ROADS AND TRAFFIC AUTHORITY OF NSW, COUNCIL OF THE SHIRE OF EVANS & PIONEER ROAD SERVICES PTY LTD v PALMER

We agree that the superelevation of the curve was in the range 13.5 to 14%.

4.1 Should there have been loose aggregate on the road

We agree that control of the aggregate application for the works was within tolerance ordered and expected for this class of work.

We agree that this left some loose aggregate on the road surface. We agree that the issue of loose aggregate should not be considered separately from the signage and management of the site .

We agree that there should have been monitoring, management and control of the site after application of the seal and before final sweeping of the road surface .

We agree that on the information available, the signage provided was less than that required (see 1.2 above) for the conditions presented with loose aggregate present .

We agree that when considered with the absence of signage and control or monitoring , then there should not have been loose aggregate on the roadway .

Therefore the road should have been swept earlier or appropriate signage and controls put into place.

5.1 What happened to the vehicle before the commencement of the 26m of marks on the roadway (what initiated the loss of control)?

We generally agree on the behaviour of the vehicle from the beginning of the skid marks left on the road.

We agree that we have seen no probative evidence that would provide a scientific basis for determining the location or the cause of the loss of control of the vehicle.

Each of the experts individually, is unable to provide a definitive view of the initiation of the loss of control.

We agree that there are various possibilities that exist, none of which can be presented as the joint, or only, view." [Emphasis in original.] 23 To a substantial degree on the basis of the joint experts report, his Honour made the following findings: "[154] A number of matters were, clearly established upon the evidence, and accepted as such by the experts. There is no real issue in relation to them. They include the following;

a) the sign posts warning of the work, its nature and dangers, were seriously inadequate;

b) the 'reduce speed sign' located in a 100 km/h zone was, in the absence of any indication of a safe speed for the road works, of no value whatsoever; c) there should have been more stone warning signs as well as 'slippery' surface signs repeated at regular intervals;

d) there should have been a Roadworks 60 km/h limit for the entire section of road;

e) the 75 km/h sign was misleading and dangerous in that: (i) it suggested that even in normal conditions the safe speed for the two bends was the same, when clearly there was a proper differential between them of 15 to 20 km/h;

(ii) it indicated that the safe speed during the roadworks was the same as under normal conditions;

(iii) it failed to advise that the roadworks continued round the bend, and that the safe speed was substantially less than 60 km/h; and

(iv) it should have been covered up until the gravel was removed.

f) the adjoining embankment added to the hazard by reason of the potential drop off and the proximity of the newly widened shoulder to it;

g) the broken back bend was inherently dangerous because of the tight radius of the second bend which was covered by the same advisory speed as that for the first bend; h) the normal friction between the wheels of the plaintiff's car and the road surface, which determines the speed at which a bend can be safely taken, was significantly reduced by the presence of loose aggregate on the newly sealed surface;

i) the loose aggregate was not evenly spread, by the morning of the accident, having been accumulated, in sections, into mounds;

j) the plaintiff began to lose control on the roadway before the point at which the tyre marks were left;

k) the plaintiff had not driven over this section of road during the resealing and hence was not to know what was its condition in the area of the broken back bend; l) the plaintiff had safely traversed this section of roadway on many previous occasions, but came to grief on the one occasion when there was gravel on the road;

m) other motorists had found the bend and the gravel difficult to negotiate."

The Statutory Scheme 24 The relevant provisions of the Roads Act 1993 are as follows: " 7 Roads authorities (1) The RTA is the roads authority for all freeways. (2) The Minister is the roads authority for all Crown roads. (3) The regulations may declare that a specified public authority is the roads authority for a specified public road, or for all public roads within a specified area, other than any freeway or Crown road. (4) The council of a local government area is the roads authority for all public roads within the area, other than: a) any freeway or Crown road, and b) any public road for which some other public authority is declared by the regulations to be the roads authority. 5) A roads authority has such functions as are conferred on it by or under this or any other Act or law. … 46 Main Roads The Minister may, by order published in the Gazette, declare to be a main road: (a) any public road, or (b) any other road that passes through public open space and joins a main road, State highway, freeway, tollway, transitway or controlled access road. … 61 Road works on certain classified roads (1) It is exclusively the function of the RTA to make decisions as to what road work is to be carried out: a) on any freeway, State highway or metropolitan main road, or b) on any other classified road in respect of which the carrying out of that kind of road work is, by virtue of an agreement or direction under this Division, the responsibility of the RTA. (2) It is exclusively the function of the RTA to construct and maintain State works. 62 Roads agreements between RTA and roads authorities (1) The RTA and a roads authority may enter into an agreement under which some or all of the functions of the roads authority with respect to a classified road become, to the extent provided by the agreement, the responsibility of the RTA. (2) While an agreement under this section has effect, the functions of the roads authority with respect to the road are, to the extent provided by the agreement, to be exercised by the RTA. (3) This section does not limit the power of the RTA to exercise any function conferred on it by or under any other provision of this Act with respect to a classified road. 63 Ministerial directions (1) The Minister may, if of the opinion that special circumstances so require, direct that some or all of the functions of a roads authority with respect to a classified road are to become, to the extent provided by the direction, the responsibility of the RTA. (2) While a direction under this section has effect, the functions of the roads authority with respect to the road are, to the extent provided by the direction, to be exercised by the RTA. 64 RTA may exercise functions of roads authority with respect to certain roads (1) The RTA may exercise the functions of a roads authority with respect to any classified road, whether or not it is the roads authority for that road, and, in the case of a classified road, whether or not that road is a public road. (2) The roads authority for a classified road with respect to which the RTA is exercising a particular function may not exercise its functions with respect to the road in any manner that is inconsistent with that in which the function is being exercised by the RTA. 65 RTA has immunities of a roads authority While exercising the functions of a roads authority under this Division with respect to a road for which it is not the roads authority, the RTA has the immunities of a roads authority with respect to that road. … 71 Powers of roads authority with respect to road work A roads authority may carry out road work on any public road for which it is the roads authority and on any other land under its control. … 74 Standard plans and specifications (1) The RTA may cause standard plans and specifications to be prepared for the carrying out of road work on a classified road, either generally or in a particular case, and may require a roads authority to carry out any such road work in accordance with those plans and specifications. (2) Any road work in respect of which the RTA has made such a requirement must be carried out by the roads authority in accordance with the requirement. 75 Public authorities to notify RTA of proposal to carry out road work on classified roads A public authority may not carry out road work on a classified road, being work that involves: (a) the deviation or alteration of the road, or (b) the construction of a bridge, tunnel or level crossing in the road, unless the plans and specifications for the proposed work have been approved by the RTA. … 114 Roads authorities may only regulate traffic in accordance with Part A roads authority may not regulate traffic on a public road by means otherwise than in accordance with this Part. 115 Roads authority may regulate traffic in connection with road work etc (1) A roads authority may regulate traffic on a public road by means of barriers or by means of notices conspicuously displayed on or adjacent to the public road. (2) The power conferred by this section may be exercised by the RTA for any purpose but may not be exercised by any other roads authority otherwise than: (a) for the purpose of enabling the roads authority to exercise its functions under this Act with respect to the carrying out of road work or other work on a public road, or (b) for the purpose of protecting a public road from serious damage by vehicles or animals as a result of wet weather, or (c) for the purpose of protecting earth roads from damage caused by heavy vehicles or by animals, or (d) for the purpose of protecting members of the public from any hazards on the public road, or (e) for the purpose of protecting vehicles and other property on the public road from damage, or (f) for the purpose of enabling a public road to be used for an activity in respect of which a permit is in force under Division 4 of Part 9, or (g) for a purpose for which the roads authority is authorised or required, by or under this or any other Act or law, to regulate traffic. … 116 Applications for consent (1) A roads authority may apply to the RTA for consent to: (a) the erection of any notice or barrier, the carrying out of any work or the taking of any other action for the purpose of regulating traffic on a public road for purposes other than those referred to in Division 1, or (b) the removal of any notice or barrier, the demolition of any work or the ceasing of any action for which it has been given consent under this Division. (2) Before doing so, the roads authority must cause notice of the application to be published in a local newspaper. (3) The notice: (a) must specify the particular action for which the roads authority is applying for consent, and (b) must state that any person is entitled to make submissions to the RTA with respect to the granting of consent, and (c) must indicate the manner in which, and the period (being at least 28 days) within which, any such submission should be made. (4) This section does not apply to the erection of any notice, the carrying out of any work or the taking of any other action that the roads authority is required by Division 3 to erect, carry out or take. 117 Public submissions (1) Any person may make submissions to the RTA or to the roads authority with respect to the application. (2) The roads authority must ensure that any submissions received by it with respect to the application are forwarded to the RTA. 118 Decision on application (1) After considering any submissions that have been duly made with respect to an application, the RTA may grant consent to the application, either conditionally or subject to conditions, or may refuse the application. (2) The roads authority is authorised to take such action as is specified in a consent under this section. 119 Review of RTA's decision (1) A roads authority may request the Minister to review the decision of the RTA: (a) to refuse an application under this Division, or (b) to impose conditions on a consent granted under this Division. (2) The request must be accompanied by copies of all submissions made in connection with the original application. (3) The Minister, after taking into consideration the submissions and any representations made by the RTA with respect to the application, may deal with the application in any way in which the application could have been dealt with by the RTA. (4) The Minister's decision under this section is taken to be the decision of the RTA and has effect accordingly. … 145 Roads authorities own public roads (1) All freeways are vested in fee simple in the RTA. (2) All Crown roads are vested in fee simple in the Crown as Crown land. (3) All public roads within a local government area (other than freeways and Crown roads) are vested in fee simple in the appropriate roads authority. (4) All public roads outside a local government area (other than freeways and Crown roads) are vested in fee simple in the Crown as Crown land. 146 Nature of ownership of public roads (1) Except as otherwise provided by this Act, the dedication of land as a public road: (a) does not impose any liability on the owner of the road that the owner would not have if the owner were merely a person having the care, control and management of the road, and (b) does not affect the rights or liabilities of any person under any easement or under any Act or law, and (c) does not affect any rights of any person with respect to minerals below the surface of the road, and (d) does not constitute the owner of the road as an occupier of the land, and (e) does not authorise the owner of the road to dispose of any interest (other than an easement or covenant) in the land, and (f) does not prevent any lands that were previously considered to be adjoining lands for the purposes of the Land Acquisition (Just Terms Compensation) Act 1991 from continuing to be so considered. … 163 Roads authorities to keep records (1) A roads authority must keep a record of the public roads for which it is the roads authority. (2) The record must indicate with respect to each public road: (a) its location, and (b) the name and number (if any) given to it by the roads authority, and (c) the reference of any plan in accordance with which its boundaries or levels have been fixed or varied by the roads authority, and (d) such other particulars as may be prescribed by the regulations. (3) The record must be available for inspection by members of the public, free of charge, during the normal business hours of the roads authority. (4) The RTA must keep a record of all classified roads in addition to the records that it keeps in its capacity as a roads authority. (5) The record must indicate with respect to each classified road: (a) its location, and (b) the name and number (if any) given to it by the RTA, and (c) its classification, and (d) the reference of any plan in accordance with which its boundaries or levels have been fixed or varied by the RTA, and (e) such other particulars as may be described by the regulations. (6) The record must be available for inspection by members of the public, free of charge, during the normal business hours of the RTA. … 207 RTA may provide financial and other assistance to roads authorities for road work on classified roads (1) The RTA and a roads authority may enter into, and may perform their obligations under, an agreement under which the RTA provides financial or other assistance to the roads authority to enable it: (a) to carry out specified road work or specified traffic control work on a specified classified road, or (b) to carry out road work or traffic control work generally. (2) Under an agreement of the kind referred to in subsection (1) (a), the RTA is liable to pay to the roads authority: (a) the whole of the cost of the road work or traffic control work, in the case of work to be carried out on a main road, or (b) no less than half of the cost of the road work or traffic control work, in the case of work to be carried out on a secondary road, or (c) such part of the cost of the road work or traffic control work as the RTA determines, in the case of work to be carried out on a tourist road, unless the roads authority notifies the RTA that it is prepared to accept a lesser amount." 25 The Roads Act also contains a dictionary which includes the following pertinent definition: " regulate traffic means restrict or prohibit the passage along a road of persons, vehicles or animals." 26 MR 54 had been declared to be a main road pursuant to s46 of the Act. Nevertheless, s7(4) continued to apply to the road so that "the roads authority", within the meaning of that term in the Roads Act 1993, continued to be the Council of the Shire of Evans. None of the provisions pursuant to which the RTA could be made the roads authority applied to MR 54. 27 Two statutory issues arose in this case. First, whether or not the agreements, hereinafter referred to, were in fact a "roads agreement" pursuant to s62 of the Act. Secondly, whether the RTA exercised functions of a roads authority pursuant to s64 of the Act? 28 As suggested by s65, quoted above, the words "roads authority" was intended to be related to, if not co-extensive with, the idea of a "highway authority" at common law. Nevertheless s62, s63 and s64 indicate clearly that, in New South Wales, some of the functions of a roads authority under the Act may be exercised by the RTA, whilst other such functions are exercised by the Council. What, if any, implications a division of functions has for the applicability of the case law, which is concerned with a single roads authority, will be further considered below. 29 In addition to the statutory provisions, a non-statutory mode of classification of roads has been adopted, which has implications for the present proceedings. MR 54 is a "State Road". This is an internal classification of an administrative character adopted by the RTA and individual Councils with respect to particular roads. However, within the Roads Act 1993, Councils remain the "roads authority" for such roads. 30 The administrative system is summarised in the definition section in cl 15 of the State Road Maintenance Agreement 1996/97, between the RTA and the Council, which I will set out in more detail below. In this definition "State Road" is said to mean: "a category of roads agreed with Council for administrative purposes. They form the primary arterial network of classified roads in the State and some special purpose classified roads." 31 "State Roads" may be further classified in accordance with the definition of "State Road Hierarchy" which is said to mean: "the ranking of State Roads into groups of roads with similar vehicle operating cost characteristics and strategic importance. Previously referred to as sub networks. Determined by the RTA."

