MANSFIELD J
44 I have read the reasons for judgment of North and Emmett JJ. I agree that the appeal should be allowed, that the orders made by the learned primary judge should be set aside, and that the claim of Aurora Energy Pty Ltd (Aurora) should be dismissed with costs, including that Aurora should pay the costs of the appeal.
45 I am grateful to adopt the description of the relevant facts, and of the relevant documents, from the reasons of the joint judgment. I respectfully agree with their Honours' conclusion, for the reasons they have given, on the first issue on the appeal - namely that clause 4 of the Work Trial Agreement of 30 July 1996 continued to be the relevant term of the contractual arrangements between the Commonwealth and the Hydro relating to the Employee's working for, and training with, the Hydro at the time of his fall on 14 October 1997. I use the description of the Commonwealth to include the Australian Protective Service (the Service), Vocational (as defined in the joint reasons) and Comcare except where it is necessary to distinguish between them.
46 I also agree with North and Emmett JJ that clause 4 of the Work Trial Agreement of 30 July 1996 does not oblige the Commonwealth to indemnify Aurora in respect of any damages awarded to the Employee against Aurora for injuries suffered in the fall on 14 October 1997.
47 Clause 4 of the Work Trial Agreement provided that:
'The current employer, i.e. the Australian Protective Service, accepts liability for any injury sustained during the period of the Work Trial.'
48 As North and Emmett JJ have pointed out, the language of that clause is not the language of indemnity. It indicates - in respect of an agreement to which at least the Commonwealth, the Employee and the Hydro were parties - that liability for any injury sustained during the period of the work trial would be accepted by the Service. The liability referred to must be liability to the Employee. Indeed, in accordance with clause 4, the fall on 14 October 1997 has led to a claim by the Employee under the Safety Rehabilitation and Compensation Act 1988 (Cth) (the Commonwealth Compensation Act) and that liability to the Employee has been accepted by both the Service and by Comcare. There is presently no other liability asserted by the Employee against the Service or Comcare arising out of that fall.
49 As their Honours note, the Employee has sought compensation from the Service in respect of the injuries he then received under the Commonwealth Compensation Act, obviously on the basis that he accepts that at that time he was still an employee of the Service. Comcare has paid benefits under that Act. Although the pleadings in the Employee's claim against the Hydro and Aurora were not before this Court either at first instance or on appeal, the Amended Statement of Claim of Aurora in this proceeding asserts that the Employee's claim against Aurora includes damages to cover the compensation paid to him by the Commonwealth, presumably having regard to his obligation to repay such compensation from any damages he recovers under s 48 of the Commonwealth Compensation Act.
50 The Employee clearly also asserts a liability on the part of the Hydro or its successor Aurora in respect of that incident. As he has claimed compensation against the Service in respect of that incident, it appears that that liability is said to arise at common law for breach of a duty of care which the Hydro is alleged to have owed him by reason of the relationship of proximity between them. The alleged liability appears to stem from the Hydro providing unsafe equipment. Such a liability could also arise, for example, in the event of careless driving or of careless maintenance of a vehicle by an employee of the Hydro, for which it is vicariously liable, leading to a vehicular accident. And it could arise whether the incident occurred in the premises of the Hydro, or at any site where it was carrying out its operations, or indeed on the open highway.
51 The issue is whether, judged objectively from the position of reasonable people in the position of the parties (see Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352-353; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; and Toll (FGCT) Pty Limited v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]), clause 4 was intended by the parties to extend to any such liability on the part of the Hydro so that the Commonwealth or the Service were also thereby agreeing to indemnify the Hydro for any liability it incurred in relation to the Employee.
52 There is no indication that that was the intention of the parties.
53 The terms of clause 4 do not use the word 'indemnity'. The concept of shifting by agreement any liability of Hydro to the Employee to the Commonwealth so that the Commonwealth should incur that liability to the exclusion of the Hydro is a significant one. It is one which would have been expected to have been explicitly addressed: see e.g. the remarks of Kirby J in Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 at [67]-[68]. The identification of the Service as the current employer accepting liability puts the focus upon its liability to the Employee. The nature of the work trial clearly called for elucidation of the Employee's relationship with the Service and with Comcare, so that he (and the other parties to the Work Trial Agreement) would know in unequivocal terms who was his employer at material times. That elucidation is provided. It carried with it the assurance of the existence of the protection available under the Commonwealth Compensation Act. In my view, the wording of clause 4 points to the 'liability' being liability incurred by the Service to the Employee.
54 The context, namely the relationship which arose under the Work Trial Agreement, explains why all the parties would have wished to remove any doubt about the identity of the employer and so about the entity against which the Employee might make a compensation claim. The acceptance of the ongoing relationship of employer/employee between the Service and the Employee is a sensible matter to identify at the time. The Employee, in the context of the arrangement, would be unlikely to have eschewed that entitlement, or to have eschewed any entitlement to recover damages from the Hydro if he were injured through its negligence. The Hydro and the Commonwealth could not agree to remove that latter entitlement from him. It is most unlikely that the word 'liability' was to perform two different functions and to carry two different meanings. Consequently, if the word 'liability' in clause 4 was intended to provide that the Commonwealth would indemnify the Hydro for any liability for negligence to the Employee, it would remove the function of that clause as identifying for the benefit of the Employee and the Hydro the employer of the Employee.
