Sydney Trains v Argo Syndicate AMA 1200

s Cas 61-110 Bailey v New South Wales Medical Defence Union Ltd (1995) 184 CLR 399; [1995] HCA 28 Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 Dickson Primer Industries Pty Ltd v National Employers' General Insurance Association Ltd [1974] 2 NSWLR 292 Findlay v Westfield Development Corporation Ltd [1972] 1 NSWLR 422 Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53 Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31 Henderson v Merrett Syndicates [1995] 2 AC 145; [1994] UKHL 5 Hewett v Court (1983) 149 CLR 639; [1983] HCA 7 Icon Co (NSW) Pty Ltd v The Owners - Strata Plan No 97315 [2022] NSWCA 114 James Adam Pty Ltd v Fobeza Pty Ltd (2020) 103 NSWLR 850; [2020] NSWCA 311 Karenlee Nominees Pty Ltd v ACN 004 312 234 Ltd (1994) 8 ANZ Ins Cas 61-236 Landon v Ferguson (2005) 64 NSWLR 131; [2005] NSWCA 395 Lexmead (Basingstoke) Ltd v Lewis (sub nom Lambert v Lewis) [1982] AC 225 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 Manufacturers Mutual Insurance Ltd v Hooper (1988) 5 ANZ Ins Cas 60-849 QBE Underwriting Ltd as managing agent for Lloyds Syndicate 386 v Southern Colliery Maintenance Pty Ltd (2018) 97 NSWLR 459; [2018] NSWCA 55 R & B Directional Drilling Pty Ltd (in liq) v CGU Insurance Ltd (No 2) [2019] FCA 458; 369 ALR 137 R v Khazaal (2012) 246 CLR 601; [2012] HCA 26 Rheem Australia Ltd v Manufacturers' Mutual Insurance Ltd [1984] 2 NSWLR 370 Scenic Tours Pty Ltd v Moore [2018] NSWCA 238; 361 ALR 456 Slater v Finning Ltd [1997] AC 473 State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412; [1966] HCA 56 Sydney Trains v Argo Syndicate AMA 1200 [2021] NSWDC 685 Sydney Trains v Argo Syndicate AMA 1200 (No 2) [2023] NSWDC 381 Synergy Scaffolding Services Pty Ltd v Alelaimat [2023] NSWCA 213 Taitoko v R [2020] NSWCCA 43 Thiess Bros Pty Ltd v New Zealand Insurance Co Ltd (1968) 13 FLR 3 Transfield Construction Pty Ltd v GIO Australia Holdings Pty Ltd [1996] NSWCA 538; (1997) 9 ANZ Ins Cas 61-336 Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd (2017) 94 NSWLR 108; [2017] NSWCA 27 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158 Wilson v Wilson (1854) 5 HL Cas 40; 10 ER 811 Winston v Roach [2003] NSWCA 310 Zurich Australian Insurance Ltd v Regal Pearl Pty Ltd [2006] NSWCA 328; 14 ANZ Ins Cas 61-715 Texts Cited: S Crennan and W Gummow, Jesting Pilate (3rd ed, 2019, Federation Press) D Derrington and R Ashton, The Law of Liability Insurance (3rd ed, 2013, LexisNexis) H Hart and T Honoré, Causation in the Law (2nd ed, 1985, Clarendon Press) Category: Principal judgment Parties: Sydney Trains (Appellant) Argo Syndicate AMA 1200 (Respondent) Representation: Counsel: D Weinberger (Appellant) J Catsanos SC, R Perla (Respondent)

Solicitors: McCabes (Appellant) HBA Legal (Respondent) File Number(s): 2023/00323670 Publication restriction: Nil Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2023] NSWDC 381 Date of Decision: 15 September 2023 Before: Andronos SC DCJ File Number(s): 2020/00315332

