State of NSW v Tempo Services Ltd

LOWER COURT District Court JURISDICTION : LOWER COURT 9672 of 2001 FILE NUMBER(S) : LOWER COURT J C Gibson DCJ JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40118 of 2003

MEAGHER JA GILES JA HODGSON JA

Friday, 6 February 2004 STATE OF NEW SOUTH WALES v TEMPO SERVICES LIMITED

FACTS The State of New South Wales applied for leave to appeal from proceedings brought against the State (the claimant) by a school cleaner, the plaintiff below, who sought damages for personal injury arising from an accident she claimed to have suffered at a state school. In those proceedings, the State put on a cross-claim seeking indemnity pursuant to a contract made with Tempo Services Limited (the opponent, and the plaintiff's employer) who provided cleaning services at the school. That indemnity was expressed to be given against claims "arising out of or in connection with or caused by the performance of the Services".

The plaintiff's claim against the State was settled, with judgment given in favour of the State. The State persisted in its cross-claim against Tempo Services Limited, and, relying on the indemnity, sought judgment for its costs in the proceedings. The trial judge dismissed the cross-claim, holding that the clause relied on by the State did not entitle it to indemnity from Tempo. The State appealed to this Court.

HELD per Meagher JA:

1. The fact that the opponent bore no blame for the plaintiff's injury can have no relevance for the question of whether the accident (and therefore the opponent's liability in costs) arose "in connection with the performance of services". [6]
2. The fact (inter alia) that the plaintiff's presence at the school had no other reason than the performance of the contractual services must compel a finding that the injury arose "in connection with" the performance of the services". Australian Paper Plantations Pty Ltd v J & E M Venturoni [2000] VSCA 71, not followed. [8]
3. The decision of the Judicial Committee in Canada Steamship Lines Pty Limited v R [1952] AC 192, in light of Darlington Futures Limited v Delco Australia Pty Limited (1986) 161 CLR 500, is no longer good law. [9]

HELD per Hodgson JA (Giles JA agreeing):

1. "Provision of services" means provision of services by the opponent; and those services include doing whatever is necessary to have cleaners in place at appropriate times. [19]
2. That the injury occurred at a work place, during working hours, when the plaintiff was there for the purpose of performing services, gives the injury sufficient connection with the provision of services. Australian Paper Plantations Pty Ltd v J & E M Venturoni [2000] VSCA 71, distinguished. [20]
3. The indemnity given in the contract is wide enough to give the State an indemnity in respect of costs. An indemnity in respect of "claims" includes an indemnity against costs reasonably incurred in defending claims. [21]

ORDERS

1. Leave to appeal granted;
2. Appellant to file Notice of Appeal within 14 days;
3. Appeal allowed;
4. The judgment of Gibson DCJ to be set aside, and instead thereof judgment be entered for the appellant on the cross-claim;
5. The respondent to pay the appellant's costs of the appeal and of the proceedings before Gibson DCJ;
6. The respondent to have a certificate under the Suitors' Fund Act, if otherwise entitled.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40118 of 2003

MEAGHER JA GILES JA HODGSON JA

Friday, 6 February 2004 STATE OF NEW SOUTH WALES v TEMPO SERVICES LIMITED Judgment 1 MEAGHER JA: This matter concerns the construction of an indemnity clause contained in a contract between the claimant, State of New South Wales and the opponent Tempo Services Limited. Tempo is a company which carries on the business of contract cleaning. The present contract related to the cleaning of certain school premises. The indemnity clause, cl. 20 (c), was in the following form: "The Contractor shall be liable for and indemnifies and shall keep indemnified the Government against any liability, loss, expense, damages, claims, suits, actions, demands or proceedings, whether arising under any statute or at common law, in respect of personal injury (including illness) to or death of any person arising out of or in connection with or caused by the performance of the Services." 2 In the present case, the basic facts are those described by her Honour Gibson DCJ: "The plaintiff, who can only be described as a hopeless witness, agreed with leading questions from her counsel that on 5 September 2000 she tripped in the courtyard on the raised pit cover, suffered injuries but continued to work until November 2000. She agreed she had arrived that day for work at approximately 1.30pm and had noted instructions to commence cleaning in a particular area. She had strapped a "back pack" vacuum cleaner to her back, picked up a mop and walked to that area by crossing the school courtyard. On her way she observed some other persons and was not looking where she was going and tripped on the metal lid cover of a pit in the school courtyard. The plaintiff had been the school cleaner at the school for nine years and had crossed the school courtyard on at least a daily basis during that time." 3 The plaintiff, Mrs Coleiro, settled her action against the State of New South Wales, which obtained, by consent, a verdict in its favour. It is now, therefore, damnified only in costs. 4 Her Honour gave judgment in favour of Tempo Services Limited in the State's cross-action against it. The State's cross-action was, of course, founded on the contractual right of indemnity which I have set out. 5 It seems to me self evident that the State's damnification (slight though it may be) obviously "arises out of" or "arises in connection with" the work specified in the contract, which was the provision of cleaning services to the school. 6 It is therefore necessary to examine by what means her Honour arrived at such an apparently extraordinary result. This is not an entirely easy exercise, but one must suppose that her Honour's reasoning is contained in the following passage: "Firstly, the defendant must establish that the plaintiff suffered loss or damage arising out of the performance of the employer (the cross-defendant) of the services referred to in the indemnity clause. I note the defendant contends that walking across the courtyard amounted to carrying out the contract (or was at least preparatory to doing so). The evidence is that the plaintiff was required to clean certain rooms and she obviously had to travel there to do so. Secondly, however, the defendant must establish some connection between the injury and the performance of the services. It is my view that the defendant has established only what was proved in Venturoni , namely that the plaintiff was travelling across the defendant's premises for the purpose of carrying out her work when completely fortuitously and for no reason associated with the performance of any services the plaintiff tripped and fell. Further, it is my conclusion that the use of words referring to causality ("arising out of") meant that the parties did not intend the clause to apply in circumstances where there was not merely no blame capable of being attributed to the cross-defendant but there was simply no causal connection at all. Construing clause 20(c) contra proferentem means that not merely causal connection but some basis for liability must be established. However, if I am wrong in this regard, then the absence of any causal connection is of itself sufficient for me to hold that the defendant has not established the requisite elements to enable it to rely on the indemnity."

