Cheng Nian Zhang v Vlado Popovic

CATCHWORDS : Join Insurer - Change name of defendant - Leave to amend statement of claim

Civil Procedure Act 2005 LEGISLATION CITED : Corporations Act 2001 (Cth) Law Reform (Miscellaneous Provisions) Act 1946 Motor Accidents Compensation Act 1999

Allianz Australia Insurance Limited v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568 Andjelkovic v AFG Insurance Ltd (1980) ACTR 17; (1980) 47 FLR 348 Bailey v New South Wales Medical Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399 Dixon v Royal Insurance Australia Ltd (1998) 90 FCR 390 Eastern Creek Holdings Pty Limited v Axis Speciality Europe Limited [2010] NSWSC 840 Emanoil Alexiou v Chain & Power International Pty Limited & Ors [2010] NSWSC 1002 Fishwives Pty Ltd v FAI General Insurance Co Ltd [2001] NSWCA 193; (2002) 12 ANZ Ins Case 61-515 CASES CITED : Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 Lissenden v Yorkville Nominees Pty Ltd [1984] 3 NSWLR 138 National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (No 4) (1996) 138 ALR 409 Nominal Defendant v GLG Australia Pty Ltd [2006] HCA 11; (2006) 228 CLR 529 Oswald v Bailey (1987) 11 NSWLR 715 Seery v John R Carr & Associates Pty Ltd (Supreme Court of New South Wales, 3 November 1995, unreported) Travel Compensation Fund v FAI General Insurance Co Ltd (1999) FCA 1214 Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18 Zurich Australia Insurance Ltd v CSR Ltd (2001) 52 NSWLR 193; [2001] NSWCA 261

TEXTS CITED : N G Rein SC, "Choosing your life raft: A review of Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 6 and its analogues" (2007) 81 ALJ 180, 182-183

Cheng Nian Zhang (Plaintiff) Valdo Popovic (First Defendant) Calabro Real Estate Pty Limited (Second Defendant) PARTIES : Interfreight (Aust) Pty Ltd (Third Defendant) Popovic Haulage Pty Limited (Fourth Defendant) Insurance Australia Limited trading as NRMA Insurance (Fifth Defendant) National Transport Insurance by its manager NTI Limited (Sixth Defendant)

L J Byrne (Plaintiff COUNSEL : J Sharpe (Fifth Defendant) S G Campbell SC with J Hallion (Sixth Defendant)

Bryan Gorman & Co (Plaintiff) SOLICITORS : Moray & Agnew (Fifth Defendant Hedges Legal (Sixth Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2009/298017 CHENG NIAN ZHANG v VLADO POPOVIC & ORS

