JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : HARTLEY -v- JAMES TURNER CONTRACTING PTY LTD & ANOR [2000] WADC 215

Contract - Failure to insure as require by contract - Denial of agreement - Clause said to be onerous - Claim of variation - Waiver - Estoppel - No damage

First Defendant ordered to pay second defendant damages in the sum of $119,889.28

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; (1986) 160 CLR 226

Maxitherm Boilers Pty Ltd v Pacific Dunlop Ltd [1998] 4 VR 559

The Commonwealth of Australia v Verwayen (1990) 170 CLR 394

Western Sydney Regional Organisation of Councils Group Apprentices v Statrona Pty Ltd & Ors, unreported; CCA of NSW; BC9505301; 29 August 1995

Arthur Barnett Ltd v National Insurance Co of New Zealand [1965] NZLR 874

Ashington Holdings Pty Ltd v Wipema Services Pty Ltd [1999] NSWCA 456

Baltic Shipping Co v Dillon "Mikhail Lermontov" (1991) 22 NSWLR 1

Bank of Western Australia v Ocean Trawlers Pty Ltd & Ors (1995) 13 WAR 407

Bentley et al v Fayas et al 260 Wis. 177

Bradburn v The Great Western Railway Company [1854] EngR 538; [1874] LR 10 Exch 1

Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelsgesellschaft mbH [1983] 2 AC 34

Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (Eng) Ltd [1979] 1 WLR 401

Caledonia North Sea Limited v London Bridge Engineering Limited & Ors 1st Division, Inner House, Court of Sessions, O/1261/5/1990, 17 December 1999

Castellain v Preston (1883) 11 QBD 380

Coghlan v S H Lock (Aust) Ltd (1985) 4 NSWLR 158

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523

Esso Petroleum Co Ltd v Hall Russell & Co Ltd [1989] 1 AC 643

Hacai Pty Ltd v Rigil Kent Pty Ltd, unreported; FCt SCt of WA; Library No 960450A; 16 August 1996

Halliday v High Performance Personnel Pty Ltd (In Liq) [1993] HCA 13; (1993) 67 ALJR 678

Hussain v New Taplow Paper Mills Ltd [1988] AC 514

Immer (No 145) Pty Ltd v The Uniting Church of Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6; [1988] 1 All ER 348

Kwei Tek Chao (t/as Zung Fu Co) v British Traders and Shippers Ltd [1954] 2 QB 459

Mid-Century Insurance Co v Hutsel 10 Cal App 3d 1065

Mulcahy v Hoyne [1925] HCA 17; (1925) 36 CLR 41

Napier v Hunter [1993] AC 713

Nolan v Hamersley Iron Pty Ltd & Ors [1999] WADC 18

Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32; (1988) 165 CLR 197

R G and T J Anderson Pty Ltd v Chamberlain John Deere Pty Ltd (1988) 15 NSWLR 363

Reese Bros Plastics Ltd v Hamon-Sobelco Australia Pty Ltd (1988) 5 BPR 11,106

Romford Ice & Cold Storage Co Ltd v Lister [1956] 2 QB 180

Shamsher Jute Mills Ltd v Sethia (London) Ltd (1987) Vol 1 Lloyds Rep 388

Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; (1957) 98 CLR 93

Tekely v Pryce (2000) NSWCA 6

Thornton v Shoe Lane Parking Ltd (1970) EWCA Civ 2; [1971] 2 QB 163

Tropical Traders Ltd v Goonan & Anor [1964] HCA 20; (1964) 111 CLR 41

1 KENNEDY DCJ: The plaintiff was employed as a roof plumber by the first defendant. He was injured on a site on which the second defendant was the principal contractor. The plaintiff sued both for damages and they sought contribution or indemnity from each other.

2 By the commencement of the trial all but one of the issues between the parties was settled and that remaining issue was between the first and the second defendants.

3 The settlement was contained in a Minute of Consent Orders:

"1. There be judgment for the Plaintiff against the Defendants in the sum of $303,422.10.

