[2006] 1 WLR 1173
Agricultural Land Management Ltd v Jackson [No 2] (2014) 48 WAR 1
[2014] WASC 102
Allianz Australia Insurance Ltd v Mercer [2014] TASFC 3
[2005] NSWCA 19
Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441
Astley v Austrust Ltd (1999) 197 CLR 1
[1999] HCA 6
Austral Plywoods Pty Ltd v FAI General Insurance Company Ltd [1992] QCA 4
Source
Original judgment source is linked above.
Catchwords
[2006] 1 WLR 1173
Agricultural Land Management Ltd v Jackson [No 2] (2014) 48 WAR 1[2014] WASC 102
Allianz Australia Insurance Ltd v Mercer [2014] TASFC 3[2005] NSWCA 19
Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441
Astley v Austrust Ltd (1999) 197 CLR 1[1999] HCA 6
Austral Plywoods Pty Ltd v FAI General Insurance Company Ltd [1992] QCA 47 ANZ Ins 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[1956] HCA 53
Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478[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[2018] NSWCA 55
R & B Directional Drilling Pty Ltd (in liq) v CGU Insurance Ltd (No 2) [2019] FCA 458369 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
(1997) 9 ANZ Ins Cas 61-336
Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd (2017) 94 NSWLR 108
[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
Judgment (22 paragraphs)
[1]
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)
[2]
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
[3]
[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.]
[4]
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].
[5]
JUDGMENT
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.
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".
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.
[6]
Factual and procedural background
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.
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.
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.
[7]
Ms Michael's accident and subsequent claim against Sydney Trains
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.
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.
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.
[8]
Sydney Trains' belated proceedings against Infrastruction's insurer
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.
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).
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]).
[9]
The role of the Civil Liability Act
Part 1A of the Civil Liability Act had an important, and far from straightforward, application to this litigation.
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.
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.
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.
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.)
[10]
The reasoning of the primary judge
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.
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.
[11]
The slipperiness of the tiles
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.
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.
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.
[12]
Who selected the tiles?
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.
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.
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.
[13]
Causation
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.
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.
[14]
Issue arising on appeal
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.
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).
[15]
Breach of the implied term
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.
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.
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.
It was common ground that there was no direct evidence about the process of selecting and approving the tiles.
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.
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.
[16]
Argo's challenge to the finding of causation
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.
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.
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.
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.
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.
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.)
[17]
A "break in the chain of causation"?
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.
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.
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".
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".
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".
[18]
Insurance defences
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.
[19]
Did the policy respond to liability for contractual damages?
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.
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.
"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.
"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.
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".
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.
[20]
Did the performance warranty exclusion apply?
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.
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.
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.
[21]
Conclusion and orders
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.
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.
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.
I propose the following orders:
Appeal allowed.
Set aside the judgment of the District Court of 15 September 2023 and order 2 as to costs of the same date.
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.
Argo to pay Sydney Trains' costs of the proceedings in the District Court and in this Court.
PAYNE JA: I agree with Leeming JA.
GRIFFITHS AJA: I agree with Leeming JA.
[22]
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
The Station Refresh Scope of Work also included Part 9 "Opportunity Works", which involved further tile replacement in the two lifts (one from the concourse to the platform, the other from the concourse to Penshurst Rd), and also:
Top of stairs to Platforms, 1x row of floor tiles and 1x row of stair nosing tiles (floor area: 1.5m2, check on site).
These "Opportunity Works" were followed by the following paragraph:
For the Concourse, propose tile options matching the dimensions of the original tiles. Tiles are to be a R12 slip rating and approved by Sydney Trains prior to installation. Installation is to be in line with the Sydney Trains Tiling Specification and Australian Standards.
The documents in the appeal books do not explicitly disclose whether and if so the extent to which Infrastruction performed the "Opportunity Works" as opposed to those in Parts 1-8 of the scope of works document. However, it is tolerably clear from the test reports which were central to the issues of breach and causation, and the receipt showing the types of tiles purchased by Infrastruction, that tiles were laid on both the stairway and the concourse.
A six-page specification stated that "Test results demonstrating compliance of slip resistance of floor finishes with AS4586 1999, AS4663 2002, HB 197 1999". The same page stated that wet pendulum tests were also required six months into the defects liability period.
The appeal books reproduce three test reports commissioned by Infrastruction from Work Safe Slip Testing Pty Ltd. Each is dated 26 March 2016, but that date is wrong. Infrastruction purchased 76.23 sqm of "305x305" tiles and 55 sqm of "200x200" tiles from Glennon Tiles on "01/04/2016" and a payment stamp makes it plain that the date is a reference to 1 April 2016. Infrastruction's Site Manager sought a quotation for a slip test on 14 April 2016, a request to book the tests was made on 15 April 2016, and on the same day the company said in response that "[t]he soonest I can conduct the testing is Tuesday the 26th", to which Infrastruction's Site Manager said that would be fine. An invoice for $825 (which was the amount of the quotation) was issued on 4 May 2016 and paid on 16 June 2016. The invoice stated that the testing was "in line with AS 4663:2013 & AS 4586:2013". The primary judge made no finding, nor is it necessary to do so for the purposes of resolving the appeal, but the contemporaneous documents compel the conclusion that the date of 26 March 2016 which appears on the face of each report is a mistake. A much more likely date is 26 April 2016. Indeed, although every page of the report contains a reference to "26 March 2016", the section describing the pendulum test results states the test date was "26/04/2016".
Each test report included standard information relating the BPN result to classifications pursuant to AS 4586:2013. A mean BPN from three swings which was greater than 54 was ranked "P5" under that standard, and was regarded as having a "very low" contribution to the risk of slipping when the surface was wet. A mean "British Pendulum Number" or "BPN" in the range of 45-54 was ranked "P4", and had a "low" contribution to the risk of slipping. A mean BPN in the range of 35-44 was ranked "P3" and had a "moderate" contribution to the risk of slipping. The table equated the classifications of P5, P4 and P3 under AS 4586:2013 to the classifications "V", "W" and "X" respectively under AS 4586:2004.
The slip resistance testing of the nosing tiles, and the 200 x 200mm tiles on the concourse, produced results of 51 and 62, or P4 and P5, both of which were within the Specification. Hence attention in the appeal was directed to the slip resistance testing of the tiles on the stairway landing.
The test results section of the critical report describes the test area as "Penshurst railway station stair landing" and the surface as "Cream coloured tiles 304x304mm". Five locations on the landing were tested, and the mean BPN at each location was either 41, 40 or 42. Because that number was less than 45, the result was a classification of class "P3" or "X" with a "moderate" notional contribution to the risk of slipping when the tile was wet.
