Mie Force Pty Ltd v Allianz Australia Insurance Ltd

Policy

1. Under the Policy, which was effective from 30 June 2017, "Insured" is defined (see the definitions section at p 6 of the Policy), relevantly, as follows: Insured means: 1. the Named Insured; 2. any parent or subsidiary company (including subsidiaries thereof) of the Named Insured and any other organisation under the control of the Named Insured and over which it is exercising active management whether now or hereafter incorporated; 3. any of the following persons or entities for whom or for which the insured parties under clauses (1) and (2) above are obliged to arrange insurance by virtue of a Contract or assumption of responsibility, but only to the extent required by such Contract or assumed responsibility and in any event only for such coverage and Limits of Liability as provided in this policy; a) any principal or user or agent of the principal or owner; or joint venture partner; b) any construction manager or project manager or superintendent; c) any contractor or sub-contractor of any tier, other than those categories more specifically defined elsewhere in this Policy; d) any architect, supplier, manufacturer, engineer or other consultant for their on site activities only; e) any lessor; financier; mortgagee or trustee; f) any government body; g) any other namely with an insurable interest in the Contract(s). 4. any director, executor, officer, Employee, contract staff or partner of any of the Insured under clauses (1), (2) or (3) whilst acting as such …
2. "Named Insured", in turn, is relevantly defined in the schedule to the Policy as follows: Rohrig (Qld) Pty Ltd, Rohrig (NSW) Pty Ltd, Rohrig (Vic) Pty Ltd, Rohrig Constructions Pty Ltd, Rohrig Rentals Pty Ltd, Rohrig Investments Pty Ltd ATF GK & AK Rohrig Trust and Elite Shop Fitting Pty Ltd and/or subsidiary and/or related corporations and/or financiers and/or sub-contractors and/or principals as defined under Australian Corporations Law for their respective rights, interests and liabilities including employees and agents of such entities and subsidiary or controlled companies now or hereafter formed or acquired. The interests of financiers are automatically included where they have an insurable interest in the interests insured …
3. Thus, the definition of "Named Insured" (and hence the definition of "Insured") expressly includes Rohrig and its sub-contractors, as well as "employees and agents of such entities". As noted already, Allianz accepts that Rhino Stripouts is a "Named Insured: as it is a sub-contractor of Rohrig.
4. The introduction to the Policy provides that "[i]n consideration of the Named Insured having paid or agreed to pay the Premium, the Insurers agree to indemnify the Insured in the manner and to the extent provided herein, subject always to the Limits and Sub-limits of Liability, Conditions, Exclusions and other terms of or any Endorsements to this Policy". The insuring clause (1.1) is set out in the primary judgment at [31], as are other provisions of the Policy (see [28]-[30], [32]).

Primary judgment

1. The parties filed a statement of agreed facts and a statement of real issues in dispute in the proceedings before the primary judge.
2. The primary judge summarised the principles of construction applicable to policies of insurance (from [35]); and no complaint is here raised as to this summary. Relevantly, reference was made to the requirement for an objective approach to the determination of the meaning of a policy of insurance (such a policy being a commercial contract), namely as to what a reasonable businessperson in the position of the parties would have understood the relevant policy terms to mean (Allianz Australia Limited v Rawsons Homes Pty Ltd [2021] NSWCA 224, noting what Henry J said below at [43] in Rawson Homes Pty Ltd v Allianz Australia Insurance Limited [2020] NSWSC 1654). The primary judge also noted (at [36]) that where words are unambiguous, they cannot be ignored, citing Australian Broadcasting Commission v Australasian Property Rights Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36 per Gibbs J, as his Honour then was.
3. The primary judge noted that Mie Force's primary submission was that it fell within the scope of a "Named Insured" because either "sub-contractor" includes sub-sub-contractors (and as a sub-contractor of Rhino Stripouts it was therefore a sub-sub-contractor of Rohrig) (the "sub-contractor issue") or it was an agent of Rhino Stripouts (a sub-contractor) (the "agent issue") (at [42]). On appeal the focus by Mie Force was instead on the "agent issue".
4. Her Honour first addressed the "sub-contractor issue", noting that Mie Force had contended that it was a "sub-contractor" of Rohrig under the Policy on two bases: first, that the word "sub-contractor" in the definition of "Named Insured" included "sub-sub-contractor" and, second, because under cl 1.2(a)(v) of the terms of the Works Period Agreement, the "Contractor" (i.e., Rhino Stripouts) included its "agents, … contractors and others under its control", and Mie Force was an agent or contractor of Rhino Stripouts.
5. The primary judge rejected the first of those arguments (i.e., that the term "sub-contractor" in the definition of "Named Insured" in the Policy included a "sub-sub-contractor") (see [52]). Mie Force complains that her Honour does not appear to have considered the second part of its argument (i.e., that which was based on cl 1.2(a)(v)), but Mie Force no longer presses ground 8 of the grounds of appeal which related to that complaint.
6. In rejecting the contention that "subcontractor" included "sub-sub-contractor), the primary judge distinguished Petrofina (UK) Ltd v Magnaload Ltd [1984] QB 127 (Petrofina), a decision on which Mie Force had placed reliance. In Petrofina, it was held that a "sub-sub-contractor" was within the ordinary meaning of the term "sub-contractor" in an all risks policy of insurance. The primary judge distinguished Petrofina on that basis, namely that the policy there under consideration was an "all risks" policy whereas the Policy in the present case was a "liability" policy which was responsive to occurrences of property damage and liabilities to third parties (at 52).
7. Her Honour considered that the better construction was that "Named Insured" was intended to include only those legal entities that had a direct legal relationship with the Rohrig companies for "at least" the reasons set out at [52] of the primary judgment (which are considered in due course below). In any event, her Honour was not persuaded on the evidence that Mie Force was a "sub-contractor" of Rhino Stripouts (at [55]; [56]).
8. Her Honour then turned to the "agent issue", noting (at [58]) that the word "agent" is not defined in the Policy; and that the parties had accepted that the word could be used in different ways. Her Honour there noted the observation of Lord Herschell in Kennedy v De Trafford [1897] AC 180 at 188 that "[n]o word is more commonly and constantly abused than the word 'agent'".
9. At [59], her Honour explained that the parties had diverged on whether "agent" as used in the Policy meant "agent" in its stricter legal meaning of a person who can legally bind a principal (as Allianz contended) or an agent as understood in a more colloquial meaning of "any form of intermediary, or of persons who simply perform functions for others" (as described in P Watts, W Bowstead and F M B Reynolds, Bowstead and Reynolds on Agency (22nd ed 2021, Sweet & Maxwell) (Bowstead and Reynolds on Agency) as Mie Force contended).
10. The primary judge ultimately did not find it necessary to decide this issue because her Honour did not accept that, even adopting Mie Force's construction, Mie Force factually was Rhino Stripouts' agent (at [71]). Had it been necessary to decide the issue as to the meaning of the term "agent" in the definition of "Named Insured", her Honour would have preferred Mie Force's construction, namely that "agent" was used in the more colloquial sense of "any form of intermediary, or of persons who simply perform functions for others" (at [59], [64]); rather than the stricter legal meaning (of an entity with authority legally to bind a principal) ([59]-[70]).
11. Her Honour gave three reasons for that preferred construction from [65].
12. First, her Honour considered that the construction afforded to "agent" in Comalco Aluminum Ltd v Garraway Metals Pty Ltd (Full Federal Court of Australia, 8 December 1993, unrep) (Comalco), by reference to the discussion in Halsbury's Laws of England (4th ed), vol 1, Agency (Halsbury's) at [702], was appropriate to the Policy (at [65]-[66]). Second, that it was open to the insurer to employ a definition of agent reflecting its legal meaning (similar to the insurer's use of the definition of "employee"), but the insurer had not chosen to do so (at [67]). Third, that the word "agents" appeared to direct attention to those persons who are carrying out the "Insured Operations" as either employees or agents, which her Honour considered supported the meaning of "agents" in the sense of an "alter ego" of the principal, as in Comalco (at [68]). In that context, her Honour said that the meaning of "agents" was coloured by its grouping with "employees"; and said that, absent any words which suggested that "agents" was specifically used to extend the concept beyond an employee's usual limitations vis a vis effecting legal relations with third parties, this was another factor favouring Mie Force's construction (at [69]).
13. Her Honour's conclusion that, even on Mie Force's broader construction of the term, Mie Force had not established that it factually was Rhino Stripouts' agent, was for three reasons: first, that Rhino Stripouts attended the site through Mr Murphy who directed Mie Force's employees to carry out work in his capacity as a controller of both companies (from which her Honour concluded that Mie Force was not doing Rhino Stripouts' work on its behalf); second, that there was no evidence that Rhino Stripouts ever disclosed to Rohrig or others that Mie Force was its agent or sub-contractor; and, third, that Mie Force was not authorised to perform Rhino Stripouts' contractual obligations; instead Mie Force (along with another entity) was contracted to provide labour and then Rhino Stripouts used that labour force to carry out its own obligations (at [71]).

