In that case the contract between the contractor and the Commissioner provided, inter alia, as follows: "7 The Contractor shall undertake the whole risk of carrying out the contract, and without limiting the generality thereof, shall- (a) hold the Commissioner indemnified against all claims arising out of (1) damage to the property of the Contractor or any third party (2) death or bodily injury to the Contractor or his employees, or employees of the Commissioner, or any third party including persons transported in vehicles engaged by the contractor…" 44 By (3:2) majority the court held that the indemnity clause extended to a claim for damages to the property of a third person caused by collision with the contractor's motor vehicle where the negligence of the Commissioner was the cause of damage. 45 Mr Marshall also referred to State Government Insurance Office (Queensland) v. Brisbane Stevedoring Proprietary Limited (1969) 123 CLR 228, a case to which I shall come in relation to the insurance claim, as an example of an indemnity clause which was in the hiring agreement for a crane, being held to entitle the owner to be indemnified by the hirer despite being found to be at fault.

Consideration 46 In my view, the matters put by Mr Garling do not overcome the width of the language used in cl 7(a) notwithstanding the absence of express reference to negligence. Amongst other things, the word "damages" seems to connote fault. Indemnity is given against claims against Multiplex in respect of relevant personal injury to or death of "any person". It is difficult to see how such a claim against Multiplex could be maintained in the absence of fault on the part of Multiplex, its servants or agents. 47 I have already indicated my view in respect of the submission that the circumstance that Mr Burke had finished his day's work meant that his injury and the liability of Multiplex did not arise out of or in the course of the execution of the works. I accept the submission that the terms of the judgment following the settlement establish at least some liability in Pentax to Mr Burke. There is no basis to conclude that the liability of Multiplex is purely vicarious. Even if it were I do not consider that it would for that reason be excluded from reliance upon cl 7(a). 48 The circumstance that the obligations imposed upon Pentax by cl 7(b) are not elsewhere imposed upon Multiplex does not lead to the conclusion that the parties would not, and did not, agree upon an indemnity in the terms claimed by Multiplex. 49 I find the judgment of Judge Walmsley SC convincing and think his conclusion on the contract indemnity claim correct.

The insurance claim 50 It was agreed at the trial that there was on foot at the relevant time a construction, risks and third party legal liability insurance policy issued by Vulcan. 51 The insured project was: "The redevelopment of the Grace Bros store located at George and Pitt Street, Sydney, New South Wales, including all activities ancillary thereto." 52 The insured were: "Market Street Projects Limited, Colin Ging and Partners Pty Ltd, Coles Myer Properties Holdings Ltd as trustee of the Market Street Property Trust, Myer Stores Sydney City Council and all contractors and subcontractors of any tier." 53 It was accepted that Pentax was insured under the policy. 54 Section C of the policy dealt with third party legal liability. The relevant insuring clause provided: "The Insurers hereby agree, subject to the Limitations, Exclusions, Terms and Conditions hereinafter mentioned to: 1. pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay for or in respect of: (a) Personal Injury (as defined) suffered or alleged to have been suffered by any person or persons, (b) Loss or Damage to Property (as defined) caused by or contributed to by and/or arising out of an Occurrence happening during the Period of Insurance anywhere in the Territorial limits stated in the Schedule in connection with the Insured Project." 55 Under the heading Conditions Applicable to Section C, there appears, inter alia: "1. Cross Liability (a) Each of the parties comprising the Insured shall for the purpose of this Section be considered as a separate and distinct entity and the words "the Insured" shall be considered as applying to each party in the same manner as if a separate policy had been issued to each of them in its name alone. (b) Provided that nothing in this Condition shall be deemed to increase the limit of the Insurer's liability under Section C.1. in respect of any one Occurrence". 56 Under the heading Definitions-Section C, there appears, inter alia: "Personal Injury shall mean: (a) bodily injury, death, sickness, disease, disability, shock, fright, mental anguish and mental injury including loss of services resulting therefrom" 57 Under the heading Exclusions Applicable to Section C there appears, inter alia: "This Section shall not apply to liability: 1. For personal injury sustained by any person arising out of and in the course of his/her employment by the Insured under a Contract of Service of apprenticeship with the Insured, where claims for such personal injury are brought directly against the Insured by an employee of that Insured." 58 Under the heading General Conditions Applying to All Policy Sections, there appears, inter alia:

"1. Waiver of Subrogation In the event of Insurers indemnifying or making a payment to any Insured(s) the Insurers shall not exercise any rights of subrogation against any other Insured(s) hereunder".