JUDGMENT (Leave to amend statement of claim; to change name of defendant; join insurer) 1 HER HONOUR: By amended notice of motion filed 16 August 2010, the plaintiff seeks, firstly, an order grant leave to amend the name of the third defendant from Interfreight Transport Pty Ltd to Interfreight (Aust) Pty Ltd pursuant to s 64 of the Civil Procedure Act 2005; secondly, leave to amend the statement of claim to join as the sixth defendant to the proceedings pursuant to s 6(1) of the Law Reform (Miscellaneous Provisions) Act 1946 ("the Act") and s 64 of the Civil Procedure Act, National Transport Insurance by its manager NTI Limited; and thirdly, leave to proceed against Interfreight (Aust) Pty Ltd in these proceedings pursuant to s 471B of the Corporations Act 2001 (Cth). 2 The plaintiff is Cheng Nian Zhang ("Mr Zhang"). The first defendant is Valdo Popovic ("Mr Popovic"). The second defendant is Calabro Real Estate Pty Limited ("Calabro"). The third defendant is currently named Interfreight Transport Pty Ltd ("Interfreight") but it is sought to change the name of this defendant to Interfreight (Aust) Pty Ltd. The fourth defendant is Popovic Haulage Pty Limited ("Popovic Haulage"). The fifth defendant is Insurance Australia Limited trading as NRMA Insurance ("NRMA") and it consents to the orders sought in the notice of motion. The proposed sixth defendant is National Transport Insurance by its manager NTI Limited ("the insurer"). Mr Zhang relied on the affidavit of his solicitor Bryan Gorman sworn 2 August 2010. 3 For the purposes of this application, I accept the Mr Zhang's version of events as pleaded. On 16 September 2007 Mr Zhang was injured in an accident at a container terminal at Botany, New South Wales. The accident involved a trailer attached to a prime mover ("the trailer"). The trailer comprised of two ramps at the rear of the trailer, one on the left side and one on the right. The trailer had two hydraulic lifting devices, one on the left and one of the right and two safety chains. The ramps were each fixed to the rear of the trailer in the area of the floor of the tray of the trailer and each could be lifted down to the ground so that each ramp formed a platform from the ground to the tray of the trailer and each ramp could be lifted to a vertical position relative to the floor of the trailer. 4 Hydraulic lifting devices controlled the movement of each ramp. When not in use, each ramp was brought into the vertical or upright position, drawn alongside the vertical frame of the trailer and fixed in place by the use of the safety chain. On the day of the accident the left ramp had been moved into an almost vertical or upright position using the hydraulic lifting device but it was necessary to manually push the ramp further towards the trailer in order to bring the ramp into a full vertical position and in order to engage and fasten the left safety chain to the left ramp. Calabro was the owner of the trailer at the time of the accident. It is alleged that Mr Popovic was employed by Interfreight Transport (Aust) Pty Ltd or by Popovic Haulage. Interfreight is currently in liquidation. 5 On the day of the accident, Mr Zhang was at the container terminal with his own truck waiting to collect a container, nearby the trailer. Mr Popovic was the driver of the trailer at the time of the accident. At the request of Mr Popovic, Mr Zhang went to assist Mr Popovic and manually pushed the left ramp of the trailer while Mr Popovic controlled the hydraulic lifting device relevant to the left ramp. The arm of the hydraulic lifting devise relevant to the left ramp broke or snapped away from the trailer and the left ramp fell from the vertical position towards the ground and in the process crushed and pinned Mr Zhang underneath the left ramp. Mr Zhang sustained serious injuries. 6 Mr Zhang claims that the accident was a "motor accident" within the meaning of the Motor Accidents Compensation Act 1999. Alternatively, if the accident was not a motor accident, as such, and fell outside the Motor Accidents Compensation Act, liability in respect of the accident was to be determined pursuant to the Civil Liability Act 2005 rather then the Motor Accidents Compensation Act. 7 In relation to the Motor Accidents Compensation Act claim, Mr Zhang claims that Mr Popovic and/or Popovic Haulage is liable to compensate him in relation to the accident and the NRMA is liable to indemnify each of them under the compulsory third party insurance policy. Mr Zhang has joined NRMA as the fifth defendant and claimed against it under s 6(4) of the Act.

Application to join insurer 8 So far as of the Civil Liability Act claim is concerned, Mr Zhang claims that Interfreight is liable to compensate him in relation to the accident. Mr Zhang now claims that the insurer by its manager NTI Ltd is Interfreight's insurer under a policy of insurance that covers liability in respect of the Civil Liability Act claim. Mr Zhang seeks to join NTI Ltd as the sixth defendant pursuant s 6(4) of the Act. 9 The insurer accepts that the first, second, third and fourth defendants are insured if the exclusion clauses as outlined later in this judgment do not apply. The insurer also accepts that if leave is granted for the insurer to be joined as the sixth defendant it does not oppose the change of name of the third defendant. The main issue raised in this motion is whether or not the insurance cover extends to the third defendant because of certain exclusion clauses contained in the policy (Ex PD7). The insurer submitted that it is futile to grant leave under s 6(4) of the Act and opposes the order sought.

Leave under s 6(1) and (4) of the Law Reform (Miscellaneous Provisions) Act 1946 generally 10 Section 6(1) and (4) of the Act relevantly read: "6 Amount of liability to be charge on insurance moneys payable against that liability (1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability. … (4) …. Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken." 11 So far as s 6(4) if concerned, no proceedings have been taken by the insurer to disclaim liability. 12 Both parties referred to Tzaidas v Child & 3 Ors 61 NSWLR 18; [2004] NSWCA 252; Fishwives Pty Ltd v FAI General Insurance Co Ltd [2001] NSWCA 193; (2002) 12 ANZ Insurance Cases 61-515; Allianz Australia Insurance Limited v GSF Australia Pty Ltd (2005) 221 CLR 568; [2005] HCA 26; and Eastern Creek Holdings Pty Limited v AXIS Speciality Europe Limited [2010] NSWSC 840. 13 In Tzaidas v Child, the New South Wales Court of Appeal explained the history and operation of s 6 at [14] - [23]: "14 Section 6 of the Law Reform (Miscellaneous Provisions) Act creates "a new right with an associated remedy to enforce it" ( Bailey v New South Wales Medical Defence Union Ltd (1995) 184 CLR 399 at 446 per McHugh and Gummow JJ). The right is the charge established by s 6(1). There is conceptual difficulty in a charge attaching at the time of the event giving rise to the claim against the insured if that time is before the contract of insurance is made, as may occur with claims made policies, and differing views have been expressed as to the application of s 6 in those circumstances. …

15 Unless at the time of the event giving rise to the claim against the insured the insured was a corporation under winding-up within s 6(2), the remedy is subject to the requirement of leave.

