Bon McArthur Transport Pty Ltd (In Liq) v Caruana

Judgment 1McCOLL JA: I agree with Meagher JA's reasons and the orders his Honour proposes. 2BASTEN JA: The background to these proceedings is fully explained in the judgment of Meagher JA, with whose reasons I agree. The orders he has proposed should be made. 3On 22 June 2006, Mr Stephen Caruana ("the plaintiff") was seriously injured when a forklift driven by a Mr Brazel ran into him whilst he and Mr Brazel were working together at premises occupied by the first appellant, Bon McArthur Transport Pty Ltd (In liq) ("BMT"). The plaintiff and the driver were both employed by a labour hire company which is now in liquidation. The plaintiff obtained a judgment against the employer's insurer, Workers Compensation Nominal Insurer, for the full amount of his loss. The liability of the Nominal Insurer derived from the liability of the employer, which in turn was vicariously liable for the negligent driving of the forklift which struck the plaintiff. Subject to a minor variation to correct an arithmetical error, that judgment is not challenged. 4The plaintiff's claim against BMT was based upon its statutory liability as the "owner" of the forklift, the negligent operation of which caused the plaintiff's injury. The claim was brought pursuant to s 112 of the Motor Accidents Compensation Act 1999 (NSW), relying upon the statutory definition of "owner", which included "any person who solely or jointly or in common with any other person is entitled to the immediate possession of the vehicle": s 4(1)(a)(iii) (in the case of a registered vehicle) or (b) (in the case of an unregistered vehicle). Because the vehicle was used for the purposes of the business of BMT, there was an available inference that BMT satisfied the definition of "owner". (There was some documentary evidence that BMT hired forklifts, although there was no evidence as to the identity of the vehicle involved in the accident.) However, BMT was in liquidation. Accordingly, to recover on any sum awarded on the basis of that claim, the plaintiff needed to identify an insurer of the business. 5The only insurer potentially liable was QBE Insurance (Australia) Ltd ("QBE"). A schedule to the policy issued by QBE on 30 November 2005 identified the insured as "Bon McArthur Pty Ltd; McArthur Corporation Pty Ltd and/or Australian subsidiary corporations (as defined under the Australian Corporations Law) now existing or hereafter constituted or acquired for their respective rights, interests and liabilities". In 1998 Bon McArthur Pty Ltd (which changed its name in 2009 to Mireau Pty Ltd) had licensed BMT to carry on its transport and warehousing business. BMT was not a subsidiary of either of the named corporations. Accordingly, its liabilities were not covered by the policy. 6The plaintiff sought to address that difficulty in two ways. The first was to suggest that the policy in fact extended to BMT, although it was not named in the schedule. The other approach was to demonstrate that Mireau was the "owner" of the forklift. The latter claim was not made good on the evidence, as explained by Meagher JA. 7The suggestion that BMT was covered by the QBE policy flew in the face of the express identification of the insured in the schedule issued by QBE. On the other hand, there was evidence to suggest that the identification of the insured was wrong. The business operated by BMT was known as "McArthur Express". The evidence indicated that the premium received by QBE was based on the turnover of that business. Further, a "closing" tax invoice issued by the broker attached a "coverage summary" which referred to the insured as "McArthur Express Pty Ltd (sic); Bon McArthur Transport Pty Ltd and subsidiary and/or related corporations ...". There was no evidence suggesting that Mireau ran any business, let alone one with a turnover anything like that on which the premium was calculated. If BMT had still been in business when the claim was brought, it might have sought rectification of the insurance policy to reflect what may well have been the common intention of the parties, namely to insure the business operated by BMT. However, no such relief was, or could have been, sought in these proceedings between these parties. The claim against QBE must therefore fail. 8Having found the Nominal Insurer vicariously liable for the loss caused by the driver's negligence, and QBE responsible under its insurance policy for the same loss on the statutory basis of vicarious liability, the trial judge apportioned liability between the two respondents equally. Because QBE is not liable, there is no need to decide whether that apportionment was warranted. Nevertheless, I agree with Meagher JA that the equal apportionment was appropriate and would not have been overturned had it continued to have effect. 9At the hearing of the appeal, senior counsel for the Nominal Insurer announced his appearance for the insurer and for the plaintiff. It may be that the plaintiff enjoyed an indemnity in respect of his costs of the proceedings in this Court, but that is not known. On the other hand, he had no practical interest in the outcome of the proceedings. He had a judgment against the Nominal Insurer for the full value of his loss and had no apparent financial interest in maintaining his judgment against QBE. On the other hand, the Nominal Insurer, which had succeeded in its cross-claim against QBE, had a financial interest in maintaining its entitlement to a contribution from QBE of 50% of its judgment. It has failed in resisting the appeal and QBE should have an order for costs against it. There is no reason why the plaintiff should be required to pay any costs of the proceedings in this Court. 