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] In 2016, the appellant, Sydney Trains, engaged a contractor, Infrastruction Pty Ltd, to provide and install tiles on a stairway between the platform and concourse at Penshurst railway station. There were two sets of tiles - one with dimensions of about 300 x 300mm and the other 200 x 200mm. In early 2016, testing indicated that, when wet, the larger tiles had a "moderate" contribution to the risk of slipping and the smaller tiles had a "low" risk. On a rainy day after Sydney Trains had reopened the stairway, a commuter slipped on one of the larger tiles at the top of the stairway and injured herself. After Sydney Trains was found liable for that injury, and Infrastruction having been deregistered, Sydney Trains brought separate proceedings under s 601AG of the Corporations Act 2001 (Cth) against Infrastruction's public liability insurer, the respondent Argo, alleging Infrastruction's breach of implied terms in a contract between Infrastruction and Sydney Trains, to which, so it was said, the policy responded. The policy indemnified the insured "against liability for Injury…sustained or as a result of an Occurrence". At trial, the primary judge found that Infrastruction had breached an implied term of the contract by laying tiles which were moderately slippery when wet and therefore not reasonably fit for their purpose. The primary judge found that Infrastruction's breach had caused the commuter's fall (given video evidence indicating the location of the slip) but found that Sydney Trains' act of reopening the stairway in circumstances where it knew of the defective tiles "broke the chain of causation". The primary judge proceeded to find that the policy responded to Infrastruction's liability for contractual damages. On appeal, Sydney Trains submitted that the primary judge erred in finding that it was the sole cause of the commuter's injury merely because it reopened the stairway and knew or may have known of the tiles' slipperiness. Argo submitted that the primary judge erred in finding that Infrastruction breached the implied term and that that breach caused the commuter's fall. It also submitted that the Policy did not respond to a claim based on Infrastruction's breach of contract with Sydney Trains, because the contractual liability was not liability "for" an Injury, and that an exclusion in the Policy for breach of performance warranties applied. The Court held, allowing the appeal: 1. In circumstances where the appellant as buyer was placing some reliance upon the contractor's skill and judgment in selecting the appropriate tiles, and the buyer had identified the purpose of the building supplies to be installed, there is an implied term that those supplies be fit for purpose. That is so notwithstanding that the buyer had reserved the option to approve the proposed tiles: [66]-[79]. Scenic Tours Pty Ltd v Moore [2018] NSWCA 238; 361 ALR 456, applied. Hewett v Court (1983) 149 CLR 639; [1983] HCA 7, referred to. 2. Although video evidence of the commuter's slip and fall at the top of the stairs was not sufficient, it was open to the primary judge to find that Infrastruction's breach had caused the commuter's slip, having regard to the inferences that could be drawn from surrounding circumstances to the effect that the tiles were wet at the time: [80]-[96]. 3. The chain of causation is not necessarily broken by the act of a plaintiff which constitutes a more immediate cause of the loss or damage than the defendant's negligence. The use of metaphors such as "break the chain of causation" is no substitute for legal analysis. It was not established that Sydney Trains made a deliberate decision to reopen a stairway known to be more slippery than the specifications it had proposed, or that it even appreciated the nature of the defect: [97]-[124]. 4. Until and unless someone suffered personal injury, there was no liability for "Injury" so defined. Whether an indemnity "for" Injury responds only to direct claims by someone who actually sustains personal injury is a question of construction depending on the text and context of the words in the Policy. While, generally speaking, "for" connotes a closer relationship than "in respect of", the phrase when used in the context of this Policy was apt to encompass secondary liability for personal injury: [126]-[156]. Rheem Australia Ltd v Manufacturers' Mutual Insurance Ltd [1984] 2 NSWLR 370, Manufacturers Mutual Insurance Ltd v Hooper (1988) 5 ANZ Ins Cas 60-849 and Zurich Australian Insurance Ltd v Regal Pearl Pty Ltd [2006] NSWCA 328; 14 ANZ Ins Cas 61-715, considered. D Derrington and R Ashton, The Law of Liability Insurance (LexisNexis, 3rd ed, 2013), referred to. 5. There is no proper basis to construe the performance warranty exclusion so as to apply to liability for breaches of a term that tiles supplied by Infrastruction be fit for purpose. The words "unless liability would have attached in the absence of such clauses or warranties" also confirm that the exclusion is directed to additional liability arising out of consensually assumed obligations, rather than those imposed by law: [157]-[164].

JUDGMENT

1. LEEMING JA: Sydney Trains appeals as of right from a District Court judgment in favour of Argo Syndicate AMA 1200 ("Argo"): Sydney Trains v Argo Syndicate AMA 1200 (No 2) [2023] NSWDC 381. The underlying facts are commonplace: a commuter fell on a recently retiled stairway descending to a station platform, and after Sydney Trains was found liable because the tiles were too slippery, it sued in separate proceedings the public liability insurer of the contractor which had laid the tiles, the company having been deregistered.
2. Sydney Trains sued on what it said was a written albeit unexecuted contract, or alternatively upon implied terms of whatever contract had been in place for laying the tiles. The primary judge was unpersuaded that there was a written contract between the parties, but found that two of the three alleged implied terms were in place, and that the contractor had breached one of them by laying tiles which were "moderately" slippery when wet and for that reason not reasonably fit for their purpose. Nonetheless, Sydney Trains' claim was dismissed, because his Honour found that Sydney Trains' act of reopening the stairway, in circumstances where it was aware of the results of testing the slipperiness of other tiles on the stairway, "broke the chain of causation".
3. Some of the issues in this appeal require attention to such basic questions as the role of s 5D of the Civil Liability Act 2002 (NSW), the availability of contributory negligence and the way in which the occurrence-based public liability policy and various of its exclusions operated. This comes about because of the unusual procedural background and the moderately complex interaction of contract, tort and statute.

