Transfield Services (Australia) v Hall; Hall v QBE Insurance

CATCHWORDS: TORTS - negligence - duty of care - non-delegable duties of care - respondent injured in fall from high ropes course when safety strop from which rope suspended broke - appellant contracted by Commonwealth to maintain plant and equipment at site - appellant engaged subcontractor to carry out inspection of ropes course and certify - whether subcontractor negligent - whether appellant owed non-delegable duty of care to respondent for negligence of subcontractor - whether general doctrine in Australian law that a person has a non-delegable duty to ensure reasonable care taken by an independent contractor employed to engage in an extra-hazardous or inherently dangerous activity - whether subcontractor employed to engage in extra-hazardous or inherently dangerous activity - whether scope for extending concept of non-delegable duties beyond existing categories - relevance of factors of control and vulnerability to finding of non-delegable duty - persuasiveness of authorities recognising proximity as the basis for a non-delegable duty - relevance of terms of contract between appellant and Commonwealth to finding of non-delegable duty - whether appellant vicariously liable for negligence of subcontractor - where alleged liability of appellant not put to trial judge on basis of vicarious liability - whether doing of the very act that the appellant directed the subcontractor to perform caused damage - INSURANCE - indemnity insurance - products liability - whether liability arose out of insured's business - where activities giving rise to liability were incidental to insured's business - whether ropes course a product within meaning of policy - whether exclusion clause applies - where exclusion clause admits of more than one interpretation - whether liability caused by or arose out of advice given for a fee - where liability in question has one cause that falls within an insuring clause and another cause that falls within the exclusion - where those causes are concurrent - WORDS AND PHRASES - "possession" - "control" - "advice"

LEGISLATION CITED: Safety, Rehabilitation & Compensation Act 1988 (Cth)

ACQ Pty Ltd v Cook [2008] NSWCA 161 Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520 Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Donoghue v Stevenson [1932] AC 562 Fitzpatrick v Job [2007] WASCA 63; (2007) 14 ANZ Ins Cas 61-731 GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 Hall v Adventure Training Systems Pty Ltd [2005] NSWSC 1079; (2006) 14 ANZ Ins Cas 61-673 Hall v Adventure Training Systems Pty Ltd [2007] NSWSC 817; (2007) Aust Torts Reports 81-904 Honeywill and Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191 Imbree v McNeilly [2008] HCA 40 Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166 Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672 Leask Timber and Hardware Pty Ltd v Thorne [1961] HCA 73; (1961) 106 CLR 33 Legal and General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 Leichhardt Municipal Council v Montgomery [2007] HCA 6; (2007) 230 CLR 22 Matania v National Provincial Bank Ltd [1936] 2 All ER 633 McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28; (2007) 157 FCR 402 CASES CITED: North v Marina [2003] NSWSC 64; (2003) 11 BPR 21,359 Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313 Padbury v Holliday & Greenwood Ltd (1912) 28 TLR 494 Read v J Lyons & Co Ltd [1947] AC 156 Rylands v Fletcher (1868) LR 3 HL 330 Scott v Davis [2000] HCA 52; (2000) 204 CLR 333 State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511 Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 Stoneman v Lyons [1975] HCA 59; (1975) 133 CLR 550 Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 Thomson v Cremin [1953] 2 All ER 1185 Torette House Proprietary Ltd v Berkman [1940] HCA 1; (1940) 62 CLR 637 Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 Vero Insurance Ltd v Power Technologies Pty Ltd [2007] NSWCA 226; (2007) 5 DDCR 206 Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 Watts v Perry and the National Insurance Co of New Zealand Ltd [1972] 1 NSWLR 73 Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corporation [1974] 1 QB 57 Wilson & Clyde Coal Co v English [1938] AC 57 Wilson v Hodgson's Kingston Brewery Co (1915) 85 LJ KB 270

TEXTS CITED: G Williams, "Liability for Independent Contractors" (1956) Cambridge Law Journal 180

Transfield Services (Australia) Pty Limited (Appellant) PARTIES: Norman Lindsay Hall (Respondent/Cross-Appellant) QBE Insurance (Australia) Pty Limited (Cross-Respondent)

B Walker SC; R Gambi (Appellant) COUNSEL: SG Campbell SC; K Andrews (Respondent/Cross-Appellant) J Stevenson SC; E Muston (Cross-Respondent)

DLA Phillips Fox, Sydney (Appellant) SOLICITORS: Wyatt Attorneys, Sydney (Respondent/Cross-Appellant) Hicksons, Sydney (Cross-Respondent)

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT DATE OF DECISION: 2 August 2007

LOWER COURT MEDIUM NEUTRAL CITATION: Hall v Adventure Training Systems Pty Limited & 2 Ors [2007] NSWSC 817