Grounds of Appeal

1. The grounds of appeal fall into two categories: grounds 1-4 relating to the "agent issue" and grounds 5-7 and 9 relating to the "sub-contractor issue". As noted above, Mie Force did not press ground 8 of the grounds of appeal (which had identified error in the failure of the primary judge to find that Mie Force was a sub-contractor of Rohrig by virtue of cl 1.2(a)(v) of the terms of the Works Period Agreement). Allianz has filed a notice of contention, asserting that the primary judge erred in failing to find that "agent" bore the strict legal meaning of that term (but presses this in effect as supporting the primary judge's construction of "alter ego" - see AT 15.38).

Grounds 1 to 4 - "agent" issue

1. Grounds 1 to 4, raising the "agent issue" are as follows: 1. Her Honour erred in finding (Judgment [71]) that the Appellant was not the agent, within the meaning of that term in the definition of "Named Insured" in the Policy (Judgment [11]), of Rhino Commercial Stripouts Pty Ltd (Rhino) and therefore the agent of a "Named Insured" within the meaning of the Policy. 2. Her Honour erred in finding (Judgment [71]) that the Appellant did not do Rhino's work on its behalf. 3. Her Honour erred in failing to find that the Appellant, through its employees, attended the General Gordon Hotel and performed works under the Works Period Agreement (Judgment [14]) on behalf of Rhino. 4. Her Honour erred in finding (Judgment [71] and [72]) that the Appellant was not, as an agent of Rhino, a "Named Insured" within the meaning of the Policy.
2. Ground 1 thus challenges the finding that Mie Force was not the agent of Rhino Stripouts within the meaning of "agent" in the Policy but there is no challenge by Mie Force to her Honour's preferred construction of that term in the Policy. Grounds 2 and 3 go to the factual finding that (even on Mie Force's construction of the term) Mie Force was not an agent of Rhino Stripouts. Ground 4 follows from the determination of the "agent issue".
3. The notice of contention is that: 1. The primary judge erred in failing to find (to the extent it was necessary) that the word "agent" is used in the policy to connote a relationship of authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties.

Proper construction of the Policy - Ground 1 and the notice of contention

1. The first issue that is raised on the "agent issue" grounds of appeal is as to the proper construction of the Policy. In essence, both parties adhere to the submissions made to the primary judge in relation to the meaning of "agents" in the definition of "Named Insured" - Allianz says that the word bears its stricter legal meaning of someone with authority or capacity to create legal relations between the principal and third parties; Mie Force says that the primary judge's preferred construction is correct and that the term "agent" when used in the Policy means "agent" as understood in a general or business sense as "any form of intermediary, or of persons who simply perform functions for others" (referring to 59 of the primary judgment); i.e., in the present context, anyone employed or authorised to perform tasks by and for a "Named Insured".
2. In this regard, Mie Force notes that the word "agent" in the Policy is found in the phrase "employees and agents of such entities". Mie Force argues that an employee does not ordinarily have capacity to effect legal relations on behalf of his or her employer and suggests that it is not logical that the parties should have intended to extend coverage under the Policy to "employees" (regardless of whether they had capacity to effect legal relations) but to restrict coverage to "agents" only to those who had such capacity. Mie Force argues that, if the parties had intended the word "agent" to be restricted to its strict legal sense, it would have been easy to have done so expressly in the definition section of the Policy (as it says was done in relation to the term "employee" - see the definitions section of the Policy).
3. Mie Force argues that there is nothing to suggest that the commercial purpose of the Policy would be served by restricting cover only to agents in the strict legal sense; and submits that it would be inconsistent with the commercial purpose of the Policy to exclude an agent who was authorised by a "Named Insured" to carry out work on its behalf, except where that person happened to be authorised to create legal relations on its behalf. In that regard, Mie Force identifies the commercial purpose of the Policy as being to cover persons performing actions or activities in relation to construction works which could give rise to third party liability; the aim being to provide complete cover for all parties involved in the project (AT 7.41ff).
4. Allianz contends that the preference expressed by the primary judge for the construction of "agent" (at [66]) was wrong; and, as it did at first instance, submits that the proper construction of the term "agents" in the description of "Named Insured" is the strict, legal meaning of that word. Allianz makes that submission for the following reasons.
5. First, Allianz says that contextual and textual matters point to the parties to the policy intending the term "agents" to have its strict meaning. In this regard, Allianz says that the identity of the persons comprising the "Named Insured" is a key aspect of the Policy, as it forms one limb of the definition of "Insured" (being the parties who obtain the benefit of an indemnity). In circumstances where the limit of indemnity is $20 million plus defence costs, Allianz submits that the extent to which the Policy extends cover to entities which are not parties to the Policy is a significant commercial matter for both Allianz and Rohrig. Further, it is said that other expressions used in the description of "Named Insured" are plainly used in a technical sense (for example, "subsidiary" and/or "related corporations" as defined under the "Australian Corporations Law"); and that "employee" is also defined in the Policy in such a way that accords with its legal meaning. (As to this argument, in its submissions in reply, Mie Force says that the fact that the Policy chose to define "subsidiary", "related corporations" and "employee" by reference to a technical legal meaning provides no support to Allianz in circumstance where the Policy failed to do the same in relation to "agent".)
6. As to the significance attached by the primary judge (at [69]) to the fact that the word "agents" is found as a part of the phrase "employees and agents" (and here relied upon by Mie Force), Allianz cavils with the suggestion that employees generally do not have capacity to effect legal relations between their employer and third parties. Allianz argues that many employees have actual, implied or ostensible authority to enter into legal relations on behalf of their employer (such as employees who hold administrative, purchasing or financial positions entering into administrative or supply contracts); and hence it is submitted that the fact that agents are coupled with employees in the description of "Named Insured" does not undermine Allianz's construction of "agents". Allianz argues that, if there is any relevance to the coupling of agents with employees in the description of "Named Insured", the commonality between the two (for the purposes of third party liability insurance) is that employees and agents are usually the persons through whom companies act, in addition to the directors and officers of those companies. Further, Allianz points out that the Policy defines the term "Employee" (although that term is not capitalised where it appears in the description of "Named Insured") in a way that accords with the legal meaning of employee, supporting a construction of agent in accordance with its strict legal meaning. (In response to this submission, Mie Force again places emphasis on the fact that the Policy does not include any definition of "agent" (cf the position with employee).)
7. Second, Allianz submits that there is no commercial or businesslike reason to construe "agents" other than in accordance with its strict legal meaning; and that, to construe the requirement in accordance with its strict legal meaning, would be consistent with the evident commercial desire of parties to a contract of insurance to have a high degree of certainty as to the subject (or beneficiaries) of the insuring promise.
8. Third, Allianz submits that a construction of "agents" in the strict legal sense provides for a harmonious operation of the definition of "Insured". It is noted that "Insured" is a defined term in the definitions section of the policy wording; that definition providing that "Insured" "means" the things set out in the following five paragraphs, the first of which is the "Named Insured", which takes its meaning from the description in the Policy schedule; and Allianz submits that the remaining paragraphs of the definition of "Insured" are to be construed harmoniously so as to work together in a logical and coherent way.
9. In this regard, Allianz submits that, if "agents" is construed in the way contended for by Mie Force (the preferred construction in her Honour's view) then at least cl 3(c) of the definition of "Insured" and possibly other clauses (such as the persons specified in cl 3(d), and some of the persons falling within cl 2) would be rendered otiose. Allianz says that this is significant because the persons listed in cl 3(c) are not "Insureds" in an unqualified sense; rather, that cl 3 contains a specific limitation on when such persons are "Insureds". Allianz says that the "Named Insured" or persons within cl 2 must be obliged by virtue of a contract to, or have assumed responsibility to, arrange insurance for and, even then, the persons listed cl 3(c) are only "Insureds" to the extent required by the contract or assumption of responsibility. Allianz argues that the broad concept of agency contended for by Mie Force would render nugatory these important controls limiting the circumstances in which the persons listed in cl 3 meet the definition of "Insured".
10. As to this last submission by Allianz, Mie Force says that this overstates the result of Mie Force's construction. Mie Force maintains that the contention that "agent" carries its broad and general meaning (not its strict legal meaning) does not result in a wide array of unintended people being entitled to indemnity under the Policy. Mie Force points out that the Policy includes various restrictions and descriptors to make clear who is insured (in particular by reference to "Named Insured" and "Insured Operations"). Mie Force says that other clauses of "Insured" are not rendered otiose or nugatory by the construction for which it contends. Further, Mie Force argues that, in any event, there are many infelicities in the Policy and significant duplication and redundancy. In that regard, the drafting infelicities and duplications to which it refers seemed to be largely the references to subsidiaries and related corporations (see AT 4.35; 9.10), although Mie Force points to other drafting issues as well (see below).
11. Allianz accepts that there are some infelicities in the drafting of the Policy as a whole but says that this does not detract from the clear drafting technique in the definition of "Insured". In that regard, Allianz submits that the drafting technique used in the Policy is one of "ballooning or mushrooming" in the sense that each of the paragraphs (2)-(5) in the definition of "Insured" is intended to expand the meaning of (1) (i.e., the "Named Insured") but only in a restricted way. Allianz contends that this should not be "swept away" by construing "agents" other than by reference to its legal meaning (see AT 16).
12. As to the three matters the primary judge relied upon as supporting a broad construction of the word "agent", Allianz says that each should be rejected for the following reasons.
13. First, as to the fact that "employee" is defined according to its legal meaning but not "agent" (see at [67]), Allianz says that there was no finding (or evidence) as to whether Rohrig or Allianz proffered the terms of the Policy (which it is noted does not bear Allianz branding), and no submission is made that the Policy is ambiguous and should be read contra proferentem against Allianz; and Allianz argues that the lack of a definition of "agents" is neutral as to whether the proper construction of that word is its strict legal meaning or a broader meaning. In response to this, Mie Force says that it does not matter who drafted the Policy (noting that it does not (and never has) relied on the contra proferentem rule); and it maintains that the lack of a definition of "agent" is not neutral but, rather, supports Mie Force's construction.
14. Second, as to the finding at [68] that the word "agents" directed attention at those persons who were carrying out the "Insured Operations" (which in turn is defined to include various activities being undertaken "on behalf of the Named Insured") and therefore supported a broader meaning of the word in question, Allianz says that this mischaracterises the requirement that to fall within the description of "Insured Operations" the activities of an "Insured" be undertaken "by or on behalf of the Named Insured". Allianz argues that the requirement for a connection between the activities of an insured and the construction activities of the "Named Insured" is explicable since otherwise the Policy would be extremely broad. Allianz says, by way of example, that such a connection is necessary since otherwise secondary sub-contractors who meet the definition in cl 3(c) of the definition of "Insured" would be covered on other projects that had no connection with the activities of the "Named Insured".
15. As to this last submission, Mie Force says that its construction does not mean any sub-contractor would be covered for any work on any project. It is noted that cl 3(c) of "Insured" (like all clauses of "Insured") is tied to "Named Insured" and parents and subsidiaries (Mie Force referring to the preamble to cl 3 of "Insured"). Mie Force says that the insuring clauses have a further control (and link) with the cover being provided to "Insured Operations".
16. Third, as to the concern expressed by the primary judge at [70] that an agent in the strict legal sense would not be involved in construction work, Allianz says that a principal contractor such as Rohrig might appoint persons such as contract administrators and site supervisors to determine payment claims by sub-contractors or determine the programming or coordination of works; and that these persons might be agents, in the legal sense, of Rohrig depending on the terms of their engagement.
17. Finally, as to the construction of the word "agents", Allianz says that Mie Force has not posited a clear, alternative construction of that term; and argues that this lack of certainty points against Mie Force's contention (particularly given the fact that the Policy has a $20 million limit of indemnity). In this regard, Allianz notes that, in Mie Force's submissions (at [23]-[24]), Mie Force contends for the meaning "any form of intermediatory or of persons who simply perform functions for others" but that a slightly different formulation is set out in its submissions at [30] (namely, "a person employed or authorised to perform tasks by and for a Named Insured"). In its submissions in reply, Mie Force maintains its contention that "agent" carries its broad general meaning, namely: an intermediary or alter ego, someone who performs functions for another or someone employed or authorised to perform a task for another. Mie Force says that these expressions are all one and the same; and that, ultimately, the question is whether the Policy intended a technical legal meaning or a broad meaning.