Factual and procedural background

1. Sydney Trains is a corporation constituted under s 36 of the Transport Administration Act 1988 (NSW). Argo appears to have been an entity formed outside Australia and appointed as an agent of Lloyds for the purposes of s 95 of the Insurance Act 1973 (Cth). The second defendant at trial had been the Lloyd's syndicate named as the insurer on the policy on which Sydney Trains sued. Sydney Trains consensually amended its claim by removing the Lloyd's syndicate on 2 March 2021, and appears thereafter to have proceeded against Argo on the basis that Argo accepted any liability on the policy; at any rate, that was how the appeal was conducted in response to my inquiry, and from time to time I shall follow the parties' terminology and refer to Argo as an insurer even if that is not strictly accurate.
2. Infrastruction Pty Ltd was a company which undertook in 2016 the "refreshing" of Penshurst railway station in suburban Sydney, in the course of which it replaced tiles both on the concourse above the train platform and on the stairway from the concourse down to the station platform. No executed copy of the contract was tendered.
3. It is difficult to know precisely when in 2016 the tiles were laid. As will be seen, the timing is of some importance in resolving the issues concerning causation. The documents in the appeal books included eight invoices issued by Infrastruction between 31 January and 25 October 2016, but they do not disclose the works the subject of each invoice. The "Station Refresh Scope of Work" document confirms that the replacement of the tiles was one of nine items within Part 1 "Minor Repairs to Station Structures" (others involved glazing, electrical, hydraulic works and so on), while there were also seven other Parts (Painting Works, Garden Maintenance and Landscaping, Toilet Refresh, Lighting Improvement, Kit of Parts Installation, Deep Cleaning and Bird Proofing). Within the staircase works in Part 1 were obligations to "remove red vinyl", to install new handrails, to replace the existing "tactiles" and install new "tactiles" (these are the raised metal discs visible in one of the photographs reproduced below at [18], just before the top of the stairway), and: Replace all stair stringer tiles to all stair cases. Propose tile options matching the station decor. Tiles are to be R12 slip rating and approved by Sydney Trains prior to installation. Installation is to be in line with the Sydney Trains Specification and Australian Standards.

Ms Michael's accident and subsequent claim against Sydney Trains

1. At around 7.35am on 24 August 2016, Ms Nicole Michael slipped and fell at the top of the stairway. She had been intending to catch a city-bound train. Her fall was captured on CCTV footage. It is clear that she lost her balance while her foot was on one (or perhaps two) of the 300 x 300mm tiles at the top of the steps shown in the photograph above, the second or third from the left immediately after the row of tactiles and before the nosing of the first step down. She had been intending to descend the left side of the stairway. She fell awkwardly, coming to rest on the top few steps. Although she proceeded to work that day, she was found to have sustained serious injury.
2. In 2017, Ms Michael sued Sydney Trains for negligence as occupier of the land in the District Court, basing her claim on the slipperiness of the stairs. She did not sue Infrastruction. There was no need for her to do so; her claim was not an "apportionable claim" to which Pt 4 of the Civil Liability Act applied, and so the liability of Sydney Trains to Ms Michael continued to be solidary. Sydney Trains did not join Infrastruction on a cross-claim. It is clear that after liquidators were appointed to Infrastruction any claim could only be brought with leave of the Supreme Court pursuant to s 471B of the Corporations Act 2001 (Cth), and while there was no evidence of this in the limited materials made available in this Court, it seems to have been common ground in this litigation where almost everything was in issue that that occurred in late June 2017: see Sydney Trains v Argo Syndicate AMA 1200 [2021] NSWDC 685 at [34] and [35]. Coincidentally, on 1 June 2017 the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) commenced, replacing s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ("Attachment of Insurance moneys"), the construction of which had produced "divisions of opinion in the New South Wales Court of Appeal" (Bailey v New South Wales Medical Defence Union Ltd (1995) 184 CLR 399 at 445; [1995] HCA 28). Prima facie, the 2017 statute entitled both parties to seek leave to join Infrastruction's insurer. But that did not occur.
3. Sydney Trains defended the action but failed at trial. Ms Michael obtained judgment on 5 July 2018 in the amount of $429,399.40 plus costs. The reasons for judgment make it clear that the slipperiness of the tile at the top of the stairway was in issue, and indeed the appeal books (which are far from exemplars of compliance with the requirement in UCPR r 51.29(1) that they contain those documents which are "relevant and necessary" for the hearing and determination of the appeal) included the invoice to Sydney Trains' solicitors from the University of New South Wales for the expert report of Dr Cooke. However, neither his report nor that of the expert called by Ms Michael was tendered in the proceedings against Argo.