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40563/07 SC 20150/04

BEAZLEY JA CAMPBELL JA McCLELLAN CJ at CL

10 NOVEMBER 2008 TRANSFIELD SERVICES (AUSTRALIA) PTY LTD v NORMAN LINDSAY HALL; NORMAN LINDSAY HALL v QBE INSURANCE (AUSTRALIA) PTY LTD Judgment 1 BEAZLEY JA: I have had the advantage of reading in draft the reasons of Campbell JA and McClellan CJ at CL. 2 I agree with Campbell JA that the appellant, Transfield Services (Australia) Pty Limited, did not owe a non-delegable duty of care to the respondent, Mr Hall: see Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672 at 679; Torette House Pty Ltd v Berkman (1939) SR (NSW) 156 at 164-165; Stoneman v Lyons [1975] HCA 59; (1975) 133 CLR 550 at 564-565 per Stephen J; Mason J (with whom Barwick CJ agreed) at 576. 3 It is not necessary, for my purposes, to otherwise comment on the remainder of Campbell JA's reasons in respect of non-delegable duties and I do not do so, although I note that criticism of the concept dates back at least to 1956: see Glanville Williams, "Liability for Independent Contractors", (1956) Cambridge Law Journal 180 at 190, referred to by Hayne J in Leichhardt Municipal Council v Montgomery [2007] HCA 6; (2007) 233 ALR 200 at [155], as follows: "… the doctrinal roots of non-delegable duties are anything but deep or well established. Professor Glanville Williams went so far as to say that imposition of non-delegable duties represents the reaching of a desired result 'by devious reasoning and the fictitious use of language' Whether that particular form of criticism is merited, it is clear that the doctrine was introduced to cases concerning the liability of an employer in order to avoid the mischief of the doctrine of common employment. Though cast in terms of 'duty' the principle is one of strict liability for the conduct of another. It is, therefore, nothing but an exception to ordinary rules of vicarious liability." 4 I agree with the reasons of Campbell JA that the appellant is not vicariously liable for the negligence of Adventure Training Systems Pty Limited. It follows that I agree that the appeal should be allowed and the judgment for the respondent be set aside. The respondent should also pay the appellant's costs of the appeal at first instance. 5 I otherwise agree with the reasons of McClellan CJ at CL in relation to the cross-appeal and with his Honour's proposed orders. 6 CAMPBELL JA:

Nature of the Case 7 In 2002 the Respondent was employed by the Royal Australian Navy as a member of the Navy Reserve. He worked four days a week as a facilitator and maintainer at a physical fitness facility at HMAS Stirling in Western Australia. At the facility was a course of low ropes, and a course of high ropes, on each of which a participant could carry out various physical activities. It was called the Endeavour Ropes Course. Sometimes the bureaucratic love of acronyms led to it being called "ERC". The course was located in bush, about 100 metres from the ocean. It had been built or installed in 1993 by Rope Tech Australia Pty Ltd in conjunction with Merrybrook Pty Ltd. The trial judge found that Rope Tech Australia Pty Ltd was "a predecessor" of Adventure Training Systems Pty Limited ("ATS"). 8 Part of the duties of the Respondent involved periodical inspection and maintenance of the high ropes course. 9 On 29 January 2002, after carrying out an inspection of that course, he was preparing to abseil down from it. He attached the anchoring device for his abseiling rope to a loop of flexible steel rope. That loop was at one end of a length of wire rope called a safety strop. The other end of the safety strop was affixed to one of the rigid poles of the ropes course. The trial judge found that he adopted the correct abseiling procedure. However, when he placed his weight on his abseiling rope the safety strop from which it was suspended broke. He fell about 10 metres to the ground, suffering some significant injuries. The trial judge has assessed his damages at $1,457,711.91: Hall v Adventure Training Systems Pty Ltd [2007] NSWSC 817; (2007) Aust Torts Reports 81-904. No party appeals concerning that assessment of quantum. 10 It was common ground at the trial that the substantive law governing the Respondent's entitlements is the common law of Western Australia, to which no civil liability statute applies. No defendant made a claim for contributory negligence.

The Roles of the Defendants 11 The Respondent sued three defendants, namely, ATS, Transfield Services (Australia) Pty Limited ("Transfield") and QBE Insurance (Australia) Limited ("QBE"). He did not sue his employer, possibly because sections 44 and 45 Safety, Rehabilitation & Compensation Act 1988 (Cth) significantly restrict the circumstances in which a Commonwealth employee can bring an action for damages in respect of an injury sustained by the employee in the course of his employment. 12 The trial judge explained the respective roles of the defendants: "Adventure Training is a company based in Brookvale, New South Wales. Its involvement relates to fabrication, installation, maintenance and repair of certain aspects of the course and its component parts. Transfield is the contractor pursuant to a comprehensive maintenance contract with the Commonwealth of Australia in respect of Defence establishments situated in Western Australia, including HMAS Stirling. … QBE is the public and product liability insurer of Adventure Training pursuant to a contract of insurance entered into in the state of New South Wales. On 28 October 2005, Hoeben J granted leave for QBE to be joined as a defendant pursuant to s 6, Law Reform (Miscellaneous Provisions) Act 1946 (NSW)."