The judgment 59 Judge Walmsley SC noted that Pentax argued that the risk fell within Section C whereas Vulcan contended that it did not, and, further, that the exclusion set out above applied. 60 The judge dealt first with the exclusion question. He considered the exclusion intended to exclude claims normally covered by the common law extension of workers' compensation policies. The judge referred to Transfield Pty Limited v National Vulcan Engineering Insurance Group Limited [2002] NSWSC 830, where McClellan J at 42 describes such a clause as "the employer's liability exclusion clause". He also considered that the claim was not one brought "directly against the insured by an employee" but against a head contractor, Multiplex. He held that Vulcan could not successfully rely upon the exclusion. 61 Turning to the insuring clause, the judge considered whether the sum claimed could be said to be "for" or "in respect of" personal injury. He noted that both "for" and "in respect of" are expressions whose width varies according to the context, and referred to a number of cases, some of which I shall come to later. 62 Judge Walmsley SC did not consider that the sum had been paid "for" personal injury, although personal injury was a link in the chain. However, he did "see" the sum Pentax had become liable to pay as being "in respect of" personal injury. He said: "Those words are of great width and it is hard to see, given the context in which they appear, what work they have to do unless they go further than 'for'." 63 Vulcan had relied upon the case of Nigel Watts Fashion Agencies Pty Limited v GIO General Limited (1995) 8 ANZ Ins Cas [61-235] as supporting the contention that Pentax's claim was for and in respect of a contractually assumed liability rather than personal injury. 64 Judge Walmsley SC distinguished that case on the basis that the policy in that case used the expression "to pay any other amount in respect of the [employer's] liability independently of the act for an injury to [a worker]…". He observed that the phrase used in the policy there is of long standing and is long understood to refer to the "common law extension" of a workers' compensation policy. The judge thought that the policy words in the present matter are different and of greater breadth, being, he thought, wide enough to embrace the claim made by Pentax. 65 The Judge also thought that the fact that the word "sum" is used gives greater width to the cover. He observed: "A sum incurred at the suit of a tortiously injured person is certainly a "sum", though more usually called damages."

The Appellant's Submissions 66 The appellant's written submissions put that the insuring clause only had application if the legal obligation of Pentax is properly characterised as a liability to pay "for or in respect of personal injury". It was then put that the obligation could not be so characterised and that it existed solely because of the contractual obligations imposed by cl 7(a) of the contract between Multiplex and Pentax. 67 It was submitted that the legal obligation was not "for or in respect of personal injury" but to pay "for or in respect of" a contractual liability. Reliance was placed upon Nigel Watts Fashion Agencies, to which I shall return. 68 It was put that the obligation was of an entirely different character to the liability for damages incurred by Multiplex or Pentax to Mr Burke "for and in respect of" his personal injury. Reference was made to Unsworth v Commissioner for Railways (1958) 101 CLR 73 at 86.4-5, 91.4-5. Mr Garling submitted that this case was analogous to the present matter. 69 In respect of the applicability of the insuring clause, Mr Garling put his position in this way: "At the end of the day, the short point, however it be stated and illuminated, is the phrase 'for or in respect of personal injury' is not a phrase suitable for indemnity for a contractual obligation, however it arises, requiring the payment of money." 70 Mr Garling informed the Court that it would appear that Nigel Watts was the only case dealing with a contractual indemnity and indicated that, whilst frequently cited on other issues, it would not appear to have been cited with approval doubted or distinguished on the relevant questions.

71 He submitted that there was work to do for the phrase "or in respect of" in bringing derivative claims, including claims under the Compensation to Relatives Act 1897, within the insuring clause.