Sydney Trains' belated proceedings against Infrastruction's insurer

1. On 4 November 2020, Sydney Trains brought separate proceedings in the District Court against Argo, the Lloyd's underwriters and another insurer. The proceedings insofar as they were against the other insurer were dismissed by consent by orders filed on 24 June 2021.
2. Sydney Trains advanced claims in tort and contract. It included a claim for statutory contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, on the basis that Infrastruction was a tortfeasor which would also have been liable for the personal injury suffered by Ms Michael, and Argo stood in its shoes, both because of s 601AG and also because of the Civil Liability (Third Party Claims Against Insurers) Act, s 4(3).
3. So far as I can see, the inter-relationship between the new overlapping rights created by Commonwealth and State statute following the deregistration of an insured company has not been explored in any case, and it has been assumed that both sets of rights are available concurrently: see for example Synergy Scaffolding Services Pty Ltd v Alelaimat [2023] NSWCA 213 at [10] and [43]. There is no occasion to consider the slightly different rights, available upon a grant of leave, under State law, with the automatic entitlement conferred by s 601AG. That is not merely because of an absence of argument, but because Sydney Trains was refused leave to proceed with its claim under the Civil Liability (Third Party Claims Against Insurers) Act pursuant to s 5(3) because the claim was brought outside the two year limitation defence for claims of statutory contribution in s 26(1)(a) of the Limitation Act 1969 (NSW): Sydney Trains v Argo Syndicate AMA 1200 [2021] NSWDC 685. That period ran from the date judgment was entered in the District Court, as opposed to when that judgment was varied in the Court of Appeal, and so Sydney Trains' decision to commence a few days before the second anniversary of the variation of the judgment in this Court was too late. Section 26(2)(a) of the Limitation Act addresses this situation in terms. It provides that where the plaintiff is liable by reason of a judgment, the date that cause of action accrues is the date the judgment is given "whether or not, in the case of a judgment, the judgment is afterwards varied as to quantum of damages" (the ancestry of that provision is considered in Aer Lingus plc v Gildacroft Ltd [2006] EWCA Civ 4; [2006] 1 WLR 1173). Sydney Trains did not seek leave to appeal from that decision, nor did its eventual appeal as of right extend to that earlier decision (cf Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 at [6]-[8]).

The role of the Civil Liability Act

1. Part 1A of the Civil Liability Act had an important, and far from straightforward, application to this litigation.
2. First, in respect of Ms Michael's action for negligence against Sydney Trains, her claim arose out of a "public transport accident". It would appear that the combined operation of s 121 of the Transport Administration Act 1988 and ss 3B(1)(e) and 3B(2) of the Civil Liability Act meant that Pt 1A applied to her claim. That conclusion accords with the breadth which has been given to the words "arising out of" in this context: see Landon v Ferguson (2005) 64 NSWLR 131; [2005] NSWCA 395 at [19]-[33] (injury to employee occurring while train being driven to sheds for cleaning). If contrary to the above, s 121 did not apply, then Pt 1A applied directly to her claim.
3. Secondly, and much more importantly, part but not all of Sydney Trains' contractual claim against Infrastruction was governed by Pt 1A. That occurred in the following way. "Negligence" is defined in s 5 of the Civil Liability Act to mean "failure to exercise reasonable care and skill", and s 5A provides that the provisions in Pt 1A apply "to any claim for damages for harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise". One result is that it is necessary for Sydney Trains to satisfy s 5D on questions of causation, if and only if its claim against Infrastruction for breach of contract is one which involved a failure to exercise reasonable care and skill.
4. A breach of the first of the alleged contractual promises, to complete the works with due care and skill, would at least arguably be a failure to take reasonable care when completing the works. But a breach of a promise to provide tiles that were fit for purpose because they lacked an adequate level of slip resistance falls into a different category.
5. The character of the implied term alleged to be breached also affects Argo's partial defence of contributory negligence. A breach of the first implied term might at least arguably amount to a breach of "a contractual duty of care that is concurrent and co-extensive with a duty of care in tort" within the meaning of the expanded definition of "wrong" in s 8 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW), thereby giving rise to a partial defence of contributory negligence. Sections 8 and 9 of that statute expand the operation of the statutory defence of contributory negligence, in light of the holding in Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 that that Act is not available where there is a claim for breach of contract, even if the breach is of a duty owed concurrently in both tort and contract. But there is nothing in ss 8 and 9 to address cases where the same damage is caused by one party's tortious conduct and another party's breach of a contractual duty of care which is not concurrent and co-extensive with a tortious duty of care. (In this respect, the law of England and Wales diverges from that applicable in Australia, notably as a consequence of Henderson v Merrett Syndicates [1995] 2 AC 145; [1994] UKHL 5.)

The reasoning of the primary judge

1. It is not necessary for present purposes to summarise all aspects of his Honour's reasoning. It is also convenient to defer summarising the reasoning addressing the construction of the insurance policies until the end of this judgment, where those issues are addressed and resolved.
2. The three most important factual findings made by the primary judge, all of which were challenged by either the notice of appeal or the notice of contention, concerned the slip resistance of the tile or tiles on which Ms Michael slipped, whether Sydney Trains had selected those tiles, and whether the slip resistance of the tiles had caused Ms Michael's accident.