There can be no disagreement about what her Honour says in the first paragraph. But, thereafter, things do get muddled. Her Honour seems to place some emphasis on the fact that Tempo Services Limited bore "no blame" for the accident. But, with respect, that factor (true though it be) can have no relevance to the question of whether the accident (and therefore Tempo Services Limited's liability in costs) arose "in connection with the performance of services". 7 She also regards as important that the accident was "fortuitous", whatever that word means in the present context. Presumably it is a reference back to her having "observed some other persons and was not looking where she was going". In other words the fact that the accident, like most accidents, was inadvertent and not deliberate deprives it of being covered by the indemnity clause. One need not do more than propound such a view to realise its absurdity. 8 Next, she asserts that "there was no causal connection at all". This makes no sense unless it means that it was causally related to work which was preliminary to the contractual work, but not part of it. As so read, it makes sense, but is clearly wrong. The words "in connection with" are words of the widest import, do not require any direct or proximate relationship with the contract in question, but must have some causal or consequential relationship with it. The question then becomes: does Mrs Coleiro's injury have any causal or consequential relationship to the performance of the services contracted for? It must. She was at the accident site because the contract required her to be there; she was there during the school term, during specified hours of duty, her presence there had no other reason than performance of the contractual services; she had signed on at the commencement of her shift as required by a clause in specification forming part of the cleaning contract, and she was going about the performance of the contracted services. These factors must compel a finding that the injury arose "in connection with" the performance of the services. It does not matter that her mop was not actually on the floor. Her Honour does quote a decision of the Victorian Court of Appeal to support her reasoning. That decision is Australian Paper Plantations Pty Ltd v J & EM Venturoni [2000] VSCA 71. However, that case concerned the construction of the words "in respect of" not "in connection with", and in any event is plainly unsupportable. 9 To make matters worse, her Honour applied the wrong canons of construction in approaching the case. She applied the Privy Council decision of Canada Steamship Lines Pty Limited v R [1952] AC 192, which, after the High Court decision in Darlington Futures Limited v Delco Australia Pty Limited (1986) 161 CLR 500, can hardly be said to be good law. 10 I am therefore of the view that the following orders be made: i. Appeal allowed; ii. The judgment of Gibson DCJ be set aside, and instead thereof judgment be entered for the Appellant on the Cross-Claim; iii. The Respondent pay the Appellant's costs of the appeal and of the proceedings before Gibson DCJ. 11 GILES JA: I agree with Hodgson JA. 12 HODGSON JA: This application for leave to appeal arises out of proceedings brought against the claimant, State of New South Wales (the State), by a school cleaner, who sought damages for personal injury arising from an accident which she claimed to have suffered at Whalan Primary School. In those proceedings, the State put on a cross-claim against the opponent Tempo Services Limited (Tempo), which was the plaintiff's employer and which provided cleaning services at the school pursuant to a contract with the State, seeking indemnity on the basis of a provision of that contract. 13 During the hearing of the proceedings, the plaintiff's claim against the State was settled on the basis that there should be judgment for the State, with each party bearing its own costs. However, the State continued with its cross-claim, seeking judgment for its costs incurred in the proceedings. The primary judge dismissed the cross-claim, holding that the clause relied on by the State did not entitle it to indemnity from Tempo. The State seeks leave to appeal from that decision. The application for leave was argued on the basis that, if leave was granted, the appeal would be decided without further argument. 14 Although the primary judge described the plaintiff as "a hopeless witness", the case was decided by the primary judge, and the appeal has been conducted, on the basis that an accident occurred to the plaintiff substantially in the circumstances described by the plaintiff, which were as follows. The plaintiff arrived at the school for work at about 1.30pm. She noted instructions to commence cleaning in a particular area. She strapped a back-pack vacuum cleaner to her back, picked up a mop, and walked towards that area across the school courtyard. On the way, she tripped over a metal cover of a pit. 15 Clause 20(c) of the contract pursuant to which Tempo provided its services to the State provided as follows: 20(c) The Contractor shall be liable for and indemnifies and shall keep indemnified the Government against any liability, loss, expense, damages, claims, suits, actions, demands or proceedings, whether arising under any statute or at common law, in respect of personal injury (including illness) to or death of any person arising out of or in connection with or caused by the performance of the Services. 