10As to the costs of the trial, QBE should have its costs from the plaintiff of the plaintiff's claim against it. It should also have the costs of the first cross-claim brought against it by the Nominal Insurer. 11MEAGHER JA: On 22 June 2006 the first respondent (Mr Caruana) suffered serious injuries in a work accident, when he was struck by an unregistered forklift being driven by a fellow employee, Mr Brazel. At that time Mr Caruana and Mr Brazel were employed by Churchill Agents Ltd (CAL). The accident occurred at premises at Seven Hills from which a transport and warehousing business was being conducted by the first appellant (BMT) under a written licence agreement which it had with Bon McArthur Pty Ltd, later known as Mireau Pty Ltd (Mireau). That agreement was made in 1998. McArthur Corporation Pty Ltd was the owner of the premises at Seven Hills from which the business was conducted. At the time of the accident, the second appellant (QBE), had issued a broadform liability policy of insurance which named the insured as Mireau, McArthur Corporation Pty Ltd and "Australian subsidiary corporations" in respect of a business described as "transport operators, cartage contractors, storage & distribution, property owners & occupiers". 12Mr Caruana brought proceedings in the District Court against Mr Brazel for negligence and against CAL on the basis that it was vicariously liable for that negligence. In the course of the proceedings, an order was made substituting for CAL as a party to the proceedings, the Workers Compensation Nominal Insurer, as the insurer liable to meet any claims established against Mr Caruana's employer, CAL. Mr Caruana also made claims against BMT and QBE. His claim against QBE was brought pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 to enforce directly against QBE an alleged insured liability of Mireau. BMT and Mireau were said to be liable for the negligence of their agent, Mr Brazel, as driver of the forklift. Mr Caruana relied, as against BMT and Mireau, upon the presumption of agency in s 112 of the Motor Accidents Compensation Act 1999 (the MAC Act). Each was alleged to have been the "owner" of the forklift at the time of the accident because each was a person who "solely or jointly in common with any other person [was] entitled to the immediate possession of the vehicle": s 4(1)(b) of the MAC Act. 13These various claims were heard and determined by McLoughlin DCJ. On 9 February 2012 judgment was entered in favour of Mr Caruana against the Workers Compensation Nominal Insurer and BMT for $1,711,450.20 and against QBE for $1,611,450.20, being the amount of the verdict against the other defendants less a deductible of $100,000. In relation to the claim against QBE, the primary judge held that each of BMT and Mireau was insured under the broadform liability policy and that each was entitled to immediate possession of the forklift at the time of the accident and accordingly was an "owner" to whom the presumption in s 112 of the MAC Act applied. As a result, each was liable for Mr Brazel's negligence as driver of the forklift. As between CAL (the Workers Compensation Nominal Insurer) and BMT and Mireau, the primary judge held that liability should be apportioned equally, so that CAL should bear 50 per cent and each of BMT and Mireau should be liable severally for the remaining 50 per cent. 14BMT and QBE appeal from the judgments against them. At the commencement of the hearing of the appeal the Court was advised that BMT had been deregistered and accordingly had ceased to exist: s 601AD(1) of the Corporations Act 2001 (Cth). That still required that BMT's liability to Mr Caruana be addressed, because BMT was insured by QBE against that liability and Mr Caruana could recover the amount of that liability against QBE notwithstanding that BMT had been deregistered: s 601AG. 15QBE's appeal raises three issues. They are: (1) Whether BMT and Mireau were entitled to an indemnity under the broadform liability policy issued by QBE (ground 1); (2) Whether BMT and Mireau were entitled to immediate possession of the forklift and therefore "owners" within s 4(1)(b) of the MAC Act (grounds 2 and 3); (3) Whether the primary judge erred in apportioning liability as between CAL on the one hand, and BMT and Mireau on the other, on the basis that the latter should severally bear 50 per cent (grounds 4, 5 and 6). 16There was also a separate appeal brought by the Workers Compensation Nominal Insurer challenging the primary judge's assessment of Mr Caruana's damages. QBE also challenged that assessment of damages in its appeal (ground 7). Those quantum appeals have been resolved on the basis that the damages as assessed by the primary judge should be reduced by $125,000. Therefore, depending on the outcome of the remaining issues in this appeal, it may be necessary to make orders adjusting the judgments in favour of Mr Caruana against BMT and QBE to take account of that agreement.