Determination as to construction

1. It is relevant at the outset to set out the passages from Halsbury's and Bowstead and Reynolds on Agency to which reference was made in the primary judgment.
2. In the 4th edition of Halsbury's, after reference at [701] to the nature of the relation of agency, it is said: 702. Other uses of the word "agent". In addition to meaning a person employed to create contractual relations between two parties, the word "agent" is used in at least two other senses. Thus it is often used in business in a complimentary and not a legal sense, as in the case of the appointment of a "sole selling agent", "exclusive agent", or "authorised agent". The relation so established between the appointor and appointee is usually that of vendor and purchaser and no contractual relationship is established between the appointor of the agent and third parties by the sale of goods by the so-called agent to those third parties. The word "agent" is also frequently used to describe the position of a person who is employed by another to perform duties often of a technical or professional nature which he discharges as that other's alter ego and not merely as an intermediary between the principal and the third party. Thus a solicitor may be his client's agent for the purpose of instituting or continuing legal proceedings on his behalf. Similarly where a person other than a servant is permitted by the owner of a vehicle to drive it for the owner's purposes, the driver will be the owner's agent for the purpose of making the owner vicariously liable for the driver's negligence in driving.
3. The passage in the 22nd edition of Bowstead and Reynolds is: Meaning of term "agent", where a question of construction When it is necessary , as in statutory interpretation or in the construction of an agreement, to attribute a meaning to the word "agent", it may be said that the central significance of the term agent refers to a person who attracts both the external and internal aspects of agency, for it is here that the complete complex of rules is most fully worked out and it is because of the external powers that the internal duties are imposed. And where the term agent is used in a statute or formal document, it has been said that it may be presumed that the word is used in this, its proper legal connotation, unless there are strong contrary indications. But there is certainly no rule to that effect, and the terms is often used of any form of intermediary, or of persons who simply perform functions for others. Conversely, the context may suggest that the word encompasses only professional agents who are independent contractors. Similarly, the word 'authority' in a statute may not require actual authorisation by the principal, but extend to acts, authorised or not, occurring in the performance of authorised tasks. Another common form of words comes from the context of injunctions, which are often issued against "the defendant, its servant and agents". The only direct party will be the defendant, but the wording signals that the defendant needs to control those whom it has engaged to do the enjoined activity, who might be independent contractors that are not exercising any agency functions in the common law sense. Essence of agency … However, this question is viewed, it is useful to note the typical features of the internal position which distinguish agency from other relationships. So, the agent: undertakes to use due diligence on behalf of another, rather than undertake strict duties to another in a situation commercially adverse to that other; is subject to fiduciary duties; and is remunerated by commission or an equivalent rather than by controlling the agent's own profit. Though any of these three features can be modified in an appropriate case, they nevertheless remain typical.
4. In NMFM Property Pty Ltd v Citibank Ltd (No 10) (2000) 107 FCR 207; [2000] FCA 1558, Lindgren J (at [513]) noted that distinction between commercial and legal usages of the term "agent" there referring to International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644 (per Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ) as to the concept of agency in the latter sense.
5. In the present case, there is no textual indication that the word "agents" is used in the stricter legal sense of the term. The term is not defined (cf the term "Employees"). That said, if the term "agent" is construed to mean simply someone who performs a task on behalf of another then any employee or sub-contractor would be covered by the word "agent" (as Mie Force accepts would be the result of its construction), thus making a number of terms in the definition of "Insured" seemingly otiose.
6. That said, both parties accept that there is some infelicity in drafting of the Policy.
7. Mie Force points to the fact that, in the Policy, "financiers" are expressly included within the definition of "Named Insured" but also covered under cl 3 of the definition of "Insured" where a Named Insured is obliged to arrange insurance; and that an "agent" of the entities set out in the definition of "Named Insured" is a "Named Insured" but an "agent of the principal" is also covered under cl 3 of the definition of "Insured", if a Named Insured is obliged to arrange insurance. It is also noted that the definition of "Named Insured" includes "subsidiary" (which would include, for example, a subsidiary company of Rohrig) and that the definition of "Insured" also includes "subsidiary" (which would also include a subsidiary company of Rohrig). Mie Force argues that therefore "Named Insured" and "Insured" would cover the identical subsidiary company, both in a direct legal relationship with Rohrig.
8. Mie Force also points out that the definition of "Named Insured" includes "employee", which would include an employee of Rohrig; and that the definition of "Insured" includes "Employee". Mie Force says that this would include an employee of Rohrig; and therefore that the definitions of "Named Insured" and "Insured" would include the identical employee, both with a direct legal relationship to Rohrig.
9. While a "mortgagee" is not expressly within the definition of "Named Insured", Mie Force argues that a mortgagee would be a "financier" and so covered as a "Named Insured"; but it is noted that "mortgagee" is expressly referred to in cl 3 of the definition of "Insured". Mie Force says that, if the primary judge's reasoning is correct, then it should follow that a "mortgagee" would only be covered under cl 3 where a Named Insured was obliged to arrange insurance but that "financiers" would be covered as a Named Insured without that requirement.
10. As to the drafting of the Policy more generally, Mie Force says that in some respects it appears to have been cut and pasted; and that it does not exhibit internal coherence and consistency. In that regard, Mie Force points out that the Policy contains capitalised terms, which it says are clearly intended to be defined but are not defined (referring by way of example to the definition of "Construction Period", which refers to "Contract" and "Contract Works", capitalised, neither of which is defined); and that exclusion 2.3(a) refers to "You" or "on Your Behalf", apparently cut and pasted from another policy; and that exclusion 2.12(c) refers to buildings at which the Insured is undertaking work "in connection with the Project" yet "Project" is not defined.
11. In argument on the present appeal, Mie Force embraced the proposition that its complaint as to the findings on the "agency issue" included that the primary judge incorporated a notion of control and direction into the colloquial concept of agency referred to in Bowstead and Reynolds on Agency (see AT 6.35). In other words, Mie Force's complaint is that the primary judge construed "agent" as in effect "alter ego" importing a concept of control and direction rather than simply referring to someone who performs a task for others.
12. The difficulty here is that once the stricter legal meaning is not accepted, there is a looseness of language in any colloquial concept of "agency" (which is highlighted by the dispute as to her Honour's factual findings in respect of that issue).
13. I consider that her Honour did not err in finding that the strict legal meaning of the term is not intended (there being no textual or contextual requirement for the stricter interpretation) but also that her Honour did not err in importing into the colloquial concept of "agent" in this Policy (i.e., as a form of intermediary or alter ego of the principal) a notion of control or direction. Without such a limitation the concept would be inordinately broad - someone who sweeps the pavement could be an "agent" of the Insured. That cannot have been intended. In that sense, the concept of an "alter ego" is instructive. In ordinary parlance, an "agent" is more naturally understood as someone who steps into the shoes of another (the principal) in the performance of a particular role or task, rather than simply doing something for the other's benefit.
14. Therefore, ground 1 is not made good.