The Arrangement between the RTA and the Council 32 The State Road Maintenance Agreement 1996/97 was a contract entered into between the RTA and the Council of the Shire of Evans. The latter is referred to as the "Agency", in the Agreement. The primary operative provision of the Agreement is cl 4.1 which provides: "4.1 The RTA engages the Agency to provide Maintenance Services on the network of State Roads identified in Schedule 2 according to this agreement." 33 Clause 11 of the Agreement refers to "Maintenance Services". The principal obligation is found in cl 11.1 which provides: "The Agency agrees to perform the Maintenance Services set out in Schedule 4." 34 The definition of "Maintenance Services" in cl 15 is given the meaning: "all of the services provide by the Agency to the RTA under this agreement, including inspection, delivery of the Work Program, audit, benchmarking, performance measuring." 35 The words "Work Program" are defined to mean: "the approved program of routine and specific project maintenance work on the network." 36 Schedule 3 to the Agreement sets out a Program Structure which identifies certain categories of programs and sub-programs. The relevant characterisation for the bitumen reseal project involved in these proceedings is that of the "Infrastructure Maintenance Program" in the "Road Structure" sub-program, with a work type identified as "Periodic". 37 The construction of the contract and the implications of the arrangements under this contract are elucidated by the Recitals to the Agreement: "2.1 The RTA and Councils share responsibility for the management of the roads and traffic system in New South Wales and are committed to a joint consultative approach to the exercise of that responsibility. 2.2 The RTA is accountable to the NSW Government to ensure that it achieves best practice and best value for money in the delivery of all Maintenance Services. 2.3 The RTA wants to work in partnership with the Agency to promote the most cost effective delivery of Maintenance Services. 2.4 The RTA and Councils have an agreed administrative procedure 'Arrangements with Councils for Road Management' (the 'Yellow book') which sets out the administrative framework within which the RTA makes an allocation available to the Agency. 2.5 On a State Road where Council carries out the work, the RTA decides what work is to be done and engages Council to carry out the work. The process is formalised by an agreement referred to in the Yellow Book (Section B). 2.6 The RTA and the Agency therefore enter into this agreement to administer the management, implementation and payment of the Maintenance Services." 38 Of particular significance for the present case is cl 6.1 which provides: "6.1 Where the Agency is a Council, the Agency agrees to administer this agreement according to the requirements in the Yellow Book. However, parts B.03 and B.05 of the Yellow Book describing the RTA's maintenance and use program are replaced by Schedule 3. Of particular relevance to the Agency are: (a) Project Management (Section C) (b) Legal Matters (Section G) (including indemnity, recovery of cost of damage to roads) (c) Financial Arrangements (Section F) (including accounting system and inspection of Records)." 39 It is also material to note cl 6.3 and cl 6.6. These provide: "6.3 The Agency agrees to perform the Maintenance Services; a) in a diligent manner; b) to the standard of skill and care expected of an Agency experienced in the provision of road maintenance services;

… 6.6 The Agency may subcontract any part of the Maintenance services provided the Agency uses tendering practices according to the NSW Government's Code of Practice for the Construction Industry and Code of Tendering for the Construction Industry. Subcontracting does not relieve the Agency from its obligations and liabilities contained in this agreement." 40 The obligation upon the Council to administer the Agreement in accordance with the Yellow Book, as set out in cl 6.1, has a reciprocal obligation in the same terms imposed upon the RTA by cl 7.1: "7.1 The RTA agrees to administer this agreement according to the requirements in the Yellow Book." 41 There are a number of other relevant provisions: "11.3 The Agency agrees that all Maintenance Services will be provided to conform with the appropriate RTA specification or in its absence, the appropriate Australian Standard. 11.4 The Agency is to manage the Maintenance Services by systematically planning, organising, directing, controlling and reporting maintenance activities. The Agency agrees to use a Maintenance Management System that satisfies the RTA Manager. … 11.6 The Agency agrees to manage the maintenance program according to Business Rules in Schedule 3. … 11.13 The Agency is to complete the specific projects listed in Schedule 4 within the scope, time and allocation specified and to the quality required by the RTA. .. 11.15 The Agency is to provide traffic control for Maintenance Services according to RTA's Traffic Control at Worksites Manual, and agrees to immediately follow the directions of the Police."

The said 'Business Rules' are: "1. The Agency must not transfer allocations between programs. Funds allocated to the Infrastructure Maintenance Program must not be spent in the Traffic Management Program or vice versa. 2. The Agency must correctly record the cost and accomplishment of Maintenance Services against the appropriate Maintenance Activity. 3. Council must use the 'Council Payment Invoices' procedure for submission of invoices to the RTA. 4. The 'Management of Restoration and Minor Projects' procedure is to be used for those works where specified. 5. Council is to prepare and keep up to date a bar-chart (or similar) program showing the timing of all RTA funded works." 42 The document referred to as the Yellow Book is more fully described as: Arrangements with Councils for Road Management. 43 The foreword to the Yellow Book states: "Local Government Councils have a major role in the management of roads within NSW and the RTA provides considerable financial and other support to assist in that task. … This manual now provides for an extension of modern working arrangements to all work on State Roads and any other works which the RTA may specifically fund. The new arrangements take into account the Government's aim to reduce administrative complexity and cost, and the need for the RTA to reduce its supervision of Councils and increase Councils' responsibility and accountability for State funds distributed by the RTA. The new Arrangements are not intended to be a mere updating of current procedures. They incorporate modern management techniques for such areas as project management, financial arrangements and contract management. The Arrangements are a blend of conditions which must be followed, guidelines which should be followed and best practice for Councils' information." 44 The foreword is followed by a summary, in an Introduction, of the new arrangements. Relevantly, this section provides: " What are the key elements in the project management based approach? The new arrangements are based on State, Regional and Local Roads as the basic categorisation of roads for administrative purposes and reflect the RTA's shift to take greater responsibility for the strategic management of State Roads. A major feature is the move to improved project management of all works on State Roads carried out by Councils. The approach will also apply to other works by Councils for which the RTA provides a specific allocation. Key principles include: · RTA to determine and fund all programs of work for State Roads. · Council may deliver all or part of a project/program by agreement with RTA (including concept stage). · Council to submit estimates of the full cost of the agreed project/program. … · RTA, when satisfied with the estimate and when funding is available, will accept Council estimate and agree to Council commencing work. · Council will be responsible for adherence to RTA technical standards, where available rather than plans or specifications being approved by the RTA. · Council will be responsible for delivery of project stages to agreed time, cost and quality targets. · Council compliance with technical and financial standards will be monitored by random audit. …" 45 The definitions found in Section A.O1 include the following: " 'State Roads' are a category of roads agreed with Council for administrative purposes. They form the primary arterial network of classified roads in the State and some special purpose classified roads." 46 In Section B, headed "Works Carried Out by Councils", are the following observations: "B.01 LEGAL FRAMEWORK UNDER THE ROADS ACT Who is the Roads Authority? The Roads Act 1993 provides that a roads authority may carry out road work on any public road for which it is the roads authority. A roads authority owns the roads for which it is the roads authority and may regulate traffic, control the carrying out of activities on the road and exercise other functions as conferred by the Act. Section 7 provides that: · The RTA is the roads authority for Freeways. · The Council of a local government area is the roads authority for all public roads within its area other than: any Freeway or crown road and any public road for which some other public authority is declared to be the roads authority. Who decides what works are to be carried out? Under Section 61, only the RTA may make decisions as to what road work is to be carried out on: · Freeways, State Highways and Metropolitan Main Roads or · any other classified road where an agreement has been made under Section 62 for the RTA to exercise the functions of a roads authority, or

the Minister has directed the RTA under Section 63 to exercise the functions of the roads authority. Councils may make decisions over what work is to be done on any other classified road except Tollways and State Works. Who carries out the work? Only the RTA may carry out work on a Freeway, Tollway or State Work. A Council may exercise its functions as the roads authority and carry out works on any other classified road except where the RTA is exercising the functions of a roads authority. The RTA may carry out work on a classified road where the RTA and Council have made a roads agreement under Section 62. … The RTA has a general power under Section 64 by which it may exercise the functions of a roads authority on any classified road irrespective of whether it is the roads authority for that road. … Financial Provisions The RTA and Council may enter an agreement under Section 207 under which the RTA provides financial assistance to a Council to enable it to: · carry out specific road work or specified traffic control work on a specified classified road, or · carry out road work or traffic control work generally. … Application to State and Regional Roads State and Regional Roads are administrative categories that generally operate within the framework of existing legislation as follows: State Roads Within Part 5, Division 3, the following is applicable: · On a State Road under the direct control of the RTA, the RTA decides what work is to be done and carries out the work · On a State Road where a Council carries out the work, the RTA decides what work is to be done and provides funding under a Section 207 assistance agreement, for the Council to carry out the work." [Emphasis added] 47 Section B.02 deals with the "Administrative Arrangement of Funds", noting that: "The RTA makes financial contributions to Councils for carrying out works on certain roads depending on the availability of funds .. [which] are disbursed through the following 3 programs:- · Maintenance Program · Enhancement Program · Use Program." 48 As noted above Section B.03 of the Yellow Book was deleted by cl 6.1 of the Maintenance Agreement. Section C did however apply. Section C.03 was headed "Projects on State Roads" and it provides: "The RTA may commission Council to carry out projects on any State Road. The RTA in consultation with Council will determine projects to be undertaken on those State Roads for which Council carries out work by agreement with the RTA. The RTA in consultation with Council will determine those phases/stages of the project development cycle for which it proposes to engage Council. The RTA may invite Council to prepare estimates to carry out the work as specified by the RTA. The RTA may accept Council's estimate, approve funding and agree on time, cost and quality standards for the project through negotiation with Council. Council will be required to provide the RTA with advice of completion to agreed technical and other quality standards for any given stage of a project before consideration is given to proceeding with the next stage." 49 Section C.07 provides under the heading "Maintenance Programs on State Roads": "The RTA will determine maintenance programs on State Roads in consultation with Council. Where a Council carries out maintenance of a State Road by agreement with the RTA, the RTA will issue a schedule of works which it requires Councils to carry out. The RTA may require Council to provide information to assist in determining the schedule of works. The use of a maintenance management system will be required once Council has been trained in MMS by the RTA. Council will then be required to report to the RTA in MMS format. Councils may use a system other than the RTA's system provided that reporting requirements are met." 50 Of further relevance is Section C.18 under the heading "Administering Minor Contracts". The contract in question in this case between the Council and Pioneer was classified as a "minor contract". Section C.18 provides: "Minor contracts are to be administered in accordance with Council's normal procedures and meet the requirements of the Local Government Act with regard to accountability. Notwithstanding this, all materials used shall conform to the RTA's current technical specifications where available. These specifications may be obtained from the RTA Manager." 51 Furthermore, Section C.19 under the heading "Works-As-Executed Plans" provides: "For works on State Roads, soon after a project is completed, Council should forward to the RTA Manager:- · … · for roadworks - works-as-executed plans of the geometric parameters of the work, signposting and linemarking. The plans are to be appropriately certified by Council's delegate." 52 In Section F, further provision is made in relation to financial arrangements as follows: "F.01 HOW ARE FINANCIAL ALLOCATIONS MADE TO COUNCIL? When is Council advised of financial allocations? RTA Programs for assistance to Council commence at the beginning of the financial year on 1 July. The RTA will give Councils preliminary advice of allocations for annual programs and for new projects and ongoing allocations for continuing projects as soon as possible in the financial year. Allocations will be confirmed after the NSW Government hands down the State budget. State Roads - All Works For those State Roads cared for by Council by agreement with the RTA, the RTA will determine the works to be carried out by Council and allocate the required funds. Council may make submissions for works it recommends to be carried out. … F.02 ACCOUNTING SYSTEM FOR RTA ALLOCATIONS …. RTA allocations may not be used for any purpose other than that for which they are made available." 53 Of particular significance in the present case is the indemnity provision. In Section G "LEGAL MATTERS", the Yellow Book provides: " G.01 Cost of Legal Expenses and Damages Any damages, costs, charges or expenses of any nature whatsoever paid, suffered or incurred by Council in respect of any action, claim, suit or proceeding taken by or against Council in respect of any work, is to be paid or borne by Council and is not to be charged to the cost of the work, and Council is to indemnify and save harmless and keep indemnified the RTA from and against all such damages, costs, charges and expenses."