16 The ancestry of s 6 is described in Bailey v New South Wales Medical Defence Union Ltd at 440-44. The leave requirement was introduced in s 9 of the Law Reform Act 1936 (NZ), but without the words now found in s 6(4), "Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken". For convenience, I will refer to this as "the prohibition". The prohibition was a New South Wales addition, by an amendment in the Legislative Council explained as the Government's intention "that the insurer should be able to raise equities as between himself and the insured" and making clear "that the liability of the insurer will be only the liability he has contracted to undertake under the terms of the policy". (New South Wales Parliamentary Debates, 9 April 1946, 2nd series, vol 180, p 3177)

17 The purpose of the leave requirement had been described in various ways; for present purposes, it is sufficient that it was intended to protect insurers from unwarranted direct actions by claimants upon their insureds. The prohibition is a gloss upon the leave requirement. Leave must be refused if the prohibition is found to apply, although it may be refused in the exercise of the general discretion even if the prohibition is not found to apply. As was said by McHugh and Gummow JJ in Bailey v New South Wales Medical Defence Union Ltd at 448, their Honours' construction of s 6 having the agreement of Brennan CJ and Deane and Dawson JJ at 415. 'This provision is not directing the court that leave be denied only in a case where it is satisfied both of entitlement to disclaim liability and that necessary steps have been taken to establish entitlement to do so. Leave may be refused in other cases but must be refused in these cases.'

18 For the prohibition to apply the court must be satisfied of two things: first, entitlement to disclaim liability, and secondly, taking necessary proceedings. Satisfaction as to taking necessary proceedings can not be passed over. The application for leave pursuant to s 6(4) can not amount to taking necessary proceedings, since the necessary proceedings must be something outside the application. CGU submitted that proceedings were necessary only if the insurer's entitlement to disclaim liability was not obvious. I do not think that is right. The proceedings are those 'necessary to establish ' the insurer's entitlement to disclaim liability (emphasis added). Establish means what it says. The court does not decide, additionally to its satisfaction that the insurer is entitled to disclaim liability, whether or not the entitlement is obvious, and even if it did that would not establish the entitlement to disclaim liability. So long as the insurer's entitlement to disclaim liability is in issue, other proceedings are necessary to establish it.

19 Returning to satisfaction as to entitlement to disclaim liability, it is not equivalent to satisfaction that the insurer is not liable to provide indemnity. The words are 'satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability' (emphasis added). As was pointed out by Blackburn CJ in Andjelkovic v AFG Insurance Ltd (1980) 47 FLR 348 at 354 they do not cover, for example, where the respondent to the application for leave contends that it was not a party to the contract of insurance. His Honour considered (ibid) that they also do not cover a contention that on its proper construction the claim against the insured is not a risk covered by the policy, and do not 'exhaust the grounds on which an insurer may oppose the application for leave'. The emphasised portion of the words is important to the operation of the prohibition.

20 The satisfaction as to entitlement to disclaim liability, even within its scope, must be less than a determination whether or not the insurer is liable. The insured is not a party, and the proceedings necessary to establish the insurer's entitlement to disclaim liability would be superfluous: see Andjelkovic v AFG Insurance Ltd at 355; Lissenden v Yorkville Nominees Pty Ltd (1984) 43 NSWLR 138 at 142 per Mahoney JA. In Andjelkovic v AFG Insurance Ltd at 355 it was said that it was sufficient if the court was satisfied that the insurer had a bona fide and arguable ground for disclaiming liability; whether or not this be correct, acceptance that it is arguable that the insurer is obliged to provide indemnity would normally mean that there could not be the satisfaction.

21 In the result, there is an intersection between satisfaction as to entitlement to disclaim liability, for the purposes of the prohibition, and existence of an arguable case that the insurer is obliged to provide indemnity, for the purposes of the general discretion. For the latter purpose an arguable case has come to be held sufficient for a grant of leave, see for example Oswald v Bailey (1987) 11 NSWLR 715 at 734; Dixon v Royal Insurance Australia Ltd (1998) 90 FLR 390 at 400; Travel Compensation Fund v FAI General Insurance Co Ltd (1999) FCA 1214; Fishwives Pty Ltd v FAI General Insurance Co Ltd (2002) ANZ Ins Cas 61-515 at 75,998.

22 The intersection has led to some looseness in the cases, failure clearly to distinguish between grant or refusal of leave because of the prohibition and grant or refusal of leave in the exercise of the general discretion. In few cases have other proceedings been taken - Lissenden v Yorkville Nominees Pty Ltd and Seery v John R Carr & Associates Pty Ltd (Giles J, 3 November 1995, unreported) are - and in other cases determinations that the insurer is entitled to disclaim liability, appearing to result in refusal of leave because of the prohibition, are more correctly exercises of the general discretion.