Factual finding as to no agency - grounds 2 and 3

1. As to the factual finding that there was no agency (grounds 2 and 3), Mie Force says that it was not in issue before the primary judge that Mie Force carried out certain tasks at the Hotel on 30 July 2018 (referring to the admission in the Commercial List response filed by Allianz on 5 October 2022 at 14 to that "on or about 30 July 2018, [Mie Force], through its employees, carried out certain tasks at the Premises"). Mie Force says that this admission is pivotal (AT 5.17).
2. It is noted that the only tasks performed at the Hotel on 30 July 2018 were tasks relating to the "Rohrig Works" (referring to Mr Murphy's first affidavit of 14 March 2022 at [31]-[33]), those being the works which Rhino Stripouts contracted to provide to Rohrig under the Sub-contract (referring to Mr Murphy's first affidavit at [25]). Mie Force says that Mr Murphy's evidence as to this is uncontradicted and must be accepted placing weight on Mr Murphy's evidence that he "authorised" Mie Force and its employees to attend the Hotel premises and to perform the Rohrig Works on behalf of Rhino Stripouts (see Mr Murphy's first affidavit at [31]-[33]). In response to Allianz' observation that the legal characterisation of the relationship between Rhino Stripouts and Mie Force was a matter for the primary judge rather than Mr Murphy, Mie Force relies on Mr Murphy's evidence as going to the factual matrix against which the legal characterisation of the relationship must take place.
3. In this regard, Mie Force challenges the finding that it "supplied labour" to Rhino in relation to the performance of its sub-contract with Rohrig (the Sub-contract) (see Sch 1 [5] in its submissions).
4. Mie Force argues that it must follow, from the fact that it carried out the Rohrig Works (as admitted at 14), that it did so on behalf of Rhino Stripouts (since Rhino Stripouts was the entity which had contracted with Rohrig to procure and perform the Rohrig Works). Mie Force maintains that, in this way, it was the "agent" of Rhino Stripouts, in the business sense of a person carrying out work on behalf of another. Mie Force points out that Rhino Stripouts recorded the fees incurred with Mie Force (referring to the invoices issued by Mie Force to Rhino Stripouts) as an expense item ("Sub-contractors") in its accounts (see Mr Murphy's first affidavit at [24]).
5. Thus, Mie Force submits that the primary judge erred in finding: that Mie Force was not Rhino Stripouts' agent (on the basis that Mie Force was not the "alter ego" of Rhino Stripouts in relation to performance of the works on 30 July 2018); that Mie Force was not doing Rhino Stripouts' work on its behalf; and that Mie Force was not authorised to perform Rhino Stripouts' contractual obligations (see [71]); and thus Mie Force challenges the ultimate finding that it was not an "agent" of Rhino Stripouts (and hence a named insured) for the purposes of the Policy (ground 4).
6. Mie Force argues that, if Rohrig had authorised two persons to carry out identical work at the Hotel on its behalf and one of them happened to have authority to create legal relations on behalf of Rohrig, it would be a commercial nonsense if that agent was covered for damage caused by both of them, but not the other.
7. Allianz, on the other hand, maintains that her Honour's conclusion (that Mie Force was not an "agent") was correct. Allianz says that the "alter ego" test was not satisfied on the evidence. Insofar as Mie Force seeks to challenge the factual finding that Rhino Stripouts attended the site "through" Mr Murphy (see at [71] of the primary judgment), Allianz says that Mr Murphy's evidence does not establish the proposition contended for by Mie Force.
8. Allianz says that Mr Murphy's affidavit shows that, although Mr Murphy was not present at the Hotel on 30 July 2018, he attended the site almost every day or every second day; that during the course of his site visits, he undertook activities such as dropping off equipment, monitoring progress and giving instructions; and that Mr Murphy also spoke with Rohrig's foreman about the general nature of the work required and how many people would be needed. Allianz argues that, in carrying out those activities, Mr Murphy was, on his own evidence, acting (at least) in his capacity as managing director of Rhino Stripouts. It is noted by Allianz that Mr Murphy deposed that, in his capacity as managing director of Rhino Stripouts, he decided personally to oversee and manage the demolition works that were the subject of the Sub-contract between Rohrig and Rhino Stripouts (see Mr Murphy's affidavit at [29]).
9. Allianz further says that, even aside from this affidavit evidence, Mr Murphy was the managing director of both Rhino Stripouts and Mie Force and Allianz argues that there is no sound basis to conclude that Mr Murphy was only acting in the latter capacity (i.e., for Mie Force) when engaged in these activities. I note that, in response to this, Mie Force contends that Mr Murphy attended the Hotel both as managing director of Rhino Stripouts and as managing director of Mie Force, pointing again to Allianz' pleading at 14; and Mie Force contends that this establishes that it attended the Hotel as Rhino Stripouts' "agent" (in the sense of that that term for which Mie Force contended below and which was taken to be the preferred construction by the primary judge).
10. Allianz argues that Rhino Stripouts' use of labour hire employees (sourced, not exclusively, from Mie Force) does not establish that Mie Force was the alter ego of Rhino Stripouts. Allianz says that, even though employees of Mie Force performed some of the physical works, Rhino Stripouts retained the oversight of the demolition works.
11. Allianz says that if its (Allianz') construction of agents is preferred, there can be no doubt Mie Force was not Rhino Stripouts' agent. Allianz points to the evidence that: Rhino Stripouts entered into commercial relations with Rohrig (Mr Murphy signing an umbrella agreement with Rohrig in his capacity as the director of Rhino Stripouts and also the appliable works order relating to the demolition work at the Hotel in his capacity as the director of Rhino Stripouts); Rhino Stripouts continued to deal with Rohrig throughout the course of the demolition works at the Hotel (noting that Mr Murphy signed sub-contractor's statements that accompanied payment claims in his capacity as director of Rhino Stripouts); and Mr Murphy personally oversaw and managed the performance of the demolition sub-contract works in his capacity as managing director of Rhino Stripouts. Allianz says that Rhino Stripouts continued to manage its legal relationship with Rohrig; and that Mie Force did not represent Rhino Stripouts vis-à-vis Rohrig as the managing director of Rhino Stripouts (i.e., Mr Murphy) managed this relationship.
12. Further, Allianz says that there was no assertion by Mr Murphy, let alone any evidence supporting the proposition, that Mie Force could, or did, enter into or had the capacity to create legal relations with Rohrig on the part of Rhino Stripouts. It is noted that Rhino Stripouts' constitution enabled the appointment of agents of the company by resolution of the directors but that there was no resolution appointing Mie Force as agent.