Contract between the Council and Pioneer 54 The Yellow Book, which governs arrangements between RTA and Councils, also makes express provision for tendering for work to the private sector. Section C.14 includes the following: "Preparing Tender Documents Tender documents are to be based on the RTA's 'Model Specification'. This includes, at present, the National Public Works Conferences (NPWC), Edition 3 (1981), General Conditions of Contract. In addition, works over $1 million should incorporate Quality Systems based on Category B of Australian Standard 2990-1987, Quality Systems for Engineering and Construction Projects. The Model Specification can be obtained from the RTA Manager. It is continuously under review and care must be taken to use the version that is current. Council must be able to certify that the tender documents and plans have been prepared and checked in accordance with recognised quality standards. Calling Tenders Tenders should not be called until the RTA has agreed to the financial commitment involved." 55 The contract between the Council and Pioneer is contained in a document which bears date 13 November 1996 and is described as: "Specification for Sprayed Bituminous Surfacing Works (Quality Assurance Contract)". The executed one page Memorandum of Agreement of that date refers to the Council having called for tenders for a contract according to the Plan Specification Schedule to Specification, and General Conditions annexed thereto and states that Pioneer lodged such a tender, which had been accepted. The Memorandum states: "Now this agreement witnesseth that in consideration of the premises the Contractor hereby agrees to perform the various works required in and about the full and proper completion of the Contract in accordance in all things with the said several annexures hereto." 56 Amongst the documents annexed is a document described as a "Specification" which includes "Part 1 Conditions of Tendering and Information for Tenderers", "Part 3 General Conditions of Contract (for Minor Contract)", "Part 4 Special Conditions of Contract" and "Part 5 Technical Specification". 57 In Part 1 there is a sub-part 1.2, entitled "Conditions of Tendering: RTA Form 403 (November 1990)". That document defines the "Authority" to be the Roads and Traffic Authority of New South Wales. The document makes it clear by insertions that the relevant tender is to be addressed to the Council. 58 In Part 2 there is provision for a "Tender Form". That form is RTA Form 403 which is headed with the name of the Roads and Traffic Authority of New South Wales and with the sub-heading "Minor Contract Tender". An attachment outlines the terms of the particular project in issue in these proceedings. 59 Part 3 is "General Conditions of Contract (for Minor Contract)" and contains what is described as "RTA Form 404 (February 1991) General Conditions of Contract (for Minor Contract)" and "Annexure to General Conditions of Contract". RTA Form 404 is the contract form linked to RTA Form 403 (the tender form), in each case for what is described as a "Minor Contract". The General Conditions are also headed with the name of the RTA. 60 Part 5 entitled "Technical Specification" relevantly contains Pt 5.1 "Job Specific Requirements" and Pt 5.3 "Traffic Control". 61 Part 1, the "Specification", includes the following relevant clauses: "1.1.1 Description of Work The Contract is for sprayed bituminous surfacing works in the Evans Shire Council area." 1.1.3 Scope of Work The Contract is for all aspects of sprayed bituminous surfacing work and includes:- (a) Assessment and pre-treatment of the existing pavement. (b) Design of bituminous surfacing in accordance with binder type and aggregate type and size nominated by the Superintendent. (c) Supply, spray primer, primer binder and binder -Class 170 bitumen (including adhesion agent where required and preparation of surface). (d) Supply, incorporate and spray cutter oil in primer, primer binder or binder. (e) Supply, and apply aggregate pre-coating material only as directed by the Superintendent. (f) Control of traffic and erection of signposting. (g) Maintain road free of loose stone ." [Emphasis added] 62 Clause 1.1.5 is headed "Particulars to be Submitted by the Tenderer". Amongst those particulars are: "(e) The proposed equipment and method for control of traffic and signposting of the work." 63 Clause 1.1.7 under the heading "Assessment of Tenders" states relevantly: "Conforming tenders will be evaluated on the following criteria: · the tendered rates or prices and total amount. · the tenderer's ability to complete works of the quality specified within the contract period. · the tenderer's safety, industrial relations and performance records." [Emphasis added] 64 By cl 1.1.9 under the heading "Summary - Checklist for Tenderers" one of the matters that is required is stated to be: "Complete Tender Form (RTA Form 403)". 65 RTA Form 403 is required to be used with RTA Form 404 which contains the "General Conditions of Contract". 66 The relevant clauses of the General Conditions are: "15 Protection of Persons and Property The Contractor shall: (a) provide, erect and maintain all barricades, guards, fencing, temporary roadways and footpaths, signs and lighting; and (b) provide watchmen and traffic flagmen lawfully required by any public, municipal or other authority and by the Superintendent or necessary for the protection of the Works or of other property or for the safety and convenience of the public and others and shall remove the same when no longer required. [Emphasis added] … 18 Property Damage and Public Risk The Contractor shall indemnify the Principal against all loss of or damage to the property of the Principal (other than the Works but including existing property on which the works are being carried out) and against any claim or action brought by any person against the Principal or his agents in respect of personal injury or death of any person or loss of or damage to any property arising out of the construction of the Works by the Contractor. 19 Public Liability Insurance Before commencing work under the Contract the Contractor shall at his cost effect a Public Liability Policy of insurance, for an amount not less than the sum stated in the Annexure hereto and with an Insurer approved by the Principal, in the joint names of the Principal, the Contractor and all sub-contractors employed from time to time in relation to the Works for their respective rights and interests to cover their liabilities to third parties including the liabilities set down in Clause 18. 20 Accident or Injury to Employees The Contractor shall indemnify the Principal against liability for all loss or damage resulting from personal injury to the Contractor or his agents occurring during the execution of the Works, except such injury resulting from breach of the Contract by the Principal or his negligent act. 21 Insurance of Employees The Contractor shall at his own cost insure and keep insured his workmen under an Insurance Policy pursuant to the Workers Compensation Act, 1987. The policy of insurance under this clause shall cover the Principal's liability at common law and shall be effected with an insurer approved by the Principal." 67 The identification of the scope of work in the Conditions of Tender, which I have quoted above, is repeated in Pt 5 of the contractual documentation under the heading "5.1 Job Specific Requirements" which included as pars 5.1.3(f) and (g) under the heading "Scope of Work", subclauses in identical terms to pars 1.1.3(f) and (g) (see par [61]). 68 Part 5.3 under the heading "Control of Traffic" contains the following provisions: "5.3.1 General The work to be executed under this part of the Specification consists of all work necessary to provide for the safe movement of traffic and the protection of persons and property through and/or around the worksite. … 5.3.2 Control of Traffic Traffic control shall be in accordance with RTA specification Part G10 - Control of Traffic, a copy of which forms annexure 5E to this Part and with AS 1742.3 - 1985, which together are to be considered as the minimum requirements for traffic control. The Contractor shall provide a Traffic Control Plan to the Superintendent at least five (5) working days prior to any proposed work. The Traffic Control Plan shall provide that, at each end of each work site, the contractor shall supply, erect and maintain temporary reflectorised warning and Road work Speed Zone signposting required during sealing operations and until all risk of flying stones has passed. The Contractor shall also supply, erect and maintain 'Windscreen Damage' - Pictorial (T3-9) signs at intervals not greater than 1 kilometre apart, and at crests of hills through each work site for traffic in both directions. Council shall supply, erect and maintain such other signs as are required to be left in position until the work is delineated." 69 The "Superintendent", specified earlier in the documentation in an annexure to the General Conditions, was the Director of Engineering Services of the Council. 70 The RTA Specification G10 is a printed form headed "Control of Traffic". It includes the following clauses: "1.1 Extent of Work The work to be executed under this Specification consists of all work necessary to provide for the safe movement of traffic and the protection of persons and property through and/or around the work site. The extent of work includes the design, construction, maintenance and removal of temporary roadways and detours, the provision of traffic controllers, signposting, roadmarkings, raised pavement markers, lights, barriers and any other items required. All temporary traffic arrangements required by works under this Contract are included under this Specification except where specified otherwise. Control of traffic shall be in accordance with AS1742.3, this Specification, and the Drawings. Wherever the word 'should' occurs in AS1742.3 the word 'shall' applies and the required action is the Contractor's responsibility." 71 Table 4.2 of AS1742.3 is entitled "Guide to the Selection of Speed Limit of Roadworks". The guide provides for roads in rural areas where "a fresh bituminous seal has just been laid" is 60 km/h. 72 Clause 1.3 is concerned with the Traffic Control Plan. It provides in part: "The plan shall include: .. (c) A signpost layout plan showing: (i) location, size and legend of all temporary signs; (ii) temporary regulatory signs and temporary speed zones; and (iii) all traffic control devices such as temporary traffic signals, linemarking, pavement reflectors, guideposts, guardrail, barrier boards etc." 73 Clause 1.7 on the subject of "Temporary Speed Zoning" is of particular significance: "Where a temporary speed limit has been approved, in accordance with Clause 4.1, the Contractor shall arrange for the supply of appropriate temporary speed zoning signs, including posts and fittings, for erection. Where and when directed by the Superintendent, the Contractor shall erect these signs, cover the signs when the speed zone is not in use and remove the signs when the speed zone is no longer required as part of the provision for traffic. A diary recording operation times of the speed zone shall be kept by the Contractor. All costs associated with temporary speed zoning signposting shall be borne by the Contractor." 74 Clause 4.1 to which reference is made is in the following terms: "4.1 Regulatory Traffic Control Devices A Regulatory Traffic Control Device shall be as defined in clause 1.4.7 of AS 1742.3, and shall require approval by the appropriate authority before its erection. This approval shall be obtained through the Superintendent. The Contractor shall apply for approval in writing at least six weeks before the Regulatory Traffic Control Device is intended to be used." 75 Finally cl 4.5 states: "4.5 Signs Signs shall be designed and manufactured in accordance with AS 1743. Details of each letter shall be as shown in AS 1744." 76 RTA Form 403 and "General Conditions" refers to the RTA as the relevant authority and on occasions as the "Principal". It was plain that the parties adapted this contract to their own use. In the General Conditions the word "Principal" was defined to mean the RTA. An issue arose in these proceedings as to whether or not particular reference to "Principal" was a reference to the Council or to the RTA. Wood CJ at CL concluded that the word "Principal" in the General Conditions was a reference throughout to the Council which, only as a matter of convenience, adopted a standard form for contracts of this character prepared by the RTA in its own name. It was adopted for purposes of a particular Council with the intention that the specific definition of "Principal" contained in the standard form did not apply. 77 This is plainly a bipartite contract with a particular person appointed as Superintendent, being the representative of one of the contracting parties. Only two parties have contractual rights and obligations. Amongst the rights and obligations of the Principal are the following: · The right to appoint the Superintendent (cl 2(xi)). · The obligation to pay the Contractor (cl 3(b)). · The right, upon forfeit, to the security deposit lodged with itself (cl 5). · The right to submit for execution the form of Agreement (cl 6). · The right to nominate sub-contractors (cl 10). · The right to approve the insurer for the works and for public liability insurance, which insurance must be taken out in the joint names of the Principal, the Contractor and sub-contractors (cl 17 and cl 19). · The right to be indemnified against loss or damage including loss or damage to the property of the Principal (cl 18). 78 There is no room in this bipartite arrangement for a third party. Either the Council is the "Principal" or the RTA is the "Principal". There is no doubt from the covering document that it is intended that the contracting party be the Council.

Issues in the Appeal 79 The primary issue between the Appellants and the Plaintiff was causation. Similar matters arose with respect to the contributory negligence alleged. The Appellants also challenged his Honour's findings on life expectancy which are of considerable significance in the calculation of damages. 80 Important issues arose amongst the Appellants. The RTA challenged the finding that it owed a duty of care to the Plaintiff. The other parties sought to uphold that finding. This issue will require careful consideration of the statutory scheme and of the arrangements between the RTA and the Council. 81 The Council and the RTA challenged his Honour's alternative causation finding that there should have been an Armco guardrail in place. In addition to its significance on the issue of causation, this is a matter which may affect contribution, because Pioneer was not involved in this breach. 82 The proper construction and applicability of indemnities by Pioneer to the Council and by the Council to the RTA were also in issue, as were his Honour's conclusions on contribution between the parties based on a finding of liability in the RTA limited to vicarious liability. Finally, at a late stage, the Council sought to amend its grounds of appeal to pursue a claim for damages for breach of contract against Pioneer.

Causation 83 A number of possible causal mechanisms for the accident were considered during the course of the proceedings before Wood CJ at CL. His Honour summarised the possibilities in the following way: "[68] The possibilities which were variously explored with the experts can ultimately be reduced to the following: a) loss of traction on the left horizontal curve, caused by the presence of loose gravel, in a turn with the radius and camber which it possessed;

b) error on the plaintiff's part through inattention, distraction, or insufficiently precise steering, which allowed her vehicle to drift too far out to the right over the centre line as she took the curve, to which she responded by steering to the left in order to get back onto the correct side of the road, followed by overcorrection, which reaction initiated instability and loss of traction and control;

c) contact with some discontinuity in the road surface which caught a wheel and initiated a yaw, to which there was then an over correction; d) an intermediate possibility in which the broken back nature of the turn was the catalyst for the turn being slightly tighter than the plaintiff had reasonably expected, for which there was no capacity for accommodation, because of the reduced friction due to the gravel on the roadway.

e) error on the part of the plaintiff in putting her nearside front wheels into the gravel shoulder on the eastern side of the corner, followed by over-correction to get out of the gravel, leading to a loss of traction and control." 84 Two of these five possibilities involved error on the part of the Plaintiff. His Honour rejected both of them. 85 As to the error alleged that the front wheels strayed on to the gravel shoulder to the left of the car, his Honour rejected this as a possibility on the objective facts (see pars [34]-[43] and [69]). There was no challenge to this factual finding in the appeal. 86 The other error on the Plaintiff's part which was raised, i.e. inattention, distraction or other inadequacy, was also rejected by his Honour. It remains a live issue on the appeal on the basis that such was an alternative explanation for the accident. It was said that inattention, distraction, etc. could have been caused by any one of a number of unknown phenomena. Accordingly, it remained as a possible cause to a degree that prevented a finding, on the basis of the balance of probabilities, that the accident had been caused by any fault attributable to any Appellant. 87 By reason of the Plaintiff's difficulty in giving precise evidence of the cause of the accident - a not infrequent occurrence, for example, in the case of compensation to relatives claims or, as was the case here, inability to recall the precise sequence of events - the relevant findings depended on a process of inference in a case which was, substantially, circumstantial. Wood CJ at CL referred to the approach to making findings of this character in Luxton v Vines (1952) 85 CLR 352 at 358; Holloway v McFeeters (1956) 94 CLR 470 at 480-481; Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 161-162; and Trevali Pty Limited v Haddad NSWCA, 16 November 1989. 88 His Honour approached the issue of causation in four distinct ways: (i) In the case of a particular hazard that has been created and which comes to pass, an inference of causation would be drawn unless there is reason to the contrary (see pars [160]-[168]).

(ii) In the alternative to (i) that on the balance of probabilities the cause of the accident was the combined effect of the gravel and speed (pars [169]-[186]).

(iii) If the initial loss of control of the vehicle had been caused by some other factor the presence of the gravel prevented the Plaintiff from regaining control of the vehicle (pars [187]-[189]).

(iv) In the further alternative, failure to install an Armco guardrail was negligent and would have prevented the substantial injuries which the Plaintiff suffered (pars [194]-[197]). 89 The first way in which his Honour established the causal link was based on the reasoning of judgments which suggest that an inference of causation is available "in the absence of any sufficient reason to the contrary", to use the formulation of Dixon J in Betts v Whittingslowe (1945) 71 CLR 637 at 649. See Bennett v Minister of Community Welfare (1992) 176 CLR 408 at 420-421; Chappel v Hart (1998) 195 CLR 232 at 244 per McHugh J; Naxakis v Western General Hospital (1999) 197 CLR 269 at [127]. This method of closing evidentiary gaps or, as it is sometimes described, shifting the onus, has been further developed by the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2002] 3 WLR 89; see Jane Stapleton, "Lords a'leaping evidentiary gaps" (2002) 10 TLJ 276. 90 I do not find it necessary to decide the case on this basis. I agree with his Honour's conclusion that the cause of the accident was the combined effect of the gravel and speed. It appears that no-one turned their mind to the need for temporary speed signs on the relevant section of the road. In view of the additional hazard created by the gravel, this was a clear breach of the duty of care on the part of both Pioneer and the Council for the reasons given by Wood CJ at CL. 91 It is the case, as the Appellants submitted, that there was no evidence excluding some other causal mechanism, specifically inattention by, or distraction of, the driver. The submissions descended to suggesting that perhaps a bee had flown into the car. All of this was pure speculation. 92 There was virtually no objective evidence about the loss of control. There were skid marks on the road but they commenced well after the point at which control was lost. One of the experts attempted to draw inferences from some marks on the road at about the point of loss of control. This evidence was based on photographs and his Honour correctly rejected it as inconclusive. 93 No expert had an opportunity of inspecting the site at the time of the accident. The opinion evidence could not be based on marks on the road or on the gravel at or about the point at which the loss of control occurred. This did not deter the experts from engaging in wide-ranging speculation about causes which was of limited, if any, assistance to the Court. Much of the evidence contained elaborate statements of the obvious and often travelled well beyond any area of expertise, e.g. evidence about what statements by accident victims usually contain. 94 Expert evidence was adduced to the effect that drivers sometimes do not obey speed advisory signs. Such evidence is of no assistance. 95 The Respondent could, as I have shown, give only limited evidence about the chain of events. However, the last thing she could remember was that, at some point shortly after she encountered the gravel, when travelling under the 75 km/h signposted limit, and as she began to round the bend, she recalled the steering wheel pulling to the left. The overwhelming probability was that this was caused by the wheels of the car drifting to the right. This occurred at a bend where there was a substantial quantity of loose gravel. On the balance of probabilities the proper inference was that the initial displacement of the tyres was occasioned by the combined effects of speed, the curvature of the road and the loose gravel. The loss of control followed in a manner not capable of rectification by an ordinary driver, as the experts set out in their evidence. 96 His Honour found that if there had been an advisory sped sign of 55 km/h, the Plaintiff would have reduced her speed to a point where she would not have lost control of her vehicle: [182]. It was open to his Honour to so conclude, particularly in view of the Plaintiff's express evidence that she was travelling at a speed less than the advisory sign. 97 In my opinion, there was no evidentiary gap on the issue of causation. The Respondent's evidence about the movement of the steering wheel, in all the circumstances of the case, established the requisite causal connection. The Appellants' contentions in this respect should be rejected. 98 Furthermore, in view of the conclusion on causation and his Honour's finding that she would have reduced her speed but for the 75 km/h speed sign, there is no basis for the challenge to his Honour's rejection of the Appellants' submission that the Respondent was guilty of contributory negligence. She had no notice of the gravel and the road works which, in the absence of the sign, may have required her to consider reducing her speed. The existence of the sign, which she said she obeyed, meant that she did not fail to have proper regard to her safety. 99 A material finding of fact which his Honour made was based on the evidence of an eye witness, who was driving on the road behind the Plaintiff. His Honour found that the Plaintiff's speed at the second bend was "somewhat above 60 km/h and somewhat less than … 75 km/h" (par [180]). Although the eye witness referred to her speed at the first bend, he gave a range which his Honour accepted as likely to be applicable at the critical second bend. This finding was open to his Honour. 100 The Council's submission sought to combine this observation by the eye witness with the Plaintiff's evidence that she slowed down after encountering the gravel, to suggest that she had slowed down to a safe speed of 55-60 km/h. This is speculation. His Honour's finding of fact was open. 101 Later in his Honour's reasons, his Honour made a finding that the 75 km/h speed sign was excessive even in normal driving conditions. This finding was not part of his Honour's consideration of causation. As noted above, the Plaintiff had frequently driven on this stretch of road and may well have experienced the difficulty in negotiating the second bend to which other local drivers testified. Issues of contributory negligence may well have arisen if his Honour's relevant finding on causation was not based on the interaction of speed and the gravel. They do not, however, arise.