The slipperiness of the tiles

1. The Specification provided that tiles were to have minimum thickness of 10mm and "Slip Rating: R12 minimum / Class W". As earlier mentioned, three reports were prepared in (most probably) late April 2016. Counsel for Sydney Trains admitted that those reports were in his client's possession from March or April 2016.
2. One of the reports tested the slip resistance of the "nosing tiles", which were laid at the edge of the steps and may be seen in the photographs. They were ridged. The other two reports tested the 300 x 300mm tiles laid on the stair landing, and the 200 x 200mm tiles laid on the concourse. The nosing tiles, and the 200 x 200mm tiles on the concourse, all tested well within the Specification. However, the tiles on the landing had a "Slip Resistance Value" of 41, which corresponded with a classification of X, rather than W. AS4586 stated that that level of slip resistance corresponded to a "moderate" contribution to the risk of slipping when the surface was wet.
3. The primary judge was acutely aware of certain evidentiary peculiarities in the litigation. Despite the slipperiness of the actual tile or tiles on which Ms Michael fell being the main issue in the trial of her action against Sydney Trains, none of the expert evidence adduced by the parties to that litigation was tendered before him. In the earlier litigation, by reference to different evidence, the trial judge (Curtis ADCJ) determined that there was a breach of a duty owed to users of the railway station to have tiles with an SRV of less than 54. The primary judge was conscious that s 91 of the Evidence Act 1995 (NSW) precluded his relying on the reasons for judgment of Curtis ADCJ (which for some reason was tendered without objection), and did not do so. After summarising those matters, the primary judge said at [81]-[84]: Ultimately, the question is whether Sydney Trains has established, on the evidence before me, that a moderate (as opposed to low) contribution of the floor surface to the risk of slipping when wet is a breach of the obligation of fitness for purpose. On the basis of the Work Safe Reports - particularly Table 3B - I find that laying tiles that make a moderate contribution of the floor surface to the risk of slipping when wet was a breach of the implied obligation. I accept the Work Safe Reports as establishing that compliance with the obligation of the duty to provide tiles of adequate slip resistance required the provision of tiles on and around the staircase with a SRV of 45 or more. The stairs were under cover but otherwise open to the elements. In wet weather they would be traversed by many people, some of whom could reasonably be expected to be rushing to catch their trains. I also accept that the Work Safe Reports establish that, in supplying and laying tiles with a SRV of 41, Infrastruction was in breach of the implied term of fitness for purpose.

Who selected the tiles?

1. The primary judge noted that there was no direct evidence as to who selected the tiles, both parties having advanced a purely documentary case. Sydney Trains pointed to an invoice and receipt for the tiles, in support of the finding that Infrastruction had selected and acquired the tiles, or at least had shifted the evidentiary burden to Argo to establish that Infrastruction had not been responsible for the selection of the tiles.
2. On the other hand, Argo referred to the Scope of Works and Technical Specifications, which identified particular types of tiles to be used, to be supplied from Glennon Tiles, and further that in any case Sydney Trains was required to "approve" the tiles.
3. The primary judge resolved this at [65]-[67]: The evidence on this question is slight. Infrastruction had a copy of the Specification, which provided a minimum standard of slip resistance rating. There was no evidence of any communication in which Infrastruction sought the approval of Sydney Trains for any particular tiles. The Specification identified Glennon Tiles as a potential supplier of tiles but, in its terms, only pre-approved particular tiles from Glennon Tiles for the purpose of colour matching. In my view, the pre-approval of Glennon Tiles and the cognate question of Infrastruction's responsibility to "propose" tiles went only to the question of the aesthetic compatibility of the proposed tiles with the Sydney Trains colour scheme. In the absence of evidence to the contrary, the usual course of events would be that the party supplying and installing the tiles would be responsible for their selection. For the Insurer to establish that the tiles had been selected, mandated or approved by Sydney Trains would have required some positive evidence that Sydney Trains was responsible for the selection or approval of the tiles. I am not satisfied this was the case. In my view, the Specification does not suffice in this regard. Accordingly, I find that Infrastruction was responsible for the selection and acquisition of the tiles.

Causation

1. The only basis upon which Argo succeeded at trial in not being contractually liable to Sydney Trains on Infrastruction's public liability policy was because his Honour found that there was a break in the chain of causation.
2. The primary judge referred to the video evidence, and was "satisfied that the slipperiness of the tile at the top of the stairs was factually a cause of Ms Michael's slip and fall and consequent personal injury": at [86]. This was disputed by Argo's notice of contention. His Honour noted that Sydney Trains, which sued to recover the amounts paid pursuant to the judgment in favour of Ms Michael, together with its own costs of the trial and interest, bore the onus of showing, by either direct or circumstantial evidence on the balance of probabilities, that its loss was caused by the breach of contract. His Honour recorded Argo's submission that "any breach by Infrastruction did not materially cause or contribute to the harm suffered because a subsequent event can be treated, in a practical sense, as the sole cause of the damage", relying upon Chappel v Hart (1998) 195 CLR 232 at 238 and 244; [1998] HCA 55. Argo relied on the fact that Sydney Trains, with knowledge of the unfitness for purpose of the tiles that had been laid, opened the staircase for use by the general public and that this conduct was the "proximate cause" of the loss in law. His Honour thereafter addressed the reasoning in Lexmead (Basingstoke) Ltd v Lewis (sub nom Lambert v Lewis) [1982] AC 225 and Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd (2017) 94 NSWLR 108; [2017] NSWCA 27, on the basis of which he framed the issue as being whether Sydney Trains not merely knew of the breach, but also whether it was aware of its significance when it opened the station to pedestrian traffic. His Honour thereafter reasoned at [95]-[100]: In the present case, Mr Catsanos places great emphasis on the fact that Sydney Trains, at some point between April and August 2016, elected to open the concourse and staircases to the public with knowledge that the tiles, as laid, made a moderate contribution to the risk of slipping when wet. Further, there was evidence before the Court that there had been a number of incidents in the period between April and August 2016 in which commuters slipped and fell on tiled surfaces at the Station. The evidence did not demonstrate, however, that slipperiness of tiles similar to those in issue in the current proceedings was a cause of any of those incidents, so was of no weight. More significantly, the Specification itself, irrespective of whether it had contractual force, evidenced Sydney Trains' knowledge that a minimum SRV of 45 was Sydney Trains' own standard in respect of tiles laid in the public areas of the Station. Sydney Trains had knowledge of the contribution of the tiles to the slipperiness of the surface when wet some months prior to Ms Michael's fall. It had knowledge of the significance of such slipperiness to the risk of pedestrians slipping and falling on them. Sydney Trains determined to open the staircase to the public notwithstanding such knowledge. In the circumstances of this case, this appears to me to be a sufficient basis to find a break in the chain of causation between Infrastruction's breach of contract and Sydney Trains' loss by reason of its liability to Ms Michael in respect of her 24 August 2016 fall. I, therefore, find that Infrastruction's breach of the implied warranty of fitness for purpose did not cause Sydney Trains' loss. I should add that if, contrary to my views above, there was also implied into the contract an obligation to comply with all relevant Australian Standards and Building Code conditions, my conclusions as to causation would continue to apply. Accordingly, an essential component of Sydney Trains' claim cannot be made out and its claim against the Insurer fails.

