In Chan v Cresdon Pty Ltd [(1989) 168 CLR 242 at 256] , Mason CJ, Brennan, Deane and McHugh JJ described the statement in Ankar set out above as evidencing a "settled principle governing the interpretation of contracts of guarantee".
140 After a historical review of decisions and opinion from the 18th century onwards in England, United States and in Australia, the principal judgment expressed the view at 913 [23] that:
The principles adopted in Ankar , and applied in Chan , are therefore relevant to the construction of indemnity clauses.
With some observations about possible future developments in the law, Kirby J approved of the disposition in the principal judgment - see p 923 [70] and [74]. Callinan J dissented.
141 I respectfully observe, in relation to the passage I have set out from Andar at 911 [17], that the view that the liability of the surety is strictissimi juris and the view that ambiguous contractual provisions should be construed in favour of the surety are not the same views. The present case raises no need to consider the operation of a preference for a construction that reads a provision otherwise than as a condition, which is the subject which their Honours treated as strictissmi juris. The arguments related to the other aspect of their Honours' observation, the construction of ambiguous contractual provisions. I respectfully observe that what their Honours said relates to the resolution of questions of construction arising on ambiguity, and that their Honours said nothing which could promote readiness to detect ambiguity, or which might tend to create perceptions of ambiguity which would otherwise not be perceived. In my opinion there is no special rule for contracts of indemnity about what constitutes an ambiguity, or about how ambiguity is discovered, and there is no rule which favours the discovery of ambiguity.
142 There is no special or easy path to the detection of ambiguity, and an indemnity clause, like any other contractual provision, should be construed according to its natural and ordinary meaning read in the light of the contract as a whole. The ambiguity to which their Honours refer in Ankar is ambiguity of which the contractual language is fairly susceptible without placing a strained construction on it: and it is always necessary to construe the language an indemnity clause, as of any contractual clause, in the context of the entire contract of which it forms part. See Darlington Futures Ltd v. Delco Australia Pty Ltd (1986) 161 CLR 500 at 507-510, particularly (at 510):
[T]he interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity.
See too the passage quoted in Darlington at 508 from Photo Production Ltd v. Securicor Ltd [1980] AC 827 at 851 (Lord Diplock):
In commercial contracts negotiated between business-men capable of looking after their own interests and of deciding how risks inherent in the performance of various kinds of contract can be most economically borne (generally by insurance), it is, in my view, wrong to place a strained construction upon words in an exclusion clause which are clear and fairly susceptible of one meaning only even after due allowance has been made for the presumption in favour of the implied primary and secondary obligations.
143 The Joint Venture, as the profferor of the contract documents including cl 12, is in an adverse position with respect to the resolution of any ambiguity for a further reason than the reason that Andar establishes. I would think too that while resolution of ambiguity in favour of the surety would, conforming with Andar, usually be found to be the correct resolution, there may be cases in which, although ambiguity can literally be detected in that more than one meaning can reasonably be attributed to some expression, context may require a construction adverse to the surety.
144 Courts have when applying indemnity clauses sometimes found it difficult to suppose and difficult to conclude that one party to a contract should intend to indemnify the other party from the consequences of the indemnified party's own negligence: for an example, based on an indemnity clause which was not in the same terms as cl 12, see Canberra Formwork Pty Ltd v Civil & Civic Ltd (1982) 41 ACTR 1 23 - 24 (Blackburn CJ, citing Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd [1973] 1 QB 400 at 419 (Buckley LJ) and Davis v The Commissioner of Main Roads (1988) 117 CLR 529 at 524 (Kitto J, dissenting)). This passage from Canberra Formwork was referred to in Leighton Contractors Pty Ltd v Smith [2000] NSWCA 55 at [5] where Mason P and Fitzgerald JA disapproved of Blackburn CJ's approach: see [9]. Their Honours said "….the modern approach to construction of commercial contracts is to give them their literal and ordinary meaning" and referred to Darlington Futures. Meagher JA reached the same conclusion: see [26]. The decision supporting entitlement to indemnity related, of course, only to the indemnity clause then under consideration. In my understanding the Court of Appeal in Leighton Contractors v Smith disapproved of the approach to the construction of indemnity contracts to in Canberra Formwork v Civil & Civic and other authorities there referred to, and showed that it is incorrect to approach an indemnity clause with any such predisposition.
145 Parenthetically I add that the Joint Venture's claim for indemnity against Chadwick and Normoyle is not based on circumstances in which the Joint Venture was negligent; the Joint Venture was at fault only in the sense that it was in breach of its statutory duty.
146 Counsel for Chadwick submitted that cl 12 is ambiguous in that it is capable of the construction that "any act, neglect or default" applies only to a negligent act or to a breach of contract or statutory duty. In this submission "neglect" and "default" have connotations of omission and of fault with respect to some duty or obligation under contract, statute law or negligence law; and "act" appearing as it does in a collocation with them should be taken to fall within the same connotation. The argument places "act" in a genus with "neglect" and "default" and requires "act" to be construed ejusdem generis. This submission led to references to dictionary definitions of these expressions or some of them; and I find no real assistance in the dictionary references, which of course cannot give effect to any influences of context and collocation.