72 The written submissions put that the claim initially brought by Mr Burke against Pentax amounted to a claim brought directly against the Insured by an employee of the Insured so as to attract the operation of the exclusion. 73 Mr Garling, whilst not abandoning the submission, proffered little in support of the applicability of the exclusion.

Multiplex's submissions 74 The written submissions emphasise the width of the words "for and in respect of". In particular, reference is made to the judgment of Taylor J in State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 where, at 416, he adopted the comments of Mann CJ in Trustees Executors & Agency Co. Ltd. v Reilly [1941] VLR 110 that at (p.111): "The words 'in respect of' are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connexion or relation between the two subject-matters to which the words refer." 75 In the same judgment, at 418, Taylor J observed: "However, in Genders v Government Insurance Office of New South Wales (1959) 102 CLR 363 four members of this Court thought that proceedings for contribution by one tortfeasor against another fell within the cover provided by a policy which insured the latter against all liability incurred by him 'in respect of the death or bodily injury to any person caused by or arising out of the use of a motor vehicle'." 76 Mr Marshall drew attention to the contrast between the insuring clause and the exclusion. The insuring clause contains the phrase "for or in respect of" whereas the exclusion clause uses only on the word "for". Thus supporting the breadth of application of the insuring clause. 77 Further, the exclusion clause refers to the bringing of a claim for such personal injury "directly against the Insured". The insuring clause does not refer to "directly" which supports, Mr Marshall put, a construction contemplating indirect claims for personal injury or death. 78 The submissions relied upon the width of the expression "caused by or contributed to by and/or arising out of the occurrence", and in that connection referred to Government Insurance Office of New South Wales v R.G. Green & Lloyd Pty Limited (1966) 114 CLR 437 and noted the observation of Menzies J at 445 that: "The words 'arising out of …' have no doubt a wider connotation than the words 'caused by…'" 79 Reference is made in the submissions to a purported quote from Barwick CJ which I do not think is supported by his judgment. He did, however, say: "[t]he words 'arising out of' in s.10 of the Act and in the indemnity clause of the policy are not merely, if at all, explicative of the words 'caused by'; they are really used in contrast to them; and in the total expression are extensive in their import." 80 I do not understand the thrust of the appellant's submissions on the insurance claim to be that Mr Burke's injury was other than caused by or contributed to and/or arising out of an occurrence happening during the period of insurance (at least once the contractual indemnity issue was decided against Vulcan), but rather that the sum Pentax was obliged to pay was not for or in respect of personal injury. 81 Mr Marshall put that viewing the policy as a whole it is a policy which covers the entirety of the work on site. He submitted that the following were not inherently unlikely or something that no-one would turn their minds to: "(a) There would be contractual arrangements between contractors and sub-contractors which affected liabilities like the indemnity in this case. (b) One of the contractors or subcontractors or project engineer or project manager might be sued in respect of personal liability, not necessarily directly. (c) That a comprehensive policy covering all the people on the site should respond to a claim arising from the allocation of responsibility for the outcome of such proceedings provided for in the contractual arrangements". 82 He emphasised the absence of a clause excluding liability in the case of liability assumed under contract. He submitted that the "express wording" of the policy makes it clear that liability assumed under contract was contemplated as falling within the policy having regard as to the absence of any exclusion directed to such assumed liability.

83 The submission also put that the use of the phrase "all sums" reflected a broadly framed indemnity and was not suggestive of a limitation on the cover provided. Reference was made to the decision of Einstein J in Schipp v Cameron (unreported, NSWSC 9 July 1998), in which he said: "I accept the plaintiff's submissions in relation to the characterisation of a loss under the policy. Clause 12 provides, inter alia that an indemnity exists 'against all loss to the Assured … whensoever occurring arising from any claim or claims first made against the Assured…in respect of any description of civil liability whatsoever incurred in connection with the Practice.' . The indemnity is broadly framed, using words such as 'all' and 'any,' which do not readily suggest limitation on the cover provided by a policy to the type submitted by the Insurers."