Issue arising on appeal

1. Sydney Trains brought a very narrow appeal, confined to a challenge to the finding of fact that the chain of causation was broken. In contrast, Argo in addition to defending the appeal sought to sustain the judgment by a substantial notice of contention, in which it challenged the primary judge's findings of breach and causation and denied that any liability on the part of Infrastruction was liability to which the policy responded. Until the hearing, it also advanced a partial defence of contributory negligence. Strictly speaking, this required a cross-appeal, because Argo was seeking to vary rather than to affirm the judgment of the District Court: see UCPR rr 51.17 and 51.40. However, nothing turns on this, because this ground of Argo's notice of contention was abandoned as earlier described.
2. The most convenient course is to address the issues in a logical order, which departs from that of the oral submissions in support of the notice of appeal and notice of contention. Accordingly, what follows addresses the following issues: 1. did the primary judge err in finding breach of the implied term (notice of contention ground 4); 2. did the primary judge err in finding that the breach of the implied term caused Ms Michael's fall (notice of contention ground 5); 3. did the primary judge err in finding that Sydney Trains' reopening of the station knowing of the slip resistance tests broke the chain of causation (notice of appeal ground 1), and 4. did the primary judge err in dismissing Argo's submissions that the insurance policy did not respond (notice of contention ground 3).

Breach of the implied term

1. Ground 4 of Argo's notice of contention contended that the evidence did not establish that there was an implied term that the tiles be fit for purpose, and did not establish that the term was breached. It also challenged the intermediate finding of fact that Infrastruction was responsible for the selection and acquisition of the tiles.
2. In the absence of testimonial evidence, these submissions must be resolved by reference to the documents. They show that Infrastruction placed an order for 108 boxes of tiles (63 of the 305 x 305mm tiles and 55 of the 200 x 200mm tiles) on 1 April 2016 which were delivered to the Infrastruction Site Office at Penshurst at some stage thereafter. The invoice recorded that the terms of the sale were "Cash on Delivery". The invoice bears two stamps. One is difficult to read, save for the concluding letters "VED" and the date "APR 2016" which surely denotes that the invoice was received in April 2016. The other is a stamp identifying the project, amount, date and cheque number, on which has been written the price, project IP113, code 20:01 and "OK to pay". Prima facie, Infrastruction thereby became the owner of the tiles in its possession, until they became affixed to the station concourse, steps, platform and other surfaces.
3. Infrastruction also arranged for Work Safe Slip Testing to investigate the slip resistance of the tiles, most likely on 26 April 2016, and paid that company's invoices and received that company's three reports, copies of which were also given to Sydney Trains.
4. It was common ground that there was no direct evidence about the process of selecting and approving the tiles.
5. Argo challenged the reasoning of the primary judge at [66] that "the usual course of events would be that the party supplying and installing the tiles would be responsible for their selection". It said that the finding was "not supported by any evidence and [was] not reliable". It said that the effect of the contract was that Infrastruction's role was merely "to propose options and recommendations for [Sydney Trains'] consideration, as opposed to supplying materials". The high point of this case was the references in the Specification to the effect that Sydney Trains was to approve the tiles to be used.
6. I do not accept these submissions. The issue is one which turns on inferences to be drawn from the documents, in circumstances where neither side chose to call any evidence from the people involved.