The reports also included photographs, which the parties deployed in a wide range of ways, including, importantly, to establish the dimensions of the tiles on which the slip occurred. The principles governing the use of photographic evidence were summarised in Taitoko v R [2020] NSWCCA 43 at [80]-[81]:
True it is that care must be taken when photographs are deployed. I regard it as self-evident that photographs (and, especially, the reproductions of photographs in appeal books) can contain obvious distortions of distance, colour and shape. They can also contain non-obvious distortions of distance, colour and shape. I sought to explain this in Goode v Angland (2017) 96 NSWLR 503; [2017] NSWCA 311 at [213]-[224], including by giving an example central to that appeal: the parallax error in photography of horses travelling around an oval racetrack.
The care which must always be taken in the use of photographs is inherent in their nature, as has regularly been observed in judgments. I would not read those observations as establishing some rule of law or principle of evidence; cf Amante v R [2020] NSWCCA 34 at [4]-[8]. Read fairly and in context, the statements in decisions such as in Angel v Hawkesbury City Council [2008] NSWCA 130 at [69]-[72] and Blacktown City Council v Hocking [2008] NSWCA 144 at [167]-[172] relate to the particular use of the particular photographs in those cases (respectively, photographs which distorted distance, taken after the event, sought to be used to displace the testimonial evidence of witnesses, and photographs of the lip of a pit used to establish its condition seven or eight years earlier), rather than some general rule or principle. Each case will depend on the particular photograph and the particular purpose for which it is sought to be deployed.
In what follows, it will be seen that some matters can confidently be established from the photographs in evidence, while other conclusions cannot safely be drawn from the same photographs.
The report included the following photographs:
The image of the stairway may be contrasted with another picture of the stairway. This image also shows the tactiles at the top of the stairs.
The photograph is undated but evidently was taken after the work on the stairway was completed. (One of the elements in the scope of work was "Install new handrails to concourse/platform stairs around the existing heritage handrail and replace centre handrail". The photograph above shows the new handrails which may be contrasted with the handrail seen in the photograph in the slip test report, noting its distinctive curve.) More importantly, the picture from the slip test report reveals that only the right hand side of the stairway (as one looks down from the concourse to the platform) had at that stage been tiled, and that members of the public were excluded from that half of the stairway by the red fencing. It seems probable that either commuters were continuing to use the left hand stairway or else there was additional temporary access to the platform.
Two other details emerge from the photographs in the test report of the concourse tiling, both of which were raised during the course of the parties' submissions.
First, the "test area" is described in the report as "Penshurst railway station platform". But the report includes the following photograph showing where the testing occurred:
The top right corner of the top right photograph shows the stairs descending from the concourse to the street, and indeed it shows parts of a blue vehicle parked on the street. It is plain that this test was of tiles laid in the concourse at the top of the stairway, rather than on the station platform at the bottom of the stairway.
Secondly, the tiles themselves are square as may be seen from the top left photograph (although as one would expect, the parallax error in the photographs taken from an angle close to the ground make them seem like oblongs in most of the images). The dimensions of the tiles are definitely around 200 x 200mm, as may be seen from contrasting the bottom photograph with the image of the same machine when placed on the stairway landing in the first photograph reproduced above. The two pins on the legs of the machine are separated by a distance of just less than two tile widths when the machine is on the landing, but when it is placed in the concourse, the same pins are separated by almost three tile widths. That is because the legs are around 550mm apart, which is just less than 2 x 300mm, as well as being just less than 3 x 200mm.
The reason for explaining this is because of what is apparent from the photograph of the stairway when completed. The tiles on the stair landing are the same dimension as the tiles on the stairs, and are also of the same dimension as the tiles just above the top step of the stairway where Ms Michael slipped, as may be seen either by counting the tiles on each step and on the landing, or by following the lines of grouting separating each tile. That is to say, the photographs demonstrate that although Ms Michael slipped and fell as she was leaving the concourse and about to descend the stairway, she slipped on a row of 300 x 300mm tiles, not 200 x 200mm tiles. There must be a row of 300 x 300mm tiles at the top of the stairs, between the nose of the first step and the tactiles.
That point was made in Sydney Trains' submissions in reply:
Ms Michael slipped on the top "stair landing": J [85] [Red 103X]. The tiles that were tested were on the middle "stair landing": [Page 2 of Work Safe Report - Blue 148]. The tiles on the middle landing and the tiles on the top landing were the same: see the photograph at [Page 4 of Work Safe Report - Blue 150]. Those tiles were "Cream coloured tiles 304x304mm": [Page 2 of Work Safe Report - Blue 148].
The significance of these details will become plain when dealing with Argo's submission that Sydney Trains broke the chain of causation when it "reopened" the station.
Sydney Trains appealed, but the appeal was compromised on 6 November 2018 on the basis that the judgment would be reduced to $409,000. The costs order was later quantified (by agreement between the parties executed on 1 July 2019) in the amount of $207,500. There is no dispute about these amounts.
It was admitted on the pleadings that Infrastruction was deregistered on 16 June 2020. That gave rise to a new entitlement on the part of Sydney Trains pursuant to federal law. Section 601AG of the Corporations Act provides:
Claims against insurers of deregistered company
A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:
(a) the company had a liability to the person; and
(b) the insurance contract covered that liability immediately before deregistration.
Section 601AG was introduced in 1998, with the general purpose of providing an alternative to reinstating the company to the register for the purpose of proceeding against its insurer: see Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd (2005) 62 NSWLR 148; [2005] NSWCA 19 at [18]. It was said at [19]:
Section 601AG creates a new cause of action. The action is not a claim for damages. It is for an amount that was payable to the deregistered company under the relevant insurance contract. A claim in terms of s 601AG is subject to two conditions, namely, proof that the deregistered company "had a liability" to the person claiming and that the insurance contract covered that liability immediately before deregistration.
It is sometimes said that the insurer "stands in the shoes" of the deregistered insured for the purpose of s 601AG (for example Allianz Australia Insurance Ltd v Mercer [2014] TASFC 3; 309 ALR 154 at [102]). As was noted in Almario, the result is that there are two distinct aspects to the new federal cause of action in its application to the facts of this appeal. First, Sydney Trains has to establish its claim in contract against Infrastruction. Secondly, Sydney Trains has to establish that Infrastruction's policy responds to that liability.
The result of the forensic choice by Sydney Trains not to join Infrastruction or its insurer Argo to the original proceedings brought by Ms Michael, coupled with Sydney Trains' decision to delay for more than two years after judgment had been obtained against it, was substantially to narrow its rights against Argo. Sydney Trains had been found liable on a tortious claim, but the only claims that Sydney Trains advanced were based on its contract with Infrastruction, in respect of which Sydney Trains was entitled as of right to sue Argo, but on the basis that Sydney Trains would succeed only to the extent that Infrastruction's insurance policy responded to that contractual liability.