16 The primary judge found that the State was not entitled to be indemnified in respect of this accident, primarily it seems because she found that the accident was not causally connected to the performance of services. The State seeks leave to appeal, on the following grounds: 1. Her Honour erred in construing clause 20(c) ("the indemnity clause") in a contract between the State Contracts Control Board and the Respondent, dated 27 January 1999, for the cleaning of Government sites, Contract No 98/20125/5, Zone 5 ("the Contract") so as not to apply in the circumstances of the injury suffered by the plaintiff on 5 September 2000. 2. Her Honour erred in finding that the Appellant had failed to establish some connection between the injury and the performance of the contracted services, and that the injury suffered by the plaintiff was not an injury "arising out of or in connection with or caused by the performance of the contracted services" within the indemnity clause. 3. Her Honour erred in finding that the Appellant had established only that "the plaintiff was travelling across the defendant's premises for the purpose of carrying out her work when completely fortuitously and for no reason associated with the performance of any services the plaintiff tripped and fell". 4. Her Honour erred in construing the indemnity clause contra proferentem. 5. Her Honour erred in finding that construing the indemnity clause contra proferentem meant that "not merely causal connection but some basis for liability" had to be established. 6. Her Honour erred in finding that the Appellant had failed to establish the requisite elements of the clause 20(c) indemnity. 17 Mr. Walker SC for the State submitted that the words "in connection with" in cl.20(c) did not require any causal connection; and that in so far as the primary judge construed the clause contra proferentem in reliance on what was said in Canada Steamship Lines Pty. Limited v. R [1952] AC 192, she gave contra proferentem a wider operation than allowed by what the High Court of Australia said in Darlington Futures Limited v. Delco Australia Limited (1986) 161 CLR 500. Mr. Walker submitted there was ample connection between the injury and performance of the services: the plaintiff was at the work place, during working hours, for the purpose of performing services. 18 Mr. Hislop QC for Tempo accepted that contra proferentem had a limited role, as stated in Darlington. However, he submitted that cl.20(c) applied only when services were actually being performed; and at the time of the injury, the plaintiff was not performing cleaning services, but merely walking to a place where such services would commence. Even if that were incorrect, he submitted, there was an insufficient link here. The injury was not "caused by" or "arising out of" the performance of services: the latter words should not be given as wide a construction as they have been in the beneficial workers compensation legislation. The words "in connection with" may not have the widest ambit, and must be interpreted in their context: Burswood Management Limited v. Attorney-General (1990) 23 FCR 144 at 146. The words were not wider than "in respect of", which had been construed in Australian Paper Plantation Pty. Limited v. Venturoni [2000] VSCA 71 in a similar indemnity as not extending to a case where there was a mere temporal connection between the accident and the carrying out of the agreement. Finally, he submitted that cl.20(c) did not extend to costs, in circumstances where there was no liability in the State against which the indemnity operated. 19 In my opinion, "provision of services" in cl.20(c) is not limited to provision of services by a person who is injured; so that the argument that the injury could not be in connection with the provision of services in this case, because no services were being provided at the time, must fail. "Provision of services" in cl.20(c) means provision of services by Tempo; and those services include doing whatever is necessary to have cleaners in place at appropriate times, as well as monitoring and supervising the provision of services in various ways. It is plain in my opinion that services were being provided by Tempo, both at the school and elsewhere at the time the plaintiff had her accident. 20 Furthermore, in my opinion the personal injury to the plaintiff in this case was "in connection with" Tempo's performance of services. The matters referred to by Mr. Walker, namely that the injury occurred at a work place, during working hours, when the plaintiff was there for the purpose of performing services, had signed on, and was going about the performance of services, gives the injury sufficient connection with the provision of services. There is no need in my opinion to consider on whether the Victorian case of Venturoni was correct or not: in my opinion, it is distinguishable, if only because the words "in respect of" can be considered, in this context, as being narrower than the words "in connection with". 21 Finally, in my opinion, cl.20(c) is wide enough to give the State an indemnity in respect of costs. An indemnity in respect of "claims" includes an indemnity against costs reasonably incurred in defending claims. 22 For those reasons, in my opinion the following orders should be made: 1. Leave to appeal granted. 2. Appellant to file Notice of Appeal within 14 days. 3. Appeal allowed. 4. The judgment of Gibson DCJ to be set aside, and instead thereof judgment be entered for the appellant on the cross-claim. 5. The respondent to pay the appellant's costs of the appeal and of the proceedings before Gibson DCJ. 6. The respondent to have a certificate under the Suitors' Fund Act, if otherwise entitled. *********

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