2. The Defendants do pay the Plaintiff's costs agreed at $39,118.70 inclusive of disbursements.

3. In respect of the contribution proceedings between the Defendants on the apportionment of liability in tort for the Plaintiff's claim (that is, without taking into account the Second Defendant's contractual claim), there be orders that:

(a) in respect of the Second Defendant's liability to the Plaintiff, the First Defendant do indemnify and pay the Second Defendant $113,802.26 (after the operation of section 92(b) of the Workers' Compensation & Rehabilitation Act) being 65% of that liability;

(b) in respect of the First Defendant's liability to the Plaintiff, the Second Defendant do indemnify and pay the First Defendant $106,197.74 being 35% of that liability;

(c) the Defendants do pay their own costs in respect of the defence of the Plaintiff's claim and the costs of the contribution proceedings in respect of the apportionment of liability for the Plaintiff's claim."

4 The remaining issue, found in paragraphs 12 and 13 of the second defendant's further amended defence and amended counter claim to first defendant's amended statement of claim in contribution proceeding, is:

"12. It was an express term of the first contract and the second contract that prior to commencing the work and the additional work, the first defendant would obtain a general public liability insurance policy covering the first defendant's business operations on the site and extended to include liability for 'worker to worker' incidents, noting the interests of the second defendant as joint insured ('the liability policy').

13. In breach of the term pleaded in paragraph 12 hereof, the first defendant failed to obtain the liability policy either prior to commencing the work and the additional work or at all."

5 As the result of the settlement between the parties the second defendant's schedule of damages against the first defendant is as follows:

1. The amount of the second defendant's

liability to the plaintiff being 35 per cent

of the defendant's liability to the plaintiff,

excluding costs. $106,197.74

2. The amount of the second defendant's

liability to the plaintiff for costs

being 35 per cent of the defendant's

liability in respect of the plaintiff's

costs. $13,691.55

$119,889.28

6 As a result of an arrangement between the plaintiff and the second defendant no interest is claimed until judgment is delivered.

7 In answer, the first defendant, by its re-amended reply and defence to second defendant's amended defence and counter-claim to first defendant's amended statement of claim in contribution proceedings, puts in issue a number of matters. The first defendant says that there never was a contract in the terms alleged by the second defendant, that the term which the second defendant says was in the contract was never part of the contract, at most it was a subsequent purported imposition which was wholly ineffective and to import such a condition into the contract it would be necessary to bring it to the attention of the first defendant in some way.

8 The first defendant goes on to say that if there is such an express term then it has been varied or waived by the second defendant because the first defendant was allowed on site and completed the work without being required to produce the insurance documents. Also, for that reason, the second defendant is estopped by conduct from using this term against the first defendant. Alternatively, the conduct of the parties in proceeding without complying with the alleged insurance requirement gave rise to an estoppel by convention. Finally, because the second defendant had its own insurance it has suffered no damage.

9 Turning now to the facts, in early March 1994 the second defendant was awarded the contract to erect a building at 100 St George's Terrace Perth. It entered into a sub-contract with the first defendant for the supply and installation of roofing and roof plumbing. Before it did this it called for tenders from three different sub-contractors.

10 Mr Robert De Francesch, who is a director of the second defendant, gave evidence that he prepared a tender brief for the supply and installation of the roofing and roof plumbing. The Tender Brief is a one page document and it specifies that it wants a fixed lump sum for the duration of the contract and says, inter alia, "(4) Allow for all scaffolding requirements unless otherwise agreed with De Francesch Builders (De Francesch Builders will provide scaffolding to south and Part West Elevation)".

11 The Tender Brief lists documentation as follows:

"Drawing No's ...

Specifications

Bill of Quantities

De Francesch Builders Compliance Form

De Francesch Builders Construction Programme

Conditions as per Head Contract."

12 It will be noted there that there is a reference to a compliance form. The standard compliance form used by the second defendant is in evidence and on the last of four pages is the following:

"Insurance:

Copy of certificate of currency with respect to the following must be supplied prior to commencement of work on site:

a) Workers compensation, or any other insurance required by law with regards to the employers' liability, and extended to include common law insurance for an unlimited amount, in respect of the sub-contractors employee.

Such a policy is to include the name of De Francesch Builders Pty Ltd and National Mutual Property Services as principals.

b) General Public and Products Liability Insurance, covering the sub-contractor's own business operations, and extended to include liability for worker to worker incidents, noting the interest of De Francesch Builders Pty Ltd and National Mutual Property Services as joint insureds.

The limit of indemnity in this policy is to be a minimum of 5 million dollars.