Sydney Trains advanced a claim on a written contract, incorporating a suite of documents produced in connection with its request for quotations to undertake the "refreshing" of the station. It was unable to produce any executed contract, and relied on various standard form documents for construction work on its stations, and in particular on an 11 page document titled "Station Refresh Program Penshurst Station Scope of Work Document" and a six page document titled "Sydney Trains Tiling Specifications - SRP3", each of which it said were incorporated into the written contract which it invited the Court to infer had been brought into existence.
Argo did not admit that there was a written contract, and indeed positively submitted at trial that "the absence of executed contractual documentation nor [sic] any explanation for that suggests that what might be termed the usual Sydney Trains contractual arrangements were not in place on this particular job". It is more than a little odd that a State government authority which spent some $800,000 on works did so without a written contract. But in any event, Sydney Trains' case based on a written contract was rejected by the District Court, and Sydney Trains' appeal does not challenge that rejection. Hence the significance of Sydney Trains' alternative claim based on implied terms.
Argo's defence did not admit that there was any contract in place between Sydney Trains and Infrastruction. It is not necessary to pause to consider how that was a reasonably arguable position for the pleader to adopt, when work had plainly been done over many months for which Infrastruction rendered precisely calculated invoices, because Argo accepted in closing address, properly albeit belatedly, that "There must've been an agreement. It's inescapable that there was some agreement in place".
Sydney Trains relied on three implied terms: that Infrastruction promised to complete the works with due care and skill, to ensure that the tiles installed by it would have an adequate level of slip resistance and that the works would comply with all relevant Australian Standards and conditions imposed by the Building Code of Australia.
The first and second terms, but not the third, were found to be in place, and the second, but not the first, was found to have been breached by Infrastruction.
The primary judge was not satisfied that this first implied term was breached. His Honour said at [76] that the "only relevant acts in performance by Infrastruction of its duties appear to be the acquisition of materials from Glennon Tiles and the physical act of laying the tiles" and there was "no evidence that could support a finding of a want of skill and care in either respect". Sydney Trains does not appeal from the rejection of that part of its case.
The breach of the second implied term, to ensure that the tiles had an adequate level of slip resistance, found by the primary judge, is in a different category. It is not formulated as a duty to take reasonable care, but rather as a fixed obligation to supply tiles with an adequate level of slip resistance. It resembles the implied condition derived from s 19 of the Sale of Goods Act 1923 (NSW), in respect of which it is well established than when a buyer relies on a seller to supply goods for a known purpose, the implied condition that they be fit for purpose is strict. In Lord Reid's words, the statutory condition "covers not only defects which the seller ought to have detected but also defects which are latent in the sense that even the utmost skill and judgment on the part of the seller would not have detected them": Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31 at 84. The same point was made by Lord Steyn in Slater v Finning Ltd [1997] AC 473 at 486 ("liability does not depend on whether [it] exercised reasonable care"). Accordingly, it is difficult to see how breach of that duty involved a failure to exercise reasonable care and skill. When during the hearing in this Court this was raised with both counsel (because it affected not only Sydney Trains' case on causation, but also Argo's notice of contention based on contributory negligence) it was not suggested that it could.
The hearing proceeded on the bases that Sydney Trains' claim on the second implied term (a) was not a claim for damages for harm resulting from negligence, and thus it is not necessary to satisfy s 5D in order to establish causation, which is determined as a matter of general law, and (b) was not concurrent and co-extensive with a tortious duty, and thus was outside the scope of ss 8 and 9 of the Law Reform (Miscellaneous Provisions) Act 1965.
Those consequences cut both ways. Sydney Trains' written submissions, and initially its oral submissions, emphasised the significance of s 5D in relation to a break in the chain of causation. But s 5D is inapplicable, and counsel abandoned his reliance on the section when this was pointed out. Conversely, the final ground of Argo's notice of contention, and the written submissions made in support of that ground, urged a finding of contributory negligence. But contributory negligence is not available in respect of the breach of the implied term found by the primary judge, and indeed Argo formally withdrew that ground when the foregoing was pointed out during oral address.
The primary judge rejected the third alleged implied term, on the bases that it was neither so obvious that it went without saying nor was it necessary to give business efficacy, given there was already an implied obligation at law as to the fitness of the tiles for their purpose, and in the absence of any evidence of industry practice: at [74]-[75]. Sydney Trains' appeal does not extend to challenging this conclusion.
It may seem contrary to minds habituated to identifying the separate elements of causes of action in "tort" and "contract", but the additional hurdle imposed by provisions such as ss 5B and s 5D to claims for "negligence" may mean that there are different tests for breach and causation when a person sues for breaches of different promises in the same contract. That is a consequence of Pt 1A being a mandatory overlay to all claims to which it applies, which (broadly speaking) are claims based on a failure to take reasonable care.
There is nothing in the evidence to displace the obvious inference that Infrastruction selected the number of tiles. It is obvious that Infrastruction would determine how many tiles were needed (including presumably an allowance for wastage). The number and size of the tiles would depend upon decisions taken by Infrastruction as to how they were to be laid.
There is also nothing in the evidence to displace the obvious inference that Infrastruction determined the timing of the order and its delivery. There were many other tasks occurring at the station, and while some were independent of others, some involved a definite order. For example, the removal of the red vinyl on the stairways necessarily preceded the laying of tiles on the same area. The tiling of the toilets on the station will have preceded other aspects of the refurbishment of those rooms. And so on.
True it is that the documents suggest that Sydney Trains had a role in approving the tiles. In particular, the scope of work document, under the section dealing with tiles in the concourse, stated that the tiles were to be "approved by Sydney Trains prior to installation". Let it be assumed, favourably to Argo, that that occurred. Even so, that does not deny that it was Argo which selected the tiles for Sydney Trains' approval. It is far from uncommon for customers to identify the purpose and general parameters of building supplies to be installed, to rely upon the tradesperson's expertise in selecting the right supplies, and to do so even though reserving to themselves an entitlement to approve the particular selections made.
I also would not accept Argo's submission that there was no implied term. Consistently with what was said in Hewett v Court (1983) 149 CLR 639 at 647, 650, 655 and 662; [1983] HCA 7, I proceed on the basis that s 19 of the Sale of Goods Act did not apply to whatever contract was in place to "refresh" Penshurst railway station. Nonetheless, the reasoning in contracts for the sale of goods to which the legislation applies is apposite to refute Argo's submission that the role played by Sydney Trains negated the implied term found by the primary judge. Sackville AJA writing for this Court said in Scenic Tours Pty Ltd v Moore [2018] NSWCA 238; 361 ALR 456 at [217] (an appeal was allowed, but not on this point):
The Sale of Goods Act 1893 (UK) (1893 Act) and its Australian counterparts provided that where a buyer expressly or impliedly made known to the seller the particular purpose for which the goods were required, so as to show that the buyer relied on the seller's skill and judgment, there was an implied condition that the goods were fit for that purpose. The test of whether the buyer had relied on the seller's skill and judgment was whether in all the circumstances a person in the position of the seller would have realised that his or her skill and judgment was being relied on. While the questions of particular purpose and reliance were distinct they were closely related and were often considered together. (Footnotes omitted.)