23 In the exercise of the general discretion, satisfaction that the insurer is entitled to disclaim liability will normally mean that leave should be refused, since (as McHugh and Gummow JJ described in Bailey v New South Wales Medical Defence Union Ltd at 448-50) if there is an entitlement to disclaim liability there can be no moneys payable and nothing on which the charge under s 6(1) can operate. Leave will be refused although proceedings to establish entitlement to disclaim liability have not been taken ( Fishwives Pty Ltd v FAI General Insurance Co Ltd at 75,997). But the exercise of the general discretion is not confined by the prohibition, with its reference to entitlement to disclaim liability under the terms of the contract of insurance. The focus is on the outcome - if the insured is liable, what are the prospects that the insurer will be obliged to provide indemnity - and anything bearing on the outcome is relevant." 14 In Fishwives Pty Ltd v FAI General Insurance Co Ltd the New South Wales Court of Appeal stated at [47]: "47 I do not accept the appellant's submission that the judge was bound to grant leave if there was an arguable case on the non-disclosure issue. I can readily accept that leave may be given where the Court is satisfied that there is an arguable point on the insurer's indemnity issue. It is now established that the grant of leave to proceed against an insurer does not foreclose the insurer's right to litigate issues going to its liability to indemnify the insured in the substantive proceedings. Dixon's Case shows the insurer lives to fight another day. But it does not follow, in my view, that a court that is positively satisfied of the insurer's entitlement to disclaim, after issue has been joined on that matter as between the plaintiff and the insurer, must exercise the discretion in favour of the grant of leave. The court is 'seized of the discretion to grant leave' ( National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1996) 138 ALR 409 at 418 per Lindgren J), but it is not driven to exercise the discretion in a particular way." 15 As shortly stated by Hammerschlag J in Eastern Creek Holdings Pty Limited v Axis Speciality Europe Limited [2010] NSWSC 840 at [20] when seeking leave pursuant to s 6(4) of the Act, the plaintiff must show that: firstly, there is an arguable case against as to the liability of the insured; secondly, there is an arguable case that the policy responds; and thirdly, there is a real possibility that if judgment is obtained, the insured would not be able to meet it: see also N G Rein SC, "Choosing your life raft: A review of Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 6, and its analogues" (2007) 81 ALJ 180, 182-183. The insurer did not contend that there was not an arguable case against the third defendant, or that if judgment was obtained the insured would not be able to meet it.

The insurance policy 16 The policy document is written by National Transport Insurance and is entitled "Fleet Motor Policy" ("the insurance policy"). Section 1 is headed "Loss or Damage". Section 2 is relevant here and I have reproduced it in full. Section 2 is headed "Legal Liability" and relevantly reads: " SECTION 2 LEGAL LIABILITY

In this section, where we refer to Your Motor Vehicle, we mean Your registered Motor vehicle. We will also mean Your unregistered Motor Vehicle where it is described in the Schedule as a Class 9a, 9b, 9d type Motor Vehicle.

This Section does not cover liability of whatsoever nature directly or indirectly caused by, resulting from or in connection with any Act of Terrorism (declared or not declared) regardless of any other cause or event contributing concurrently or in any other sequence to the legal liability, including action taken in controlling, preventing, suppressing or in any way relating to any Act of Terrorism.

(a) We will pay any amount up to the liability Limit shown in Part's 1 or 2 below (whichever applicable) for any number of claims arising out of one event, which You are held legally responsible to pay as a result of an accident, for damages in respect of: (A) bodily injury (fatal or non-fatal) to Another Person (B) damage to or loss of property of Another Person caused: (1) by You using Your Motor Vehicle; or (2) by and during loading or unloading merchandise onto or off Your Motor Vehicle direct to or from a fixed place of rest beside Your Motor Vehicle; or (3) by merchandise or equipment/components of Your Motor Vehicle, falling on / in or from Your Motor Vehicle.

For a Motor Vehicle whose cargo is Non Dangerous goods in terms of the Australian Dangerous Goods Code, the Indemnity Limit is up to $25,000,000 in total.

Where costs, charges & expenses have necessarily and reasonably been incurred to clean up and remove any non hazardous debris, being merchandise that has fallen from Your Motor Vehicle as a result of a collision or overturning thereto, and after settlement for removal of the same debris under the applicable Cargo Transit or Carriers Liability Insurance over your load, there remains an amount excess of that settlement (excess loss amount) for which You still incur a loss, then we will pay any excess loss amount, below $10,000 arising out of that accident.