The decision of Hoeben J granting that leave is Hall v Adventure Training Systems Pty Ltd [2005] NSWSC 1079; (2006) 14 ANZ Ins Cas 61-673. 13 ATS took no active part in the trial. Neither did it take any active part in the appeal. 14 Transfield had contracted with the Commonwealth to maintain plant and equipment at HMAS Stirling. ATS had inspected the rope course in question in December 2001, pursuant to a contract it had entered with Transfield. At the time, the course was closed because of concerns about its safety. ATS issued Transfield with a report dated 17 December 2001 that said: "An inspection was carried out on all elements and found to be in safe working order. On each element all cables, eyebolts (and nuts) strand-vices, wire rope grips, stays and belay pulleys were checked and found to be ok. Belay wire rope lines and belay pulleys are 20 months old at time of this report."

Once the appropriate naval officer received that report, the course was re-opened. She had relied on the report in allowing the course to be re-opened.

Why the Respondent Fell 15 The steel rope that broke and caused the Respondent's fall has been described in uncontested engineering evidence as being: "… composed of a single wire rope coiled or looped back on itself. This is then brought in parallel to its parent and so the two adjacent strands were swaged. This was done using an aluminium alloy ferrule (elliptical) …. A thimble was inserted into the loop or eye to make it more rigid and permit a defined geometric shape." 16 The ferrule in question looks like an elongated collar of metal, that surrounds both of the parallel strands of wire rope. This configuration meant that one end of the wire rope protruded from the ferrule. In late 1993 or early 1994, a few months after the course opened, the ferrule and the rope for a short distance on the other side of the ferrule to the loop were covered with a plastic shrink wrap material. The trial judge described it as "similar to electrical tape … but it is opaque". The shrink wrap was applied to cover the ferrule and the wire rope so that people using the course did not spike their hands on a strand of wire when using the safety strop. The shrink wrap had never been removed from the safety strop from the time it was first applied. 17 After the Respondent's injury, the shrink wrap was removed from the strop, and it was found that the wire rope underneath the shrink wrap was badly corroded. Uncontested engineering evidence stated that corrosion underneath the shrink wrap was foreseeable, in an open-air environment near the sea. The trial judge found that the shrink wrap should have been removed by ATS during the inspection, that removal of the shrink wrap was easy, replacement of it was inexpensive, and the corrosion such that it would have been readily visible if the shrink wrap had been removed. On this basis she found ATS negligent.

Findings and Issues Concerning Transfield's Liability 18 The trial judge also found that Transfield was liable for the negligence of ATS, notwithstanding that ATS was an independent contractor engaged by Transfield, because Transfield owed a non-delegable duty of care to users of the ropes course. Transfield appeals against the finding that any such non-delegable duty existed. It submits that it owed no duty of care at all to the Respondent, and also that if it did owe a duty of care that duty of care was not a non-delegable one. 19 The Respondent, by Notice of Contention, seeks to uphold the result at which the trial judge arrived concerning Transfield's liability. One argument to that conclusion relies upon the terms of the contract between Transfield and the Commonwealth as an aid to finding that Transfield owed a non-delegable duty of care to the Respondent. Another argument is that, regardless of whether a non-delegable duty of care exists, Transfield has a vicarious liability for the negligence of ATS.

Findings and Issues Concerning QBE's Liability 20 The trial judge found that QBE was not liable to indemnify ATS for its liability. The primary reason for this conclusion was that QBE's liability to indemnify arose under the policy only in relation to liability arising out of the Insured's Business, and the liability of ATS in the present case did not arise out of the Insured's Business. 21 Against the possibility that she was wrong in that conclusion, she also considered three other arguments that QBE put as to why the policy would not respond even if the loss had been one that arose out of the Insured's Business. Those arguments were:

(1) the policy provided indemnity only concerning claims arising out of or in connection with any Product, and the ropes course was not a "Product" within the meaning of the policy;

(2) the liability fell within an exclusion of liability caused by or arising out of the rendering of professional advice or service by the Insured; and

(3) the liability fell within an exclusion of liability caused by or arising out of advice given for a fee. 22 The trial judge rejected arguments 1 and 2, but upheld argument 3. 23 In this appeal the Respondent, by a notice of cross-appeal, submits that QBE should have been found liable on the basis that ATS's liability arose out of the Insured's Business, and was not a liability caused by or arising out of advice given for a fee. QBE, by notice of contention, submits that the trial judge should have found for it on arguments 1 and 2, that there is a better reason than the reason the trial judge adopted why the liability of ATS in the present case did not arise out of the Insured's Business, and that in any event ATS was not negligent. FACTS RELEVANT TO BOTH TRANSFIELD'S AND QBE'S LIABILITY