It is also settled that where a buyer relies in part upon a seller's skill and judgment, even if the buyer also relies on the buyer's own skill and judgment, the element of reliance is established: Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 490.
It is true that Sydney Trains' documents identified a range of tiles, mostly to be supplied by its nominated manufacturer. It is also true that the documents suggested that Sydney Trains would approve the tiles proposed by Infrastruction. But none of that is inconsistent with Infrastruction being subject to a term that the tiles it purchased and laid when performing its contract have an adequate level of slip resistance.
Argo's final fallback submission on this ground was that the implied term was simply to supply tiles which Glennon Tiles warranted were category "W". I do not agree. It was clear enough that an aspect of the work was that Infrastruction would commission slip resistance testing of the tiles, after they were laid. What mattered to Sydney Trains was how slippery the surface as installed was, and that was determined by matters additional to the inherent qualities of the tiles (for example, the width of the grouting, and any slope of the surface). Further, Infrastruction appears to have been required to provide further slip resistance testing six months later. All of this is inconsistent with an implied term which is satisfied merely by using a particular type of tile.
For those reasons, I would reject ground 4 of the notice of contention, which challenged the primary judge's findings of breach of contract.
There is no reason to doubt the accuracy of that report, to the effect that (a) it was raining, (b) the ground was wet, and (c) signage was placed to the effect that the surface was wet at the time. The video does not show any signage, but that does not mean that there was none. It may have been out of the camera lines, or it may be that the "yellow wet/safety signs" were only erected after Ms Michael's fall. But nothing turns on this for the purposes of the proceeding between Sydney Trains and Argo (although it would be highly relevant to the action brought by Ms Michael against Sydney Trains). Even if the signs were only placed after she fell, that remains powerful evidence that the surface was wet.
This was raised in address:
GRIFFITHS AJA: Would they not get some assistance from blue 340?
CATSANOS: Yes, they do, but that is fairly general.
GRIFFITHS AJA: "Weather was raining at the time." "Ground was wet."
CATSANOS: We don't know what ground. We know that they put up some cones but we know that this was under cover. Normally what would happen in a case like this is you would call some evidence to say that the tile was wet, "I observed the tile to be wet. The tiles around it were wet".
…
CATSANOS: … I accept, with respect, what Justice Griffiths says that there is evidence that there'd been rain, but that doesn't mean this tile was wet. It was under cover.
It is true that the tiled surface was under cover, but it was exposed as is clear from the photographs of the stairway. The cover did not prevent dew from forming during a winter night. Nor did it prevent precipitation from reaching the steps from the sides. Nor did it prevent moisture from the soles of commuters' feet or umbrellas being left on the tiles. It seems decidedly unlikely that "yellow wet/safety" signs would be erected at the top and bottom of the stairs if the stairway was not wet. It would also be passing strange for the author of the incident report to record that the ground was wet if what was intended to be recorded was that Ms Michael had slipped on a dry surface, but that there was other ground on which she did not slip which was wet.
That is not all. The CCTV footage shows that a woman who preceded Ms Michael down the stairway was holding a compact umbrella which has the appearance of recently having been closed (it had been compacted, but was not tied up). The woman who stopped to assist Ms Michael after she fell was carrying a large umbrella. So was at least one other commuter who is seen a few seconds later descending the stairway.
The video also appears to show a reflection of the overhead fluorescent lighting on the stair landing and some of the lower steps, which is consistent with their being wet. If that were the only evidence bearing on the question, I would not regard it as reliable. But the issue is merely whether Argo is correct in its submission that Sydney Trains had not discharged the onus which lay upon it to establish one element of its case, namely, that the tile or tiles on which Ms Michael slipped had been wet. Argo pointed to no positive evidence to displace the inference, which I regard to be close to overwhelming from all of the matters mentioned above, that more probably than not that tile or tiles were wet.
I also do not accept Argo's submission that it cannot be inferred that the particular tile or tiles on which Ms Michael slipped were unduly slippery.
As explained at length above, and as Sydney Trains had contended in written submissions supplied in advance of the hearing reproduced above, Ms Michael slipped on at the top of the stairway where the tiles were 300 x 300mm. The tiles had been recently laid by Infrastruction. They were of the same type, and supplied in the same order, as those tested on the landing. The testing on the landing took place at five locations. If the location of the arrows is accurate, the testing was of five individual tiles. It is clear that in each case, a mean BPN was taken from three swings of the machine. Each of the five 300 x 300mm tiles tested on the landing had a BPN of 40, or 41 or 42, in each case giving rise to a classification that the tile had a "moderate" increase in the risk of slipping when wet. In contrast, the five 200 x 200mm tiles tested in the concourse had mean BPNs of 62 in the case of four of them, and 63 in the case of the fifth.
Contrary to Argo's submission, there is the opposite of "considerable variability" in the slip resistance of the tiles. All five of the five 300 x 300mm tiles that were tested made a "moderate" contribution to the slipperiness of the surface when wet, and all five of the five 200 x 200mm tiles that were tested made a "low" contribution to slipperiness of the surface. Likewise the nosing tiles were also consistently of a "low" contribution to surface slipperiness.
It is not known why the expert evidence which addressed the slip resistance of the very tile or tiles on which Ms Michael slipped was not tendered at the trial of Sydney Trains' claim against Argo despite having been tendered in the earlier trial of Ms Michael's action. It might be thought unsatisfactory that it should be left to the court to make the series of deductions from the slip resistance testing that occurred which have earlier been set out. But parties are free to litigate an issue on the evidence chosen by them, and it is possible that both sides saw some forensic advantage in not tendering the evidence which must have been known to both of them. The issue accordingly fell at trial, and falls again in this Court, to be determined without what may well be the most probative evidence. Nonetheless, I would conclude that in circumstances where every 300 x 300mm tile which was tested was more slippery than the specification required, the particular 300 x 300mm tile or tiles on which Ms Michael slipped and which came from the same batch were also more slippery than the specification required. The best evidence of the slip resistance of the tile or tiles on which Ms Michael fell which is available to this Court is the slip resistance of tiles of the same dimension supplied by the same supplier which were laid a few months earlier, five of which were tested and all of which had approximately the same BPN of 40 or 41 or 42. The known availability of expert evidence (albeit after the event), which neither side chose to tender, does not stand in the way of upholding the finding made by the primary judge that the slipperiness of the tile contributed to Ms Michael's fall.