PART 2 - Hazardous/Dangerous goods carrying Liability

For a Motor Vehicle whose cargo is any of the following Dangerous good classes in terms of the Australian Dangerous Goods Code, We will indemnify You for a Limit up to $250,000 in total, where the accident loss or damage is accidental from Your standpoint-

Class 1 explosive substances or articles Class 2 gases Class 3 flammable liquids or substances Class 4 flammable solids or substances Class 5 oxidising agents or organic peroxides Class 6.1 toxic substances Class 8 corrosive liquids or substances Class 9 miscellaneous dangerous goods

We will also indemnify You up to the limit under Part 2 for the costs incurred by or on behalf of a public authority for the cleaning up and removal of a contained escape of Hazardous/Dangerous goods, that is not for the removal or salvage of Your load indemnified under a policy of Cargo Transit or Carriers Liability Insurance.

(b) We will not pay; (1) if the property damaged belongs to You.

(2) if the property damaged is in Your physical or legal control. Provided however that We will pay up to $100,000 any one Accident where such property damage is to property leased or rented by You as Your business premises.

(3) if liability occurs beyond the limits of a carriageway or thoroughfare declared a designated road, whilst merchandise is being delivered or collected away from Your Motor Vehicle.

(4) for any claim in respect of which insurance is required according to law.

(i) which is in excess of any monetary or other limitations imposed by law, or (ii) which is below any threshold amount imposed by law or (iii) which by operation of law is otherwise not covered. (6) for any claims, including loss of consortium, in respect of or arising out of the death of or bodily injury to any employee of Yours (which expression includes any person engaged under a contract of service or apprenticeship with You) where same arises out of or in the course of the person's employment with You.

(7) for any liability imposed by the provisions of; (i) any worker's or workman's compensation legislation, or (ii) any accident compensation legislation, or (iii) any industrial award or agreement or determination.

(8) for any liability for death or bodily injury arising out of or in any way connected with a defect in Your Motor Vehicle or in a Motor Vehicle, but in Queensland only if it causes loss of control of the vehicle whilst it is being driven; except where such Motor Vehicle is a Queensland registered backhoe, end loader, forklift, mobile crane or hoist or other mobile machinery, and the death or bodily injury occurs whilst such Motor Vehicle is, on land which is not designated as a road according to law, or in a public place. (9) for any liability for death or bodily injury by a Queensland or New South Wales registered trailer whilst that trailer is being towed by a Motor Vehicle or running out of control having become accidentally detached therefrom at the time the death or bodily injury occurs.

(10) for death or bodily injury caused by or in connection with Your Motor Vehicle, if Your Motor vehicle is registered in the Northern Territory of Australia.

(11) for any liability for loss of use arising out of or from loss or damage to property in Your physical or legal control."

[My emphasis added at (8)] 17 Section 4 is headed "Principal or Employer Indemnity". Section 6 is headed "Terrorism Loss or Damage" and contains another heading "Exclusions to the Policy". 18 In Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 at 394 Kirby P spoke of three general rules in dealing with the construction of insurance policies. Two are relevant here. They are, shortly stated, where there is doubt as to the meaning of a policy, particularly in respect of terms contained in standard printed forms proffered by the insurer to the insured, courts, if not otherwise able to resolve the ambiguity, will construe the policy contra proferentem; and insurance policies will be construed in their commercial and social setting and having regard to their purposes. If one construction strikes fundamentally at the purpose of the policy, which is to spread the risk insured against, whilst another construction that is reasonably available would effect that purpose, the latter will be preferred.

19 The insurer contended that Mr Zhang has no arguable case that the policy responds because clause (b)(8) in Section 2 of the insurance policy is a clear exclusion clause containing the simple words "defect" and applies because Mr Zhang's injuries "were arising out of or in any way connected with a defect in a motor vehicle." The other exclusion clauses that the insurer relies upon are 4(a), 4(a)(i), 6(d) and 7 in Section 6 but concedes that whether these other exclusion clauses apply are arguable and therefore matters for determination at trial. 20 The insurer's counsel referred to paragraphs 15, 16, 18, 19, 24(a), (b) (d) (f) and (g), 26(d), 27, 28(a), (b), (d) and (g) of the amended statement of claim to establish that Mr Zhang is alleging that the trailer was defective. It is not necessary to reproduce all of the above but so far as the third defendant is concerned, paragraphs [19], [27] and [28] relevantly plead: "19 The arm of the hydraulic lifting devise relevant to the left ramp broke or snapped away from the trailer causing the left ramp to fall from the vertical position towards the ground and in the process causing a collision between the falling ramp and the Plaintiff standing underneath the ramp attempting to push it (called "the collision"). … 27. At all material times the Third Defendant and the Fourth Defendant owed to the Plaintiff duty of care in the use of the trailer. 28. The Third Defendant and/or the Fourth Defendant was each in breach of its duty of care, by reason of its negligence and/or was in breach of its duty of care being vicariously liable for the acts and omissions constituting negligence on the part of the First Defendant.