Was BMT entitled to an indemnity under the QBE policy? 17The insurance of the Bon McArthur group was placed by an insurance broker, AEI Brokers Pty Ltd. There was an issue before the primary judge as to the admissibility of various communications between the broker and QBE which preceded the issue by QBE of a schedule for the insurance covering the period 30 November 2005 to 30 November 2006. In my view, the primary judge did not err in admitting that material. The issues before his Honour included whether the agreement of the parties was wholly in writing and constituted by the applicable broadform wording and schedule issued by QBE or whether it was made and recorded in the earlier or subsequent exchanges between them. The various communications tendered were relevant to these issues. 18It is necessary to refer to that evidence in some detail. It indicated that for a number of years the general liability insurance of the Bon McArthur group had been written for 12 month periods expiring on 30 November of each year. On 10 December 2003, and for the period 30 November 2003 to 30 November 2004, QBE issued a policy schedule for the policy identified as No 15 1828241 PLB, which described the insured as "Bon McArthur Transport Pty Ltd, Mireau Pty Ltd", six other named corporations "and/or Australian subsidiary corporations". Those named insured included BMT. On 12 December 2003 the broker requested QBE to correct the name of the first insured to "Bon McArthur Pty Ltd not Bon McArthur Transport Pty Ltd". On 17 December 2003, QBE issued a revised policy schedule naming the insured as "Bon McArthur Pty Ltd, McArthur Corporation Pty Ltd and subsidiary corporations". As a result BMT was no longer a named insured. It also was not a subsidiary of either of the named insured. 19That policy was renewed for the period 30 November 2004 to 30 November 2005. In the renewal quotation submitted by QBE, which was accepted by the broker, in the broker's closing tax invoice to which was attached the broker's coverage summary and in the policy schedule issued by QBE, the insured were described as "Bon McArthur Pty Ltd, McArthur Corporation Pty Ltd and/or Australian subsidiary corporations". That schedule, as with the schedule issued by QBE to the broker in the previous year, stated on its first page: "We are pleased to advise that this policy is now in force for the period shown. The policy details are set out below and must be read in conjunction with the policy wording." 20The standard form wording applicable to the broadform liability policy issued for the 2004-2005 period was not in evidence. The version of that wording which was effective from 22 August 2005 was in evidence. It stated on its first page: "The Policy part of this booklet contains the Policy Terms and Conditions, which detail all the terms, conditions and exclusions relating to the Policy. It forms part of your legal contract with us. If we issue you with an insurance Policy, you will be given a Policy Schedule. The Policy Schedule sets out the specific terms applicable to your cover and should be read together with the Policy Terms and Conditions. The Policy Terms and Conditions and the Policy Schedule we send to you form your legal contract with us so please keep them in a safe place for future reference." 21Negotiations for the November 2005 renewal of policy No 15 182841 PLB commenced in October 2005. QBE requested declarations as to estimated turnover and wages which were provided on 17 November 2005. The estimated turnover for 2005-2006 was $54M and the estimated wages for the same period were $13M. No reference was made to that turnover being generated solely or principally by BMT. Further information was requested as to estimated payments to be made to subcontractors and contractors. The evidence does not disclose what response was made to that request. By an email dated 24 November 2005, QBE provided its "renewal quotation". That quotation identified the Insured as "Bon McArthur Pty Ltd, McArthur Corporation Pty Ltd and/or Australian subsidiary corporations", identified the standard form wording to apply as the wording which had become effective from 22 August 2005 and contained details as to the description of the business insured, period of insurance, limits of liability, deductibles and premium. On 29 November 2005 the broker responded to QBE's quotation by email as follows: "Following receipt of your terms I am pleased to confirm the renewal of the policy and would be obliged if you could bind cover accordingly. Our renewal closing will follow in due course." 22The broker's closing tax invoice dated 29 November 2005 described the transaction to which it related: "Insured: Bon McArthur Pty Ltd Insured location: Australia Wide Renewal for: Public & Products Liability Insurance 30.11.05 to 30.11.06" Those details were followed by the broker's calculation of "the amounts due in respect of the above detailed policy transaction" and a request that if those amounts could not be agreed QBE should "contact our office immediately in order that any discrepancy can be resolved". There was attached to the invoice the broker's coverage summary which described the insured as "Mcarthur [sic] Express Pty Ltd, Bon McArthur Transport Pty Ltd and subsidiary and/or related corporations". This summary also contained a slightly different description of the Insured's business. Its second and third pages included references to the policy document, the Privacy Act, Insurance Brokers Disputes Ltd and what was described as a "Soft Dollar Disclosure". Under the heading "Refer Policy Document", the summary included the statement: "Please refer to your Policy Document for a full explanation of your policy conditions and excesses as applicable". The copy of the broker's closing tax invoice bears a date stamp 13 December 2005, suggesting that it was processed by a QBE mail room on that date. 23On 11 January 2006 QBE requested by email that the broker forward "your closing asap". On 17 January 2006 a further email was sent requesting the broker's "closing invoice". On the same day the broker responded attaching what it described as a "3rd copy of the closing that has been sent to you" and noting that this would "bring this matter to an end". The closing tax invoice and coverage summary dated 17 January 2006 were in the same terms as the earlier closing and summary dated 29 November 2005. 