Argo's submission that the majority of the testing showed the tiles to have high levels of slip resistance is of no assistance, to say the least. It is true that a majority (two out of three) of test reports showed tiles with high levels of slip resistance. It is true that a majority of tiles tested (approximately ten out of fifteen) showed high levels of slip resistance. But Argo's "majorities" only exist if one ignores the fact that three different sorts of tiles were being tested. Every single 300 x 300mm tile which was tested - all five - was found not to attain the minimum slip resistance in the specification. Ms Michael slipped on a 300 x 300mm tile.
I would reject ground 5 of the notice of contention.
I am disinclined to accept Sydney Trains' pleading point. True it is that Argo should have positively pleaded the conduct on the part of Sydney Trains which, so it alleged, produced the result that that conduct was the sole effective cause of Ms Michael's injury notwithstanding Infrastruction's own breach. Argo did not do this, and merely putting causation in issue falls short of what is required: cf Icon Co (NSW) Pty Ltd v The Owners - Strata Plan No 97315 [2022] NSWCA 114 at [12]-[13]. Nonetheless, in a trial where causation was in issue, and where counsel for Sydney Trains made no objection to the submissions advanced in writing and orally as being unpleaded but instead engaged with them on their merits, not lightly would I conclude that the submission was outside the scope of the issues the parties are to be regarded as having chosen to litigate: cf Banque Commerciale SA (en liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 287; [1990] HCA 11.
However, it is not necessary for me to reach a final conclusion on Sydney Trains' threshold submission that this finding was precluded by the pleadings because I have concluded that, when addressing Argo's submission on its merits, the primary judge erred.
It was common ground that the question turned on the facts. It was also accepted that this Court was in the same position as the primary judge in terms of drawing inferences from the evidence, which was relevantly wholly documentary. And it was also common ground that Argo bore the onus of establishing conduct by Sydney Trains which "broke the chain of causation". As Mason P put it in Winston v Roach [2003] NSWCA 310 at [69], the burden of "disentangling the possible causes and excluding the operation of the accident as a contributing cause" lay upon Argo. I do not consider that Argo has discharged this onus. I do not accept Argo's submission that once it was accepted that Sydney Trains had the slip resistance test reports, the onus shifted to Sydney Trains to explain why it reopened the stairway such that that decision should be regarded as the sole cause of Ms Michael's injury.
The starting point then is to determine what happened, and when. Given the way Sydney Trains and Argo conducted the litigation, that involves a largely inferential process.
For the reasons elaborated above, it seems likely that the tiles on one half of the stairway, and on the concourse, were laid in the first three weeks of April 2016. The limited materials in the appeal books do not establish when the stairway was reopened to the public. Still less does it establish whether the entire station was ever shut down during the works. A recurring motif in Argo's submissions was Sydney Trains' decision to "open" the station. But (a) common sense (it is no small thing to close a railway station for days or weeks), (b) the absence of any suggestion in the Works Specification that the station would be closed, and (c) the red plastic fencing visible on the partly-tiled stairway in the photograph in the slip resistance test report all favour the inference that the station remained open to commuters while the works were being undertaken, in which case the relevant decision was to reopen the stairway, rather than to reopen the station.
But all that really matters in this respect is that the photographs in the slip resistance test reports establish that the stairway was only half tiled when those tests were undertaken. What must have happened is that Infrastruction laid tiles on one half of the stairway before (probably) 26 April 2016, and thereafter the results of the slip resistance testing were obtained. There is nothing to suggest that the remainder of the stairway was tiled with anything other than the same tiles, or that a different method was used in laying the tiles. Noting how the photographs of the stairway in the slip resistance report show the tiled half as being fenced off, it is possible that commuters were obliged to use the other half of the stairway, or else the lift, to get to and from the platform, and then when the remaining half of the stairway was being tiled, the first half was reopened. There are other possibilities too. But all that matters for present purposes is that after receipt of the slip resistance testing reports, the same 300 x 300mm tiles were laid on both the remainder of the stairway and the row of tiles at the top of the stairway, possibly while commuters were using the half of the stairway which had already been tiled to travel between the concourse and station platform.
The point I am labouring to make is that what occurred is quite different from a situation where work is undertaken, tests are done on the completed work showing a non-compliance, and an occupier then decides to reopen the site despite having been given the test results. Instead, the test results were given to Infrastruction and Sydney Trains while the work was still being done.
How did this come about? There are a few possibilities. It is probable, but not certain, that Infrastruction's Site Manager read the bottom line of the report which showed that the stair landing tiles had a mean BPN of around 41 resulting in a classification of P3. It also seems probable that the report came to the attention of an officer who was supervising the contract on the part of Sydney Trains, who may or may not have noticed the non-compliance. But whatever occurred, it is certain that the balance of the tiles were laid. There is nothing in the evidence to suggest that there was any subsequent testing.
One possibility is that no one at Infrastruction or Sydney Trains appreciated the significance of the slip resistance testing. That is consistent with the work continuing and the stairway being opened.
Another possibility is that someone at Infrastruction did appreciate the significance of the slip resistance testing on the stairway landing, but did not bring it to the attention of the relevant person at Sydney Trains. It is not unknown for contractors to supply large volumes of documentation during building projects, and for unwelcome news to be buried in the details.
A third possibility is that Infrastruction took appropriate steps to bring the results to the attention of the relevant person at Sydney Trains, but that person was sick, or on leave, or simply missed the significance of the document or the email, or did not care.
A fourth possibility is that the relevant officers at Infrastruction and Sydney Trains well knew that the testing had revealed that all five tiles tested on the stairway landing had produced BPN results of 40 or 41 or 42, rather than the 45 required by the specification. It is possible that Sydney Trains nonetheless confirmed that the work should continue, on the basis that near enough was good enough, and that it was important to restore full stairway access to the station.
I should not be taken to have attempted to be exhaustive of the possibilities whereby the works continued and the stairway was reopened after receiving the slip resistance testing reports.
The point of my setting out those possibilities, all of which are entirely speculative, is to explain why I have concluded that Argo failed to discharge its onus.
Argo accepted that the onus lay upon it to establish on the facts that its breach of the implied term to supply tiles which were fit for purpose should not be regarded as a cause of Ms Michael's fall. That depends on findings of fact as to what occurred.
One danger which is present in this area of legal reasoning is that resort to metaphors or Latin phrases may result in a failure to identify the facts on which a conclusion is based. Metaphors may illuminate, but they are often unhelpful. Hart and Honoré famously explained how easy it is "to be misled by the natural metaphor of a causal 'chain'": H Hart and T Honoré, Causation in the Law (2nd ed, 1985, Clarendon Press) at 72. Latin phrases may also mislead, especially if their meaning is not clearly grasped. Argo's liability does not depend upon whether or not a "chain of causation" has been broken. Nor does Argo's liability depend on whether Sydney Trains' reopening of the stairway was a novus actus interveniens. To the contrary, to state that the chain of causation was broken, or that Sydney Trains' reopening of the stairway was a novus actus interveniens is merely to state the conclusion for which Argo contends, without explaining how or why that conclusion is reached. And the person to whom such a submission is made may be distracted by the metaphor or the Latin and thereby fail to appreciate that the submission is one which is devoid of reasoning.