Determination as to challenge to "no agency" finding

1. I see no error in the finding by the primary judge that, even on Mie Force's broader construction of "agents", Mie Force was not the agent of Rhino Stripouts in relation to the carrying out of the demolition works. The primary judge, in my opinion, correctly characterised Mie Force as the supplier of a labour force for the benefit of Rhino Stripouts. That was in substance Mr Murphy's own evidence as to the arrangements between the entities.
2. Mie Force's employees were performing their contractual obligations owed to their employer (Mie Force) when directed to attend and carry out the demolition works at the Hotel. True it is that those works were for the benefit of Rhino Stripouts (to enable it to perform its obligations under the Sub-contract) and Mie Force's employees attended at the site to perform the relevant demolition services (Rhino Stripouts having no employees of its own to do so). It may be accepted that Rhino Stripouts (through its site foreman, who was supervised by Mr Murphy, or through Mr Murphy himself) directed Mie Force's employees in what they were to do at the site (presumably having first been directed by Mie Force to work at the site and to follow instructions by the site foreman or other responsible officer, whose activities Mr Murphy oversaw). But it is not apt to regard this as Mie Force (or its employees) acting as the "alter ego" for Rhino Stripouts; rather, it is consistent simply with Mie Force being the supplier of labour (for which it charged Rhino Stripouts in its invoices). How those services were characterised in the accounts is not determinative. Indeed, in the same way, a person hired to act as a waiter at an office Christmas party is someone performing services for the benefit of the office and presumably subject to instruction or direction by responsible officers at the office, but is hardly an "agent" of those at the office hiring his or her services (nor is that worker sensibly regarded as an "alter ego" of the hirer(s) of his or her services).
3. Therefore, grounds 2 and 3 were not made good.
4. It therefore follows that ground 4 fails.