24On 18 January 2006 QBE issued a schedule to the broker for the renewal of the policy for the period 2005 to 2006. That schedule contained on its first page the same notation as was contained in the schedule for the 2004-2005 renewal. It named the Insured as "Bon McArthur Pty Ltd, McArthur Corporation Pty Ltd and/or Australian subsidiary corporations". The schedule was sent under cover of a letter to the broker which stated: "Please find enclosed our duly issued renewal schedule together with a copy of the applicable policy wording. We ask that you carefully peruse the enclosed to ensure that it reflects the intention of the contract as negotiated. Should there be any error or omission please do not hesitate to contact us." The evidence before the primary judge did not suggest that there was any response requesting that the names of the insured be altered. 25Finally, on 13 February 2006 the broker emailed QBE a request that there be noted on the policy "an additional trading name for the Insured: McArthur Express (Victoria) Pty Ltd". The subject heading to that email was "151828241PLB McArtur [sic] Corporation". The email requested that the application be processed "at nil EP" (ie at nil extra premium). QBE responded on 16 February: "Cover confirmed we await your closing". On 16 February the broker forwarded a closing tax invoice for that alteration to the cover. In that invoice the transaction details were described as follows: "Insured: Bon McArthur Transport Pty Ltd Insured location: Australia Wide It is hereby declared and agreed with effect from 13.02.06, the existing policy is endorsed to note the addition of the following trading name: McArthur Express (Victoria) Pty Ltd" There was attached to that closing a further coverage summary which described the Insured as "McArthur Express Pty Ltd, Bon McArthur Transport Pty Ltd, McArthur Express Pty Ltd and subsidiary and/or related corporations". 26On the basis of this evidence it was argued before the primary judge that BMT was either a named insured or a person having the benefit of the cover as a subsidiary or related corporation of a named insured. The primary judge dealt with this argument at [22]-[42] as follows. He first referred to the broker's coverage summaries dated 29 November 2005, 17 January 2006 and 16 February 2006. The descriptions of the insured in those three summaries were inconsistent with the description in the schedule issued by QBE and dated 18 January 2006. For that reason, there was "ambiguity", presumably in the sense that the language of the documents said to evidence the contract was "susceptible of more than one meaning": [24], [35]. Having identified that "ambiguity", the primary judge considered that it was permissible to look at evidence of surrounding circumstances to assist in the interpretation of the contract. Those circumstances, as described by the primary judge, were that the business insured included "transport operator", that the business was a substantial business with a turnover of $55M and that a subsequent renewal declaration dated 20 November 2006 had referred to turnover for BMT of $50.7M and wages of $13M. His Honour noted that this last circumstance was well after the policy had issued but considered it admissible and relevant not as to any question of construction but as to the question whether BMT was a party to or insured under the earlier contract: [40]. 27His Honour concluded: "[41] I also accept that if the full facts were known, it would be commercially absurd to issue a policy to Mireau given that all of its business operations had been transferred to [BMT] and I also accept that the words demonstrate the common intention that all companies involved in the group and connected with the business were intended to be covered." On that basis the primary judge held that BMT was entitled to an indemnity under the policy. He did not address whether BMT was a named insured or entitled to an indemnity because it was otherwise within whatever was the description of the insured. 28QBE submits that the primary judge's conclusion was wrong. The parties' agreement was recorded in the schedule which it issued and the broadform policy wording. There was no ambiguity in the schedule in relation to the identification of the insured, which included subsidiaries of the named insured. Evidence was not admissible to vary or contradict the clear language of the writing which evidenced the contract. In response, Mr Caruana supports the primary judge's reasoning. The insurance agreement was not wholly in writing and it was permissible to receive evidence on that issue. Mr Caruana also argued that QBE's conduct, in accepting without comment the broker's closing tax invoice and coverage summary dated 16 February 2006, constituted an agreement varying the contract so as to include BMT as a named insured. 