It is much clearer to use plain English. The law has long proceeded on the basis that more than one act may be a sufficient cause of an injury, in which case (subject to statute such as Pt 4 of the Civil Liability Act providing otherwise) both acts will be regarded as a cause of the entirety of the loss or damage. Thus in Agricultural Land Management Ltd v Jackson [No 2] (2014) 48 WAR 1; [2014] WASC 102 at [429], Edelman J observed that it has become well-accepted that 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 metaphor that there was a break in the chain of causation, or that something else is a novus actus interveniens, is merely a way of saying that notwithstanding a breach of duty by Infrastruction of its implied promise to provide tiles which were fit for purpose, and despite that breach being a cause of Ms Michael's injury, Sydney Trains' later conduct should be regarded for the purpose of determining liability as the sole cause of the injury, and Infrastruction's earlier breach should not be regarded as having caused that injury.
Once the legal test is expressed in ordinary words, rather than conclusionary metaphors or Latin phrases, it is tolerably plain that Argo must fail on this issue. Argo bore the onus. Argo made no attempt to establish what in fact happened at Penshurst railway station after around 26 April 2016 when Infrastruction's Site Manager received the slip resistance test results. I would accept that, in principle, if Sydney Trains instructed Argo to proceed to tile the remainder of the stairway with the same tiles, notwithstanding the results, with full knowledge that the surface would be more slippery than its specification, then that would be a proper basis for the conclusion that Argo's breach should not be regarded as causing Ms Michael's injury. But Argo did not come close to making out a case of a deliberate decision to reopen a stairway known to be more slippery than Sydney Trains' specification.
Take another possibility, which may be equally extreme. Suppose that neither the relevant employee of Infrastruction, nor the relevant employee of Sydney Trains, appreciated the significance of the test results. Then it is tolerably clear that Sydney Trains' decision to reopen the stairway would not be regarded as excluding the breach by Infrastruction as a cause of Ms Michael's injury.
As Sydney Trains pointed out, in Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd at [153], this Court held that where a purchaser acquired an interest in land containing defective concrete pavements, the mere fact that the acquirer had knowledge of the defects was not of itself sufficient to break the chain of causation. Bathurst CJ there contrasted the case with Lambert v Lewis [1982] AC 225 where a person who acquired an item of equipment with the benefit of a warranty deliberately made use of the equipment knowing it to be defective. The reasoning, applicable only by analogy, does not assist Argo.
The issue is one of fact. Limited assistance is to be obtained from other decisions. The short point is that Argo bore the onus to establish that Infrastruction's breach of contract, which led to tiles which were more slippery than it had promised being laid where Ms Michael slipped and which contributed to her fall, should nonetheless not be regarded as a cause of the damage suffered by Ms Michael. For practical purposes, that required Argo at the very least to establish that Sydney Trains fully appreciated the nature of the defect in the tiles and its significance, and nonetheless elected to instruct Infrastruction to continue the job following which Sydney Trains reopened the stairway. This is not established by Sydney Trains' possession of the slip resistance reports in April 2016.
The primary judge accepted Argo's submissions that there was a break in the chain of causation, but without pausing to explore the factual findings necessarily implicit in order to reach that conclusion. Once those findings are considered, it is clear that the conclusion cannot be sustained. Accordingly, this ground of appeal is made out.
Argo's submissions on these grounds mentioned a single paragraph of a single decision, Zurich Australian Insurance Ltd v Regal Pearl Pty Ltd [2006] NSWCA 328; 14 ANZ Ins Cas 61-715 at [45], for the proposition that whether or not "for" means "in respect of" will be determined by context. As Mr Catsanos SC said in address, that decision refers to some of the numerous other decisions that have addressed submissions advanced by insurers which have denied indemnity when their insureds have been sued for derivative claims based on a personal injury. But as will be seen that decision holds that a similarly worded policy does respond to a contractual claim analogous to that brought by Sydney Trains.
These questions are questions of construction. The applicable principles were not in dispute. As Gleeson CJ said in McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22], regard must be had to the language used by the parties, the commercial circumstances which the document addressed, and the objects which the contract was intended to secure. As was the case in Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16], the particular questions of construction are assisted by the precept that preference is given to a construction supplying a congruent operation to the various components of the whole.
I do not accept the starting point of Argo's submissions. The policy granted an indemnity against liability for personal injury. The "Occurrence" which engaged the policy was not the laying of tiles in April 2016 which, of itself, caused no injury to anyone. The "Occurrence" was the personal injury sustained by Ms Michael when she slipped on the tiles. That is so notwithstanding that at times in the argument Sydney Trains agreed with Argo that the laying of the tiles was the "Occurrence".
Indeed, it is far from clear to me whether it was even open to Argo (or Sydney Trains) to advance this point. The policy on which Argo accepts it is liable is a policy for the period from 31 July 2016 until 31 July 2017. The tiles appear to have been laid in April or May 2016, and if the laying of the tiles was the "Occurrence", that was before the policy commenced.
The question is one of construction. Until and unless someone suffered personal injury, there was no liability for "Injury", and thus there could be no indemnity provided by the policy. I would respectfully agree with the following proposition in D Derrington and R Ashton, The Law of Liability Insurance (3rd ed, 2013, LexisNexis) at 930:
It is axiomatic that in order to be the subject of indemnity the occurrence must have a component of harm, because in its absence there would be no liability requiring indemnity, and it is necessary to remember this primary fact in the construction of the policy and particularly as to the meaning of 'occurrence'.
The position would be different if the indemnity were in respect of property damage; in that case, affixing defective tiles to the structures on the station would give rise to the issues of construction considered in Austral Plywoods Pty Ltd v FAI General Insurance Company Ltd [1992] QCA 4; 7 ANZ Ins Cas 61-110, Transfield Construction Pty Ltd v GIO Australia Holdings Pty Ltd [1996] NSWCA 538; (1997) 9 ANZ Ins Cas 61-336 and R & B Directional Drilling Pty Ltd (in liq) v CGU Insurance Ltd (No 2) [2019] FCA 458; 369 ALR 137. But Sydney Trains sued on Argo's public liability policy for personal injury.