Particulars of Breach of Duty: (a) Failing to provide an arm to the hydraulic lifting device in respect of the left ramp which was safe and now liable to break or snap away from the trailer. (b) Providing the trailer for use with an arm to the hydraulic lifting device in respect o the left ramp which was unsafe in that it could break or snap away from the trailer. … (d) Failing to maintain the hydraulic lifting device in respect of the left ramp and in order to ensure that by appropriate maintenance the arm of the device was safe for use and so that it would not break or snap away from the trailer. (e) Failing to test the arm of the hydraulic lifting device in respect of the left ramp to ensure that it could not break or snap away from the trailer. (f) Failing to reinforce with welding or otherwise to strengthen the arm of the hydraulic lifting device in respect of the left ramp and so that the arm could not break or snap away from the trailer. (g) Allowing or permitting the First Defendant to use the trailer when the arm of the hydraulic lifting device in respect of the left ramp was deficient to hold in place the left ramp. …" 21 The paragraphs of the statement of claim do not specifically plead but they do speak of "break or snap away".

22 The insurer's counsel also referred to the report of Mr David Dubos, a safety engineer, dated 11 November 2008 (Ex PD4) together with portions the contents of Police and WorkCover files as reference to a "defect". The Police Report indicates that inspection of the trailer revealed that the hydraulic arm connection to the ramp which was welded to the rear of the trailer had snapped away from the trailer. Mr Dubos's report is based on assumptions of fact based on the instructions given by Mr Zhang's solicitor. 23 At best, as far as the insurer is concerned, Mr Dubos reports at paragraphs [46] and [113]: "46 It is apparent to me that Mr Zhang in interacting with the trailer which had a defective ramp, was working within the system of work provided by Mr Popovic. and Interfreight Transport. That is, he was called upon to handle a ramp which was, unsafely secured and he was subject to the defects in the system of work managed by Mr Popovic and Interfreight Transport. … 113 On my information, Mr Popovic and Interfreight were operating a trailer with inherent or unacceptable hazards associated with it. The strength and stability of the attachment point for the ramp in question was defective. It is apparent that Mr Popovic and Interfreight introduced the use of the trailer into the work system, and permitted use of the machinery by the Plaintiff without carrying out consultation, hazard identification, risk assessment, supervision or training or control of risks which would have prevented the accident to the Plaintiff. As a result the Plaintiff in using the machinery, experienced a failure of the machine where the attachment of a supporting mechanism failed, and the Plaintiff was severely injured as a result." 24 I accept that there is a reference to the trailer having a "defective ramp" and that "the strength and stability of the attachment point for the ramp was defective" and there is also reference to "failure of the machine." 25 In support of the proposition that clause (b)(8) contains words that are not simple in construction, Mr Zhang pointed to the consideration of causation of accidents by defects and other causes in the High Court cases of Allianz Australia Insurance Limited v GSF Australia and Nominal Defendant v GLG Australia Pty Ltd (2006) 228 CLR 529; [2006] HCA 11 and the Court of Appeal in Zurich Australia Insurance Ltd v CSR Ltd (2001) 52 NSWLR 193; [2001] NSWCA 261 to indicate that the courts have grappled with these issues and come to differing conclusions. 26 Counsel for Mr Zhang submitted that the policy at best is ambiguous. In particular counsel relied on Allianz Australia Insurance v GSF Australia. Allianz Australia Insurance v GSF Australia dealt with the compound issue of whether the injury was caused for the purposes of the definition of "injury" in s 3(1) of the Motor Accidents Compensation Act, during the use or operation of a vehicle by a defect in the vehicle. In Nominal Defendant v GLG Australia the court dealt with the question of whether, for the purposes of s 3(1), the injury was caused by the driving of the vehicle in question. According to counsel for Mr Zhang, in Nominal Defendant v GLG Australia at [27], it was found, similarly in this respect to Allianz Australia Insurance v GSF Australia, that the cause of the injury was the designing and implementing an unsafe system of work. It is not necessary to refer in detail to Allianz Australia Insurance v GSF Australia. 27 In Zurich Australia Insurance Ltd v CSR Ltd the New South Wales Court of Appeal stated at [46], [47] and [70]: "46 In an approach which, in my opinion, is applicable to the Motor Accidents Act , machinery etc was found to be "defective" if it was not fit for the purpose for which it was designed or the use for which it was intended.