Acknowledgment

Acceptance of De Francesch Builders Works Order is deemed as total acceptance of all aspects of this Compliance Form."

13 Mr De Francesch said that compliance forms are issued for all major projects and this was a major project.

14 On 15 June 1994 the second defendant received a fax, dated 14 June 1994, containing a quote from the first defendant which, omitting formal parts, reads:

"We submit our tender including Addendum 1, (excluding all scaffolding as per Item 4 of Tender Brief), for the complete roof treatment as per Bill of Quantities 06/3 - 06/12 and relevant drawings.

Our works include for all hoisting and safety requirements that may be associated with this contract.

For the fixed lump sum of $201,740."

15 (It is signed "Bruce Turner, Manager").

16 The second defendant then sent an order to the first defendant which again, omitting formal parts, reads:

"We are pleased to accept your quotation dated 14/6/94, to supply and install Roofing and Roof Plumbing at the above project.

Fixed Lump $201,740.00

Based on the following documentation: Drawings

Bill of Quantities

Specification

DeFrancesch Compliance Form

DeFrancesch Construction Programme

Conditions as per Head Contract

Tender Brief.

Note: Proof of insurance cover for Workers' Compensation and Public Liability Insurance required prior to commencement on site."

17 In evidence Mr De Francesch said he had no recollection of the first defendant complaining that they did not get a compliance form and certainly had they asked for one it would have been sent to them again.

18 During the course of the work it became obvious that additional work was required and the first defendant was asked to provide a quote in relation to that, which it did, by facsimile dated 21 July 1994. Then a second order was sent out which is in the same terms as the first order which I have set out above, except that the fixed lump sum is $12,231 and the quotation is said to be dated 21 July 1994.

19 It was agreed between the parties that the plaintiff was injured during the term of this second lot of work and this is referred to by both the first and second defendant as the second contract.

20 Mr De Francesch said that his insurance requirements for each part of the work included a requirement that the first defendant obtain public liability insurance for the second defendant with the second defendant's name on the policy as a joint insured. When he eventually went to search his records he was unable to locate any certificate of currency from the first defendant in relation to that matter.

21 Mr De Francesch conceded that these proceedings had been controlled and conducted on behalf of the second defendant by its insurer, H I H Insurance, and that the second defendant had consented to this course of action and had assisted and co-operated with H I H Insurance in this regard.

22 So far as that is concerned, counsel for the second defendant was at pains to point out that this was not a subrogation action. Further, when the initial part of the action was settled it was made clear to me that the plaintiff had given the second defendant six months to pay the second defendant's share of the settlement and that if the second defendant was not successful in this action then the second defendant's insurers would cover the second defendant.

23 Mr Bruce Turner is a director of the first defendant. He said that he never dealt with Mr Robert De Francesch but with a staff member, a Mr Menegola. He said that in preparing his first quote he used some plans that were handed to him and a specification for the bill of quantities but he would not accept, in cross-examination, that when he signed his quote he had in his company's possession a tender brief, rather, he would have looked at the relevant drawings and based his quotation on the drawings, but he would not have checked out any other documents. This cross-examination was directed toward the words in the first quote: "(excluding all scaffolding as per Item 4 of Tender Brief)", which indicate that whoever drew up the terms of the quote had read the tender brief.

24 Mr Broom did all the book-keeping and work of a clerical nature for the first defendant. He agreed that he prepared the quote document and submitted it to Mr Turner for signature. Turner would give him the figures to prepare the quote; he, Mr Broom, would put it on the computer and then give it back to Mr Turner for signing. Turner prepared all the figure work because he had no expertise in that area, furthermore, the bits such as "excluding all scaffolding" is something that Turner would have to advise him about because he is not a roof plumber and Mr Turner was the author of those words.

25 Mr Turner said that he attended at the site on the first day. Eventually the job was completed and they were paid and there were no problems. So far as the second contract is concerned, that was brought to his attention by drawings being given to him and he was also given some details verbally by Mr Menegola and he based his second quotation on that.