Life Expectancy 102 Prior to the accident, the Respondent suffered from neurofibromatosis, Type 2 ("NF2"). The difficulty in determining life expectancy for the purposes of calculation of damages arose from the existence of this prior condition and the interaction between that condition and the tetraplegia which the Plaintiff suffered as a result of the accident. 103 NF2 is an inherited disorder which results in development of benign tumours, particularly vestibular schwannoma and falx meningioma, a form of tumour in the brain. These created threats to the Respondent's life. Prior to the accident the Plaintiff had undergone surgery on several occasions. One such procedure involved the removal of a vestibular schwannoma. 104 Wood CJ at CL made the following findings: "[458] Although there were some uncertainties in relation to the plaintiff's history, it would appear that it encompasses the following events, so far as her condition of NF2 is concerned: (a) discovery in 1985, at the age of about ten years, of a subcutaneous extradural tumour at the base of the neck above the clavicle, measuring 5cms by 6cms, with an intraspinal extradural component, and also an extradural lesion at T8; (b) removal, in June 1988 of the C7 dumbbell shaped tumour, involving a hemi laminectomy at which time a left sided vestibular schwannoma/acoustic neuroma was noted on MRI scan; the neck lump was also removed later that month; (c) surgery by Dr Besser, on 10 August 1989, for removal of the left side schwannoma which was in fact intracanicular rather than vestibular (resulting in some hearing loss on that side); (d) surgery, on 9 September 1995, to remove a neuroma at the C1 level, involving a laminectomy; (e) the subsequent discovery, although before the accident, of a small right vestibular schwannoma (acoustic), of a meningioma in the falx (membrane behind the brain) and of schwannomas on the 3rd and 5th cranial nerves; (f) following the accident, the CT scans revealed that the right vestibular schwannoma and the meningioma in the falx were in the order of 1.5cm in diameter, and that the schwannoma remained intracanicular." 105 A body of expert evidence was called as to the life expectancy of a person suffering from NF2 and about the interaction between NF2 and tetraplegia. Wood CJ at CL referred to the evidence of Professor Yeo, to which I will further refer below, about studies of high level quadriplegia. His Honour accepted the evidence that the Plaintiff would have a life expectancy of sixty-eight years, equivalent to a further forty-one years of life. The issue then arose as to what, if any, allowance should be made for the prior condition of NF2. His Honour outlined the conflicting evidence in this regard, to which I will further refer below, and concluded that there should be a small reduction in life expectancy from sixty-eight years to sixty-five years. 106 Dr Yeo's evidence, which his Honour accepted, was computed by multiplying the remaining years of the normal life expectancy of a woman of the Plaintiff's age by seventy-five percent. It was on this basis that he had arrived at a figure of sixty-eight years which his Honour used as a starting point. The submission of the Appellants was that his Honour approached the task by starting in the wrong place. Another expert, Professor Evans, gave opinion evidence to the effect that the average life expectancy for a sufferer of NF2 was, coincidentally, sixty-eight years. The submission of the Appellants was that his Honour ought to have adopted this figure as a starting point and applied the seventy-five percent, derived from Dr Yeo's evidence, to it, "to give a life expectancy of a further 30.75 years to age 57". 107 His Honour set out the evidence of Professor Evans, who was called by the Plaintiff, including his evidence that the survival of NF2 sufferers had improved over time to sixty-eight years. His Honour concluded at [483] that Professor Evans' reasoning was "generally persuasive". His Honour did not, however, use Professor Evans' figure of sixty-eight years as the starting point of his calculation. 108 The Appellants submitted that his Honour ought to have started with the figure for the average life expectancy of NF2 sufferers because the Plaintiff was known to suffer the condition. Instead of doing so his Honour began with the life expectancy of all members of the community and reduced it by multiplying that life expectancy by seventy-five percent, in order to take into account the effects of the tetraplegia. The primary thrust of the Appellants submissions was that the starting point should not have been a life expectancy for an average member of the community discounted by the effects of tetraplegia. Rather, where, as here, a specific condition is known, the starting point should have been the life expectancy of persons with that condition and it is to that figure that the figure of seventy-five percent should have been applied. 109 Counsel for Pioneer gave the example of a person who was known to be suffering from a liver cancer which was expected to prove to be fatal in the short term. It would not be correct in such a case, where there was a supervening accident, to assess life expectancy on the basis of the life expectancy of a normal member of the community multiplied by the seventy-five percent with a "discount", as it were, for the liver cancer. 110 The Appellants accepted that his Honour attempted to combine the effect of the two conditions, but submitted that he failed to properly take into account the evidence which was statistically based and was sufficiently robust to support a direct arithmetic application of the seventy-five percent figure to the unchallenged evidence as to the life expectancy of an NF2 sufferer. 111 The difficulty in applying these two sets of statistics is that they do not allow for the effects of interaction between the two conditions. There was evidence of such interaction from Professor Evans which was summarised by Wood CJ at CL in the following way: "[473] … [T]he prognosis depended upon the rate at which the tumours grew, which was not altogether predictable. He observed that their rate of growth tended to slow with age, and he speculated that the plaintiff's tetraplegia, with the accompanying reduction in activity and metabolic rate, may in fact turn out to be an advantage. Similarly, he thought her risks of early death, from the condition, were reduced by the exceptional nursing care which she was receiving and by the fact that she was being suctioned and ventilated, since the common causes of death in NF2 patients were events such as pneumonia, suppressed respiration, and falls from the loss of balance, which is typically associated with an impingement upon, or surgery affecting, the 8th cranial nerve. [474] So far as future contingencies are concerned, he accepted that the plaintiff's NF2 was likely to impact upon her condition, so far as she was likely to lose either wholly or partially her hearing, and so far as she could have problems with balance, although bilateral surgery on the acoustic schwannoma would tend to equilibrate that situation. Additionally, he accepted that her condition of tetraplegia increased the risks of her developing peri-operative thrombosis and pulmonary emboli (through her inability after surgery to exercise and move around)." 112 Professor Yeo, who worked at the spinal injuries unit at Royal North Shore Hospital in Sydney, was acknowledged as an expert on the effects of spinal cord injuries, including tetraplegia. He admitted in the course of his cross-examination that he was not in possession of any information particularly relating to reduced life expectancy of the Plaintiff as a result of the pre-existing NF2. He was challenged on the basis that the computation of seventy-five percent should be applied to a likely life expectancy of a sufferer of NF2, rather than to a person not suffering from such a condition. He gave the following evidence: "Q But you made no allowance whatsoever that the neurofibromatosis might reduce her life expectancy absent the tetraplegia? A With my knowledge of that condition and with my knowledge of tetraplegia which you will appreciate the combination of those two problems together is very uncommon and therefore, one is only in fact my estimate is based on that knowledge and it was not, it was not necessary, in my opinion, to discount this patient any further than the seventy-five percent that I had anticipated that she would live from the day in which I made that estimate and from today now." 113 Professor Gareth Evans is consulting geneticist at the regional genetic service at St Marys Hospital in Manchester, UK. He is recognised as a world wide expert on neurofibromatosis. In his report, the ultimate conclusion was: "In summary, with expert medical/surgical attention and even possibly without surgical intervention I believe [the Plaintiff's] life expectancy as a ventilated quadriplegic will not in all probability be further reduced by her NF2." 114 A number of factors led Professor Evans to maintain that no further reduction to the Plaintiff's life expectancy, from the mean age of sixty-eight for sufferers of NF2, should be applied by reason of the Plaintiff's tetraplegia. The Plaintiff suffered from the disease only in the mild to moderate range and the gene fault causing the NF2 was not an aggressive version. He gave evidence that the ventilation would, if anything, be likely to assist the Plaintiff because of the level of care she would receive and her inertia would counteract some of the common causes of early death in NF2 patients, e.g. difficulty swallowing or breathing and infections such as pneumonia. Similarly, the Plaintiff was unlikely to suffer an accident due to decreased balance. In conclusion the following appeared in the course of his examination: "Q Taking all these factors into account is there any reason in your view to reduce the life expectancy below the mean age of sixty-eight? A The only reason to do that from the NF2 point of view would be if you were to say we are going to do absolutely nothing about her tumours if they get to a point where they are causing problems. Q Can I ask you to assume good treatment for the rest of her life? A Then you shouldn't be reducing it from … sixty-eight." 115 Both Professor Yeo and Professor Evans were called as witnesses for the Respondent. The Appellants' expert witness on the subject of NF2 was not accepted and no attempt was made to rely on his evidence in this Court. The Appellants adopted the stance that as a matter of logic one can combine part of the evidence of Professor Yeo with part of the evidence of Professor Evans, in order to reach a conclusion which both of them rejected. 116 By reason of their divergent specialisations, Professors Yeo and Evans approached the issue of life expectancy from opposite directions. The evidence of each happened to coincide at the life expectancy of sixty-eight, but that was only a coincidence. Each also was of the opinion that the other condition, namely the condition in which they had no special expertise, would not materially affect the conclusion that they had reached. His Honour did not wholly accept either view. 117 The life expectancy of sixty-eight reached by both Professor Yeo and Professor Evans was based on a statistical analysis leading to an actuarial result. In neither case does it provide the kind of absolute platform which a trial judge is, as a matter of logic, required to apply to the circumstances of any case. His Honour's task was to assess the life expectancy of the Plaintiff for the purposes of computing the damages that he ought award. There was no obligation in logic to begin, as the Appellants contend, with the particular actuarial estimate of a life expectancy of sixty-eight years for a sufferer from NF2. His task was to assess the whole of the evidence, which included evidence of the existence of synergy between the two conditions, in terms of their combined effect on this particular Plaintiff's life expectancy. Notwithstanding the expert evidence to the contrary, his Honour nevertheless made an allowance for both conditions. I can see no error.