47 Lord Coleridge said in Heske v Samuelson (1883) 12 QBD 30 at 31: "The question is whether the fact that the machine was unfit for the purpose for which it was applied, constitutes a 'defect in its condition' within 43 & 44 Vict.c. 42. The question really almost answers itself. If it was not in a proper condition for the purpose for which it was applied there was a defect within its condition within the meaning of the Act." …

70 I have concluded above that the design of the trailer was such that it was intended to be used in circumstances where a single worker lifted each ramp. When this happened it was, in my opinion, the use or operation a vehicle in which there was a "defect" for its intended use. It was not negligent use of a vehicle otherwise fit for the purpose or use to which it was intended to be put." 28 Zurich Australia Insurance Co Ltd v CSR Ltd supports the insurer's submissions. 29 In Allianz Australia Insurance v GSF Australia the High Court stated at [95] to [96]: "[95] The facts do not sustain a contention that Mr Oliver's injury was caused by a defect in the vehicle. Had the vehicle been functioning in the ordinary way, there would have been no occasion for GSF to send Mr Oliver and his co-worker to the airport and to arm them with crowbars. However, that could be said of a range of circumstances but for the occurrence of which Mr Oliver would not have sustained his back injury. The question, as Santow JA correctly said in his dissenting judgment, was whether the state or condition of the vehicle is to be treated as causative in the relevant legal sense required by the Motor Accidents Act.

[96] Santow JA also emphasised that this question of causality was not at large or to be answered by "common sense" alone; rather, the starting point is to identify the purpose to which the question is directed. Those propositions should be accepted. …" 30 Allianz Australian Insurance v GSF Australia supports Mr Zhang's submission. 31 For current purposes, Mr Zhang refers to that case simply to highlight that the characterisation of an accident as being caused by (or, by analogy, connected with) a defect (or some other cause such as an unsafe work system) involves an exercise of characterisation by the court. Mr Zhang submitted that if clause (b)(8) of the insurance policy is held to apply to the accident (which is denied by Mr Zhang), a similar process of characterisation would be required after consideration of all relevant evidence in the current proceedings. In this regard, Mr Zhang says that it is open on the pleading for a court to find that the accident was caused or connected with one of a number of causes including a defect, an unsafe work practice or human error and the issue should be determined at trial after consideration of all relevant evidence. I agree. 32 On the interpretation of the policy the insurer further submitted that clause 2(a) sets out circumstances where it will pay and clause 2(b) sets out circumstances where it will not pay. The insurer submitted that considered as a whole, the matters forming "Section 2 Legal Liability" of the policy-wording appearing on pages 2 to 3 provide clear context for the conclusion that clause (b)(8) is an exclusion applying to the both Parts 1 and 2 of the section. Section 2 is concerned with legal liability and is divided into two parts each of which has its own separate limit of indemnity. The insurer submitted that the exclusions in clauses (b)(1)-(11) of Part 2 are of general application to the whole section and that no commercially sensible construction can be posited to the contrary. 33 Counsel for Mr Zhang submitted that, after reading the policy as a whole, it is arguable that the disclaimer does not apply to non-hazardous goods and that even if it is ultimately held to apply to non-hazardous goods, it contains words and concepts that are not simple and its true construction is a matter for determination at trial. 34 So far as the interpretation of an insurance policy is concerned, in Eastern Creek Holdings v Axis Speciality Hammerschlag J decided at [27], that it was neither possible nor appropriate to determine at this stage of the proceedings whether the conduct complained of amounts to activities in the conduct of the business of project/construction managers, within the meaning of those words in the policy. This was because, firstly, the meaning to be attributed to those words may be affected by evidence; secondly, it will be informed by other provisions of the policy (including the schedule and the proposal) so as to give the entirety of the instrument congruent operation. 35 Counsel for Mr Zhang submitted that as in Eastern Creek Holdings v Axis Speciality the meaning in the insurance policy in this case is far from clear. Counsel for Mr Zhang submitted that the meaning of words in the policy may, firstly, be affected by evidence and, secondly, will be informed by other provisions of the policy so as to give the entirety of the instrument congruent operation and therefore it is an arguable matter so leave should be granted. 36 It is my view that it is arguable that the disclaimer does not apply to non-hazardous goods. So far as the "we will pay", "we will not pay" analysis in section 2, there is a further exclusion in section 6 where it refers to "we will not pay". The interpretation of the meaning of clause (b)(8) is arguable whether Mr Zhang's bodily injury can be consider as "arising out of or in anyway connected with a defect" by the third defendant's motor vehicle is also arguable. These issues should be determined at trial. Leave is granted pursuant to s 6(4) of the Act to join the insurer as the sixth defendant. 37 Senior Counsel for the insurer further submitted that the first, third and fifth defendants are jointly insured by it is only in relation to the third defendant that it can be shown that there is a real possibility that if judgment were obtained, the insured would not be able to meet it. In response, Mr Zhang submitted that at the end of the trial he might only be successful against the third defendant. There is no authority on this issue that requires further legal argument. This issue is one for determination at trial. Whether this submission has any force may depend on factual findings.