29Before addressing the primary judge's reasoning and conclusion, the following relevant principles should be noted. First, the ordinary rules relating to formation of contract apply to contracts of insurance. There must be an offer capable of acceptance and an acceptance of that offer which is communicated to the offeror. For there to be a binding contract, there must be agreement as to the material matters of risk, duration of cover, amount and subject of cover, the premium and the relevant terms and conditions: Allis-Chalmers Co v Maryland Fidelity and Deposit Co (1916) 114 LT 433. Whether there has been agreement as to these matters and whether the parties intended to make a binding contract upon reaching consensus, depend upon what was objectively conveyed by their words and conduct having regard to the surrounding circumstances known to them: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95 at [25]; Pacific Carriers Limited v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22]. 30Secondly, if parties have recorded their agreement wholly in writing, the parol evidence rule, subject to certain exceptions, excludes evidence of statements of intention and antecedent negotiations for the purpose of adding to, varying or contradicting the language of the written instrument: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337 at 347; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at [33]-[35]. Thirdly, for the parol evidence rule to apply, it first must be determined that the parties' agreement is wholly in writing. The fact that a document on its face appears to be a complete contract provides some evidence that the agreement was intended to be wholly in writing. However, evidence may be lead to prove that notwithstanding that there is such a document, the parties contract included oral terms or that the document was not intended to record the whole of their agreement: State Rail Authority of NSW v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 191; Norwest Beef Industries Ltd v Peninsula and Oriental Steam Navigation Co (1987) 8 NSWLR 568 at 570; and Masterton Homes Pty Ltd v Palm Assets Pty Ltd [2009] NSWCA 234; 261 ALR 382 at [1], [4], [90]. 31Fourthly, the exceptions to the parol evidence rule permit the admission of evidence to identify the parties to a contract or the capacity in which they have contracted in circumstances where the writing evidencing the contract does not make those matters clear. For example, in Young v Schuler (1883) 11 QBD 651 evidence was admitted directed to the question whether a person had signed an agreement only under a power of attorney or additionally on his own behalf as a guarantor. In Giliberto v Kenny (1983) 48 ALR 620 evidence was admitted to show that Mrs Kenny was acting for herself and her husband in signing a contract which in one place named her, and in another her husband, as purchaser. And in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, in circumstances where there was no company or entity having the name of the party nominated as purchaser, evidence was admissible to show that the party was a company which proposed to change its name to that used in the contract, a fact known to the vendor. 32The written communications between QBE and the broker establish that a binding contract of insurance was made on the terms of QBE's quotation dated 24 November 2005 when the broker's unqualified acceptance of that offer on behalf of its clients was communicated to QBE by its email dated 29 November 2005. QBE's offer unambiguously identified the insured as "Bon McArthur Pty Limited, McArthur Corporation Pty Limited and/or Australian subsidiary corporations." The broker's email requested that QBE "bind cover accordingly". It was sent the day before the existing cover expired and was a request that there should be concluded immediately a contract of insurance with the named insured on terms which included the standard broadform wording. 33The broker's closing tax invoice dated 29 November 2005 contained the broker's calculation of the amounts due in respect of "the above detailed policy transaction". The description of that transaction was in terms wholly consistent with a contract having been concluded by the earlier email acceptance of QBE's quotation. That tax invoice did not announce itself as a counter offer or draw attention to any discrepancy between any of the details of the contract as made and insurance as described in the attached coverage summary. Nor was that summary a document which it was agreed would be prepared by the broker to record the terms of the contract. On the contrary, the offer as accepted included the terms of the current broadform wording. That wording stated that the insured would be given a Policy Schedule prepared by QBE and that the Policy Schedule would set out the specific terms applicable to the cover and with that wording "form your legal contract". 34Thus the parties had made a binding contract which was to be evidenced by the Policy Terms and Conditions and the schedule which QBE would send to the insurer or its broker. That occurred and it is not suggested that the terms of the schedule as issued by QBE departed in any material respect from those set out in its quotation dated 24 November 2005. 