Duty of Care - Gravel and 75 km/h Sign 118 The RTA challenged the finding that it owed a duty of care to the Plaintiff. The starting point for determining this issue is the decision of the High Court in Brodie v Singleton Shire Council (2001) 206 CLR 512. In the joint judgment of Gaudron, McHugh and Gummow JJ, their Honours said: "[150] … Authorities having statutory powers of the nature of those conferred by the [ Local Government] Act upon the present respondents to design or construct roads, or carry out works or repairs upon them, are obliged to take reasonable care that their exercise of or failure to exercise those powers does not create a foreseeable risk of harm to a class of persons (road users) which includes the plaintiff. Where the state of a roadway, whether from design, construction, works or non-repair, poses a risk to that class of persons, then, to discharge its duty of care, an authority with power to remedy the risk is obliged to take reasonable steps by the exercise of its powers within a reasonable time to address the risk. If the risk be unknown to the authority or latent and only discoverable by inspection, then to discharge its duty of care an authority having power to inspect is obliged to take reasonable steps to ascertain the existence of latent dangers which might reasonably be suspected to exist." 119 The particular duties of a road authority referred to in this passage are an application to a particular case of the general principles discussed earlier in the judgment under the heading "Negligence and statutory powers". "[102] … [T]he powers vested by statute in a public authority may give it such a significant and special measure of control over the safety of the person or property of citizens as to impose upon the authority a duty of care. This may oblige the particular authority to exercise those powers to avert a danger to safety or to bring the danger to the knowledge of citizens otherwise at hazard from the danger. In this regard the factor of control is of fundamental importance. [103] It is often the case that statutory bodies which are alleged to have been negligent because they failed to exercise statutory powers have no control over the source of the risk of harm to those who suffer injury. Authorities having the control of highways are in a different position. They have physical control over the object or structure which is the source of the risk of harm. This places highway authorities in a category apart from other recipients of statutory powers." [Footnote omitted.] 120 Furthermore, their Honours went on to state: "[140] … The powers vested by the [ Local Government ] Act in the respondents gave them a measure of control over the safety of the person or property of citizens which was significant and exclusive. In general, road users in New South Wales are not empowered to manage or change the features of public roads. Without the consent of the relevant authority, a person must not erect a structure or carry out work in, or over, a public road, dig up or disturb its surface or remove or interfere with a structure, work or tree upon it. The result, as indicated earlier in these reasons under the heading 'Negligence and statutory powers', is that the powers vested in road authorities give them a significant and special measure of control over the safety of the person and property of road users. This may make it incumbent upon the authority to exercise its powers, whether by averting the danger to safety or by bringing it to the notice of persons in the situation of the plaintiff. In Pyrenees Shire Council v Day ((1998) 192 CLR 330), the powers of the appellant were in this category." [Footnotes omitted.] 121 With respect to the issue of control, the joint judgment referred to Burnie Port Authority v General Jones Pty Ltd (1992) 179 CLR 520 at 551-552. In that part of the joint judgment in Burnie Port Authority, the Court was dealing with the issue of non-delegable duty and gave particular attention to the interaction between the control exercised, relevantly, by someone who had undertaken inherently dangerous activities on his or her property, and the vulnerability of persons outside the premises. 122 The central significance of control in a statutory context such as the one under consideration in the present case, has been emphasised in the most recent relevant judgment of the High Court, Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54. In that case a number of persons had contracted Hepatitis A from oysters contaminated by human faeces. The contamination occurred as a result of run-off which entered Wallis Lake after heavy rainfall. The defendants were the producers and distributors of the oysters (Barclay), the State Government (on the basis of its responsibility to control the oyster industry and environmental quality generally) and the Great Lakes Council (on the basis of its responsibility for the lake environment). 123 The High Court determined that in the particular circumstances of that case, neither the State nor the Council owed a duty of care. Gummow and Hayne JJ delivered a joint judgment with which Gaudron J relevantly agreed (at [58]). Their Honours said: "[149] An evaluation of whether a relationship between a statutory authority and a class of persons imports a common law duty of care is necessarily a multi-faceted inquiry. Each of the salient features of the relationship must be considered. The focus of analysis is the relevant legislation and the positions occupied by the parties on the facts as found at trial. It ordinarily will be necessary to consider the degree and nature of control exercised by the authority over the risk of harm that eventuated; the degree of vulnerability of those who depend on the proper exercise by the authority of its powers; and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute … [150] The factor of control is of fundamental importance in discerning a common law duty of care on the part of a public authority. It assumes particular significance in this appeal. This is because a form of control over the relevant risk of harm, which, as exemplified by Agar v Hyde ((2000) 201 CLR 552 at 562 [16], 564 [21], 581-582 [81]-[83]), is remote, in a legal and practical sense, does not suffice to found a duty of care. [151] In Brodie , the Council exercised physical control over the condition of the road which it was empowered by statute to maintain and which themselves constituted the direct source of harm to road users ((2001) 206 CLR 512 at 558-559 [102]-[103], 573-574 [140]). The council's measure of control over the safety of the person or property of citizens was 'significant and exclusive'. ((2001) 206 CLR 512 at 573-574 [140]). So, too, the fact of control over, and knowledge of, land or premises has been significant in identifying the duty of care owed to users of land or premises by a statutory authority which controls and manages that land or premises. Again in Pyrenees Shire Council v Day ((1998) 192 CLR 330), the Shire held a significant and special measure of control over the safety from fire of persons and property at the relevant premises. That degree of control was the touchstone of the Shire's duty to safeguard others from the risk of fire in circumstances where the Shire had entered upon the exercise of its statutory powers of fire prevention and it alone among the relevant parties knew of, and was responsible for, the continued existence of the risk of fire." [Some references omitted.] 124 Their Honours went on to consider the liability of the Great Lakes Council and said: "[152] The Council in the present appeal, by contrast, exercised a much less significant degree of control over the risk of the harm that eventuated. At no stage did the Council exercise control, let alone significant or exclusive control, over the direct source of harm to consumers, that is, the oysters themselves. It may be that the predominantly land-based sources of pollution were all ultimately subject to Council control. That, however, is the start, not the end, of the inquiry. Control over some aspect of a relevant physical environment is unlikely to found a duty of care where the relevant harm results from the conduct of a third party beyond the defendant's control. … What is significant here is the extent of control which the Council had over the risk of contaminated oysters causing harm to the ultimate consumer; control in that sense is not established by noting the Council's powers in respect of some or most of the sources of faecal pollution. [153] As Lindgren J observed in the Full Court, the relationship between the Council and the oyster consumers is indirect; it is mediated by intervening conduct on the part of others. Between the Council on the one hand and the oyster consumers on the other, their stands, in the present case, an entire oyster-growing industry comprising numerous commercial enterprises, each of which, in pursuit of profit, engages in conduct that presents an inherent threat to public safety. That threat arises from the insusceptibility of oysters to effective and reliable tests to identify contamination of the type that eventuated here. [154] In broad terms, the Council's statutory powers enabled it to monitor and, where necessary, to intervene in order to protect, the physical environment of areas under its administration. However, the conferral on a local authority of statutory powers in respect of activities occurring within its boundaries, does not itself establish in that authority control over all risks of harm which may eventuate from the conduct therein of independent commercial enterprises. … The conduct of the Council did not 'so closely and directly [affect]' oyster consumers so as to warrant the imposition of a duty of care owed by the former to the latter (cf Agar v Hyde (2000) 201 CLR 552 at 579 [70]). There were 'too many intervening levels of decision making' between the conduct of the Council and the harm suffered by the consumers (cf Agar v Hyde (2000) 201 CLR 552 at 581 [81]). As the trial judge noted, the Council had no direct responsibility for the operation of the oyster industry or the quality or safety of Wallis Lake oysters. It did not control the process by which commercial oyster growers cultivated, harvested and supplied oysters, nor the times or locations at which they did so. The Council has not been given, by virtue of its statutory powers, such a significant and special measure of control over the risk of danger that ultimately injured the oyster consumers so as to impose upon it a duty of care the breach of which may sound in damages at the suit of any one or more of those consumers." [Some references omitted.] 125 This last sentence, being the ultimate finding of the joint judgment in the Barclay Oysters case, has a relevant parallel in the present proceedings, as do some other formulations in the above extract. However, the last is particularly apt. Does the RTA have "by virtue of its statutory powers, such a significant and special measure of control over the risk of danger that ultimately injured [the Plaintiff] so as to impose upon it a duty of care"? 126 Each of the other judgments in Barclay Oysters made reference to control elements in different way. It is unnecessary for present purposes to set them out. It is appropriate however to note the observations of McHugh J: "[81] Ordinarily, the common law does not impose a duty of care on a person to protect another from the risk of harm unless that person has created the risk. And public authorities are in no different position. A public authority has no duty to take reasonable care to protect other persons merely because the legislature has invested it with a power whose exercise could prevent harm to those persons. Thus, in most cases, a public authority will not be in breach of a common law duty by failing to exercise a discretionary power that is vested in it for the benefit of the general public. But if the authority has used its powers to intervene in a field of activity and increase the risk of harm to persons, it will ordinarily come under a duty to take care." [Footnotes omitted.] 127 His Honour's judgment primarily referred to the circumstances of the case which concerned what his Honour described as "an affirmative duty of care", i.e. a duty in which non-feasance would be a breach, as the joint judgment in which his Honour participated in Brodie established. His Honour also identified a list of relevant questions in the context of establishing a duty of care on a public authority that his Honour had formulated in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 at 39 [93], one of which questions he described (at [84] of Barclay Oysters) as: "Was the authority in a position of control and did it have the power to control the situation that brought about the harm to the injured person?" 128 In Barclay Oysters McHugh J went on to further consider the element of control and explained Crimmins in part in the following way at [94]: "But most important of all, the Authority had used its powers to direct waterside workers to places of work that contained reasonably foreseeable risks of injury to the workers. This last point alone was sufficient to create a duty of care although the case was not conducted on that basis." 129 With respect to the alleged duty of the Council in Barclay Oysters his Honour said: "[99] … There was simply no relationship between the Council and oyster consumers sufficient to create a duty of care. … To create a duty, the relationship between the public authority and persons affected by the conduct of the authority must be 'so closely and directly affected by [its] act [or omission] that [it] ought reasonably to have them in contemplation as being so affected' ( Donoghue v Stevenson [1932] AC 562 at 580 ) when it directs its mind to the relevant conduct in question. In considering whether it should exercise its powers over pollution, the Council was no more concerned with oyster consumers than any other section of the public or individual. There was no close or direct relationship between oyster consumers and the Council such that it had a duty to take care for the safety of each and every one of them. In that respect, the Council stood in a different position from that of the Barclay companies which had a direct relationship with the consumers of their product." 130 The statutory scheme of the Roads Act is set out in par [24] above. By s71 a roads authority "may carry out work on any public road for which it is the roads authority". The RTA is the roads authority for certain roads by force of statute or regulation (s37) and has an exclusive power to make decisions on roadwork with respect to certain roads (s61). These provisions did not apply to Main Road 54. 131 The RTA may assume responsibility for some or all of the functions of a roads authority by agreement (s62). Alternatively, it may exercise such functions whether or not it is the roads authority (s64). It was submitted that each of these provisions, in the alternative, applied with respect to Main Road 54 by reason of the arrangements between the RTA and the Council. I would, if necessary, reject these submissions, but it is not necessary. 132 A considerable proportion of the submissions at first instance, and on the appeal, focused on whether or not the RTA was or had assumed the functions of the "roads authority" under s62 or s64 of the Roads Act 1993. That emphasis was misconceived. The answer to that statutory question would not determine the RTA's liability in tort. That liability would turn on what functions of a roads authority the RTA had assumed either by s62 or by exercise of the s64 power. 133 The existence of a duty of care at common law, as most recently affirmed in Brodie, turned on what the joint judgment identified at [103] as the roads authority's "physical control over the object or structure which is the source of the risk of harm". (See also Barclay Oysters at [151].) Whether the RTA had control of that character and, accordingly, owed a duty of care to the Plaintiff, depends on a "multi-faceted inquiry" (as Gummow and Hayne JJ said in Barclay Oysters at [149]) focussed on the actual role of the RTA in all the circumstances. 134 The Council did submit that the RTA was liable to the exclusion of the Council. This submission should be rejected. His Honour's reasons for holding the Council directly liable were correct. (See pars [7]-[9] above.) The Council clearly had, in my opinion, the requisite degree of physical control over the works. This is implicit in the provisions of the State Road Maintenance Agreement. (See pars [32]-[41] above.) 135 The Council is engaged by cl 4.1 to "provide" certain services including "delivery of the work program". Clause 2.5 of that Agreement in terminology repeated in Section B.01, Section C.03, Section C.07 and Section F.01 of the Yellow Book, affirms that it is the Council that "carries out the work". An authority which carries out work has "physical control" of the risk of harm relevant in the present proceedings. The role of the Council Superintendent under the Contract with Pioneer, in a form determined by the RTA, confirms the other evidence that it was the Council with Pioneer, to the exclusion of the RTA, that 'carried out' the work. 136 Amongst the documentation supplied by the RTA to the Council were the General Conditions of Contract and RTA Specification G.10 on Traffic Control. The use of this documentation between a Council and a subcontractor was contemplated by the RTA. This documentation makes clear what the evidence establishes to have been the case, that the hands-on role of physical supervision is to be undertaken by the Council through its Superintendent, relevantly, in this case, the Chief Engineer of the Evans Shire Council. 137 There are numerous roles contained in the documentation for the Superintendent. It is unnecessary to set them out in full. Of particular significance are the following: · Clause 23 of the General Conditions of Contract provides: "The Works shall be executed in accordance with the Contract and in accordance with any directions of the Superintendent pursuant to the provisions of the Contract." · Clause 25 provides: "The Contractor shall personally superintend the execution of the Works or have a competent representative acceptable to the Superintendent present on the site. … In the absence of the Contractor and his representative the Superintendent may take such action as he considers necessary to prevent loss of or damage to the works or any property, or to prevent injury to any persons, and the cost of such work shall be borne by the Contractor if the Superintendent so determines." [Emphasis added.] · Clause 26 provides: "The Superintendent may object to and direct the Contractor to have removed from the Works any person employed by the Contractor or by any sub-contractor who, in the opinion of the Superintendent, misconducts himself or is incompetent or negligent in the performance of his duties; and any such person shall not again be employed in upon or about the Works without the prior approval of the Superintendent." · Clause 30 provides: "In the absence of any relevant provision in the Contract, the material or standard of workmanship, as the case may be, shall be of a kind which, in the opinion of the Superintendent, is suitable for the Works. If at any time during the progress of the Works the Superintendent is of the opinion that any materials or work are of an inferior description he may direct the removal or amendment of the same by the Contractor who shall comply with such direction at his own cost." · Clause 31 provides: "The Superintendent may direct that any materials or work to be used in or form part of the Works shall be examined and/or tested, and the Contractor shall make available the said materials or work." · Clause 34 provides: "The Contractor shall proceed with the Works at a rate of progress and in a manner satisfactory to the Superintendent. The Superintendent may by written notice order the Contractor to suspend the whole or any part of the Works until such time or times and for such reasons as the Superintendent may think fit …" 138 Part 5 of the contract between the Council and Pioneer, relating to "Technical Specification", also includes a number of roles for the Superintendent including the following: "5.2.3.2 Traffic Controllers Prior to work commencing, the Contractor is to supply the Superintendent with proof that traffic controllers have attended an approved training course in the duties and responsibilities of controlling traffic, and/or hold an RTA Traffic Controller's Certificate." 139 To similar effect is the contractual obligation in cl 1.5 of RTA Specification G.10: "The Contractor shall advise the Superintendent of the names of proposed traffic controllers with a signed declaration that they are appropriately trained in the duties of traffic controllers in accordance with AS 1742.3." 140 For present purposes it is particularly significant that pursuant to cl 1.7 of RTA Specification G.10 (referred to in cl 5.3.2 of Pt 5 of the contractual documentation), it is the Superintendent who directs "where and when" temporary speed zoning signs shall be erected. Furthermore, pursuant to cl 4.1, traffic control devices require the approval of the Superintendent before their erection. By cl 1.3 the Traffic Control Plan (which must include a "signpost layout plan") is a document to be submitted "for the Superintendent's approval". 141 The State Road Maintenance Agreement between the RTA and the Council summarises the role of the RTA as: deciding "what work is to be done"; engaging the Council to carry out the work, (Clause 4.1 and recital 2.5 set out in pars [32] and [37] above) and providing funds under s207 of the Act. (See B.01 of the Yellow Book set out in par [46] above.) The oral evidence about what happened in this specific case confirms that this accurately describes the basic nature of the relationship. 142 The broader context is that of a sharing of responsibility between the RTA and Council "for the management of the roads and traffic system in New South Wales" (Recital 2.1). As the body which provides the whole of the funds for work on a main road (s207(2)(a) of the Roads Act 1993), the RTA is accountable, and concerned, to ensure that the funds are properly expended (see, e.g. Recitals 2.2, 2.3, set out in par [37] above). The focus on project management in the Yellow Book (see, e.g. pars [43]-[44] and [48]-[49]), and the requirements that subcontracting by the Councils be conducted within a specific tendering framework (see Yellow Book C.14 set out in par [54] above and Maintenance Agreement cl 6.6 set out at [39]), manifest this interest. 143 The RTA also reserves to itself the ability to require the Council to comply with certain specifications and procedures (see s74 of the Roads Act and clauses 11.3, 11.4, 11.6 11.13 and 11.15 of the Maintenance Agreement set out in par [41] and in the Yellow Book see cl 6.1 set out in par [38]). 144 Amongst the matters for which the RTA imposes requirements is the detail of any arrangement between a Council and a subcontractor like Pioneer. This encompasses RTA Form 403 on Conditions of Tendering (par [57] above); RTA Form 404 providing the General Conditions of Contract (par [59] above) and RTA Specification G.1O on Control of Traffic (par [70]-[75] above). 145 The RTA is the person for whom the work, relevant to the present proceedings, was undertaken. It selected the work and provided the whole of the funds. The process of selection of this particular project included an overview audit of the state of a number of roads, including of the relevant road. The work was to be conducted in accordance with procedures and specifications which it determined. Those specifications included requirements specifically addressed to ensuring the safety of drivers. 146 In terms of liability for non-feasance, it is pertinent to note that the primary responsibility for putting forward proposals is that of the Council. 147 The closest the RTA came to direct involvement with the temporary advisory signs required during works was set out in the evidence of the Roads Safety and Traffic Officer of the RTA which Wood CJ at CL summarised as follows: "[232] He said that as a Road Safety and Traffic Officer, it fell to him to make decisions about regulatory road signs. He also agreed that there was a protocol for the receipt and processing of applications by Councils to alter such signs, including temporary regulatory speed signs during road works. This required, in his case, authorisation by the Road Safety & Traffic Manager at Parkes, following referral by him to that office." 148 The evidence on which his Honour based these findings was to the effect that the RTA authorised temporary speed zones, when requested to do so by a Council. It did so without inspection of the site, in the case of signposting associated with roadworks under a traffic control plan. In this case there was no such plan and no such request. The Council's relevant officer accepted, however, that it was the Council's responsibility to apply to the RTA for approval to impose a temporary speed sign. This confirmed the uncontradicted evidence of the relevant Roads Safety and Traffic Officer of the RTA that councils had responsibility for advisory signs because they had day to day knowledge of the roads. This must apply with particular force to the temporary signs required by road works undertaken by Council. Nevertheless, the general supervisory function with respect to regulatory speed signs is a matter relevant to the characterisation of the RTA's role in relation to the relevant risk of harm. 149 The liability of a road authority for non-feasance, established by Brodie v Singleton Shire Council, puts the RTA's position in a somewhat different light. It is not merely a funding body. It does determine what work is to be done. Nor is it a body which responds only to applications. It does concern itself with reviewing requirements, so that it is in a position to assess the need for a work. This enables it to have an input into the priority determination process. It does concern itself with technical specifications, the quality and the cost effectiveness of work. Questions of degree are involved. 150 The issue is one of control. In this regard it is pertinent to note that his Honour found at [218] that "typically", including for the 1996/1997 year, the funding process proceeds in the following way: "- allocation by head office of the RTA of maintenance funding, on a regional basis, following approval of the State budget; - allocation of the regional funds between each council in the region; - requests by Mr Maloney of each council, within his sphere of responsibility, for proposals requiring an allocation of the funds available for that council, for the coming year; - upon acceptance of the proposals, inclusion of the work in the approved work program embodied in the State Road Maintenance Agreement for the Council for that year." 151 This outline of the role of the RTA indicates the limited degree to which its role impinged on the physical elements that led to the risk of harm that is pertinent for present purposes. In circumstances where the RTA had the complete functions of a roads authority, it has been held it acquired a non-delegable duty. (Roads and Traffic Authority v Scroop (1998) 28 MVR 233). This precedent applies only to the Council in the present case, not to the RTA. The Council was the relevant roads authority. His Honour correctly found it to be liable in accordance with Scroop. The limited range of functions performed by the RTA on the facts here under consideration raises the issue of whether there was a relevant duty of care at all. If there was no such duty, the question of delegation does not arise. 152 I have set out in par [11] above, Wood CJ at CL's identification of the facts and matters which led him to conclude that the RTA had a duty of care. His Honour also found that the RTA's liability was wholly vicarious, because there was no "relevant act or omission for which the RTA was directly responsible" (see par [13] above). The reasons why that was so give rise to an issue as to whether there was a duty at all. 153 The elements identified by his Honour are those I have set out above. They involve the selection and funding of the project and a range of interventions designed to ensure the proper (including safe) execution of road projects. Nevertheless, the task of execution is not, in any respect, assumed by the RTA. That task is reposed in the Council and its subcontractors, if any, the latter being subject to detailed supervision by the Council's Superintendent. In accordance with this arrangement, it was a Council officer who attended the site on each day of the resealing works. No officer of the RTA did so or was expected or required to do so. 154 In my opinion, the terms and conditions of RTA funding, detailed as they are, do not involve the RTA in the actual carrying out of the work. The RTA is not an authority which does "carry out works or repairs" upon the road here in issue (cf Brodie at [150]). Nor did it have "physical control over the object or structure which is the source of the risk of harm" (Brodie at [103]; Barclay Oysters at [151]), i.e. the combination of gravel and the 75 km/h sign. The RTA did not "exercise control" over this "direct source of harm" to drivers (Barclay Oysters at [152]). The relationship between the RTA and the Plaintiff was "indirect … it [was] mediated by intervening conduct" on the part of the Council and Pioneer (Barclay Oysters at [153]; see also at [154]). The RTA did not, in my opinion, control in a sufficiently proximate way the "relevant risk of harm" (Barclay Oysters at [150] and [152]). The carrying out of the works extending to the installation of appropriate speed advisory signs in the circumstances, was not a matter which it ever had the capacity to control under the arrangements in place. The RTA did not, therefore, owe a duty of care to the Plaintiff with respect to the gravel and the 75 km/h sign. 155 The position of the RTA with respect to his Honour's alternative finding of breach based on the absence of a guardrail will be considered below.