55 The fact that, despite clause 4, the Employee has sued the Hydro for damages for the injuries sustained on 4 October 1997 simply reflects that understanding of the contract. That post-contractual conduct is not, of course, a proper aid to its construction. It is nevertheless consistent with the conclusion I have reached about the meaning of clause 4 from its text and content. Put another way, if at the time of the contract an objective but informed observer had asked whether (accepting that the Service remained the relevant employer of the Employee) if the Hydro had caused injury to the Employee through its negligence, the Employee's claim for damages would have been against the Service, the answer in my view would have been a firm 'no'. And if that observer had been asked whether the Hydro's liability for its negligence had been agreed to be indemnified by the Commonwealth, the same negative answer would have been given. The text does not support that claim, nor the context. And the observer would simply have said that the parties could have, but did not, address that circumstance.
56 Indeed, if it is permissible to address the conduct of the parties in trying to negotiate a refined and different version of clause 4 (as illustrated by North and Emmett JJ), on the basis that there were successive contracts and that the relevant contract was that entered into for the second trial period or for the final trial period during which the Employee was undergoing training by the Hydro, that conduct illustrates that the parties by then had recognised that their earlier agreement (including clause 4, which in the circumstances remained part of the ongoing or renewed agreement) did not provide for the indemnity now asserted by the Hydro and Aurora and that they did not come to a consensus about it. The remarks of Hobhouse J in E.E. Caledonia Ltd v Orbit Valve Co. Europe [1993] 4 All ER 165 at 173 (affirmed [1995] 1 All ER 174) are apposite. Those negotiations in late 1996 and early 1997 would then provide the context in which clause 4 of the Work Trial Agreement as still in force should be construed. The evidence indicates that Mr Sutczak of the Hydro was to 'arrange an exchange of letters to cover [the Employee's] Workers [Compensation Coverage]' with the [Hydro] on the occasion of the first renewal of the work placement. During that period the Hydro was to pay Comcare by way of contribution to the amount Comcare was paying the Employee so the employer/employee relationship may have needed further clarification. The Hydro then suggested that the Service should 'insure in terms of the Tasmanian Workers Rehabilitation and Compensation Act 1988 or similar workers compensation legislation [sic] … [to be] unlimited in amount'. That suggestion from the Hydro focuses on liability to the Employee, rather than upon indemnity to the Hydro for any liability it might incur to the Employee. The response of the Commonwealth (which was not accepted by the Hydro), was in terms of clause 4 but additionally confirmed that the Service is insured under the Commonwealth Compensation Act in respect of liability for death of or injury to the Employee, and that any injury he suffered 'will be handled' by the Service and by Comcare. Clearly, that context points to clause 4 referring to liability to the Employee. Even if the revised clause 4 proposed by the Commonwealth had become part of the contract (as the learned primary judge found), the construction in its context would lead to the same conclusion as the Court has reached in this matter for much the same reasons.
57 There is, moreover, no business reason why the Commonwealth would have agreed to indemnify the Hydro in respect of any liability it incurred for injury sustained by the Employee. The Commonwealth was getting some benefit from the arrangement: it was receiving the benefit of the Employee being rehabilitated to meaningful employment, and so of reducing its potential liability under the Commonwealth Compensation Act to the Employee in respect of the earlier injury. But it had no control over the systems of work of the Hydro, or over the Hydro's employees in their work activities, so as to have any capacity to prevent any negligent conduct. And the Hydro, for its part, was already receiving the benefit of the services of the Employee, during his training, without having to pay him any salary. At the completion of the training period it would have had a trained A grade linesman capable of employment by it.
58 Reference may be made to Valkonen v Jennings Construction Ltd (1995) 184 LSJS 87 (Valkonen), and to National Vulcan Engineering Insurance Group Ltd v Pentax Pty Ltd [2004] NSWCA 218 (National Vulcan Engineering). In Valkonen, Cox J at [36] (with whom Matheson and Perry JJ agreed) emphasised the need to give words in exemption and indemnity clauses their plain and natural meaning having regard to the context in which they appear. His Honour followed the approach of the Full Court of the Supreme Court of Victoria in Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834. That case concerned an express indemnity clause in a contract, and the issue was as to the extent of its reach, so it is factually quite different. The helpful feature is the general approach to construction of the clause in that contract. In National Vulcan Engineering, the issue was whether an insurance policy granting indemnity in defined circumstances responded to the particular circumstances. Again, the approach to its construction was consistent with that referred to above. That is the approach which I have endeavoured to apply to clause 4 of the relevant agreement in this matter.
59 In the event that the Hydro, and so Aurora, is found to be liable to the Employee for damages for personal injuries sustained in the fall on 14 October 1997, the second declaration sought by Aurora against the Commonwealth assumes significance. The learned primary judge declared that the Commonwealth is liable to indemnify Aurora in respect of any claims for payment that are made against it under the Commonwealth Compensation Act
'… as a consequence of any damages awarded against or agreed to be paid by [Aurora] to [the Employee] for any injuries suffered by him in October 1997 provided that [Aurora] has not paid any such damages to or on behalf of [the Employee] in breach of any notice issued against [Aurora] pursuant to s 51 of the [Commonwealth Compensation Act].'
60 Section 51 of the Commonwealth Compensation Act entitles Comcare to give notice to a third party which has agreed to be, or been found to be liable, to pay damages to an employee in respect of a compensatable injury under that Act, that the third party pay to Comcare so much of the damages as does not exceed the amount that the employee would be liable to refund Comcare under ss 48 or 49 of that Act. The Employee has pursued against the Commonwealth his claim for compensation in respect of the 14 October 1997 injury, and Comcare has accepted liability to make payments under the Commonwealth Compensation Act in respect of it.
61 For the reasons given, I share in the conclusion of North and Emmett JJ that that determination should also be set aside. The result will be that, if Aurora is found liable to pay damages to the Employee, Comcare will be entitled to recover from the damages for which Aurora is liable the compensation it has paid in respect of the injury on 14 October 1997 pursuant to s 51 of the Commonwealth Compensation Act.