Argo's challenge to the finding of causation

1. The primary judge found that the breach of contract was a cause of Ms Michael's fall, but that Sydney Trains' conduct in reopening the station, knowing of the slip resistance testing, broke the chain of causation. Argo challenged the first aspect of that finding by ground 5 of its notice of contention, and Sydney Trains the second by its appeal. Although they are closely related, it is convenient to address each in turn.
2. Argo's submission challenging the finding of causation was a simple one. The testing which had been conducted on the very tile or tiles on which Ms Michael slipped had not been tendered at trial. Nor, so Argo submitted, was there any evidence to justify an extrapolation from the slip resistance of the tiles on the stairway landing to the slip resistance of the tiles at the top of the stairway. Indeed, Argo went further, and said: There was no basis to infer that the area where Ms Michael fell had a slip resistance which was not adequate, particularly when the majority of the testing showed the tiles to have high levels of slip resistance. Common human experience is that people slip for various reasons, not only because the floor surface is slippery.
3. The sole basis on which the primary judge reasoned to find causation was "[o]n the basis of the video evidence": at [86]. That evidence showed Ms Michael's falling, but Argo maintained that it did not demonstrate that any tile was unduly slippery.
4. Moreover, consistently with its approach of challenging every element of Sydney Trains' case, Argo contended that the slip resistance testing was based on the steps being wet, and it had not been shown that the tile on which Ms Michael had slipped was wet.
5. I accept Argo's submission that the video evidence showing Ms Michael's fall does not of itself establish that the particular tile or tiles at the top of the stairway was unduly slippery. This is an example of the limitations of video and photographic evidence.
6. I do not accept Argo's submission that the tiles were not wet. It is contradicted by the incident report, which was prepared in the immediate aftermath of Ms Michael's fall. It provided: 0735: Customer approached CSA and informed him she had fallen at the top of the stairs leading down towards the platform. Stated she had hurt her leg but did not want ambulance/first aid. Only wished to report it. Weather was raining at the time. Ground was wet. Possible customer slipped on stainless steel tactiles. Yellow wet/Safety signs were placed at either entrance of the concourse and at the bottom of the stairs at the time. Customer said she was not running however she did say she was rushing to catch the train. Incident visible on camera 5 and 8. (Emphasis added.)

A "break in the chain of causation"?

1. As reproduced above, the reasoning of the primary judge which was dispositive of Sydney Trains' claim was based on its "knowledge" of the slip resistance of the tiles on the stairway landing, coupled with its awareness of the significance of the defects, in circumstances where Sydney Trains nonetheless determined to open the stairway to commuters.
2. Sydney Trains submitted that its possession of the Work Safe Slip Testing reports did not entail that any relevant officer had knowledge of them. It said that there was no evidence, nor any submission made, that it was aware of the significance of the non-compliance. It said that the only evidentiary foundation for these findings was an admission that the reports were in the possession of Sydney Trains in March or April 2016. It was said that "the entire unpleaded novus actus case was determined merely because someone within my client had possession" of the slip resistance reports, and that that proposition was bad in law.
3. Argo said that possession of the reports entailed knowledge of their contents, and that it was "inescapable that the appellant was aware of the significance of those results, having regard to its role as the government authority regulating transport operation and the body of the slip testing reports which provided a detailed explanation as to the meaning of the results".
4. Argo emphasised that whether or not the chain of causation was broken was a fact specific and contextual question, and accepted what was said in Allianz Australia Insurance Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224 at [104]-[105] to the effect that the question was the same whether the claim was brought in tort or contract and involved treating the intervening act or event "in a practical sense as the sole cause of the damage". It said that its case was simply that Sydney Trains had the slip testing results, had between April and August to rectify the defects, led no evidence as to what occurred but yet chose to open the platform to the public: "We say opening the station to the public in the knowledge of that circumstance is an intervening act which breaks the chain of causation and the primary judge was entitled to come to the conclusion he did".
5. In response to the absence of this from Argo's pleading, Argo said that its defence raised causation, the written outline of closing submissions and its oral submissions made the point, to which Sydney Trains responded. Counsel for Sydney Trains had responded at trial to Argo's submissions by stating that it was "a bizarre proposition that by opening the train station to passengers there was a break in the chain of causation".

Insurance defences

1. Argo ultimately pressed two bases on which it said that the policy did not respond to liability for damages in contract on the part of Infrastruction to Sydney Trains. The first was that the liability was for damages for breach of contract, which was not a liability "for" personal injury. The second was that a performance warranty exclusion applied. It is convenient to deal with each in turn.

Did the policy respond to liability for contractual damages?