It might seem natural for both Argo and Sydney Trains to treat the "Occurrence" as the breach of contract by Infrastruction, being a legal duty owed by one to the other, on which Sydney Trains' claim was based. But Argo can only be only liable to Sydney Trains by reason of s 601AG, which means that Sydney Trains must establish that Infrastruction's policy responds to Sydney Trains' contractual claim, and that will only be because the damages sought by Sydney Trains are the consequence of Sydney Trains' own liability to Ms Michael by reason of her personal injury.
The "Occurrence" for the purposes of Infrastruction's public liability policy was Ms Michael's fall. Sydney Trains was liable as a tortfeasor to Ms Michael. Did the policy respond to Sydney Trains' claim against Infrastruction for breach of contract, when Sydney Trains' claim was for its loss flowing from the personal injury sustained by Ms Michael? Argo's point was that liability "for" injury required a direct connection between the personal injury and the liability, which was established in the case of a claim by a member of the public who sustained personal injury, but was not established by another person such as Sydney Trains which sought to pass on its own liability for personal injury by a claim for contractual damages.
The primary judge addressed this area of the law at [127]-[128]:
Counsel referred me to a number of authorities in which similar language was construed. The balance of opinion in the authorities appears to be that as a strict matter of language, devoid of context, the more natural reading of the term "for" connotes an exchange, and supports a construction that confines the definition to claims made by the party seeking relief. Absent the particular statutory context that governed the policy of motor vehicle insurance in State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412, for example, Taylor J noted that a strictly literal construction of "for accidental bodily injury" would limit liability of the insurer to the person who had himself suffered the bodily injury (at 415).
This view is corroborated by academic writers. According to the learned authors of The Law of Liability Insurance (D K Derrington and R S Ashton, 3rd ed, 2013, LexisNexis Butterworths) at [3-140], page 500:
'For' is more restricted than 'arising from'. It has a wide operation, but there is still a limitation so that it is less than 'caused by or arising out of'. If it is used to link a reference to damages or compensation with a reference to personal injury, it has, prima facie, a narrow meaning so that the policy responds only when proceedings are taken by the person injured.
Considering the issue as one which turned on the construction of the word "for", the primary judge considered six matters as relevant:
(1) As a matter of language, the more natural reading of the term "for" connotes an exchange, and supports a construction that confines the definition to claims made by the party seeking relief.
(2) Further, if the drafters of the Policy had intended to embrace a wider ambit of liability, the language of cl 2.3 could have been made unambiguous by the inclusion of the words "in respect of" instead of "for". (Conversely, the language could have been made unambiguous by inserting the word "directly").
(3) On the other hand, the definition of Injury includes cover for death. While at common law no action for death can be brought by third parties who suffer loss through the killing of another (Barclay v Penberthy (2012) 246 CLR 258 at [22]-[27], [80]-[84] and [178]), each Australian jurisdiction has enacted a version of Lord Campbell's Act which identifies persons who may sue for another's death. Sections 3 and 4 of the Compensation to Relatives Act 1897 (NSW), for example, enable an action to be brought on behalf of certain relatives by and in the name of the deceased's executor. The inclusion of death in the definition of Injury suggests that actions by third parties for economic loss resulting from Injury, as defined, were expressly contemplated. Death and other forms of personal injury are treated within the definition as members of the same class and in the same way.
(4) Similarly, the definition of Loss of Use relevant to Damage (which is also treated the same way as Injury in cll 2.1 and 2.3) expressly contemplates coverage for economic loss by reason of damage to another party's tangible property.
(5) Further, the wording of cl 2.3 relates to liability for Completed Operations and Products, which widens the ambit of cover provided by cl 2.1. Textually it connotes a broader commercial object of the Policy.
(6) Finally, the words in cl 2.3 "sustained or as a result of an Occurrence during the Period of Insurance arising out of or in connection with any Product(s) and/or Completed Operations" similarly connote a wider operation of the Policy.
His Honour considered that greater weight was to be given to the second, third, fourth, fifth and sixth factors, and concluded at [131] thus:
I consider the wider construction of "for" to be more conformable with a businesslike interpretation of the Policy and the language used in its documentary context, and construe it as "in respect of". In my view, if liability for the breaches is made out as against Infrastruction, the Policy would respond to the claim.
I respectfully agree with the result reached by the primary judge, although I would express my reasons a little differently.
First, whether an indemnity "for" Injury responds only to direct claims by persons who sustain personal injury, or whether it extends more broadly, is a well-rehearsed area of the law. Many of the decisions were reviewed by this Court in the judgment of Glass JA, with whom Samuels and Mahoney JJA agreed, in Rheem Australia Ltd v Manufacturers' Mutual Insurance Ltd [1984] 2 NSWLR 370, where attention was given to decisions which turned on the distinction emphasised by Argo, namely, between liability "for" injury and liability "in respect of" injury.
While, generally speaking, "for" connotes a closer relationship than "in respect of", it is clear that both expressions are "relational terms" (to use French CJ's expression in R v Khazaal (2012) 246 CLR 601; [2012] HCA 26 at [31]). The nature and breadth of the relationships those terms cover will depend upon the text and context of the policy. Thus in particular contexts the words "liability for injury" have been held to extend to claims by third parties, and not merely for statutory contribution to a joint tortfeasor, but to (a) liability to pay the Nominal Defendant when an insured caused damage in a motor vehicle accident for which it was relevantly uninsured, which the Nominal Defendant paid out and sought to recover pursuant to statute (Thiess Bros Pty Ltd v New Zealand Insurance Co Ltd (1968) 13 FLR 3 and Dickson Primer Industries Pty Ltd v National Employers' General Insurance Association Ltd [1974] 2 NSWLR 292 at 298), (b) claims for nervous shock by relatives and third parties pursuant to ss 3 and 4 of the Law Reform (Miscellaneous Provisions) Act 1944 (NSW) (Findlay v Westfield Development Corporation Ltd [1972] 1 NSWLR 422 and Manufacturers Mutual Insurance Ltd v Hooper (1988) 5 ANZ Ins Cas 60-849) and (c) liability to meet a claim at common law by a spouse for loss of consortium, which was the claim in Rheem Australia itself, as well as in State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412; [1966] HCA 56. As Hope JA explained in Hooper at 75,306-75,308, the latter two classes of claims are not mere "derivative" claims such as a joint tortfeasor's claim for contribution. But that does not stand in the way of their being characterised as giving rise to a liability "for" personal injury.
As the primary judge with respect correctly reasoned, the question of construction of Argo's policy does not turn so much on the decisions on the same or similar words in other contexts, but on the text and context of the words in its policy.
Also as the primary judge reasoned, "Injury" includes death. It is absurd to think that if an insured caused the death of a member of the public, the policy would respond to a claim by the deceased estate, but would not respond to a claim under the Compensation to Relatives Act 1897 (NSW) claim by a spouse or child. Such a gap in coverage would make no commercial sense.