Roles of Transfield and ATS Concerning Inspection 24 In the period from 1994 until 1999 maintenance of the course was carried out by an organisation other than ATS. By late 1999 naval personnel responsible for the course were concerned about the adequacy of the maintenance carried out, and decided to seek advice from other organisations. On 12 November 1999 ATS inspected the course, and produced an inspection report. Part of it said: "It is our recommendation that the high ropes course and tower be taken out of service as it is deemed to be below the safety standard. This report outlines the recommendations and actions required to bring the above courses and elements to a safe operational standard. Only after the following recommended actions have been addressed should the course be used." 25 Concerning the high ropes course, the report stated: "All eyebolts and fittings, including wire rope, have been checked some surface corrosion was seen on some fittings, all appear to be structurally sound other than what has been noted in this report." 26 The report made specific recommendations about what needed to be done to each element in the course. 27 On 22 November 1999 ATS sent an invoice to Transfield for "Inspection of High Ropes Course at HMAS Stirling". While Transfield must have had some sort of responsibility at that time concerning the carrying out of work at HMAS Stirling, the evidence does not elucidate what it was. 28 Lieutenant Commander Roslyn Astfalck was the manager of the adventure training activities at HMAS Stirling. On 19 October 2000 she emailed Mr Hope, of ATS, saying: "At present I am rewriting our operating procedures to bring these in line with your company's suggestions regarding ERC maintenance and inspection. The old procedure if you remember involved load testing both the belay cables and pulley blocks, this was substantiated by a number of standards. To add weight to the changes I have made to the maintenance schedule are there any Industry Standards that I can quote in support?" 29 On 29 August 2000 a contract was entered between the Commonwealth and Transfield relating to maintenance of plant and equipment at, inter alia, the Stirling base. 30 Clause 10.5(a)(i) of that agreement provided that Transfield must: "employ, and ensure that its subcontractors employ, in connection with the Contractor's Activities only persons who are careful, skilled and experienced in their respective trades and callings …" 31 Clause 10.7 of that agreement provided: "The Contractor must: (a) co-ordinate the work of all subcontractors engaged by it; (b) provide and direct all necessary personnel to administer, supervise, inspect, co-ordinate and control the subcontractors engaged by it; and (c) at all times co-ordinate the Contractor's Activities and ensure execution and completion of the work which is to be carried out by the subcontractors engaged by it in a proper and workmanlike manner according to the obligations of the respective subcontractors." 32 On 27 February 2001 naval officials promulgated a Standard Operating Procedure document known as "SOP 801" relating to adventure training equipment. Its introductory paragraph said, "the strict adherence to the Procedure contained herein is mandatory". It explicitly stated: "3. The ERC shall be maintained at the highest possible standard, due to the safety requirements of the ERC being used by personnel at heights." 33 It required inspections of different degrees of stringency at different periods of time. The requirements for a yearly inspection were outlined in Annex D. It included the following provisions: "3. The testing authority shall be a NATA endorsed company. … NOTE: HIGH ROPES COURSE IS STRUNG TO A MAXIMUM HEIGHT OF 16 METRES. VISUAL INSPECTION REQUIRES PERSONNEL TO WORK ALOFT TO INSPECT THE ENTIRE LENGTH OF EACH WIRE. … 5. Each item of cordage, steel wire rope, pole structure and fitted appliance used for support of personnel or as a personnel securing device, shall be surveyed throughout its extremities, load tested then surveyed again on completion of the test. 6. All wires and structures used for support of personnel or as a personnel securing device shall be certified stating the: … c. test load applied to the wire or structure. … 10. Any assembly of wire or structural support should not be disassembled for the purpose of the test unless directed by the Department of Defence representative nominated by the ATO." 34 The "ATO" was defined to be the "Adventurous Training Officer" [sic]. The trial judge appears to have accepted that Lieutenant Commander Astfalck was the person intended to be referred to by that title, and that Lieutenant Commander Astfalck did not give either Transfield or ATS any specific instruction to disassemble the strop and look under the shrink wrap cover. 35 The particular requirements of SOP 801 for inspection of the particular safety strop that broke were stated in Schedule 2, and included: "(a) The item shall be visually surveyed, throughout its extremities and examined for its serviceability. (b) A test load of 300 kg is to be applied to the item. The test load is to travel along its entire length where possible. (c) On completion of the test, the test weight is to be removed and the item shall be visually surveyed throughout its extremities and re-examined for serviceability." 36 In the course of 2001 Lieutenant Astfalck had discussions with Mr Hope about the procedures that should be adopted for regular inspection of the course. Lieutenant Astfalck discussed SOP 801 in detail with Mr Hope. Her evidence was: "They [ie ATS] disagreed with those requirements because these requirements actually talk about loading the cables and they were aware of what we were told to do with regard to operations and what they intended to do to actually certify that the course was actually safe to use." 37 She had drafted a revised edition of SOP 801 in 2001, but it had not been accepted. 