35It is not necessary to decide whether what was proposed in relation to the preparation of a formal schedule was an example of a case in which the parties had reached finality as to the terms of their bargain and intended to be bound immediately to the performance of those terms but at the same time proposed to have the terms restated in a form to which they would later bind themselves, which would be fuller but not different in effect: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 360. The facts in Youell v Bland Welch & Co Limited (1990) 2 Ll Rep 423 (esp at 425, 428, 429) provide an example, in the context of the making of a reinsurance contract in the Lloyds' market, of a contract within this class of case. See also on appeal (1992) 2 Ll Rep 127 esp at 133, 140. Once the formal policy and schedule are agreed by the parties, their terms are conclusive evidence of the contract unless and until altered by the process of rectification. 36Another possible view of what the parties here agreed was that QBE would prepare a schedule which would record and evidence the terms of the agreement which had already been made. Ordinarily, that would not permit QBE to issue a policy and schedule which departed from the earlier agreement in any material respect: see the discussion per Dixon J in Australian Provincial Assurance Association Ltd v The Producers and Citizens Co-operative Assurance Company of Australia Ltd [1932] HCA 34; 48 CLR 341 at 361; and per Jordan CJ and Nicholas J in Southern Cross Assurance Co Ltd v Australian Provincial Assurance Association Ltd (1939) 39 SR (NSW) 174 at 186-187. The facts in New Hampshire Insurance Co v MGN Ltd (1997) Ll Rep IR 24 provide an example of such a case. The contract was evidenced by an initialled slip and there was no subsequent agreement between the parties adopting a policy and schedule introducing different terms which had been issued by the unilateral act of the insurer. In that context Staughton LJ observed (at 54): "The field of insurance may well be one where it is normal practice to make a preliminary contract and then for one party (the insurer) to send detailed terms to the other, not expecting a reply unless the other regards them as unsatisfactory. This may be what happens in ordinary life with motor insurance or householders comprehensive insurance. Often the necessary acceptance can be inferred when the insured, having received the proposed policy, pays the premium." The preliminary contract may authorise the insurer to issue a policy in its ordinary or standard form for the relevant risk insured: Adie & Sons v The Insurance Corporation (1898) 14 TLR 544; or it may expressly authorise the insurer to alter, by the policy subsequently issued, the obligations undertaken in the preliminary contract: see Symington & Co v Union Insurance Society of Canton, Ltd (No 2) (1928) 34 Com Cas 233 at 235-236. 37The primary judge in his analysis did not address the communications between the broker and QBE in terms of offer and acceptance or note that there was no ambiguity in, or lack of correspondence between, the terms of QBE's renewal offer and the broker's acceptance of that offer on behalf of its clients. Although the broker's coverage summaries inaccurately reflected the contract, they had no contractual effect as offers or counter offers. As with the wording prepared and tendered to the underwriters by the London broker in Assicurazioni Generali SPA v Ege Sigorta AS (2002) Ll Rep IR 480, the broker in this case did no more than wrongly record the names of the parties insured under a contract which had been made. In doing so the broker did not accomplish an amended contract. There was no ambiguity or uncertainty as to the identity of the named insured in the contract made by the broker's email of 29 November 2006 and recorded in the schedule subsequently issued by QBE. 38The primary judge's observation (at [41]), that from the insured's perspective it was necessary that BMT be insured as the principal entity conducting the business, is plainly correct. However, the evidence did not suggest that QBE became aware at any relevant time before the contract was made that BMT was the principal entity conducting the business or that it was intended that it be an insured under the policy. The objective theory of contract requires that the construction of the communications constituting the offer and acceptance be determined by what reasonable persons in the position of QBE and the broker would have understood them to mean. Whilst that requires consideration of the context, it does not permit regard to uncommunicated subjective intentions which did not form part of the negotiations. For these reasons the primary judge was in error in concluding that BMT was indemnified under the QBE policy. 39It remains necessary to consider Mr Caruana's argument that there was a variation to that contract initiated by the broker's email request dated 13 February 2006. In terms, that request was only for the addition of another named insured. QBE's email dated 16 February confirmed that amendment as made. There was no request for or agreement to an amendment which included BMT as a named insured. These communications occurred after the broker had received the wording and schedule issued by QBE with its letter of 23 January 2006 requesting that the broker contact QBE if there was "any error or omission" in those documents as reflecting "the intention of the contract as negotiated". The broker's subsequent tax invoice dated 16 February 2006 did not announce itself as a request for any further amendment to the existing cover or draw attention to any discrepancy between the contract as made and varied and the insurance described in the attached coverage summary. The argument that QBE's conduct in accepting that closing invoice and summary without comment constituted an agreement to BMT's inclusion as an insured is rejected.