84 In response to the appellant's reliance upon Unsworth Mr Marshall referred to subsequent authority which, he submitted, established that the matters relied upon by the appellant no longer represented the correct legal position. I shall come to a consideration of the cases later.

85 Mr Marshall relied upon the contra proferentum principle the applicability of which is not disputed. The written submissions referred to Johnson v American Home Assurance Company (1998) 192 CLR 266. However, I do not need to go to that case as Mr Marshall contented himself with reliance upon the contra proferentum principle. Mr Garling had, for his part, done so in relation to the contractual indemnity claim. 86 As to the exclusion clause the written submissions relied upon the judgment and put that it was well established that the exclusion is intended to exclude claims brought by an employee against his insured employer. Reliance was placed upon Transfield and Speno Rail Maintenance Australia Pty Ltd v Hammersley Iron Pty Ltd and Zurich Australia Insurance Ltd (2000) 23 WAR 291 87 Mr Marshall submitted that the absence of an exclusion for liability assumed under the contract "does sit conformably with the limited construction of exclusion 1 for which Multiplex argued". Consideration 88 Mr Garling relied upon the decision of this Court in Nigel Watts Fashion Agencies. 89 In that case an employer leased premises from a landlord under a lease containing what Kirby P, as he then was, described as an "exceptionally widely drawn indemnity". An employee was injured when entering a lift on the premises. He obtained a judgment against the landlord who in turn recovered a judgment against the employer in reliance upon the indemnity. 90 The employer claimed indemnity from its Workers' Compensation insurer in respect of that judgment relying, amongst other grounds, upon the common law extension in the Compulsory Workers' Compensation policy. 91 In respect of that claim Kirby P, with whom Mahoney and Handley JJA agreed, said at 75642: "The first argument of the employer can quite readily be dismissed. It was put to the Court with proper diffidence and brevity by counsel for the employer. The argument was that the extended terms of the promise to "pay any other amount in respect of [the employer's] liability independently of the Act for any injury to [a worker]" was wide enough to cover the liability in respect of the injury to the worker in respect of the which the employer was liable as third party. This claim must be rejected. The phrase in the policy is of long standing. Its purpose is plain. It is to provide indemnity to the employer for common law liability to a worker qua worker. It is not to provide indemnity to the employer in respect of every other way in which the employer might be liable to other persons, as by a promise in a contract of lease. The judgment against the employer as third party rested entirely upon the employer's contractual liability under the lease. It was based on the exceptional provisions of that document. The workers' compensation policy issued by the insurer to the employer did not respond to such a liability". 92 The provision relied upon was in different language to that at issue here and it had a well established meaning and purpose as set out by Kirby P. I agree with Judge Walsmley that the case is not persuasive in determining the proper construction of the insuring clause in this matter. 93 We were referred by counsel to a number of decisions of the High Court in connection with related but not analogous problems. 94 The relevant question in Unsworth was whether proceedings for contribution between tortfeasors were an action to recover damages or contribution in respect of personal injury within the meaning of a statute which imposed limits upon the amount recoverable from the respondent in an action for damages. Fullagar J held that proceedings to obtain contribution in pursuance of the statutory right were not proceedings for an action to recover damages. 95 Taylor J agreed. At 91 he said: "The next question is whether the appellant's claim against the commissioner was 'an action to recover damages in respect of personal injury'. Clearly it was not. The cause of action given by s. 5(3) of The Law Reform Act , is of an entirely different character; it is, in effect a claim for a partial indemnity, and, although one of the ingredients which must be established is that the person against whom the claim is made is a person 'who is, or would if sued have been, liable in respect of the same damage', it is in no sense an action to recover damages in respect of personal injury". 96 However, in Genders v Government Insurance Office of NSW (1959) 102 CLR 363 it was held that the liability of a tortfeasor to pay contribution to another tortfeasor was included within categories of events described as " all liability in respect of the death of any person". Taylor J was a party to that decision. 97 In Genders Menzies J, after distinguishing Unsworth and earlier cases, said at 387 "...while in some cases there may be good reason for confining the meaning of the general words 'in respect of', there is no reason for restricting their amplitude in a statutory provision that is clearly enough intended to secure comprehensive protection to drivers of motor vehicles not only for their own good but for the benefit of those who are affected by the use of such vehicles".