38 Some of the work required to be done under the maintenance contract was classified as "general buildings and facilities maintenance", and some as "fixed plant and equipment". There were different procedures and payment regimes for carrying out those two types of work. On 24 May 2001 the Commonwealth issued a variation order to Transfield. It included, inter alia, the high ropes course in the fixed plant and equipment that the maintenance contract dated 29 August 2000 applied to. While Transfield used its own labour to carry out some types of work on fixed plant and equipment (predominantly electrical and mechanical maintenance) Mr Eden, a Transfield officer, explained "if there was enough volume of that particular task to justify employing that capability full time we would opt to use a subcontractor as the most cost effective method to do that task." Inspection of the high ropes course was one of the types of task concerning which Transfield opted to use a subcontractor. 39 A Noble & Son Ltd ("Noble") specialises in testing lifting gear and mining equipment. It operates a NATA accredited laboratory. It had supplied some steel ropes and accessories for repairs to the ropes course in 2001, and had issued testing certificates in October 2001 relating to various ropes in the course. Those certificates show that the manner of testing adopted was to apply weights that were twice the workload limit of the rope. In contrast, there is no evidence to suggest that ATS was endorsed by NATA in any way. 40 On 8 November 2001 Transfield submitted to a navy official a quotation from Noble for annual inspection and testing of various items, one of which was the high ropes course. A navy official notified Transfield that it approved that request on 13 November 2001. However there is no indication that Noble actually did anything to test the course before the Respondent was injured. A separate part of Transfield's letter of 8 November 2001 stated that "Transfield & Nobles have undertaken a comprehensive inspection of all facilities and have identified a significant number of non-conforming ropes and fitting". It proposed spending $5,000 "to undertake immediate repairs". There is no written acceptance of that proposal, and it is not clear whether the work ATS later agreed to do, of "replacement of all strand vices to the high ropes course with new and hard eyes" was the repair work that Transfield was referring to. 41 Towards the end of 2001 the Respondent had noticed that some of the ropes of the course had started to elongate. He brought it to the attention of Lieutenant Astfalck. She decided to close the course, and seek advice about what to do. The procedure adopted under the maintenance contract with Transfield was for any problems concerning maintenance of an item to which the contract applied to be brought to the attention of a help desk that Transfield operated. Lieutenant Astfalck discussed the situation with someone at the Transfield help desk. Her evidence was: "They decided at that point that they would incorporate some of the maintenance work with some of the maintenance work due in April because we needed to fly Adventure Training Systems out from the Eastern States". 42 She had no direct contact with ATS that resulted in ATS carrying out its inspection of the course in December 2001. 43 On 28 November 2001 Transfield faxed ATS requesting that it provide a quote for: "1. Carry out assessment of course and certify. 2. Replacement of all strand vices to the high ropes course with new and hard eyes." 44 On 10 December 2001 ATS replied to Transfield, saying: "This quotation is based on the information / request as outlined in your fax of 28th Nov 01. 1. Carry out assessment of course and certify. 2. Replacement of all strand vices to the high ropes course with new and hard eyes. Adventure Training Systems recommends the following; 1. Inspection and report high and low ropes facilities. Cost $ 650.00 2. Replacement of all strandvices on high ropes course (excluding belay lines). Cost $ 1,148.00 (total of 13 strandvices with hard-eye thimbles). 3. Labour, Travel, Accommodation and Expenses. Cost $5,400.00 Total Contract Price $ 7,198.00 NB Any additional strandvices and hard-eye thimbles required will be an additional cost of $ 88.30 per unit." 45 It was pursuant to acceptance of that quotation that ATS carried out its inspection, and issued its report dated 17 December 2001 (para [14] above). 46 The Multi-vine (sometimes also referred to in the evidence as the milking machine) was the part of the ropes course at which was located the particular safety strop that failed. As well as the general conclusion that all elements were found to be in safe working order, the report of 17 December 2001 gave a more specific statement of items of work that had been performed. It included: "All equipment, (wire rope grips, Quick-links) showing surface rust were cleaned with a wire brush and treated with Cold Gal Paint, or Oil product. … The wire rope on hand and foot lines is currently showing significant rusting due to the location and age of the course. It is recommended that in the next 6 months a sample of wire rope be removed from the course and tested by a NATA Certified rigging/lifting supply company to determine the condition of such wire rope." 47 It identified specific work that had been done on various parts of the course, including the Multi-vine, but said nothing about the safety strop located there. It gave specific recommendations for other work that should be performed, including to the Multi-vine. No recommendation was made relating to the safety strop at the Multi-vine. 48 On 20 December 2001 ATS sent an invoice to Transfield relating to "inspection, maintenance and upgrade work for Endeavour Ropes Course". An amount of $6,543.64 was charged for that item, without any allocation into component parts. When 10% GST was added the invoice total became $7,198, ie, equal to the quoted amount. TOPIC 1 - LIABILITY OF TRANSFIELD?