1. Infrastruction had taken out an EBM Construction Risks 44A Public and Products Liability Insurance Policy, with cover extending to public liability, pollution liability and completed operations or products liability. The insuring clause was: The Insurer(s) hereby agrees, subject to the limitations, Exclusions, terms and Conditions of this Policy, to indemnify the Insured against all its legal liability to pay compensation or damages (including claimants' costs, fees and expenses) in accordance with the law of any country within the Territorial Limits set out in the Schedule. This indemnity applies to legal liability as specified in each Section of this Policy, arising from an Occurrence within the Territorial Limits in connection with the Business of the Insured specified in the Schedule, and is subject to the exclusions applicable to that Section or otherwise to this Policy.
2. Within Section A of Part 2, which concerned Public Liability, cl 2.1 provided: The Insured is indemnified in accordance with the Insuring Clauses against liability for Injury, Damage, or Advertising Liability sustained or as a result of an Occurrence during the Period of Insurance.
3. "Injury" was defined to mean: death, bodily injury, illness, disease, mental injury, mental anguish, shock, false arrest, invasion of privacy, detention, false imprisonment, false eviction or malicious persecution [sic] but does not include Occupational Illness.
4. "Occurrence" was defined to mean: an event or series of events attributable to one source or original cause or continuous or repeated exposure to conditions, which results in Injury or Damage provided that the Insured did not intend that such Injury or Damage would result. All exposure to substantially the same general conditions shall be deemed one Occurrence.
5. Ground 3(a) of the notice of contention reiterated Argo's submissions at trial, that: 1. the relevant "Occurrence" was the laying of the tiles which was a breach of the contract on which Sydney Trains sued, as opposed to Ms Michael's slip, and 2. the policy did not respond to claim based on Infrastruction's breach of contract with Sydney Trains, because the contractual damages were not "Injury".
6. Thus it was put in Argo's written submissions in this Court: The respondent's short point below was that the claim by the appellant was a claim for breach of contract said to have resulted in economic loss. It would never result in a "liability for injury" and the policy therefore did not respond. And: The Occurrence for which damages are sought in the present case was the so-called contractual breach, it was not the injury to Ms Michael. The appellant did not sue for that injury, it sued for contractual damages, a background cause of which was the injury to Ms Michael. This is distinct from a claim in negligence by the person who suffered injury or someone claiming through that person.

Did the performance warranty exclusion apply?

1. Grounds 3(b) and (c) of Argo's notice of contention relied on exclusions for performance warranties and professional activities: This Policy excludes liability: 3.1 arising out of liquidated damages clauses, penalty clauses or performance warranties under a Contract unless liability would have attached in the absence of such clauses or warranties; … 3.3 arising out of any negligent act error or omission in the performance of the Insured's professional activity or duties, including product design; However, this Exclusion 3.3 shall not apply to: (a) Injury, Damage, or interference with traffic or property or the enjoyment of use thereof by obstruction, trespass, loss of amenity or nuisance; (b) the rendering or failure to render professional medical advice or first-aid by medical persons or any other person(s) employed by the Insured to provide such services at or in the vicinity of any work site or premises owned or used by the Insured.
2. The claim that the "professional activity" exclusion was engaged was supported by two paragraphs of written submissions and a passage in GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 at 568 to the effect that "professional" is very broad and is not necessarily confined to persons holding professional qualification. After this Court observed that there was a deal of authority, some in this context and some in other contexts such as s 5O of the Civil Liability Act, concerning what is a "professional", not to mention the five addresses by Sir Owen Dixon collected under the heading "The Professions" in S Crennan and W Gummow, Jesting Pilate (3rd ed, 2019, Federation Press) at 263-283, and the width of the exclusion if it extended to any person who was performing work for remuneration, and after an opportunity for instructions had been given, counsel advised that this ground was not pressed. Nothing more need be said.
3. The primary judge rejected the submission based on the performance warranty at [133]: Mr Catsanos submitted that the performance warranty exclusion at cl 3.1 operates to exclude liability. In my view, it would not be consistent with a businesslike interpretation of the Policy to treat an obligation of fitness for purpose in respect of the installation of tiles for use in a public place (which is implied in law) as a performance warranty. Such a construction, if applied to the whole of the Works performed for Sydney Trains, would leave very little work for the Policy to do. Further, the immediate documentary context of the reference to a performance warranty, in its proximity to liquidated damages clauses, penalty clauses and limitation where liability would otherwise attach, indicates that exclusion cl 3.1 does not apply in the present circumstances.

Conclusion and orders

1. For those reasons, I have concluded that Sydney Trains' appeal should be allowed, and none of the grounds which were pressed in Argo's notice of contention are made out.
2. The judgment below should be set aside and in lieu thereof Sydney Trains is entitled to judgment against Argo. There is no reason why costs should not follow the event, both at first instance and in this Court.
3. At the conclusion of the hearing, Argo advised that the judgment amount nominated in the notice of appeal was not necessarily agreed. I understood that to be by reason of the calculation of interest, as opposed to the judgment debt and quantification of Ms Michael's costs, although Argo did not explain the area of disagreement or the basis of any dispute. It sought a period for the parties to be heard further in the event, implying that it was likely that agreement would be forthcoming. The orders I propose will accommodate Argo's request.
4. I propose the following orders:
5. Appeal allowed.
6. Set aside the judgment of the District Court of 15 September 2023 and order 2 as to costs of the same date.
7. Direct the parties to file and serve within 14 days of today agreed orders, or in lieu of agreement, short minutes of order for which each party contends accompanied by submissions not exceeding three pages, as to the amount of the judgment to be entered in favour of Sydney Trains in lieu of the judgment of the District Court, including as to the time at which such judgment should be entered or taken to have been entered.
8. Argo to pay Sydney Trains' costs of the proceedings in the District Court and in this Court.
9. PAYNE JA: I agree with Leeming JA.
10. GRIFFITHS AJA: I agree with Leeming JA.

Amendments 08 May 2024 - replaced "show" by "shows" in first sentence of [22] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 May 2024