Likewise, it would be very strange if the policy responded to a claim brought directly by Ms Michael for her personal injury, but not to a claim brought by a joint tortfeasor for statutory contribution, especially in circumstances where the direct claim and the claim for contribution would often be made in the same proceedings and heard and determined at the same trial. Once again, it would be a serious limitation to the protection afforded by Infrastruction's public liability insurance, so much so that it could be described as absurd, if it were only protected by direct claims by members of the public, and not protected against claims for contribution by employers or occupiers or manufacturers or any other joint tortfeasor.
The references to absurdity in the preceding two paragraphs are deliberate. A conclusion of absurdity of a contractual construction may occur in two quite different circumstances. One occurs when a court departs from the literal or natural meaning of the language, either through a process of rectification by construction, or to apply a strained meaning. Many of the authorities are reviewed in Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158 at [51]-[60]; see also James Adam Pty Ltd v Fobeza Pty Ltd (2020) 103 NSWLR 850; [2020] NSWCA 311. Familiar examples are when "John" was read as "Mary" in Wilson v Wilson (1854) 5 HL Cas 40; 10 ER 811 and when "inconsistent" was read as "consistent" in Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53.
The present case is distinct. This is not a case of departing from the literal meaning, but instead giving content to an inherently flexible, context-dependent relational term such as "for". Even if the most natural meaning of "liability for injury" is liability for injury sustained by the claimant, there is nothing strained in "liability for injury" extending to secondary or derivative liability of a third party which is the direct consequences of someone's personal injury.
Indeed, Glass JA observed in Rheem Australia at 375 that "the liability of a tortfeasor for an injury is in modern parlance not limited to his primary liability to the injured party but includes as well the secondary liability he may incur to others as a result of or consequent upon that injury". I respectfully agree, although I would not regard Glass JA's reasons as extending to all secondary liability, however remote from the injury, so long as there is some causal connection between the injury and the liability. That is implicit in McHugh JA's concurrence in Hooper.
The fourth, fifth and sixth considerations identified by the primary judge are confirmatory of the width of the phrase "liability for injury" in this policy.
I respectfully doubt the force of the second consideration relied on by the primary judge, although it is a submission which is commonly enough made. The meaning of the words that appear in a contract (or a statute or a will or any other legal instrument) is often not greatly illuminated by a submission that posits words which were not used, which if they had been used would clearly resolve the question of application which arises in the facts of the particular case. I am saying nothing more nor less than that a submission that the question of construction would disappear if different words had been used is often merely rhetoric, and does not greatly assist resolution of the legal meaning of the words which have in fact been used.
In the light of those considerations, the first consideration identified by the primary judge was rightly rejected by his Honour as dispositive. It is really saying nothing more than if the words "liability for Injury" are considered in isolation then it is more natural that they connote a direct or primary liability for Injury, rather than an indirect or secondary liability. But it is axiomatic that the words are not to be considered in isolation. The policy is to be read as a whole, and in particular it is to be construed in light of the fact that "Injury" extends to death and the other considerations mentioned above. This is precisely the point made by Spigelman CJ writing for this Court in Zurich Australian Insurance Ltd v Regal Pearl Pty Ltd at [45]:
The Appellant's submissions in this Court relied on these authorities as if they established the proposition that the word "for" in such a context will be read narrowly so that, absent a formulation such as "with respect to", an insuring clause will only respond when proceedings are instituted by an injured person. This submission should be rejected. The word "for" is capable of meaning "in respect of". Whether it does so or not will be determined by the context.
Likewise in QBE Underwriting Ltd as managing agent for Lloyds Syndicate 386 v Southern Colliery Maintenance Pty Ltd (2018) 97 NSWLR 459; [2018] NSWCA 55 at [24], it was observed that if could be "unsafe to construe such inchoate relational terms as 'for' and 'in respect of' in isolation".
When the contract is read as a whole, it is clear that the relational term "for" in this context is one which is broad, rather than narrow, extending to secondary liability for personal injury. The primary judge was correct to conclude that the insuring clause responded to Sydney Trains' claim for damages for breach of contract, where the damages were Sydney Trains' loss caused as the direct result of Ms Michael's personal injury by slipping on the insured's tile.
Argo made these submissions in writing, which it did not elaborate in oral address:
The appellant submitted in the court below that there was a failure by Infrastruction to provide tiles that achieved certain standards of performance as required by the Scope and Specification.
The respondent contends (as developed later in these submissions) that if Infrastruction was subject to an implied term of installing tiles of a certain slip resistance, that obligation would only extend to supplying tiles that are appropriately rated, not a warranty that every tile in the box (potentially thousands of tiles on the job) in fact complied with that rating.
However, if the appellant's position is correct and the obligation on Infrastruction went beyond supplying tiles with a certain rating but extended to ensuring or warranting the performance of each and every tile, Infrastruction was necessarily providing a "performance warranty", thereby triggering the exclusion.
Sydney Trains said that there was nothing unusual about Infrastruction being required to perform the services in accordance with the specification or with due care and skill, which was something within the ordinary limits of liability for such a contract.
I agree with the primary judge. There is no proper basis to construe the exclusion so as to apply to liability from breaches of a term that tiles supplied by Infrastruction be fit for purpose. First, that is not a "performance warranty" in any ordinary sense of the term. Secondly, the words "unless liability would have attached in the absence of such clauses or warranties" confirm that the exclusion is directed to additional liability arising out of consensually assumed obligations, rather than those imposed by law. Thirdly, as Sydney Trains submitted in writing in advance of the hearing and to which Argo made no response, in Zurich Australian Insurance Ltd v Regal Pearl Pty Ltd at [109], Spigelman CJ quoted with approval what Hedigan J had said in Karenlee Nominees Pty Ltd v ACN 004 312 234 Ltd (1994) 8 ANZ Ins Cas 61-236 at 75-661-75-662 in connection with a similar exclusion:
The exclusion is intended to apply to the situation where, by an agreement, an insured extends the limits of the ordinary liability arising, such as [by an] agreement for liability for injury without proof of fault ... The exclusion is also directed to the case where the insured assumed liability beyond that which is normally incidental to the occasion, for example the degree of skill ordinarily expected of an expert.
That approach, in connection with a similar exclusion, was endorsed by Allsop CJ in R & B Directional Drilling Ply Ltd (in liq) v CGU Insurance Ltd (No 2) at [164], who concluded at [165]:
The liability of [the insured subcontractor which provided drilling services] here has not been founded on negligence. But there is nothing unusual about being required efficiently (that is adequately, competently and capably) to perform the Services in accordance with the Specification and the Plans under cl 2.1. This is within the ordinary limits of liability for such a sub-contract.
The same reasoning applies to Infrastruction. The circumstances where the exclusion applies are far removed from a liability for loss caused by breach of an implied term to provide goods that are fit for purpose. This ground is not made out.