Trial Judge's Reasoning on Non-Delegable Duty 49 The trial judge recognised that there were some categories of relationship in which one person has been held to owe the other a non-delegable duty. However she held that the facts of the instant case did not fall within any of those recognised categories. 50 The trial judge also recognised that a non-delegable duty of care had been held to arise in some circumstances where the relationship between the plaintiff and the defendant evidenced elements of "control" by the defendant and "special dependence or vulnerability" on the part of the plaintiff. However, she held that those characteristics were not manifested in the present case. 51 She held that a third category of case where a non-delegable duty arose was "where the activity being carried out by the defendant's independent contractor is sufficiently dangerous, or alternatively a substance associated with the activity being carried out by the defendant's independent contractor is sufficiently dangerous". The trial judge held that Transfield was under a non-delegable duty of this type. She found that the duty arose from the following factors:

(i) Transfield's contractual obligation under clause 10.5 of its contract to engage only careful, skilled and experienced subcontractors.

(ii) The activities to be carried out by the subcontractors of Transfield were dangerous, because of the dangerousness of the activities on the high ropes course, and the vulnerability of people using the course to deficiencies in its physical integrity.

(iii) The contractual obligation of Transfield, contained in clause 10.7 of its contract with the Commonwealth, to ensure that the work of its subcontractors was carried out in a proper and workmanlike manner. 52 Counsel for both Appellant and Respondent in the present case accepted, in broad terms, the trial judge's categorisation of circumstances where a non-delegable duty of care could arise. The qualifications to this are that Mr Walker SC, counsel for the Appellant, noted the imprecision of "sufficiently dangerous", in the formulation of the third category, and Mr Campbell SC, counsel for the Respondent, submitted that the factors which gave rise to the second category could also be relevant to the third category.

Nature of a Non-Delegable Duty 53 In Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672 Mason J (with whom Deane and Dawson JJ agreed), at 679, referred to a non-delegable duty as being a duty "… of such a nature that its performance cannot be delegated to a contractor on the footing that delegation to a competent contractor is a sufficient compliance with the duty." 54 Such a duty differs from ordinary duties of care in negligence, in that for ordinary duties of care in negligence the duty is, in its totality, a duty for the defendant to take reasonable care to avoid causing harm of a particular type to the plaintiff. Concerning such a duty it is well established that if the defendant delegates to an independent contractor the performance of those activities that might possibly cause harm to the plaintiff, and the defendant has exercised reasonable care to choose an appropriately skilled contractor, and the task that is delegated is not one the performance of which must necessarily involve the performance of activities from which damage to the plaintiff will result, then the defendant has exercised reasonable care. 55 What the non-delegable duty contemplates is a duty that is more stringent than this. It is not a duty of strict liability, in the sense that the defendant is liable for any damage suffered regardless of whether the defendant, or anyone else, has been negligent. Before a plaintiff can succeed in a case based on breach of such a non-delegable duty, the plaintiff must establish that someone has been negligent. However, the situation differs from an ordinary duty of care in negligence in that a person subjected to such a duty cannot perform it by taking reasonable care to select an appropriate independent contractor to carry out the acts that eventually injure the plaintiff. 56 In one aspect of its operation it may not be appropriate to call a non-delegable duty a "duty of care" at all. This is because a defendant bears liability for any injury that the plaintiff sustains by reason of a failure on the part of an independent contractor to take care not to cause the type of harm in question to the plaintiff, when there has been no personal want of care on the part of the defendant in selecting the contractor or in any other respect whatever. But the non-delegable duty of care retains the ordinary aspects of a duty of care if the defendant seeks to perform it completely through his own actions, rather than by having an independent contractor act on his behalf. 57 This feature of non-delegable duties has been recognised for decades. In Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 Windeyer J said, at 95: "… apart from true instances of strict liability, the distinction between delegable and non-delegable duties does not, it seems, really amount to more than the adoption of convenient headings for those cases in which defendants have been held not liable for the negligence of independent contractors and cases in which they have."