147 It is correct, in my view, that "neglect" and "default" connote omission, failure and breach of duty, but in my opinion this connotation does not carry any implication for the meaning of "act", which in its ordinary and natural meaning is neutral as to fault or breach of duty, and free of any connotation which might place it in a genus into which "neglect" and "default" also fall, in any way which would colour the meaning of "act". Quite otherwise, "act" in its ordinary and natural meaning is distinct from "neglect" and from "default" in this respect, and its presence in the collocation is an indication that the person drafting cl 12, and the parties to the contract used it for its neutrality of any connotation of failure. The parties should be taken to have used the word "act" to contribute some additional meaning and not to have included the word to no purpose. To my reading of the whole of cl 12, the word "act" is strikingly distinct from "neglect" and from "default" and conveys in what I must respectfully say is to my mind an altogether clear way the intention of the parties to give a right of indemnity in situations of which fault was not an aspect.
148 Counsel for Chadwick referred in detail to the provisions of cl 11 relating to insurance. I have set out the whole of cl 11 to show that cll 11 and 12 deal with different subjects. In my opinion there is no interaction between cl 11 and cl 12 and the obligations which it creates. Liberty to insure is especially reserved to Chadwick by cl 11.1(e). Clause 12 does not relate to or refer to insurance, and imposes on Chadwick an obligation outside the ordinary range of insurances which it is compulsory for employers to have. Indeed it is not usual for insurance to extend to obligations such as indemnities undertaken contractually, although such insurances are not unknown and are matters for negotiation within the insurance market.
149 In my opinion the words of cl 12 yield no ambiguity with respect to the meaning of "act" and give no ground for the operation of the principles of construction referred to in Anker and approved in Andar.
150 There is nothing unreasonable about a contractual provision which allocates the risk of liability in an operation to one party involved in the operation or to the other: that is something which the parties can make an arrangement about if they choose to, in the exercise of their economic liberty. There is no unreasonableness calling for the Court to be convinced of what the parties intended by use of language of abundant clarity: cf L. Schuler v Wickman [1974] AC 235 at 251 (Ld Reid).
151 An element which these words have in common is the specificity with which an act, a neglect or a default as a result of which the Joint Venture incurred liability must be identified. For a right of indemnity to exist the right must be related to an identifiable act, to an identifiable neglect or to an identifiable default. In short it cannot be based on a non-specific relation between the Joint Venture's incurring liability and the presence of the sub-contractor on the site. It is not enough to say that if the sub-contractor had not been on site the accident would not have happened.
152 Of the matters which are put forward against Chadwicks on behalf of Joint Venture as "any act … of the subcontractor, its employees or agents …." the one which in my opinion requires consideration is the act of Mr Vranjkovic in walking in the passageway, tripping and falling. It was also suggested that instructing Mr Vranjkovic to carry the tracks from the ground floor to the place of work on the upper floor was such an act; there is little in the evidence or findings about whether there ever was an instruction of that kind, it is far less clearly available for consideration as causative of the Joint Venture's liability, and further consideration of it is not necessary.
153 In my finding Mr Vranjkovic's successful claim for damages against the Joint Venture is a claim arising as a result of an act of an employee of Chadwick, namely of Mr Vranjkovic himself, and the act was related to Chadwick's execution of the works. The causal connexion between Mr Vranjkovic's act in walking in the passageway, tripping and falling while carrying tracks to Chadwick's place of work and his claim against the Joint Venture is close and direct, and a finding that the claim arose as a result of his act is the only finding reasonably available. For this reason the Joint Venture has a contractual right under cl 12 to be indemnified, and should succeed in its appeal against Chadwick, with the costs of the first cross claim and of the appeal.
154 There is no evidence establishing an act in which anyone directed or arranged for Mr Vranjkovic to carry loads along the passageway. He may have acted on his own initiative. There is no finding and the Court of Appeal was not told why there should be a finding that any person representing Chadwick directed Mr Vranjkovic to act as he did.
155 The only connection of Mr Vranjkovic's accident with Normoyle is that Normoyle brought railings or pipes on to the site. Normoyle stored its pipes elsewhere, on a different level to that where Mr Vranjkovic's accident occurred, and no evidence establishes that Normoyle had any part in getting the railings to the area where Mr Vranjkovic tripped, still less that Normoyle had anything to do with their being strewn on the floor in Mr Vranjkovic's path. No relevant act, neglect or default by Normoyle has been identified. For this reason Normoyle is in my opinion entitled to succeed in its appeal against the judgment awarded to the Joint Venture against Normoyle, on the basis of enforcement of the indemnity in cl 12. Normoyle should obtain an order for its costs of the third cross claim and of its appeal.
156 There is no ground for basing a claim for an indemnity on breach of cl 8(a) relating to site control because there is no basis for a finding that there was such a breach.
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