26 Mr Broom said that he dealt with the insurance policies and each year at 30 June he arranged for the workers' compensation and public liability policies. Generally speaking, his dealings with the second defendant were dealings with Lara De Francesch, the sister of the Robert De Francesch and if at any time he needed verification of insurance he always spoke to her about it and where needed he would send a facsimile of the certificate of currency on workers' compensation and public liability. He cannot recall what he sent in relation to this particular contract because they were doing a number of contracts with the second defendant and one contract would flow into another, but if Ms De Francesch wanted an updating on the certificate they would speak to each other and he would send it to her. So far as Ms De Francesch specifically asking about insurance for this particular site, he could not recall her doing that.

27 On the evidence I have Mr Turner is mistaken when he says he did not see the Tender Brief. The words in his tender "(excluding all scaffolding as per Item 4 of Tender Brief)" make it clear that he had read it and brought it to mind when he was preparing the quote. The only other person who had input into the preparation of the quote was his employee, Mr Broom, who said that Mr Turner would have needed to advise him about such words.

28 The Tender Brief specifically refers to the compliance form and it seems to me that the most probable inference is that Mr Turner did get a copy of the compliance form with the Tender Brief. It is specifically referred to in the Tender Brief. Mr De Francesch says that they issue compliance forms with all major projects and this was a major project. Further, there was no cross-examination of Mr De Francesch to suggest that the compliance form was not with the Tender Brief. Both the first and the second defendant are extremely experienced in calling for tenders and tendering and they have been doing business with each other for many years. In all of those circumstances it seems to me that the most probable inference is that the compliance form was with the Tender Brief.

29 The Tender Brief is an invitation to treat on the terms of the Tender Brief. The Tender Brief at least includes all documents which were supplied with it, including the "De Francesch Builder's Compliance Form". The tender submitted by the first defendant is an offer, it is described as a "tender", business efficacy demands that it be on the same conditions as the Tender Brief and that is to say, as the offer sought. It would be pointless to put in some different offer and at least it would be incumbent upon the tenderer to point out that the tender is on a different basis from the Tender Brief. The order of the second defendant is acceptance of the offer. It is not a counter-offer. The second defendant is entitled to expect that the offer would be on the basis of the invitation to treat.

30 I agree with counsel for the first defendant that the second defendant could not impose a new term on the first defendant in the Order, it would be wholly ineffective. It would be a counter-offer which would require effective acceptance by the defendant and certainly silence could not in those circumstances be regarded as acceptance.

31 The accident with which we are concerned occurred in what the parties referred to as the "second contract", however, that second contract is really simply a variation or an addition to the first contract work and is part of the same building. That second contract, if I can call it that, must be looked at in the context of the Tender Brief, including the compliance form, and it is against that background that the offer of 21 July 1994 must be interpreted and had the first defendant obtained insurance before commencing the first contract it would have continued on into the second contract and certainly that was a term of the second contract in my view.

32 If the first defendant also argues that some special mention over and above a reference to the compliance document should have been made in the Tender Brief I find myself unable to agree. In Maxitherm Boilers Pty Ltd v Pacific Dunlop Ltd [1998] 4 VR 559 at 560, Ormiston JA said:

"The answer to the first question, relating to the inclusion in the contract of the appellant's general terms and conditions, depends on when and how the contract between the parties was made. I agreed with the analysis by Buchanan JA of those matters. More specifically, the question required an answer whether a number of apparently restrictive terms within the appellant's general terms and conditions should be treated as part of the appellant's offer and whether, assuming that to have been made out, the respondent Pacific Dunlop ought objectively to be treated as having accepted the whole of those terms and conditions or whether those apparently restrictive terms should not be treated as having been accepted by it. Where terms are explicitly referred to by an offeror, it can be rare that an apparent acceptance by the offeree should not carry with it the offeree's assent to the whole of the terms described, but I would agree that, where a term is so onerous or is otherwise of a kind such as to suggest that it might not reasonably be expected to be part of the terms of the contract, the issue is whether the accepting party can reasonably be taken to have assented to the particular term. It has not been shown in this case that any of the terms contained in the appellant's general terms and were of a kind which the respondent, Pacific Dunlop, ought not to be taken to have accepted."