The Armco Guardrail - Council 156 The Council challenged his Honour's finding that it was negligent in failing to install an Armco guardrail at a position which would have prevented the Plaintiff's car leaving the road and rolling down the embankment. This was a finding in the alternative to his Honour's finding against the Council and Pioneer that the cause of the accident was the combined effect of the gravel and speed. 157 As indicated above, in my opinion, the Council's challenge to the first basis for causation should be rejected. Nevertheless, the issue of the guardrail remains of some significance. His Honour took into account the fact that there was no guardrail when apportioning responsibility between the Council and Pioneer. This was a matter with which Pioneer was not involved. Accordingly, the determination of whether or not the absence of the guardrail was a pertinent breach of duty on the part of the Council, is capable of affecting the issue of contribution between the Council and Pioneer which his Honour assessed at 50%. It could also be material on any issue of contribution between the RTA and Pioneer. His Honour ordered Pioneer to indemnify the RTA. (In the case of the Council, the order for indemnity was based, alternatively, on the contract.) 158 An Armco guardrail was in fact installed after the accident, but this occurred after funds had become available for the purpose under the Commonwealth Government's Road Safety Black Spot Program. Until the criteria for this program were relaxed, which happened after the accident, the project would not have qualified for funding under this program. 159 In Brodie, the joint judgment of Gaudron, McHugh and Gummow JJ said in the context of breach: "[155] … The cost and practicality of an alternative and safer design, if one be available, may be weighed against the funds available to the construction authority." 160 Furthermore, the joint judgment in Brodie said at [104]: "… financial considerations and budgetary imperatives may fall for consideration with other matters when determining what should have been done to discharge a duty of care. That is the position in Canadian law. It is that advocated in this Court a century ago. In Miller v McKeon ((1905) 3 CLR 50 at 60), Griffith CJ said: 'So the Government of a newly-settled country, which undertakes the first formation of a road, whether the soil has or has not been formally dedicated as a highway, is bound to use such care to avoid danger to persons using it as is reasonable under all the circumstances. These circumstances include the nature of the locality, the extent of the settlement, the probabilities as to the persons by whom the road is likely to be used, and the monies available to the government for the purpose.' Each element in these sentences merits careful attention. Evidence respecting funding constraints and competing priorities will be admissible." [Some references omitted.] 161 Their Honours concluded: "[162] The formulation of the duty of care includes consideration of competing or conflicting responsibilities of the authorities. In the circumstances of a given case, it may be shown that it was reasonable for an authority to deal in a particular priority with repairs in various locations. The resources available to a road authority, including the availability of matérial and skilled labour, may dictate the pace at which repairs may be made and affect the order of priority in which they are to be made. It may be reasonable in the circumstances not to perform repairs at a certain site until a certain date, or to perform them after more pressing dangers are first addressed. Even so, it may well be reasonable for the authority to exercise other powers including, for example by erecting warning signs, by restricting road usage or, in extreme cases, by closing the road in question." 162 Gleeson CJ said in Barclay Oysters at [6]: "Decisions as to raising revenue, and setting priorities in the allocation of public funds between competing claims on scarce resources, are essentially political. So are decisions about the extent of government regulation of private and commercial behaviour that is proper. At the centre of the law of negligence is the concept of reasonableness. When courts are invited to pass judgment on the reasonableness of government action or inaction, it may be confronted by issues that are inappropriate for judicial resolution, and that, in a representative democracy, are ordinarily decided through the political process." 163 His Honour referred to Brodie v Singleton Shire Council and, with reference to par [162] of the joint judgment which I have quoted above, added at [7]: "In that case, three members of the majority expressly accepted that it may be proper and necessary for a court to decide whether the priorities of a local council in dealing with road repairs in various locations were reasonable. The decision in the case required that view. Even so, the scope for judicial examination of the reasonableness of governmental spending priorities was not held to be, and cannot be, at large. Raising and spending money for road repairs involves setting priorities, not only between parts of the road system, but also between all the claims upon an authority's resources, and between the interests of taxpayers and those of road users. My view remains that setting priorities by government for the raising of revenue and the allocation of resources is essentially a political matter, and that, if the reasonableness of such priorities is a justiciable issue, that can be so only within limits." 164 Issues of priority arose in this case with respect to each of the Council and the RTA. 165 Wood CJ at CL found that a guardrail ought to have been installed, and that ought to have been done, even having regard the cost of the railing which his Honour described as "substantial, although not prohibitive". His Honour said: "Cost is but one consideration": [300]. The cost involved was $56,000. 166 There is no basis, in my opinion, for a finding that the Council had available to it funding that could encompass the construction of a guardrail at that point in the road as a priority at the relevant time. The only practical possibility was funding from the RTA, whether from the RTA's own funds, or from a Commonwealth program as, in the event, occurred. 167 His Honour found that the Council and the RTA shared the responsibility of "a road authority" and accordingly, each owed the duty of care which was identified by the High Court in Brodie v Singleton Shire Council. His Honour indicated that he would take into account such evidence as was led concerning restraints on funding and competing priorities: [371]. However, his Honour did not set out what he took into account about funding in this regard. 168 His Honour made findings of fact about competing demands on the Council, including the following: "[264] There was evidence tendered concerning the condition of the longer section of roadway between Sofala and Bathurst. This revealed that: (a) there were a number of other sections adjacent to drop offs, near crests or curves, some of which were deeper and longer horizontally, than that at the accident site, as well as significant stands of mature trees, in other sections, none of which were guarded with fencing; (b) there were some sections of the road which were gravel shouldered and with a narrow tar seal just wide enough for two vehicles to pass. [265] The evidence also showed that, apart from the two State roads within the Shire which ran respectively from Goulburn to Ilford, and from Hartley to Bathurst via Jenolan Caves and Oberon (MR253), there were within the Council's boundaries many unsealed roads, as well as other roads which were narrower than the Sofala road, or which had less in the way of shoulders, or which had drop offs and stands of trees adjacent to the roadway." 169 In my opinion, it was not open to his Honour to find that the Council was in breach of its duty by failing to install the guardrail. The expenditure of $56,000 may not appear a large amount, but the Council's resources were limited. 170 In evidence was the Annual report and financial statement of the Council for the year ending 30 June 1997. The annual revenue of the Council, by way of rates and other operating revenue, was less than $1.7m. It also had $2,507,000 of "user charges and fees" of which $2,273,000 was RTA road works funds. There were also $1,985,000 in other grants and contributions. Over the course of the year, the Council incurred about $8m in expenses which, after adjustments, resulted in a net deficiency of $970,000 for the year. 171 Section 428(2)(d) of the Local Government Act 1993 requires the Annual Report of the Council to contain: "a report on the condition of the public works (including public buildings, public roads and water, sewerage and drainage works) under the control of the council as at the end of that year, together with: (i) an estimate (at current values) of the amount of money required to bring the works up to a satisfactory standard, and (ii) an estimate (at current values) of the annual expense of maintaining the works at that standard, and (iii) the council's program of maintenance for that year in respect of the works". 172 In its Annual report, the Council reported that with respect to its assets, such as council chambers, war memorials, SES headquarters, depots, amenities block etc, $2,089,925 was required to bring the assets to a satisfactory standard. Furthermore, with respect to public roads, the amount required was $3,518,894, although almost all of this was for sealing. The amount required to bring the 155 bridges in the shire up to a satisfactory standard was estimated to be $1,512,408 and the report noted: "The condition of bridges is such that rectification has become a matter of urgency and replacement is beyond the financial capacity of the local community to maintain the asset". 173 In these circumstances, it was appropriate that the Council proceeded on the basis that all work on a State road like MR54, should be limited to funds provided by the RTA. It was not unreasonable for the Council to fail to supplement those funds from its own resources. 174 Wood CJ at CL did note an alternative finding of liability on the part of the Council relevant to the guardrail issue. His Honour found that until funds became available for the guardrail the 75 km/h speed sign should have been replaced with a 55 km/h sign [381]. This finding was open to his Honour. 175 I do not believe this finding has any effect on the issue of the contribution between the Council and Pioneer. Whether a lower speed could have been advised for the second curve on a permanent or temporary basis is not a matter to which I would give weight.