Grounds 5-7; 9 - "sub-contractor" issue

1. Grounds 5 to 7 and 9, raising the "sub-contractor issue", are as follows: 5. Her Honour erred in finding (Judgment [52]) that the term "sub-contractor in the definition of "Named Insured" in the Policy did not include sub-subcontractor. 6. Her Honour erred in failing to find (Judgment [55] and [56]) that the Appellant was a sub-subcontractor of Rohrig (NSW) Pty Ltd (Rohrig) and therefore a "sub-contractor" within the meaning of the definition of "Named Insured" in the Policy. 7. Her Honour erred in finding (Judgment [56]) that there was no evidence that the contract between Rhino and the Appellant included an agreement by the Appellant to carry out certain parts of the work that Rhino had contracted with Rohrig to do. 9. Her Honour erred in finding (Judgment [52], [55] and [72]) that the Appellant was not, or in failing to find that the Appellant was, a "sub-contractor" within the meaning of that term in the definition of "Named Insured" in the Policy and therefore a "Named Insured" within the meaning of the Policy.
2. Mie Force maintains its contention that the Policy contains significant duplication, redundancies and infelicities in drafting. Mie Force says that the term "sub-contractors" in its normal sense would be understood as persons performing contract work regardless of whether they were retained under a direct contract with the principal or whether they were retained by a sub-contractor to the principal. Mie Force submits that in an industry which routinely operates through sub-contractors and sub-sub-contractors, there was a good commercial rationale for construing the word "sub-contractors" in this way in the present Policy. Mie Force says that it is no answer to say, in a policy containing much duplication and infelicity in drafting, that sub-contractors of any tier were also referred to elsewhere in the Policy.
3. As to ground 5 (i.e., that "sub-contractor" includes "sub-sub-contractor"), Mie Force submits that Petrofina is directly on point (the facts - see below - being very close to the facts in this case) and that the reasoning of Lloyd J is persuasive in construing the Policy. Mie Force notes that Petrofina involved liability in respect of the performance of work not by a sub-contractor itself but by a sub-sub-contractor and a related entity of the sub-sub-contractor; and that there was also informality in the arrangements between the entities pursuant to which work was performed.
4. Mie Force refers to the statement by Lloyd J at 136C of Petrofina that: In the case of a building or engineering contract, where numerous different sub-contractors may be engaged, there can be no doubt about the convenience from everybody's point of view, including, I would think, the insurers, of allowing the head contractor to take out a single policy covering the whole risk, that is to say covering all contractors and sub-contractors in respect of loss of or damage to the entire contract works. Otherwise each sub-contractor would be compelled to take out his own separate policy. This would mean, at the very least, extra paperwork; at worst it could lead to overlapping claims and cross-claims in the event of an accident. Furthermore, … the cost of insuring his liability might, in the case of a small sub-contractor, be uneconomic. The premium might be out of all proportion to the value of the sub-contract. If the sub-contractor had to insure his liability in respect of the entire works, he might well have to decline the contract.
5. Insofar as the primary judge distinguished Petrofina (at 52) on the basis that the Policy in the present case is not an "all risks" policy, Mie Force complains that her Honour did not elaborate as to why the rationale for the decision was not applicable to the present Policy. Mie Force submits that there is obvious convenience in the head contractor taking out a policy which covers liability for property damage caused by anyone taking part in the works (cf GIO General Ltd v Centennial Newstan Pty Ltd [2014] NSWCA 13 at [13] per Meagher JA, with whom Hoeben JA agreed; [118] per Gleeson JA, with whom Meagher and Hoeben JJA agreed) and maintains its contention that the term "sub-contractor" is a word which simply describes a party carrying out work under a contract which is subsidiary to the head contract.
6. Further, Mie Force submits that the parties would have contemplated that building contractors and sub-contractors would employ related entities to perform works and that there may well be a degree of informality in the way in which building contractors and sub-contractors arrange their relationships and arrange for contractors or sub-contractors to perform works. Thus, Mie Force says that a strict and legalistic interpretation of the term "sub-contractors" would be inappropriate; that the real concern is to cover an entity performing part of the works under a contract.
7. Mie Force notes that in McMurray v AIG Insurance Limited [2018] WASC 144, (McMurray) Chaney J applied the rationale in Petrofina in connection with a claim for indemnity under a project and legal liability policy in respect of liability resulting from a fire caused by a painting sub-contractor (see McMurray at [1]-[5], [51]). Mie Force also notes that an appeal from McMurray was dismissed in Tokio Marine & Nichido Fire Insurance Co Ltd v Hans Bo Kristian Holgersson trading as Holgerssons Complete Home Service [2019] WASCA 114 (Tokio), reference being made at [37] by the Court of Appeal of Western Australia to Chaney J's view at [42]-[43] (albeit that the Court of Appeal did not find it necessary to consider the appellant's challenge on this issue).
8. Mie Force submits that the other matters relied upon by the primary judge (at 52, (2), (4)-(6)) (as to the harmonious operation of the definitions of "Named Insured" and "Insured" and the proposition that a broad construction of "sub-contractor" in the former definition would give rise to redundancy and duplication) have little weight in a policy, such as the present, which (as already noted) it says is poorly drafted; does not evidence consistent and coherent drafting; and reveals significant duplication and redundancy. Mie Force argues that the principle that a court will avoid a construction which would involve clauses being nugatory or ineffective has less scope (see George 218 Pty Ltd v Bank of Queensland (No 2) (2016) 313 FLR 287; [2016] WASCA 182) where the drafting technique "is an impediment to the search for internal coherence and consistency in the instrument".
9. Accordingly, Mie Force submits that issues of harmonious operation, redundancy and repetition, to which the primary judge referred, do not carry weight in the case of the Policy; rather, that those matters assume a coherently and consistently drafted policy and that the present is not such a policy. Mie Force thus argues that the matters relied upon by the primary judge at 52, (2) and (4)-(6) do not warrant departure from the construction accepted in Petrofina.
10. As to grounds 6 and 7, Mie Force submits that the primary judge erred in failing to find that it was a sub-contractor of Rhino Stripouts ([55]) and that there was no evidence that the contract between Rhino Stripouts and Mie Force included an agreement by Mie Force to carry out certain parts of the work which Rhino Stripouts had contracted with Rohrig to do ([56]). Mie Force here invokes the observation of Lloyd J in Petrofina at 133 that: It frequently happens that businessmen do not tie up their contracts in ways which seem satisfactory to lawyers; particularly where the parties are companies which, though not members of the same group in the strict sense, are nevertheless as closely associated as these were. I would require a great deal of persuasion before holding that Mammoet had no contractual claim to remuneration from anyone. It seems to me that a contract must be implied between Magnaload and Mammoet, under which Mammoet became sub- contractors of Greenhams, on terms that Mammoet would carry out the operation for the agreed price.
11. Mie Force says that it may be accepted that there was a degree of informality in the arrangements here as between Rhino Stripouts and itself. However, it maintains that it is established, on the pleadings and the evidence, that Mie Force (not merely its employees) performed the "Rohrig Works" required under the Works Order (i.e., works under the Works Period Agreement) at the premises on 30 July 2018. It is again noted that Rhino Stripouts recorded the fees incurred with Mie Force (invoices from Mie Force to Rhino Stripouts) as an expense item "Sub-contractors" in Rhino Stripouts' accounts (referring to Mr Murphy's first affidavit at [24]).
12. Mie Force argues that, in circumstances where it performed the Rohrig Works pursuant to the Works Order (i.e., works under the Works Period Agreement) on 30 July 2018 and was paid therefor by Rhino Stripouts, a contract existed between Rhino Stripouts and itself that it would perform such works in return for payment. Thus, Mie Force submits it was a "sub-contractor" of Rhino Stripouts and therefore a "sub-contractor" within the definition of "Named Insured" in the Policy.
13. Allianz submits that the primary judge was correct in rejecting Mie Force's argument that it was a subcontractor of Rohrig because the proper construction of subcontractor should include sub-sub-contractors (at [43]-[56]) for the two reasons her Honour gave: that the reference to "subcontractors" in the description of "Named Insured" did not extend to sub-sub-contractors; and that Mie Force was, in any event, not a sub-contractor (of any tier) but rather a supplier of labour.
14. As to the first of those issues, Allianz submits that the harmonious operation of the terms of the Policy as a whole means that the word "sub-contractor", where used in the description of "Named Insured", does not include sub-sub-contractors. It is said that the use of tiered sub-contracting in the construction industry was a matter that was plainly known to the parties to the Policy, being both common in construction and specifically provided for in cl 3(c) of the definition of "Insured". Allianz points to the fact that cl 3(c) of the definition of "Insured" expressly provides for sub-contractors of any tier to be an "Insured" but only in limited circumstances. Allianz argues that if "sub-contractor", where used in the description of "Named Insured" and cl 1 of the definition of "Insured", included sub-sub-contractors, the controls in cl 3(c) would be redundant.
15. As to the reliance placed by Mie Force on Petrofina, Allianz says that Petrofina is clearly distinguishable in that it involved a policy of insurance of a different subject matter and which contained very different terms. Allianz says that the policy in Petrofina did not contain as detailed a description of the "Insured" as is found in the Policy and, specifically, did not provide for sub-contractors of any tier to be covered in particular circumstances; instead, it simply described the insured as comprising specifically named persons who were the owners of the refinery where the construction works were being carried out and the financiers of the project and/or the named the main contractor for the construction works "and/or Contractors and/or Sub-contractors". Allianz maintains that the reasoning in Petrofina at 133 does not apply to the Policy, which separately provides for sub-contractors of any tier to meet the definition of an "Insured" (albeit in limited circumstances).
16. Insofar as Mie Force places emphasis in its submission on the fact that in Petrofina Lloyd J held that there was an implied contract under which the relevant party (Mammoet) became a sub-contractor, Allianz says that the factual circumstances in the present case are very different; that Mie Force simply supplied labour to enable Rhino Stripouts to perform its contract with Rohrig. Further, it is noted that the Policy expressly provides for suppliers to meet the definition of "Insured" in circumstances that here were not satisfied.
17. Allianz says that the observation by Lloyd J at 136 as to the convenience of allowing a head contractor to take out a single policy was made in the context of the issue there raised as to the nature of each party's interest in the contract works the subject of the insurance. Allianz argues that while the observations of Lloyd J in Petrofina may have some force in respect of first party property insurance for the contract works where the value of the entire contract works may be disproportionate to the value of the sub-contract, they are not relevant to third party liability claims where a sub-contractor's premium is assessed by reference to the risk of third party claims arising from the work it undertakes. Further, it is submitted that the convenience of a head contractor insuring the liability to third parties of sub-contractors of any tier is a commercial decision that cannot be blindly applied to all policies of insurance issued to head contractors.
18. Allianz also says that Mie Force wrongly seeks to draw some comfort from the decision in Tokio (where the policy of insurance, although it included a third party liability section, was in very different terms to the Policy, in that it did not separately provide for cover to sub-contractors of any tier in addition to including sub-contractors in the description of the Named Insured). Further, Allianz says that the Court of Appeal of Western Australia there did not expressly adopt the commercial convenience rationale expressed in Petrofina, it not being relevant to the task of construing the policy in that case.
19. Thus, in summary, Allianz says that the Policy should be construed according to its terms and that no guidance can be obtained from Petrofina or the commercial convenience suggested in that decision of a head contractor insuring everyone working on a construction project.
20. As to whether Mie Force was a sub-contractor (of any tier), Allianz says that the primary judge at [55] clearly accepted Allianz' submission as to the ordinary meaning of the term "sub-contractor"; that submission being based on the decision of the Full Court of the Supreme Court of Victoria in South Seas Drilling Co v Esso Australia Ltd (Supreme Court (Vic), Crockett AJC, O'Bryan and Vincent JJ, 21 September 1988, unrep). Allianz, in which it was said that: In its ordinary meaning 'sub-contractor' means (1) 'a contract, or one of several contracts, for carrying out a previous contract or part of it' (The Oxford English Dictionary); (2) 'one who contracts to render some performance for another which the latter requires for the performance of his own contract' (Macquarie Dictionary). 'Sub" is a prefix meaning 'under' (Macquarie Dictionary). If plain and ordinary meaning is to be given to the word 'sub- contractor' wherever appearing in the Charter Party, in order to find a sub-contractor there must exist somewhere a 'head contract' and a further contract under the 'head contract' whereby a contractor has agreed to perform the whole or portion of the head contract for the principal contractor.
21. Allianz says that the contention by Mie Force that it carried out parts of the contract entered into by Rhino Stripouts with Rohrig should be rejected; that there was no written agreement entered into by Rhino Stripouts and Mie Force but that it is apparent from Mr Murphy's evidence that Mie Force supplied labour to Rhino Stripouts to perform the demolition work that was the subject of the sub-contract between Rohrig and Rhino Stripouts. Allianz again notes that Rhino Stripouts, through Mr Murphy, continued to manage and oversee the demolition works. Allianz says that Rhino Stripouts did not contract with Mie Force to perform the demolition works in whole or in part; rather, it contracted with Mie Force for the provision of labour to enable the demolition works to be performed. Allianz says that there was only a supply agreement between Rhino Stripouts and Mie Force. It is noted that suppliers are separately provided for in paragraph 3(d) of the definition of "Insured". Allianz says that they are not "sub-contractors" for the purposes of the Policy (or at all).
22. As to this submission by Allianz, Mie Force in its submissions in reply again points to the pleading in which Allianz admitted that Mie Force carried out the Rohrig Works (the work which Rhino Stripouts was obliged to carry out for Rohrig). Mie Force says that these facts were not in issue in the Court below, again noting that Mr Murphy's evidence was admitted without objection and he was not cross-examined. Further, Mie Force says that there was an implied agreement between Rhino Stripouts and itself (as there was in Petrofina).
23. Finally, as to the matters relied upon by Mie Force (in its submissions at [60]) for the contention that it was a sub-contractor, Allianz argues that the fact that Rhino Stripouts recorded the fees rendered by Mie Force as falling within the expense item "Sub-contractors" (i.e., its characterisation of those fees for accounting purposes) has no weight or relevance in determining the legal relationship between the two entities; and nor is it relevant that Mie Force's employees performed works falling within the subcontract between Rohrig and Rhino Stripouts. Allianz says that every supplier to a contractor provides goods or services that will be used on a particular project but that that supply does not amount to engaging the supplier actually to perform the whole or part of the project works.
24. In its submissions in reply, Mie Force appears to accept that the accounting treatment between Rhino Stripouts and itself is not determinative of agency but says that it is a factual matter consistent with Mie Force being a subcontractor of Rhino Stripouts. Mie Force maintains that this is something which has both weight and relevance; emphasising that the factual matrix of the relationship must be considered and that the legal character of the relationship between Rhino Stripouts and Mie Force cannot be determined in a vacuum. Further, Mie Force argues that it is a matter of most relevance that its employees performed the Works (referring to its status as the employer as a core fact of primary importance in the claims against it in both the Hotel Proceedings and Neighbour Proceedings). Mie Force says that there was no mere "supply"; and it relies on Mr Murphy's evidence that Rhino Stripouts engaged Mie Force to carry out Rhino's obligations under the Sub-contract (see Mr Murphy's affidavit at [28]-[34]).
25. Allianz cavils with the suggestion by Mie Force (at [61] of its submissions in chief) that the terms of the Works Period Agreement (entered into in May 2017 before the Policy commenced on 30 June 2017) are of relevance to the construction to be given to "sub-contractor" in the description of "Named Insured" in the Policy. Allianz says that there is no evidence that it was aware of the terms of the umbrella contract at the time of entering into the Policy; and it submits that, accordingly, it is not part of the surrounding circumstances known to both parties to the Policy that can be used as part of the task of construction (referring to Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] per French CJ, Hayne, Crennan and Kiefel JJ). In this regard, in reply submissions, Mie Force maintains that if it was a "sub-contractor" of Rohrig by reason of the contractual arrangements between Rohrig and Rhino Stripouts, then it was covered under the terms of the Policy; and that those arrangements are not "surrounding circumstances" to be used in determining the meaning of the Policy.
26. Allianz thus contends that Mie Force's submissions that it was a "sub-contractor" of Rhino Stripouts and that sub-contractors of any tier fall within the use of the term "sub-contractor" in the description of "Named Insured" should be rejected.