Leave to amend name of the third defendant and s 471 of the Corporations Act 38 Mr Zhang's solicitor, Mr Gorman, explained in his affidavit that the identity of the third defendant at the time of the preparation of the statement of claim and amended statement of claim he did not have a lot of information available to him in relation to the proper name of Interfreight. Mr Gorman deposed that Calabro, Popovic Haulage and Interfreight have not been cooperative and it has not been possible to obtain any further details from them. Mr Gorman understood that Interfreight Transport Pty Ltd was the employer of Mr Popovic. 39 On 7 July 2010, Mr Gorman obtained an ASIC current and historical extract in respect of Interfreight (Aust) Pty Ltd. It is now Mr Gorman's understanding that Interfreight Transport Pty Ltd may be, together with other companies, under the control of Interfreight (Aust) Pty Ltd, forming a group of companies. 40 Mr Zhang has misnamed the third defendant because, firstly, the injuries sustained by him at the time of the accident prevented him form making enquiries as to the precise identity of the employer of Mr Popovic; secondly, his solicitor intended to join as a defendant Mr Popovic's employer and the use of his services. The solicitor initially laboured under the misconception that the employer was Interfreight Transports Pty Ltd but now understands that the reference should have been to Interfreight (Aust) Pty Ltd; and thirdly, the parties involved have not, according to Mr Gorman, been cooperative.

41 Section 64 of the Civil Procedure Act relevantly reads: "64 Amendment of documents generally

(1) At any stage of proceedings, the court may order: (a) that any document in the proceedings be amended, or

(b) that leave be granted to a party to amend any document in the proceedings. …" 42 In my view there was a genuine mistake as to the name of the employer of Mr Popovic. As there is no prejudice occasioned to the defendants leave should be granted to amend the name of the third defendant from Interfreight Transport Pty Ltd to Interfreight (Aust) Pty Ltd. 43 Mr Zhang also seeks leave under s 471B of the Corporations Act. It reads: "471B Stay of proceedings and suspension of enforcement process While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with: (a) a proceeding in a court against the company or in relation to property of the company; or

(b) enforcement process in relation to such property;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes." 44 On 2 March 2009, Interfreight (Aust) Pty Ltd was wound up pursuant to a creditors petition. It remains in liquidation. Mr John Morgan, the official liquidator of the third defendant, in his letter dated 16 August 2010 to Mr Zhang's solicitor advised that: "… since my appointment I have not received the books and records of the Company and I have not received cooperation from the director. I have written to the Australian Securities and Investments Commission and ask (sic) them to assist me to prosecute the director. At present, I have no information regarding the Company to assist you." 45 Counsel for Mr Zhang submitted that the purpose of the stay is to enable the liquidator to proceed with the liquidation without harassment from creditors and without delay, and leave applications mean that the finalising of the company's affairs are delayed before any finalisation of proceedings. The insurer submitted that Mr Zhang has to elect to proceed either by s 415B of the Corporations Act or s 6 of the Act. 46 It is my view that an election is not required. There may be some assets remaining in the company. Section 6(1) of the Act is only concerned with joining the insurer. In the circumstances, I grant leave pursuant to s 471B of the Corporations Act for Mr Zhang to proceed against the third defendant. 47 Leave is granted to join National Transport Insurance by its manager NTI Limited as sixth defendant pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946. Leave is granted to change the name of the third defendant from Interfreight Transport Pty Ltd to Interfreight (Aust) Pty Ltd. I grant leave to proceed against Interfreight (Aust) Pty Ltd. Costs are costs in the cause. 48 In all of these circumstances it seems to me that the proper order to make, and one which is consistent with the usual practice of the court, is to order that the costs of the notice of motion be costs in the cause. There are no other facts, matters or circumstances which have been brought to my attention which cause me to vary from the court's usual practice in this respect: see Emanoil Alexiou v Chain & Power International Pty Limited & Ors [2010] NSWSC 1002.

(1) Leave is granted to join National Transport Insurance by its manager NTI Limited as sixth defendant pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946.

(2) Leave is granted to change the name of the third defendant from Interfreight Transport Pty Ltd to Interfreight (Aust) Pty Ltd.

(3) Leave is granted to proceed against Interfreight (Aust) Pty Ltd.

(4) Costs are costs in the cause. **********

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