33 In the present case the term is not so onerous that it might not reasonably be expected to be part of the terms of the contract. Again, at p569, Buchanan JA said:

"As I have said, in my opinion the inclusion of an unusual term, at least in an unsigned document, may require its proponent to take special steps to bring it to the attention of the other party, for otherwise it may not be reasonable to assume consent to the term. Whether special steps are required, and what those steps must be, will depend upon the circumstances of each case. Further, I think that a term may be unusual because it is more than ordinarily onerous. However, I do not consider that the mere fact that a provision is onerous entitles a court applying the common law to reject it as a term unless special steps have been taken to draw attention to it. The relevant question is whether a contracting party can be reasonably taken to have assented to a particular term, not whether a contracting party should be subject to an unreasonable term."

34 In the present case the term is not particularly onerous and in the circumstances that it was in the Tender Brief and the tenders were called for on the basis of the Tender Brief a contracting party, and particularly as in this case an experienced contracting party, could reasonably be taken to have assented to that particular term.

35 The other defences are variously described as variation, waiver, estoppel by conduct or estoppel by convention, and all amount really to the same factual situation, that is to say, because the compliance forms said that a copy of the Certificate of Currency with respect to insurance must be supplied prior to commencement of work on site. But in fact the Certificate of Currency was not supplied and was not sought; that amounts to a variation or waiver or there is estoppel by conduct or by convention.

36 In The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 421, Brennan J said:

"Election estoppel and waiver are cognate concepts: each relates to the sterilisation of a legal right otherwise than by contract. A 'right' may include a liberty or an immunity, according to the circumstances. In Sargent v A.S.L. Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 at 655 Mason J said:

'Any discussion of the principles governing the circumstances in which a party's words or conduct may preclude him from exercising a legal right which he possesses is beset with difficulties. They have their origin in the differences to be found in the various doctrines (election, waiver and estoppel) which may come into operation and in the different concepts which each doctrine has at times been thought to embrace.'

Election consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights ... ... A doctrine closely related to election, and sometimes treated as a species of election, is the doctrine of approbation and reprobation. This doctrine precludes a person who has exercised a right from exercising another right which is alternative to and inconsistent with the right he exercised ... . An election is binding on the party who makes it once it is made overtly - or, at all events, not later than on the communication of the election to the party or parties affected thereby. ... It is binding whether or not others who are affected by the election have acted in reliance on it. In this respect election is to be distinguished from estoppel: Khoury v Government Insurance Office (NSW) [1984] HCA 55; (1984) 165 CLR 622 at p633.

Estoppel by representation of a fact (estoppel in pais) precludes a party who, by his representation, has induced another party to adopt or accept the fact and thereby to act to the other party's detriment from asserting a right inconsistent with the facts on which the other party acted. ... . Equitable estoppel or, as I prefer to call it, an equity arising by estoppel precludes a person who, by a promise, has induced another party to rely on the promise and thereby to act to his detriment from resiling from the promise without avoiding the detriment ... . An equity of this kind, by imposing a liability either to avoid detriment to the other party or to honour the promise, trenches upon the liberties or immunities of a person who is bound. An estoppel, whether in pais or arising in equity, is binding so soon as it is acted on to the detriment of the other party.

Waiver is a term of shifting meaning. Lord Wright in Smyth & Co v Bailey & Co (1940) 3 All ER 60 at p70 said:

'The word 'waiver' is a vague term used in many senses. It is always necessary to ascertain in what sense and with what restrictions it is used in any particular case. It is sometimes used in the sense of election as where a person decides between two mutually exclusive rights. Thus, in the old phrase, he claims in assumpsit and waives the tort. It is also used where a party expressly or impliedly gives up a right to enforce a condition or rely on a right to rescind a contract, or prevents performance, or announces that he will refuse performance, or loses an equitable right by laches.'

To identify the relevant legal doctrine, it is necessary to identify the sense in which we intend to use the term 'waiver'. ... We are concerned with a unilateral release or abandonment of a right. In Banning v Wright (1972) 1 WLR 972 at pp 978-979, Lord Hailsham of St Marylebone L.C. [said]:

'In my view, the primary meaning of the word 'waiver' in legal parlance is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted.'

... When a right has been waived in a sense defined by Lord Hailsham (and it is in this sense that it is used in this judgment), it is unnecessary to consider whether any other party has acted in reliance on the release or abandonment: the right is abandoned once and for all.