The Armco Guardrail - RTA 176 His Honour decided, on the basis in part of the joint experts' report, that a guardrail should have been constructed at the site. His Honour identified the responsibility of the RTA as "wholly vicarious". He did so, he said, "both in relation to the shoulder widening and the resealing work" [392]. He had earlier held that the need for the guardrail should have been apparent when the shoulders were widened and that the guardrail and the need to lower the permanent speed advisory sign should have been identified [298]. In the event, however, he concluded that responsibility for the provision of the guardrail was that of the Council [418] and [381]. His Honour found the Council liable for the failure to install a guardrail and that the RTA was vicariously responsible for this failure. He did not regard the RTA as directly responsible for the failure in this respect. 177 His Honour found that the RTA owed a duty of care and based that finding on a number of relevant considerations (see par [11] above). This reasoning could have formed the basis for a finding of breach on the part of the RTA other than only vicarious liability. This was not the basis on which his Honour proceeded. Both Pioneer and the Council challenged his Honour's finding that the liability of the RTA was wholly vicarious. 178 The Council submitted that the function of deciding whether the Armco railing should have been installed was the primary responsibility of the RTA. It referred to the safety audit of the road conducted for the RTA and the fact that all relevant funding was provided by the RTA. It referred to his Honour's finding at [298] that the need for the guardrail should have been identified in the 1996 audit. It also submitted that the RTA was responsible for the permanent speed advisory signs. Pioneer adopted the submissions of the Council on this issue. 179 There was no evidence about the original erection of the 75 km/h speed sign. The determination of responsibility for its presence must be based on evidence in a narrow compass. 180 As I have indicated above, his Honour was entitled to find that the 75 km/h sign was inappropriate, even in the absence of the roadworks. There was no challenge to his assessment of responsibility for the damage as slightly less than for that caused by the breach of duty involved in the interaction of speed and gravel. 181 The passage from [150] from Brodie, which I have set out in par [118] above, which states the duty of road authorities is directed to authorities which "design or construct roads or carry out works or repairs upon them". This does not, in terms, apply to the RTA with respect to a State road like MR54. Although not merely a funding body, the RTA does not relevantly engage in the range of tasks identified in Brodie. 182 This Court should be slow to extend the reasoning in Brodie by imposing liability for negligence with respect to the allocation of public funds. 183 As quoted above, Gleeson CJ in Barclay Oysters at [7] concluded, after referring to Brodie v Singleton Shire Council, that there are limits within which funding priorities ought to become a justiciable issue. I agree with Gleeson CJ. 184 I am reinforced in this conclusion by the observations of McHugh J, a co-author of the joint judgment in Brodie, in his Honour's judgments in both Crimmins and Barclay Oysters, set out at [126]-[129] above, about the particular situation of an authority which has increased the risk of harm by undertaking a relevant task. The position of the RTA in determining which projects should be undertaken and funding them is not of this character. It does not fall within the range of conduct considered in the joint judgment in Brodie at [153]-[165]. 185 In my opinion, the RTA should not be subject to a duty the scope of which extends to the identification of the need for a guardrail on a particular section of road and the funding of its construction. 186 Alternatively, there is the issue of breach. A project of approximately $54,000 does not raise issues of budgetary constraint in the case of the RTA, as it does in the case of the Council. However, issues of priority do arise 187 The evidence before the Court included a Road Safety Audit which had been conducted for the RTA in July 1996, about six months before the accident in issue in these proceedings. In a list, referred to as a "Log of Defects/Deficiencies" the audit had identified a range of works which were desirable from a safety perspective for the MR54, over a distance of some 790 kilometres. This report did not recommend a guardrail at the point in issue in these proceedings. 188 In a column headed "Risk Level", the various works proposed were classified in one of four categories ranging from low to medium to high to urgent. Amongst those identified as either "high" or "urgent" were a number of proposals to install guardrails. Numerous other works clearly involving substantial amounts of expenditure were also identified in one or other such categories. Many other proposals in this list involved signs, line marking and other matters of modest expenditure. Nevertheless, this report highlighted the very real choice that had to be made on issues of priorities by, relevantly, the RTA. 189 Two of the matters on this list were identified as requiring "immediate" action. They were the two which had been described as "Urgent" in the log. All others in the list were described as "Necessary". The Council officer, Mr Vautin, said that work identified on this list as "high priority" was carried out shortly thereafter. It was unclear which categories in the report he was describing as "high priority". Plainly this would have encompassed the "urgent" matters, but it is not clear whether he referred also to those classified as "high". It is unlikely to have been referring to those classified as "medium" and "low". 190 The absence of any reference to the site presently under consideration in this audit makes it impossible, in the absence of other evidence, to determine where in the priority list a reasonable authority ought to have placed a guardrail for this site. If I had found a relevant duty it may have been difficult to determine the issue of breach. The issue of who bore the evidentiary onus in this regard may have arisen. The Court received no submissions on this matter. It is best to determine the issue on the basis of duty. 191 The next consideration is the issue of the inappropriateness of the permanent 75 km/h speed sign. Pursuant to s114 and s115 of the Roads Act, the RTA has a general power with respect to regulatory signs and the Council has a limited power. Was the RTA responsible for the failure to erect a lower speed advisory sign on the second curve? This must be assessed in the light of two facts. First, the existence of the 75 km/h sign before the first curve, plainly referrable to the whole course of the broken back curve. Secondly, the risk involved by the absence of the guardrail, as found by his Honour. 192 The 1996 Road Safety Audit is categorised as a "Stage 5" audit. The Report, which contains a "Stage 5 checklist" as Appendix D, identified as one of the matters to be audited under "2 Design Speed", "2B Are the posted advisory speeds for curves appropriate?". For a reason which does not appear, the column "not applicable" was ticked with respect to this audit. 193 Mr Walker, the RTA's district Road Safety and Traffic Officer, gave evidence that local councils are responsible for traffic advisory signs because of their particular knowledge of roads in the area. Furthermore, MR54 was classified as a regional road until 1995 and was, therefore, under the control of the Council at that time. No doubt the 1996 audit was a response to the assumption of responsibilities with respect to MR54 as a State Road. 194 Because these matters were not agitated before the trial judge in the way they now appear, his Honour did not make findings of fact in this regard. In my opinion, the Council and Pioneer had an onus of establishing that the RTA had a relevant degree of responsibility for the advisory sign and did not discharge that onus.

Contribution 195 Pioneer submitted that the trial judge should have determined that the Council should bear a greater proportion of the liability than the equal division he determined. Counsel for Pioneer relied on his Honour's finding of involvement by Council officers. Counsel for Pioneer drew attention to the findings against the Council with respect to the guardrail and the inappropriateness of the 75 km/h speed sign, even in normal conditions. Pioneer did not share responsibility in either respect. 196 The Council submitted that Pioneer should bear a greater than equal proportion on the basis that the Council handed over responsibility for the works and control of the road to Pioneer. 197 These were matters of weight. His Honour's determination of an equal division was well within the range that was open to him. On the basis that Council was not liable by reason of the absence of the guardrail, which liability his Honour found and said he took into account, apportionment falls to be redetermined in this Court. 198 In my opinion, Pioneer and the Council were jointly responsible for the critical failure: the combined effects of gravel and inappropriate speed on the bend. I do not detect any feature of the case which suggests that one bore a greater responsibility than the other. Pioneer had the primary responsibility under the contract. It had to present the requisite traffic control plan and take the other steps I have set out above. However, the Council, at all times, knew what was happening at the site and did not require Pioneer to perform any of its express obligations. The contract was, after all, almost complete. 199 I would not disturb his Honour's determination.

Indemnity 200 The Council appealed from his Honour's decisions on the indemnity. He found in favour of the RTA and in favour of Pioneer. In view of my conclusion that the RTA did not owe a duty of care, the issue of indemnity in the arrangement between the Council and the RTA does not arise. The indemnity in the contract between the Council and Pioneer is still in issue. 201 The indemnity under cl 18 needs to be contrasted, the Council submits, with the concluding words of the parallel provision in cl 20. These clauses are: "18 Property Damage and Public Risk The Contractor shall indemnify the Principal against all loss of or damage to the property of the Principal (other than the Works but including existing property on which the works are being carried out) and against any claim or action brought by any person against the Principal or his agents in respect of personal injury or death of any person or loss of or damage to any property, arising out of the construction of the Works by the Contractor." "20 Accident or Injury to Employees The Contractor shall indemnify the Principal against liability for all loss or damage resulting from personal injury to the Contractor or his agents occurring during the execution of the Works, except such injury resulting from breach of the Contract by the Principal or his negligent act ." [Emphasis added.] 202 It was common ground before Wood CJ at CL and in this Court that the proper approach to the construction a clause of this character was identified in the High Court in Darlington Futures Limited v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510: "… [T]he interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract and, where appropriate, construing the clause contra proferentem in case of ambiguity." 203 Pioneer successfully contended before the trial judge, and maintains the contention in this Court, that, on its proper construction, cl 18 is limited to claims which arise out of actions of the Contractor, i.e. Pioneer. It does not extend to claims arising out of acts or omissions of the Council, whether those acts or omissions occur in the context of "construction of the Works" or otherwise. His Honour accepted the submission that it was the final words "by the Contractor" in cl 18, which led to the conclusion that the indemnity related to claims based upon the negligence of the Contractor. They did not apply to acts of negligence on the part of the Council. 204 His Honour found that the exception contained in the above underlined section of cl 20 was designed to deal with the specific situation where Pioneer might have become responsible for injuries suffered by its workers due to the negligence of the Council alone. His Honour noted that having regard to the statutory scheme of compensation to which the Contractor was subject, the express limitation in cl 20 was understandable and that its inclusion did not justify an inference that if a similar exclusion was intended in cl 18, it would have been made express. 205 Wood CJ at CL referred to the decision of the Victorian Court of Appeal in Australian Paper Plantations Pty Ltd v J & E M Venturoni [2000] VSCA 71, in which a similar conclusion was reached, although the Court there included the words parallel to the express words in the present clause, i.e. "by the Contractor", by implication into the clause there under consideration, i.e. by adding the words "by the tenderer". 206 Venturoni was a case in which the relevant indemnity applied in a cl 20 type situation. The owner of a plantation (APP) engaged a Contractor (Venturoni) to fell trees on the property. A sub-contractor engaged by Venturoni to carry out the felling was injured by a falling tree, which was held to have been caused by the unsafe character of APP's land. Venturoni successfully argued that the indemnity clause did not cover acts of negligence by APP. 207 The clause under consideration in Venturoni was: "9. Indemnity The Tenderer [Venturoni] hereby indemnifies and agrees to keep the Company [APP] indemnified against all costs, damages, fines, expenses, claims, actions and suits whatsoever arising out of or in respect of the carrying out of the agreement." 208 Buchanan JA, with whom Ormiston JA agreed, identified the basic nature of the contract as one which imposed obligations upon Venturoni and regulated Venturoni's conduct. His Honour said: "[11] In the light of the concentration of the contract upon the obligation of the respondents, the parties may well have intended clause 9 to be concerned only with the performance of the contract by the respondents and deemed it appropriate to describe a wide range of matters against which indemnity was to be provided. If it had been intended that the clause was to apply to the performance of the contract by both parties, I would have expected the indemnity to have been limited to claims, actions and suits. The addition of costs, damages, fines and expenses does produce absurd results if the clause applies to the performance of the contract by both parties. Because of the order in which the words in the phrase "costs, damages, fines, expenses, claims, actions and suits" appear, it is not possible to confine the costs and expenses to those associated with claims, actions and suits." 209 In the present case, the indemnity in cl 18 has two limbs. First, against "loss of or damage" to property and secondly, "against any claim or action brought by any person against the Principal". The limitation, the absence of which Buchanan JA emphasised in Venturoni, to causes of action is clear in this case. On the other hand, the words "by the Contractor" appear expressly. 210 The possible application of cl 18 to cover the liability of the Council for its own conduct is suggested by cl 19: "19 Public Liability Insurance Before commencing work under the Contract the Contractor shall at his cost effect a Public Liability Policy of insurance, for an amount not less than the sum stated in the Annexure hereto and with an Insurer approved by the Principal, in the joint names of the Principal, the Contractor and all sub-contractors employed from time to time in relation to the Works for their respective rights and interests to cover their liabilities to third parties including the liabilities set out in clause 18." 211 However, cl 21 makes express provision with respect to the matter excluded from the Contractor's obligation in cl 20, i.e. liability for the Principal's negligence. It provides: "21 Insurance of Employees The Contractor shall at his own cost insure and keep insured his workmen under an Insurance Policy pursuant to the Workers Compensation Act, 1987. The policy of insurance under this clause shall cover the Principal's liability at common law and shall be effected with an insurer approved by the Principal." [Emphasis added.] 212 Accordingly, even in the case in which Pioneer does not give an indemnity, i.e. with respect to injury to its employees arising from negligence of the Council, it is obliged to effect an insurance which covers that liability. Accordingly, the fact that public liability insurance is to be taken out under cl 19 in the joint names of the Council and Pioneer, does not necessarily indicate that the words "by the Contractor" should not be given the weight given to them by his Honour. 213 I have not found this matter easy to resolve. Nevertheless, on balance I have come to the conclusion that Pioneer's contention should be upheld and the appeal dismissed in this respect. The concluding words "by the Contractor" perform a function in the nature of the limitation. If cl 18 had ended with the words "arising out of the construction of the Works", it may very well be that the differences between this case and Venturoni would lead to the conclusion that one would not add any further words. In those circumstances, it may have been the case that the proper construction would be to extend the indemnity to acts performed by the Principal. The addition of the words "by the Contractor" were intended to limit the scope of the "claims or actions" for which Pioneer agreed to indemnify the Council. They were not words merely added to indicate that the "construction of the Works" was as a matter of contract to be undertaken "by the Contractor". 214 This conclusion is reinforced by the application of the contra proferentem rule. This was standard form documentation supplied by the Council to Pioneer, albeit in the Form determined by the RTA. Pioneer is entitled to the benefit of this rule. 215 In my opinion, the Council's appeal in this respect should be rejected.

Breach of Contract 216 Towards the close of oral submissions in this Court Mr C Gee QC, who appeared for the Council in this Court but not below, sought leave to amend the Notice of Appeal by adding the following ground: "The learned trial judge erred, having found in paragraphs 398 to 402 of the judgment that Pioneer was in breach of its contract with Evans Shire Council, in failing to consider the issue of what damages flowed from such breach." 217 In the course of this application Mr Gee accepted that there were no oral submissions before the trial judge in this regard. He relied entirely on the written submissions below. In the written submissions filed in support of this application in this Court the Council relied on pars [129]-[136] inclusive of its written submissions before his Honour. These submissions were under the subheading "Cause of the Loss". Nothing in them refers to a breach of contract, let alone a claim for damages based on breach of contract. These paragraphs identify the particular contractual responsibilities of Pioneer concerning the extent of the work and traffic control and are put in support of the proposition that the Plaintiff's injuries "could only have been caused by the conduct of [Pioneer]". 218 The written submissions in this Court rely on certain paragraphs in the further amended first cross-claim, and particularly par 13A which identifies a series of provisions of the contract imposing obligations upon Pioneer. In par 13B the Council asserts that any injury to the Plaintiff was caused by Pioneer's breach of these provisions. This is the subject matter upon which submissions were made. Paragraph 14 is the crucial clause with respect to the breach of contract basis. It is the paragraph that asserts that the breaches of the contract on the part of Pioneer caused the Council loss. No submissions were made with respect to this issue. 219 Mr I Harrison SC who appeared for Pioneer opposed the application on the basis that the written submissions below were exclusively concerned with the issue of indemnity and causation and that that was made clear on the structure of the written submissions. In this regard Mr Harrison is correct. 220 The ground of appeal sought to be added is that his Honour erred in finding breaches of contract but failing to consider what damages flowed from such breach. It appears his Honour was not asked to engage in any such process of reasoning. No submissions were made to him, nor to this Court, identifying any link between the breaches and the damage. 221 His Honour's finding of breach is set out at par [16] above. 222 In written submissions in support of this application, the Council submitted that the damages suffered by the Council by reason of Pioneer's breaches of contract were the full amount of any damage that they are required to pay the Plaintiff. These, it submitted, were damages naturally and directly flowing from the breaches and it must have been in the reasonable contemplation of the parties that breach could result in such loss. 223 In the written submissions in this respect Pioneer submitted, correctly, that no such case had been run before the trial judge and accordingly it was not an error for him to fail to deal with the matter. 224 Pioneer further submitted that additional fact finding would have been required at trial. It gave as an example, a finding as to what, if anything, had been the result of the failure to deliver a traffic control plan and whether that caused some kind of action or omission on the part of the Council. It noted that the Council's representative at the site, Mr Vautin, who gave evidence did not suggest that he would have done anything differently if a formal traffic control plan had been provided to him. Furthermore, as the matter had not been raised in the case, Mr Vautin was not asked whether or not he had been provided with some informal equivalent, perhaps an oral indication, in lieu of a formal traffic control plan. 225 Wood CJ at CL identified a number of contractual obligations that had been breached by Pioneer at [399] set out in par [16] above. The submissions in this Court did not proceed by way of identifying each contractual obligation and relating them to the respective ways in which the Council was found to be liable. They were rolled up in a single submission with the bold conclusion "Causation is clear". 226 As the example identified by counsel for Pioneer shows, causation is not clear. It may turn on evidence of a character which was not called. Pioneer's relevant obligations were not self-executing. Before they could have had the result of creating a situation in which the accident did not happen, actions had to be taken by the Council through its Superintendent. This was not the way the case was fought. Relevant evidence is not before the Court. 227 No submission was made which identified with precision a chain of linked steps from a contractual obligation, not involving action by the Council, to the loss or damage said to be occasioned by breach of that contractual obligation. Where, as appears, relevant evidence could have been called and was not, this Court should not grant leave. The issues are not appropriate to be agitated for the first time on appeal. Leave to amend should be refused.