Liability for "Inherently Dangerous" Activities 58 I shall start to examine whether Transfield had a non-delegable duty to the Respondent by considering how the law has dealt with arguments that there are special rules governing liability for "inherently dangerous" activities. 59 Read v J Lyons & Co Ltd [1947] AC 156 involved a plaintiff who was an invitee to the defendant's explosives factory, who was injured when a high-explosive shell being manufactured exploded without any negligence on the part of the defendant. The House of Lords held that the dangerousness of the activities make it appropriate for the defendant to be subject to a high standard of care, but rejected the notion that there was a type of activities or things the inherent danger of which resulted in the imposition of absolute liability, in the sense of liability regardless of whether anyone (whether the defendant its servants and agents, or anyone else) had been negligent. Lord Macmillan said at 172-173: "In my opinion it would be impracticable to frame a legal classification of things as things dangerous and things not dangerous, attaching absolute liability in the case of the former but not in the case of the latter. In a progressive world things which at one time were reckoned highly dangerous come to be regarded as reasonably safe. The first experimental flights of aviators were certainly dangerous but we are now assured that travel by air is little if at all more dangerous than a railway journey. Accordingly I am unable to accept the proposition that in law the manufacture of high-explosive shells is a dangerous operation which imposes on the manufacturer an absolute liability for any personal injuries which may be sustained in consequence of his operations. Strict liability, if you will, is imposed upon him in the sense that he must exercise a high degree of care, but that is all. The sound view, in my opinion, is that the law in all cases exacts a degree of care commensurate with the risk created. It was suggested that some operations are so intrinsically dangerous that no degree of care however scrupulous can prevent the occurrence of accidents and that those who choose for their own ends to carry on such operations ought to be held to do so at their peril. If this were so, many industries would have a serious liability imposed on them. Should it be thought that this is a reasonable liability to impose in the public interest it is for Parliament so to enact. In my opinion it is not the present law of England." 60 In the Full Court of the New South Wales Supreme Court in Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 Jordan CJ, at 164-165, recognised that there were some categories of relationship in which one party owed the other a non-delegable duty. At 165 his Honour said of a person who engaged an independent contractor to carry out work: "… although he is liable for all the consequences of the results contracted for, he is not as a general rule responsible for damage occasioned by negligence on the part of the contractor in applying the methods selected by the contractor for achieving those results, these methods and their application being matters over which the employer has no control, and not being methods which must necessarily be used and from which damage must necessarily result." 61 Jordan CJ declined to recognise any exception concerning work that was "extra hazardous". After an extensive review of the authorities he concluded, at 170: "… there is no general rule that if a person employs an independent contractor to do an inherently lawful act, he incurs liability for injury to others occasioned by the methods incidentally employed by the contractor in the course of its performance (these not being methods necessarily involved in the doing of the act and necessarily injurious), by reason only of the fact that the act is "dangerous," "hazardous," or "extra hazardous." " 62 On appeal to the High Court (Torette House Proprietary Ltd v Berkman [1940] HCA 1; (1940) 62 CLR 637) the decision of the New South Wales Full Court was affirmed, but not on the basis that involved acceptance, or rejection, of this latter aspect of the judgment of Jordan CJ. 63 Latham CJ at 647-648 noted that the English Court of Appeal in Honeywill and Stein Ltd v Larkin Brothers Ltd [1934] 1 KB 191 and Matania v National Provincial Bank Ltd [1936] 2 All ER 633 had held that someone who engages an independent contractor to do "an act which in its very nature involves in the eyes of the law special danger to others" can be liable for negligence in the conduct of that operation. It was those cases that Jordan CJ had declined to follow. Latham CJ, at 648, said it was not necessary to consider whether those cases were correct, because the act of the independent contractor in the case before him was not one that in its very nature involved special danger to others. Starke J at 651-652 said that the work the contractor was engaged to do: "… was lawful in itself and of such a character that if executed with due care involved no injurious consequences to others; there was no special or peculiar hazard in the work which the plumber was employed to execute. Under these circumstances the rule of law is that an employer is not responsible for the act of a person who is not his agent or servant but an independent contractor". 64 Amongst the authority quoted by Starke J for that proposition was Honeywill and Stein. Dixon J did not advert to the question. 65 The test put forward by Jordan CJ in Torette House was adopted and applied by Stephen J in Stoneman v Lyons [1975] HCA 59; (1975) 133 CLR 550 at 564-565. The defendant in that case was a landowner, who had engaged a builder to carry out work that involved construction of a trench immediately adjacent to a building on the boundary of the neighbouring land. The terms of the contract with the builder required the builder to obtain instructions from the architect before proceeding with any work that required underpinning of the adjoining property. The builder dug underneath the neighbouring property, without previously obtaining the architect's instructions, thereby causing damage to the neighbouring building. The defendant was held not liable, Stephen J at 565 doing so on the basis that: "… the negligent acts of the contractor's workmen were not authorised by the employer, the appellant, nor necessary to be employed in achieving the contractual aim; they were merely methods, and grossly unskilled and hazardous ones, selected by them for achieving the results contracted for. For these acts, as Jordan CJ points out, the employer will not be liable." 66 Stephen J also said that the matter was not one involving extra-hazardous activity, because (at 565): "… the erection upon a block of level, vacant land of a single-storeyed structure, the building contract itself calling for no special and dangerous methods of construction but on the contrary containing suitable safeguards, is not such an activity … the suggested doctrine should not … extend beyond the … case of work authorised by the employer which, however performed, inherently involves peculiar danger to others." 67 Mason J (with whom Barwick CJ agreed) said at 575 that the case was no occasion to decide whether the doctrine of absolute duty or strict liability for extra-hazardous activities was part of the common law in Australia, but said "If it has application here, it would be wrong to classify the demolition and erection of a building (necessarily involving an excavation) in immediate proximity to the wall of an adjoining building as an extra-hazardous act. The operation is one which certainly involves a risk of injury to the neighbour if it is not executed with due care. But this is not in itself enough to justify its description as extra-hazardous. To my mind this expression signifies that, notwithstanding the taking of proper precautions, there is some element of danger arising from the operation." 