These distinct doctrines serve different purposes: election (in either species) ensures that there is no inconsistency in the enforcement of a person's rights; estoppel or equitable estoppel ensures that a party who acts in reliance on what another has represented or promised suffers no unjust detriment thereby; waiver recognises the unilateral divestiture of certain rights. True it is that the divisions in nature and purpose between one of these doctrines and another have not always been expressed in the way in which I have stated them and there have been occasions when the sterilisation of a right has been dubiously attributed to one doctrine rather than to another.' "

"The time when waiver of a right occurs depends on the relationship between a party possessed of such a right and the party whose interests may be affected by exercise of the right. When the party possessed of the right knows that a new legal relationship is to be constituted between him and the party whose interests are liable to affection by exercise of the right and that the right, if exercised, might affect that new relationship, the party possessing the right must enforce the right before the new relationship is constituted or he will be held to have waived the right."

38 In the next paragraph Brennan J speaks of a party knowingly abstaining from exercising the right.

39 Although Toohey J was in the majority and disagreed with Brennan J as to the result, at p466 his Honour said:

"Any discussion of waiver or estoppel often begins with Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305 in which Isaacs J delivered the judgment of the court. At p326 Isaac J identified waiver as 'an intentional act with knowledge' ..."

40 Again at p469 Toohey J refers to the idea that waiver involves a renunciation of a right or benefit.

41 As to estoppel by convention, in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; (1986) 160 CLR 226 at 244 the High Court said:

"... Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying. ... [However] ... first, there is no estoppel unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship ... Secondly just as an estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact."

42 So far as estoppel is concerned, there is no evidence at all that the first defendant acted on anything or was or was not aware that the second defendant had not demanded to see proof of the insurance. So far as election is concerned, there can be no question of the second defendant making any election; there is no evidence to suggest that this is what happened, that is to say that it elected between two or more rights.

43 Waiver involves some intentional act by the second defendant. At the very least it would require some actual or constructive indication of an intention to waive. In the present case there is no evidence of that. The evidence is that it was a term that the first defendant obtain this insurance and that a certificate of currency was to be supplied prior to the commencement of work on the site but it appears that it was overlooked. There is nothing in the actions or lack of actions by the second defendant which could be taken as an intention to waive or waiver with knowledge.

44 It is said that in any event the second defendant has suffered no damage. On the basis of the law as it now stands in Australia it would seem to me that this is unarguable. In Western Sydney Regional Organisation of Councils Group Apprentices v Statrona Pty Ltd & Ors, unreported; CCA of NSW; BC9505301; 29 August 1995, Sheller JA said:

"It has been long established that where a plaintiff is insured and suffers, as the result of the defendant's negligence, loss covered by the policy, the sum received by the plaintiff is not taken into account in reduction of damages; Bradburn v The Great Western Railway Co [1854] EngR 538; [1874] LR 10 Exch 1; RG and TJ Anderson Pty Ltd v Chamberlain John Deere Pty Ltd (1988) 15 NSWLR 363 at 373; Hussain v New Taplow Paper Mills Ltd [1988] AC 514 at 527. In the first of these cases Pigott B at 3 said that the plaintiff was entitled to recover the damages caused to him by the negligence of the defendants, and there was no reason or justice in setting off what the plaintiff had entitled himself to under a contract with third persons, which he had bargained for the payment of a sum of money in the event of an accident happening to him. He did not receive that sum of money because of the accident, but because he had made a contract providing for the contingency; an accident must occur to entitle him to it, but it was not the accident but his contract which was the cause of his receiving it.

There is no difference in principle where a plaintiff is entitled to recover damages for breach of a contract to effect liability insurance for its benefit. The plaintiff's entitlement under a different contract for indemnity on the contingency of its becoming legally liable to pay compensation to the worker does not reduce the damages recoverable for breach of contract. The plaintiff is not indemnified by the second contract of insurance for breach of the first contract but because it has made a contract for a contingency upon the happening of which it became entitled to indemnity. If Stratrona claims against an insurer to be indemnified it must account to the insurer for any benefit which reduces the loss or liability insured against; Castellain v Preston [1883] 11 QBD 380 at 389-390, 393-394 and 402; British Traders' Insurance Co Ltd v Monson [1964] HCA 24; (1964) 111 CLR 86 at 94 and Transport Accident Commission v CMT Construction of Metropolitan Tunnels [1988] HCA 46; (1988) 165 CLR 436 at 441."

45 For all of these reasons the second defendant is entitled to judgment against the first defendant in the sum of $119,889.29.