Were BMT and Mireau "owners" of the forklift? 40In view of my conclusion as to the first issue, the critical question is whether at the time of the accident the unregistered forklift was "owned" by Mireau, an insured under the QBE policy. The primary judge held that Mireau was "entitled to immediate possession" of the forklift and therefore an "owner" to which the presumption of agency in s 112 of the MAC Act applied. 41In Havas v Standard Knitting Mills Pty Ltd [2001] NSWCA 295 the issue was whether the respondent employer was the "owner" of the forklift which injured the appellant. The Court (Hodgson JA, Stein and Heydon JJA agreeing) rejected an argument that apart from cases of joint ownership or ownership in common, one right to immediate possession must prevail over any other alleged right to immediate possession, with the result that the definition of "owner" could not permit there to be two owners both entitled to immediate possession: [18] I prefer the simpler view that, if a person is lawfully in actual possession of a motor vehicle, then that person has the immediate possession of the vehicle and is entitled to that possession, and so falls within the description "any person entitled to the immediate possession". To my mind, it would not matter that another person, who does not have actual possession, may also be entitled to the immediate possession of the vehicle in the sense that that person is entitled to retake possession at any time. Until the latter person has sought to exercise that entitlement, the person lawfully in actual possession is entitled to be in actual possession, and is fairly described as being entitled to the immediate possession of the vehicle, that being the possession which that person lawfully has. 42Whether a person not lawfully in actual possession is entitled to immediate possession depends on whether the person can, at will, retake possession from the person in actual possession. In Nominal Defendant v Morgan Cars Pty Ltd [1974] HCA 16; 131 CLR 22, an owner of a motor vehicle which was subject to a hiring agreement was held not to be entitled to immediate possession because it did not have a right to immediate possession on demand during the term of the hiring: Nominal Defendant v Morgan at 28. Similarly in Havas v Standard Knitting Mills the beneficial owner was held not to be entitled to immediate possession because it was not entitled to disrupt the respondent's actual possession of the forklift without giving reasonable notice that it should be delivered up: at [2], [23], [24]. 43The evidence before the primary judge was that there were 20 to 30 forklifts in use at the Seven Hills premises and that 10 of those forklifts were the subject of hire payments made by BMT to DFS Holdings Pty Limited (DFS). The evidence did not disclose whether those payments were being made under hire arrangements between BMT and DFS or between DFS and Mireau or some other party. Nor was there any evidence as to the ownership of the other forklifts in use at the premises. Nor did the evidence indicate whether the forklift which struck Mr Caruana was hired from DFS. 44A Licence Agreement between Mireau and BMT dated 1998 was in evidence. It indicated that before that agreement was made Mireau conducted a transport and warehousing business from the Seven Hills premises (Recital A and cl 15). Mireau granted BMT a license to carry on that business using "plant and equipment owned/or under the control of" Mireau (cl 2). After 30 June 1999 that license continued on a month to month basis and was terminable by Mireau giving not less than 30 days notice in writing (cll 3, 5). During the term of the license BMT was required to maintain, repair and service all "plant and equipment" and replace at its own cost plant and equipment lost or destroyed through no fault of Mireau (cl 4(d)). BMT was also required to replace plant and equipment that was otherwise lost or destroyed or which ceased to have value to the extent that replacement was reasonably necessary. That replacement plant and equipment was to "belong" to BMT (cl 4(e)). In the event that the agreement was terminated, Mireau was entitled to the "return" of all plant and equipment, including replacement plant and equipment acquired by BMT under cl 4(d) (cl6(a)). 45Administrators were appointed to BMT on 24 September 2007 pursuant to s 436A of the Corporations Act. The first report of those administrators was in evidence before the primary judge. It stated that BMT had commenced trading as McArthur Express from the Seven Hills premises in September 1998; that by 1998 that business included "express freight, logistic management and contract warehousing [being] a national carrier servicing Australia-wide manufacturers and retailers"; that there was a trading relation between BMT and Mireau whereby the latter provided "the vehicles to facilitate the business"; that McArthur Corporation Pty Limited owned the Seven Hills premises; that BMT generated insufficient net profits from its business to pay the annual licence fees due to Mireau; that records of BMT suggested that "plant and equipment" may have been owned by Mireau, although BMT may have funded the purchase of those assets and that further investigation was required to determine the ownership of that plant and equipment; that there were no known motor vehicles owned by BMT; and that Mireau provided the trucking fleet for the business and BMT paid the lease payments in relation to those trucks on behalf of Mireau (Blue 240-247). 46The primary judge held (at [20]) that BMT and Mireau were each entitled to immediate possession of the forklift. In reaching that conclusion he took into account the following matters: that BMT conducted the licensed business from the Seven Hills premises and that Mireau continued to operate from the same premises; that the licence agreement was not exclusive; and that BMT and Mireau jointly occupied the premises. His Honour appears to have found that Mireau was entitled to immediate possession of the forklifts in use at the premises because it was a joint occupier of the premises with BMT and continued to carry on or have an involvement in the business which was the subject of the license. In my view the evidence before the primary judge did not justify or support that conclusion. 47Notwithstanding that Mireau was providing trucking vehicles for use by BMT in its business and had licensed it to use whatever plant and equipment was owned and controlled by it in that business, the evidence did not suggest that Mireau continued to carry on the McArthur Express business or any other business at or from the premises which required or involved the use of forklifts. Although it may have carried on its business of supplying the trucking fleet from those premises, the evidence did not justify a conclusion that for that reason Mireau was in actual possession of any of the forklifts used in BMT's business, either jointly with it or otherwise. 48Nor did the evidence justify a finding as to the ownership of the forklift being driven by Mr Brazel at the time of the accident. That forklift could have been owned by DFS and hired either to BMT or Mireau. If hired to the latter, any right of Mireau to possession as against BMT was subject to the notice provision in the Licence Agreement. If hired to BMT, Mireau had no right to possession. If the relevant forklift was not owned by DFS, it could have been owned by BMT, Mireau, or a third party. If it was owned by Mireau or a third party and made available via Mireau to BMT, any right of Mireau to retake possession also would have been subject to the 30 day notice provision. 49This evidence did not permit a finding that Mireau was in actual lawful possession of the forklift, either for itself or jointly with BMT. Nor did it permit a finding that Mireau was entitled to retake possession immediately on demand being made. It is not necessary to consider whether, in the absence of the notice provision in the Licence Agreement, Mireau would have been entitled to retake possession of any forklift in BMT's possession without first being required to give a reasonable period of notice: see Havas v Standard Knitting Mills esp at [2], [24]. 50I conclude that the primary judge erred in finding that Mireau was entitled to immediate possession of the forklift and an "owner" of it. The evidence did permit a finding that BMT was in actual possession of the forklift because at the time of the accident it was being used in the conduct of its business.