Determination

1. As noted above, Mie Force placed weight on the decision in Petrofina. There, the plaintiff had retained a head contractor to construct an extension to an oil refinery and the head contractor sub-contracted a heavy lifting operation to another entity. That entity (the sub-contractor) then sub-contracted to another company, Magnaload Ltd (Magnaload) the supply of lifting equipment and services. Mammoet Stoof BV (Mammoet) was a related company to Magnaload and it was agreed between Magnaload and Mammoet that Mammoet would be responsible for the operation itself. Mammoet supplied the heavy lifting equipment (a Hydrajak). In dismantling the Hydrajak, a gantry crashed causing damage. The head contractor claimed under a policy of insurance which defined the "Insured" as the owners of the refinery and/or the named head contractor and/or Contractors and/or Sub-contractors". Magnaload and Mammoet were sued and claimed indemnity under the policy.
2. Lloyd J held (at 133) that Magnaload was strictly a "sub-sub-contractor" but that it was nevertheless a sub-contractor "within the ordinary meaning of the word 'sub-contractors' as contained in the policy", saying that: Strictly speaking Magnaload were not sub-contractors but sub-sub- contractors. But I would hold that they were nevertheless sub-contractors within the definition contained in the contracts and within the ordinary meaning of the work 'sub-contractors' as contained in the policy. To my mind the word 'sub-contractors' in the context of the policy must include sub-sub-contractors as well as sub-contractors.
3. Lloyd J also held that Mammoet was a sub-contractor (although it appears that there was nothing in the documents before Lloyd J to show that Mammoet, as distinct from Magnaload, was a contractor as such).
4. In my opinion, her Honour was correct to distinguish Petrofina. The distinction between an "all risks" policy of the kind there being considered and the kind of policy in the present case is by no means unimportant for the reasons that Allianz has given.
5. The policy in Petrofina covered property damage at just one site. The insurance contract here is far broader - it covers all insured operations for the whole of the Rohrig group, extending beyond property damage to personal injury and reputational damage. The proposition that it was intended to extend coverage to all third parties in the way that Mie Force here submits (akin to the sub-sub-contractors in Petrofina) is not compelling.
6. In any event, the observations by Lloyd J as to the convenience of such a construction of the term "sub-contractor" (i.e., that it encompassed a sub-sub-sub-contractor) in another policy in a different context is of little assistance in construing the policy at hand. The effect of the construction that Mie Force seeks to place on the term would seem to render anyone providing services to another under an arrangement of some kind with that other party's contractor a sub-contractor. That seems to me to be too broad an operation for the term "sub-contractor" to bear in this Policy and it is not an answer to say that there are other controls (by reference to the Insured Operations definition or otherwise) to limit the scope of such an extension. There is nothing in the Policy that supports the view that "sub-contractor" simply means someone performing tasks for the benefit of the Named Insured.
7. As to the reliance placed by Mie Force on the admission said to have been made by Allianz at [14] of its list response, Allianz says that the contention in the commercial list statement at [20] was that Rhino Stripouts retained and instructed Mie Force to carry out certain tasks on its behalf as part of performing the works (the particulars to this including that the retainer and instruction was partly by conduct and partly orally - the conduct being that Mr Murphy the sole director of Rhino Stripouts and one of two directors of Mie Force, permitted and directed Mie Force "through its employees" to attend the Premises and carry out the tasks as part of the performance of the Works on behalf of Rhino Stripouts). The response to this was a non-admission including all the particulars pleaded thereto. Then at [21], Mie Force pleaded that, pursuant to the retainer and instructions referred to at [20], on or about 30 July 2018, Mie Force "through its employees ("Workers"), carried out certain tasks on behalf of Rhino in the course of the performance of the Works at the Premises". In response to this was the response at 14 here said to be pivotal.
8. It is said by Allianz that on the pleadings a dispute is raised as to whether (as pleaded at [20]) Rhino Stripouts retained Mie Force to carry out certain tasks on its behalf in performing the works; and that there is then an admission that Mie Force, through its employees, carried out certain tasks at the premises (but a non-admission as to the balance). Allianz says that the admission is limited to one which is obvious (that Mie Force, through the labour hire employees, carried out certain tasks). Allianz says that this is not a legal admission of any relevance - simply a factual identification that Mie Force had some employees that did things at the premises (see AT 22.4-26).
9. I do not read the admission in the pleadings (in the Hotel Proceedings) as an unequivocal admission as to the capacity in which Mie Force was acting when, through its employees, it carried out the tasks at the premises for Rhino Stripouts. The evidence to my mind makes clear that what Mie Force, pursuant to its arrangement with Rhino Stripouts, provided was a labour force for the use of Rhino Stripouts. I consider that her Honour did not err in finding that Mie Force was not a sub-contractor to Rhino Stripouts (and hence not a sub-sub-contractor to Rohrig) in circumstances where the arrangement was clearly one for the supply of labour.
10. Accordingly, grounds 5-7 and 9 fail.