Appeals dismissed in proceedings CA 40102 of 2002 and CA 40133 of 2002.

Set aside order 1 made on 4 February 2002 so far as providing for verdict and judgment against the First Defendant and in lieu thereof verdict and judgment for the First Defendant against the Plaintiff.

Set aside order 2 made on 4 February 2002 so far as providing that the First Defendant pay the Plaintiff's costs, and in lieu thereof the Plaintiff to pay the First Defendant's costs.

The stay in order 3 made on 4 February 2002 is hereby removed.

Set aside orders 5 and 6 made on 4 February 2002.

8. The Respondents in proceedings CA 40217 of 2002 to pay the Appellant's costs of the appeal.

9. The Appellants in proceedings CA 40102 of 2002 and 40133 of 2002 to pay the Respondent's costs of the appeals.

229 HANDLEY JA: I have had the benefit of reading the judgments of the Chief Justice and Giles JA in draft and I agree with the orders proposed. I also agree with the reasons of Giles JA [pars 16-23] for refusing the Council leave to amend its notice of appeal to claim damages from Pioneer for the breaches of contract established by the findings of the trial Judge. 230 I agree with the reasons of both the Chief Justice and Giles JA on the construction of the indemnity provision in cl 18 of the Conditions of Contract. 231 Unfortunately I am not able to agree with par 145 of the reasons of the Chief Justice where he states: "The RTA is the person for whom the work, relevant to the present proceedings, was undertaken". Read literally, which may not have been intended, this is a finding that the RTA was the undisclosed principal of the Council for the purposes of its contract with Pioneer but that was not the case. If it was the undisclosed principal it would be liable to the plaintiff for the negligence of the Council and the contractor. 232 The Council was the true principal for the purposes of its contract with Pioneer, and it was not acting as the agent for the RTA. It was the owner of the land on which the road had been constructed, and on which Pioneer was to carry out further work under the contract. Thus Pioneer did the work "for" the Council. 233 The RTA exercised planning and regulatory functions, and provided the necessary funding, but in my opinion the work was not done "for" the RTA for any legal purpose. Compare Pye v Renshaw (1951) 84 CLR 58, 82. 234 Subject to these matters I agree with the reasons of the Chief Justice.

235 GILES JA: I have had the advantage of reading the reasons of Spigelman CJ in draft. Subject to what follows, I agree with them. While I arrive at the same result, on two matters I state my own reasons. 236 The first matter is the contractual indemnity between the Council and Pioneer. For convenience, I repeat the relevant indemnity provision and the associated indemnity and insurance provisions (cll 18-21) - "18. Property Damage and Public Risk The Contractor shall indemnify the Principal against all loss of or damage to the property of the Principal (other than the Works but including existing property on which the works are being carried out) and against any claim or action brought by any person against the Principal or his agents in respect of personal injury or death of any person or loss of or damage to any property, arising out of the construction of the Works by the Contractor. 19. Public Liability Insurance Before commencing work under the Contract the Contractor shall at his cost effect a Public Liability Policy of insurance for an amount not less than the sum stated in the Annexure hereto and with an Insurer approved by the Principal, in the joint names of the Principal, the Contractor and all sub-contractors employed from time to time in relation to the Works for their respective rights and interests to cover their liabilities to third parties including the liabilities set out in Clause 18. 20. Accident or Injury to Employees The Contractor shall indemnify the Principal against liability for all loss or damage resulting from personal injury to the Contractor or his agents occurring during the execution of the Works, except such injury resulting from breach of the Contract by the Principal or his negligent act. 21. Insurance of Employees The Contractor shall at his own cost insure and keep insured his workmen under an Insurance Policy pursuant to the Workers Compensation Act, 1987. The policy of insurance under this clause shall cover the Principal's liability at common law and shall be effected with an Insurer approved by the Principal." 237 The immediately relevant words are those in cl 18, " … against any claim or action brought by any person against the Principal … in respect of personal injury … of any person … arising out of the construction of the Works by the Contractor", although the indemnity also deals with damage to the Principal's property and claims against the Principal in respect of damage to property. 238 The indemnity as a whole is delineated by "arising out of the construction of the Works by the Contractor". What is the effect of those words? Specifically, is "by the Contractor" only descriptive of the activity of construction of the Works out of which the damage or claim must arise ("the first approach"), or do those closing words mean that the damage or claim must arise out of the Contractor's performance of that activity ("the second approach")? To illustrate the distinction, in Australian Paper Plantations Pty Ltd v Venturoni [2000] VSCA 71 an indemnity given by the Tenderer to the Company was construed as if "arising out of or in respect of the carrying out of the agreement" were followed by "by the Tenderer", with the consequence that the indemnity did not catch a claim against the Company for the Company's negligence. 239 As noted by Spigelman CJ, it was common ground that cl 18 should be construed in the manner identified in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510. 240 If "by the Contractor" is only descriptive of the activity of construction of the works, it is unnecessary. No one else was constructing the Works. This suggests (but no more) that the closing words have some further significance. 241 Clauses 18-21 deal with risk allocation and protection against risk. On the first approach, the risk allocation worked by cl 18 would be unbalanced. The Contractor is obliged to indemnify the Principal against damage to the Principal's property caused by the Principal or by third parties, over whom the Contractor has no control, and whether negligently or wilfully caused; and also against claims against the Principal for wrongs committed by the Principal over which the Contractor has no control, again whether negligently or wilfully committed. The only constraint is that the damage or claim arises out of the activity of construction of the Works. 242 Such a risk allocation is not unknown. An indemnity can extend to a liability caused by the negligence of the indemnified party, see for example Davis v The Commissioner for Main Roads (1966) 117 CLR 529; Valkonen v Jennings Constructions Ltd (SAFC, 29 November 1995, unreported). But the unbalanced allocation of risk, particularly in that the Principal would have no reason to be responsible for itself or towards others in what it did or failed to do in relation to the construction of the Works, gives some point to further significance in "by the Contractor". 243 It is plain enough that an equivalent imbalance in the allocation of risk was not intended in the case of personal injury of workers engaged in the Works. Absent the specific provision in cl 20, cl 18 would cover a claim brought by an injured worker against the Principal, because the injured worker would be within "any person" and the injury would arise out of the construction of the Works. Clause 20 excludes indemnity where the injury results from the Principal's breach of contract or negligent act. It would be strange if the wider risk of third party claims against the Principal for wrongs committed by the Principal were left with the Contractor. The Council submitted that, when there is the express exception in cl 20 and no such exception in cl 18, it follows that the indemnity in cl 18 is relevantly unconstrained. That does not follow. Clause 20 has the words "during the execution of the Works" followed by the exception; cl 18 has the words "arising out of the construction of the Works" followed by the words "by the Contractor". It is a sensible reading that the two combinations should be read so as to bring about a similar result, the words "by the Contractor" doing similar work to the express exception. 244 Risk allocation can be affected by insurance. The public liability insurance effected pursuant to cl 19 would in theory alleviate the Contractor's burden, in that indemnity to the Principal under the insurance would mean that the Contractor would not be called upon to indemnify the Principal. But theory and reality may be different, depending on the terms of the insurance and the solvency of the insurer. On the first approach the Contractor would still be exposed to an ample indemnity. The provision for insurance can be seen as favouring the second approach, with the insurance intended to cover the Principal with respect to its own negligent acts and omissions. That is the scheme in relation to insurance of employees. The cl 21 insurance covers the Principal's liability at common law, being a liability outside the indemnity in cl 20. The part played by the cl 19 insurance, it might be thought, is the same. 245 Each of the approaches to cl 18 is fairly arguable. On the foregoing analysis, however, which I do not think departs from anything said by the Chief Justice, the second approach better accommodates the language of cl 18 and its operation in the contract as a whole, and is to be preferred. 246 The trial judge did not accept the Council's submission that cl 18 "was not subject to a gloss that would imply a limitation in respect of any negligence found that was attributable to its own breach of duty" (para 423), holding (with particular regard to the closing words "by the Contractor") that the indemnity related to claims based on the negligence of the Contractor and not that of the Principal (paras 425-6). Pioneer submitted on appeal that any loss to the Council did not arise out of the construction of the Works, but rather out of the Council's superintendence of the Works, a submission which lacks both factual basis and commonsense attraction. Save as mentioned in the next paragraph, the debate was otherwise over the judge's holding. For the reasons I have given, I consider it to have been correct. 247 It follows that so far as the Council is liable to the Plaintiff for so-called direct breach of its duty of care, as is upheld in this Court, the Council is not entitled to indemnity from Pioneer. The trial judge found the Council liable also for breach of duty by reason of acts and omissions of Pioneer, on principles concerning non-delegable duties of care. Does that mean that the Plaintiff's claim nonetheless arose out of the construction of the works by Pioneer, and so nonetheless fell within cl 18? The Council so submitted, although rather obscurely and without elaboration. The written submissions addressed only whether cl 18 caught a claim for the Council's own negligence. In oral submissions no more was said than that "applying the read down clause, it still works" because "there were dual breaches of duty". Pioneer did not respond to the submission. 248 The Council's liability for breach of a non-delegable duty of care is a liability for breach of its own duty of care, but the breach of its duty of care is made out by failure of Pioneer to take reasonable care. It can therefore be said that so far as the Council is liable to the Plaintiff for what could be called vicarious breach of its duty of care, its liability arises out of the construction of the Works by Pioneer within the second approach earlier identified. (The language of direct or vicarious breach of duty is not satisfactory, and is sometimes used in a different way, see especially Swanton, "Non-delegable Duties: Liability for the Negligence of Independent Contractors" (1991) 4 JCL 183; (1992) 5 JCL 26. It sufficiently reflects the presently relevant distinction.) 249 But I do not think that avails the Council. Perhaps if the only basis for the Council's liability to the Plaintiff lay in the acts and omissions of Pioneer, without fault of the Council, cl 18 would apply. But that is not so. The Council has one liability only. That liability arises out of the construction of the Works, but it does not arise out of the construction of the Works by Pioneer because one of its bases is the acts and omissions of the Council, the so-called direct breach of the Council's duty of care. The "dual breaches of duty" takes the Council's liability outside cl 18 construed according to the second approach. 250 The second matter is the Council's application to amend the notice of appeal. The application was made after a member of the Court drew attention, during the Council's reply submissions, to the pleaded breach of contract claim. 251 The Council's cross-claim against Pioneer pleaded breach of the contract in relation to control of traffic and signage (including speed signs), and that it had thereby suffered loss. Apart from indemnity and contribution, the Council claimed damages from Pioneer, specifically judgment for whatever it might have to pay the Plaintiff in damages, interest and costs, and its own costs. 252 The trial judge's references to Pioneer's contractual obligations as part of giving content to Pioneer's duty of care owed to the Plaintiff, and his Honour's finding of breaches of the duty of care (see paras [399]-[402]), meant that Pioneer was in breach of contract. But no such finding was made, nor were there any findings as to the breach causing loss to the Council. That was because, as the Chief Justice has explained, the Council made no submissions to his Honour on its claim for breach of contract against Pioneer. 253 In this Court counsel for Pioneer acknowledged that he could not point to "procedural prejudice", meaning that he could not submit that he would have called other evidence at the trial. I would infer that at the trial nothing was said prior to the close of evidence to remove the Council's claim for breach of contract against Pioneer from the arena, and that it fell away simply because the Council made no submissions to his Honour on the claim. Why that was so we do not know, but in a case such as the present it is unlikely to have been because it was overlooked. 254 This is not a situation of the Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 kind, where evidence could have been given at the trial whereby a point might have been answered or a party might have conducted the case differently at trial, and so the point can not be taken for the first time on appeal. But the principle is wider. In University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 Metwally applied to reopen an appeal to argue that an Act was invalid when the validity of the Act had earlier been accepted. The Court refused the application, saying (at 483) that a party is bound by the conduct of his case and "(e)xcept in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case has been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so". The wider principle was stated in the joint judgment in Coulton v Holcombe (1986) 162 CLR 1 at 7 - "To say that an appeal is by way of rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish." 255 The question is whether it is "expedient and in the interests of justice" (see O'Brien v Komesaroff (1982) 150 CLR 310 at 319; Water Board v Moustakis (1988) 180 CLR 491 at 497; Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645-6) that the Council should be permitted to amend the notice of appeal and thereby now seek to have from Pioneer damages for breach of contract. 256 Although the trial judge's findings meant that Pioneer was in breach of contract, it was necessary also to establish causation of loss. It was properly not suggested that nominal damages would warrant the leave to amend. Loss represented by what the Council has to pay the Plaintiff in damages, interest and costs, and the Council's own costs, was not necessarily caused by Pioneer's breaches of contract, nor any one of those elements of loss. Mr Lovell of the Council was Superintendent under the contract, and Mr Vautin of the Council was on site. The Council should have considered traffic control arrangements proposed by Pioneer, but none were proposed; it did not question this, but nonetheless involved itself in signage. These were areas in which the Council was held in breach of its duty of care owed to the Plaintiff. Causation as between the Council and Pioneer requires further findings of fact, and is not an easy matter. A rational explanation for the absence of submissions to the trial judge is that it was considered that causation could not successfully be argued. 257 The Council did not provide submissions on causation, even after Pioneer pointed out the difficulties. We are not in a position to decide the Council's entitlement to damages from Pioneer for breach of contract. We were not asked to remit the matter for further findings and decision at first instance. I will not tarry over our power to do so, because even if we had been I do not think that, when the Council did not maintain the claim to damages for breach of contract in submissions at the trial, it would be just that Pioneer should have to undergo a further hearing upon a late apparent change of mind by the Council. The application should therefore be refused. 258 I agree with the orders proposed by the Chief Justice.

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