98 It is relevant to note that Owen J, sitting as a member of the Full Court of NSW, had held that liability of a tortfeasor to pay contribution was not a liability "in respect of the death of" (Genders v The Government Insurance Office of NSW (1958) 60 SR (NSW) 130). His view was, however, based upon the legislative history and not a matter of language. He said at 138: "It is true that the words used are undoubtedly capable of a wide meaning which would bring the claim within them…"

99 In State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412 it was held that liability for loss of consortium to an injured person's husband fell within an indemnity covering "liability...for injury to any person" given that "liability for" was judicially treated as equivalent to "liability in respect of" (Rheem Australia v Manufacturers' Mutual Insurance Ltd (1984) 2 NSWLR 370 per Glass JA at 374). I shall not repeat the passages I have set out earlier in referring to the submissions.

100 In Club Motor Insurance Agency Pty Ltd v Sargent (1969) 118 CLR 658 a liability to pay a judgment debt recovered against the Nominal Defendant was held to fall within the description liability " in respect of the death or bodily injury to any person…". 101 In that case the plaintiff injured in the Australian Capital Territory was compelled to sue the Nominal Defendant because the motorcar that struck him was uninsured in the Australian Capital Territory although insured in Victoria. The Nominal Defendant under the relevant legislation was entitled to recover the amount paid in satisfaction of the judgment from the owner. The owner claimed indemnity as to that payment from the insurer. Taylor J said at 661: "…But because cl 41AO(1) of the Motor Traffic Ordinance required Strang to proceed against the nominal defendant and the claim of the latter against Sargent arises under cl. 41AQ(1) the contention is that this claim cannot be said to be in respect of bodily injury to Strang. In my view the contention ought to be rejected as being based upon far too narrow a view. It may be said, of course, that because of the provisions of the Ordinance in the Territory Sargent could not be made directly liable to Strang in respect of his injuries, but there can be no doubt that he was liable indirectly in respect of those injuries. I see no reason to depart from the general views which I expressed in State Government Insurance Office (Q.) v. Crittenden , concerning the width of the expression in question and which, I think, are in conflict with the insurance company's submissions". 102 In Club Motor Insurance Agency v Sargent, Owen J adopted the reasoning of the High Court in Genders and said at 664:

"…The words 'in respect of the death or bodily injury to any person' are, in my opinion, to be given a wide meaning, as Taylor J pointed out in State Government Insurance Office (Qld) v Crittenden …, and they are amply wide enough to cover a case such as the present one". 103 Mr Marshall put that the case of State Government Insurance Office (Queensland) v The Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228 is "squarely in our favour on all fours and should decide this case".