Whether the primary judge erred in apportioning liability equally between CAL and BMT or Mireau 51On the view I have taken as to the resolution of the other issues in the appeal, this question only arises between CAL and BMT. Notwithstanding that BMT has been deregistered and is not separately represented in the appeal, I will address the question because it would arise between CAL and QBE if BMT was entitled to an indemnity under the QBE policy. 52As "owner" of the forklift, BMT was liable to Mr Caruana for the negligence of the driver as its agent, although not otherwise culpable or in breach of any duty of care owed to Mr Caruana. Similarly, CAL was held vicariously liable for the negligence of its employee, Mr Brazel, although not otherwise culpable or in breach of any duty of care owed to Mr Caruana. In circumstances where the liability of each joint tortfeasor was the result of the negligence of a third party for which each was liable and where neither was liable for breach of any duty owed directly to Mr Caruana or otherwise culpable, the primary judge is not shown to have erred in apportioning liability equally between CAL and BMT (at [53]). 53In support of its argument that the primary judge erred in relation to apportionment, QBE relied upon a statement in RP Balkin and JLR Davis, Law of Torts, 3rd ed (2004) at para 29.38 and dicta of Hislop J in Ralston v Bell [2010] NSWSC 245 esp at [130]-[132] and James J in White v Malco [1999] NSWSC 1055 esp at [552]. The statement referred to has no application to the question of apportionment as between CAL and BMT. It was made in circumstances where the question of apportionment arose between two defendants, D1 and D2, where D1 was a tortfeasor solely because it was vicariously liable for the negligence of D2. In those circumstances Hislop J observed that it "appears just and equitable" to apportion liability entirely to D2. A similar observation was made by James J in White v Malco. That is not the present case because each of CAL and BMT is a tortfeasor solely by reason of its being liable for the acts of a third party, Mr Brazel.

Proposed orders 54QBE's appeal must be allowed and the judgment in favour of Mr Caruana against it in relation to the liability of BMT and Mireau set aside. The orders for contribution as between the Workers Compensation Nominal Insurer and QBE must also be set aside. QBE is entitled as against Mr Caruana to its costs of his claim in the Court below. It is also entitled as against the Workers Compensation Nominal Insurer to its costs of the Amended First Cross-Claim. QBE is entitled to its costs of the appeal as against the Workers Compensation Nominal Insurer. For the reasons stated by Basten JA, Mr Caruana should not be required to pay any costs of the appeal. 55Although BMT has been deregistered, in view of the agreement that Mr Caruana's damages as assessed be reduced by $125,000, it is also appropriate to set aside the judgment in his favour against BMT and enter judgment for the reduced amount. 56Accordingly the orders that I propose are: (1)QBE's appeal allowed. (2)Set aside orders 1.2, 1.4, 1.6, 1.7, 1.10 (only insofar as it requires that QBE pay Mr Caruana's costs of the proceedings in the Court below) and 1.11 (only insofar as it requires that QBE bear its own costs of the proceedings in the Court below) made by the District Court on 10 February 2012. (3)Judgment for Mr Caruana against BMT (the first appellant) in the sum of $1,586,450.20, such judgment to take effect on 10 February 2012. (4)Judgment for QBE on Mr Caruana's claim made by the Second Amended Statement of Claim. (5)Judgment for QBE on the Workers Compensation Nominal Insurer's Amended First Cross-Claim. (6)Mr Caruana pay QBE's costs of defending his claim in the Court below. (7)Workers Compensation Nominal Insurer pay QBE's costs of the Amended First Cross-Claim in the Court below. (8)Workers Compensation Nominal Insurer pay QBE's costs of the appeal.

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: 03 May 2013