Conclusion

1. For the above reasons, I propose that the appeal be dismissed with costs.
2. WHITE AND KIRK JJA: We have had the benefit of reading the judgment of Ward P in draft. We agree with the order her Honour proposes. We also agree with her Honour's reasons except in one respect, relating to the meaning of the word "agent" as employed in the definition of "Named Insured" in the Policy, which in turn is picked up in the definition of "Insured". This issue is raised by the notice of contention of Allianz and has ramifications for grounds 1-4 of Mie Force's notice of appeal. The definition of "Named Insured" is set out in the President's judgment above at [18], and that of "Insured" is at [17]. In our view the word "agent" as employed in the Policy should be understood to have been employed in its established sense as a legal term of art, that is, describing persons with authority to create binding legal relations between a principal and third parties (see, eg, International Harvester Co of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Co (1958) 100 CLR 644 at 652)
3. As the primary judge noted at [35], this Court recently summarised relevant principles of construction in Allianz Australia Limited v Rawsons Homes Pty Ltd [2021] NSWCA 224 as follows (at [43], citations omitted): As a commercial contract, a policy of insurance is to be given a business-like interpretation. The task of interpretation is an objective one that requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure. A preference is to be given to the construction supplying a congruent operation to the various components of the whole.
4. There is no doubt that the word "agent" is commonly used in a range of ways, and that in business usage its significance is by no means restricted to the strict legal sense: see, eg, International Harvester at 652. The sense meant to be conveyed by use of the word in a contract will of course depend upon the context in which it is deployed.
5. Here, whilst the Policy contains some infelicities of drafting, they are not such as to mean it should be characterised as poorly drafted. Both the definitions of "Named Insured" and "Insured", and the terms of the Policy more generally, manifest that a degree of care has been taken in delineating what the Policy is meant to encompass. It is evident that lawyers have been involved in its production. In those circumstances, it is reasonable to start with a presumption that the word "agent" would be taken by a reasonable businessperson to have been employed in its established legal sense: see Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 at [167]-[174], and authorities there cited.
6. In our view the context does not suggest that a broader meaning was intended and there are reasons militating in favour of the narrower legal sense. If that meaning is not the correct one then there is some uncertainty as to what the meaning is. The primary judge noted at [59] that Mie Force submitted that the word should be construed consistently with a sentence employed in a leading textbook stating that "the term is often used of any form of intermediary, or of persons who simply perform functions for others": P Watts, W Bowstead and FMB Reynolds, Bowstead and Reynolds on Agency (22nd ed, 2021, Sweet & Maxwell) at [1-023] quoted by her Honour at [57] (the same passage appears in the 23rd edition). Her Honour said at [64] that she "preferred the construction of Mie Force". Yet the textbook refers to the presumption that in a formal document the word "agent" is used in its legal connotation. Moreover, even in the sentence quoted from the textbook two meanings were proffered. And in fact it seems from [65]-[66] and [71] of the judgment that the meaning her Honour actually adopted was one taken from Halsbury's Laws of England (4th ed), as quoted and applied by the Full Court of the Federal Court in Comalco Aluminium Ltd v Garraway Metals Pty Ltd (8 December 1993, unreported), being as follows: The word "agent" is also frequently used to describe the position of a person who is employed by another to perform duties often of a technical or professional nature which he discharges as that other's alter ego and not merely as an intermediary between the principal and third party.
7. In its submissions to this Court Mie Force opted to support the sentence from Bowstead and Reynolds on Agency, seemingly encompassing both ideas in that statement. Performing duties as the alter ego of another - the sense identified in the Halsbury's quotation - is a more restrictive notion than simply (to quote the textbook) "any form of intermediary" or "persons who simply perform functions for others". No doubt it was for that reason that Mie Force sought to support its appeal by relying on the sentence taken from the textbook rather than the somewhat different meaning adopted by the primary judge.
8. In some contracts the intended meaning of "agent", beyond the strict legal meaning, will be apparent: see, eg, International Harvester at 653. Here it is not, as illustrated by the divergence just described. That uncertainty favours adopting the settled legal meaning.
9. Further, if the meaning is "performing duties as the alter ego of another" then that would seem substantially to subsume subcontractors, as referred to in the definition of "Named Insured", along with contractors and subcontractors as referred to in par 3(c) of the definition of "Insured". The same is true of the inclusion of employees in the definition of "Named Insured", and the inclusion in par 4 of the definition of "Named Insured" of "any director, executor, officer, Employee, contract staff or partner of any of the Insured under clauses (1), (2) or (3) whilst acting as such", insofar as that relates to directors, employees and so forth of any "principal" as referred to in par 3(a). These points also apply if the meaning that Mie Force advocated was adopted. It can be accepted that there may be some degree of overlap in cascading definitions such as those at issue. But overlap is one thing; rendering other parts of the definition substantially superfluous is another.
10. The primary judge considered that the fact that the word "agents" is placed next to the word "employees" in the definition of "Named Insured" militated against the stricter construction, saying that "[e]mployees do not generally have any capacity to effect legal relations with third parties" (at [69]). In fact employees often do have that ability. So much is manifest, for example, whenever a company enters a contract by action of an employee. In any case, the point simply illustrates that the two notions are distinct if overlapping. That does not support a broader construction. As Allianz submitted, a link between employees and agents in their established legal senses is that they are persons through whom companies commonly act.
11. The primary judge considered that one factor in favour of a broader construction was that "it was open to the insurer to employ a definition of agent reflecting its legal meaning similar to the insurer's use of the definition of 'employee', but it had not chosen to do so" (at [67]). Where the issue is resolving the proper interpretation of ambiguous language, it is seldom helpful to postulate that a party could have made the meaning for which it contends clear by express words (The Interpretation of Contracts in Australia, 2nd ed, 2011, Lewison & Hughes at [2.12]; Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [111]; Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65 at [67(2)]). It could equally be said that if the parties had intended some meaning other than the established legal sense, in a context where no other meaning is clear, then it might be thought they would have defined that meaning.
12. The Privy Council, when giving reasons in an appeal from this Court for a presumption that words with an established legal meaning were intended to have that meaning (Falkiner v Commissioner of Stamp Duties [1973] AC 565 at 577), explained why parties might choose not to define such a term: In the first place, the existence of the rule will enable legal advisors to predict how a court will construe the words in various circumstances within the contemplation of client and advisors; and, if the prima facie legal meaning does not represent the client's intention, to make that intention plain. Secondly, the rule leads to economy: the meaning need not be spelled out at length, but words can rather be used in the knowledge that they will prima facie carry the meaning put on them by the law. ...
13. The primary judge here reasoned that the term "agents" appears "to be directing attention to those persons who are carrying out the 'Insured Operations', which is the construction work, as either employees or 'agents'" (at [68]). Her Honour made a related point to the effect that in circumstances where subcontractors are listed in the definition of "Named Insured", it is "difficult to see how an 'agent' in the legal sense could be involved in the construction work, for which insurance might be required" (at [70]). In effect, with both points her Honour was suggesting that it is difficult to see why there would have been a concern to include agents in the strict legal sense within the insurance provided in circumstances where there seemed to be little practical significance in a class of persons defined by their ability to bind a principal in legal relations with a third party. The definition of "Insured Operations" identified activities undertaken by the Insured on behalf of the Named Insured. As Allianz submitted, a principal building contractor might well appoint contract administrators and site supervisors who have power to bind it and who performed roles in connection with the insured operations. Thus, there is no reason to think that the legal meaning of the word "agent" would give the word no practical work to do in the Policy.
14. Mie Force made a related argument that if Rohrig had authorised two people to carry out identical work at the site and one of them "happened to have authority to create legal relations on behalf of Rohrig, it would be a commercial nonsense if that agent was covered for damage caused by both of them, but not the other". The example is somewhat artificial as, leaving aside employees (who are covered as such), it does not seem likely that two people would be carrying out identical work where one of them just happened to have been appointed a legal agent. The fact of one person having been authorised to be an agent would suggest that person would likely be undertaking distinct work. In any event, line-drawing exercises can sometimes be said to be arbitrary at the margins. Nevertheless, insurance contracts such as the Policy here draw lines.
15. For these reasons we would uphold the notice of contention. There was no suggestion that Mie Force was an agent in the relevant legal sense if the meaning contended for in the notice of contention was upheld. Our conclusion on construction thus suffices to also reject grounds 1-4 of the notice of appeal. For the avoidance of doubt we note that if we had construed the word "agent" in the same way as was done by the primary judge, and approved by Ward P, then we would have rejected those grounds for the reasons set out above by her Honour.

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