104 In that case it was held that a Workers' Compensation policy which indemnified the insurer only against a legal liability to pay damages in respect of personal injury included a liability of one defendant, found to be liable to pay damages to the plaintiff, to indemnify another defendant, also found to be liable in respect of the same liability, as the payment of an indemnity to the other defendant was only a different mode by which the first defendant's liability to pay the plaintiff the whole amount of his verdict for damages would be satisfied. (See Barwick CJ. (with whom Windeyer J. agreed), 459-460; Kitto J., 462; Owen., 464, and Walsh J., 465-466)." 105 At first blush the case does seem to offer an analogy of reasoning and there are statements in the judgments which appear to support the position for which Mr Marshall contends. 106 There are, however, at least four significant points of distinction which, in my view, result in the case being of little assistance. 107 First, the insurer was the Workers' Compensation Insurer of the employer. The relationship between the insurer of the employer was quite different to that between Vulcan and Pentax. 108 Second, the wording of the policy was relevantly different. The insuring clause in Brisbane Stevedoring being: "…all sums for which, in respect of injury to any worker employed by him, he may become legally liable by way of- (a) compensation under this Act; and (b)…damages arising under circumstances creating also, independently of this Act, a legal liability in the employer to pay damages in respect of that injury". 109 Third, the insurer was in any event liable to indemnify the employer as to so much of the verdict as was apportioned to it. A curiosity of the case was that, as Barwick CJ pointed out, the primary judge should not have made an apportionment of responsibility. The Chief Justice said at 235: "My earlier reference to s.5 (c) of The Law Reform Act was to call attention to the fact that once it was decided that the indemnity between the respondent and the second defendant was operative no apportionment of responsibility was called for and no order for contribution under The Law Reform Act could be made". 110 And fourth, the relevant insurance formed part of a statutory scheme which had implications for its operation. By way of example, Barwick CJ pointed out at 235 that: "The effect of the order that the appellant completely indemnify the respondent was that the plaintiff became entitled to be paid the whole amount of the verdict out of the Workers' Compensation Fund set up by s.5 of the Act. This is so because a finding that the respondent's liability for damages fell within the terms of the indemnity of the policy, provided the basis for a payment out of the Fund under s.9A of the Act. The situation thus created was that the whole verdict became payable out of the Fund without any recourse against the respondent, because, having a policy conforming to s.8, he was not liable to recoup the Fund under s.8(5) for any amount paid out of it to the plaintiff". 111 In Rheem Australia v Manufacturers' Mutual Insurance Ltd (1984) 2 NSWLR 370, Glass JA, after referring to the above mentioned cases other than Unsworth (which was referred to in argument) and other cases said at 375: "All these decisions in my view are founded upon a recognition that the liability of a tortfeasor for an injury is in modern parlance not limited to his primary liability to the injured party but includes as well the secondary liability he may incur to others as a result of or consequent upon that injury". 112 Mr Marshall drew our attention to the recent decision in Allianz Australia Limited v Wentworthville Real Estate Pty Limited (2004) NSWCA 100. 113 In that case the appellant insurer appealed against a judgment requiring that it indemnify the respondent estate agent in respect of contribution it had made to a verdict obtained against the owners of premises in which the plaintiff had suffered personal injury after slipping in a shower. 114 It was relevantly accepted that the professional indemnity policy issued on behalf of the insurer responded to the claim unless it fell within an exclusion clause which provided: "Except as expressly provided for in the extensions this Policy shall not indemnify the Insured in respect of any claim against the Insured: (k) For any alleged or actual bodily injury or property damage…" 115 The case is clearly distinguishable from the present matter for the wording of the clause does not include the phrase 'or in respect of'. It also concerns an exclusion clause and not an insuring clause. 116 Mason P noted at 18 that the Insurer had submitted that the words "for…bodily injury" should be read as "in respect of" or "involving" bodily injury. The primary Judge rejected that submission as did Mason P. 117 Mason P said at 31 and 32: "From start to finish the owners sought contribution and/or indemnity with respect to their liability towards (the plaintiff).

Granted that the claim against (the estate agent) sought to pass on legal responsibility to compensate for the bodily injuries suffered by the (plaintiff), more was needed to make such a claim emanating from (the owners) one that was " against the insured… for any alleged or actual bodily injury (emphasis added)". 118 As Mr Marshall pointed out, Mason P, with whom Sheller JA and Pearlman AJA agreed, observed that the primary judge was correct to apply by analogy the reasoning in Unsworth and Rolls Royce Industrial Power (Pacific) Limited v James Hardie and Co Pty Ltd (2001) 53 NSWLR 626.

119 In Rolls Royce this Court applied Unsworth. However, Stein JA (with whom Fitzgerald AJA and Davies AJA agreed on this point) said at 50 and 51: " Unsworth , although distinguished in Genders v GIO and GIO v Crittenden in circumstances where a claim is made under an insurance policy indemnifying the claim "in respect of" damage from personal injury has been applied. (references omitted)

While Unsworth deals with different legislation and not with the present question of an action for damages for breach of contract under the Limitation Act , some assistance is derived from the approach of Fullagar J and Taylor J by analogy with the present case. Genders and Crittenden on the other hand are concerned with when "for" may be read as equivalent to "in respect of" accidental bodily injury. I do not see that these authorities assist in the present context. Section 60G is concerned with claims for damages "for" personal injury not "in respect of" personal injury". 120 Having regard to the distinction thus drawn it is unnecessary to consider whether Allianz and Rolls Royce represent a departure from cases such as Club Motor. 121 Just as Stein JA did not think that Genders and Crittenden assisted with the problem with which he was dealing in Rolls Royce, I do not consider that Unsworth or, for that matter, Rolls Royce or Allianz assist in this matter. 122 To my mind, subject to one aspect, the authorities to which we have been referred provide little or no guidance to the resolution of this matter. They concern different expressions in different insurance policies (or in statutory contexts) and arise out of different factual circumstances. 123 The proviso to which I refer is the observation of Taylor J in Crittenden as to the width of the words "in respect of". I do not understand the other cases to which we have been referred to challenge the correctness of that view. 124 Mr Garling did say in reply: "We are here dealing not with a phrase, "for or in respect of", which is capable of parsing and analysis of the kind that is engaged in the statutory interpretation, it is a matter which falls to be determined by the context of the particular documents, and what a court has said about the words in another context are, particularly in these areas of insurance schemes, not even analogous we submit". 125 Clearly enough the purpose of the policy of insurance was to provide insurance to Multiplex and other persons involved with the Multiplex project. Although separate policies could have been issued this had obvious practical difficulties. By entering one policy, which contained a cross liability clause and a waiver of subrogation, the relevant parties could each be insured by a policy which responds to any particular claim made by a party. 126 Although dealing with property damage, rather than personal injury, the commercial objective of such a policy has been described by the Supreme Court of Canada in Commonwealth Construction Co. Ltd v Imperial Oil Ltd (1977) 69 DLR (3d) 558 at 562: "On any construction site, especially when the building being erected is a complex chemical plant, there is ever present the possibility of damage by one tradesman to the property of another and to the construction as a whole. Should this possibility become reality, the question of negligence in the absence of complete property coverage would have to be debated in Court. By recognizing in all tradesmen an insurable interest based on that very real possibility, which itself has its source in the contractual arrangements opening the doors of the job site to the tradesmen, the Courts would apply to the construction field the principle expressed so long ago in the area of bailment. Thus all the parties whose joint efforts have one common goal, e.g. , the completion of the construction, would be spared the necessity of fighting between themselves should an accident occur involving the possible responsibility of one of them". 127 Against this background and having regard to the width of the phrase "for or in respect of" it is my opinion that the language of the insuring clause responds to the claim of Pentax. 128 I should observe that I consider that the use of the word "directly" in the exclusion clause provides some support for the construction I prefer. Its use in the exclusion clause without appearing in the insuring clause suggests that the insuring clause responds to indirect claims. 129 Likewise, the use of the phrase "all sums" tends to support that construction. Mr Garling appeared to accept that "sums" would meet a claim for contribution, albeit he submitted: " the word "all" deals with the fact that you could be sued by two parties". I do not think that to be its only function. 130 The absence of the quite common exclusion of liability assumed under contract is at least consistent with my preferred construction.

131 Mr Garling's submission that there was work to do for the phrase "in respect of" in including derivative or indirect actions, for example, a compensation to a relative claim, even if correct, does not mean that the words had no other purpose. 132 The inclusion of the words "including loss of services" in the definition of personal injury and of "directly" in the exclusion clause may lead to a construction that the insuring clause contemplates claims such as a compensation to relatives action quite apart from the use of the phrase "or in respect of". However, I do not need to resolve this question for my conclusion would be essentially the same on either approach.

133 Whilst I have reached the same conclusion as Judge Walmsley SC I should add that a somewhat lesser degree of satisfaction as to the proper construction of the insuring clause would produce an identical result by application of the contra proferentum rule (C. E. Heath Underwriting and Insurance (Australia) Pty Ltd v Edwards Dunlop (1993) 176 CLR 535 at 541; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 at 602). 134 In respect of the curiously limited exclusion clause I think it sufficient to say that in my opinion the exclusion clause has not been shown to have any application to the circumstances of Pentax's claim.

Proposed Orders 135 In my opinion the appeal should be dismissed with costs. **********

Last Modified: 08/23/2004 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.