68 Mason J at 576 said: "The principle that in the case of dangerous operations there is a special responsibility to take care does not exclude the liability of a person who engages an independent contractor to undertake an operation which is inherently dangerous and which injures a third party. But to make the principal liable it must appear that he himself was guilty of some negligent act or omission or that he authorised some negligent act or omission by the contractor in executing the operations which the latter was employed to carry out. Thus it may appear that the principal is liable because he failed to take care to engage a competent contractor or because, having knowledge that the contractor proposed to execute the work in an unsafe manner, he did nothing to eliminate the danger." 69 If this passage stood by itself, one might conclude that Mason J was rejecting the notion that a principal had a non-delegable duty for the negligence of an independent contractor engaged to perform an inherently dangerous task, if the principal had selected the contractor with care and had no knowledge that the contractor was proposing to use unsafe methods. However when at 575 he had said there was no occasion to decide whether there was an absolute duty for extra-hazardous activities, one cannot be sure whether it is appropriate to draw that conclusion. 70 Though Kondis does not deal with liability for extra-hazardous activities, it is convenient to mention here, in its correct place in the chronology of cases, a different topic dealt with by Kondis, namely the rationale for non-delegable duties. In Kondis at 680-681 Mason J noted that the decision in Wilson & Clyde Coal Co v English [1938] AC 57, had held that an employer's duty to its workers was a non-delegable duty, but that Lord Wright in Wilson "… advances no reason or policy consideration for fixing the employer with the higher duty to see that care is taken instead of the duty that he himself take reasonable care." 71 After tracing the types of cases in which such a non-delegable duty had been held to exist Mason J at 687 sought to identify the sort of circumstances in the relationship between plaintiff and defendant in such a case which led to the imposition of that higher standard: "The element in the relationship between the parties which generates a special responsibility or duty to see that care is taken may be found in one or more of several circumstances. The hospital undertakes the care, supervision and control of patients who are in special need of care. The school authority undertakes like special responsibilities in relation to the children whom it accepts into its care. If the invitor be subject to a special duty, it is because he assumes a particular responsibility in relation to the safety of his premises and the safety of his invitee by inviting him to enter them. And in Meyers v Easton (1878) 4 VLR 283 the undertaking of the landlord to renew the roof of the house was seen as impliedly carrying with it an undertaking to exercise reasonable care to prevent damage to the tenant's property. In these situations the special duty arises because the person on whom it is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised. As we have seen, the personal duty which has been recognised in the other cases which I have discussed, such as Dalton v Angus (1881) 6 App Cas 740, may rest on rather different foundations which have no relevance for the present case. The foreseeability of injury is not in itself enough to generate the special duty. Before the special duty arises there must exist in the relationship between the parties an element of the kind already discussed." 72 In Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 the High Court considered a situation in which Stevens, who was an independent contractor to Brodribb, was injured by the negligent manipulation of logs by Gray, another independent contractor to Brodribb. One basis upon which it was argued that Brodribb had liability was that the operations involved in manipulating the logs, that caused Stevens' injury, were inherently dangerous, or extra-hazardous. 73 The argument of counsel for Stevens is reported, at page 19, as being: "… on the assumption that both men were independent contractors, the company owed a duty to Stevens to ensure that the logging and carting were performed with care, and that duty could not be delegated. [He referred to Kondis v State Transport Authority ]. If Stevens was an independent contractor, the company was liable to him for Gray's negligence because all the relevant activities were extra-hazardous: Honeywill & Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191; Matania v National Provincial Bank [1936] 2 All ER 633. The doctrine is well established in England, Canada, and America, and should be adopted here." 74 Thus, the argument that the High Court was being asked to adopt was that a person who engaged an independent contractor to perform extra-hazardous operations owes a non-delegable duty of care to someone who it was foreseeable could be injured in the course of those operations. The argument was the one that Jordan CJ had rejected in Torette House, but concerning which no ratio emerged from the decision of the High Court in Torette House. It was the argument that had been put under a serious cloud, though not decisively rejected, by the High Court decision in Stoneman v Lyons. 75 In Stevens v Brodribb Mason J (with whom Brennan J was "in general agreement") said, at 29-30: "The next question to consider is whether, notwithstanding the fact that the relationship between Brodribb and Gray is one of independent contract, Brodribb is liable to Stevens on the footing that his injury arose out of dangerous operations or extra-hazardous acts. Although the doctrine of extra-hazardous acts is sometimes treated as an exception to the general rule that a principal is not liable for the negligence of his independent contractor, it is in truth an instance of strict liability for breach of a duty of care which the principal personally owes to the plaintiff. The principal's liability is therefore primary, rather than vicarious: Salsbury v Woodland [1970] 1 QB 324 at 336-7, 347; Staveley Iron & Chemical Co Ltd v Jones [1956] AC 627 at 639, 646-7; Stoneman v Lyons (1975) 133 CLR 550 at 574. The doctrine has been applied in the United States and Canada. Although it has been affirmed in a number of English decisions ( Honeywill & Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191; Matania v National Provincial Bank Ltd [1936] 2 All ER 633 at 645-6; Salsbury v Woodland at pp 338, 345, 348), it has not achieved complete acceptance ( Hughes v Percival (1883) 8 App Cas 443 at 446-7; Rainham Chemical Works Ltd v Belvedere Fish Guano Co Ltd [1921] 2 AC 465 at 476-7, 490-1). And doubt has been cast on its authenticity by the rejection in Read v Lyons & Co Ltd [1947] AC 156 of the proposition that dangerous operations give rise to strict liability. The doctrine has not found favour in Australia. In Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 the Supreme Court of New South Wales emphatically rejected the notion that a principal could be made liable for the negligence of an independent contractor on the basis that the activities he was engaged to perform were extra-hazardous. More recently, in Stoneman v Lyons , this court discussed the shortcomings of the doctrine, emphasizing (CLR at pp 563-5, 574-5) the elusive nature of the distinction between acts that are extra-hazardous and those that are not. Furthermore, the traditional common law response to the creation of a special danger is not to impose strict liability but to insist on a higher standard of care in the performance of an existing duty: Adelaide Chemical & Fertilizer Co Ltd v Carlyle (1940) 64 CLR 514 at 522-3, 534; Swinton v China Mutual Steam Navigation Co Ltd (1953) 87 CLR 553 at 566-7; Thompson v Bankstown Corporation (1953) 87 CLR 619 at 645; Imperial Furniture Pty Ltd v Automatic Fire Sprinklers Pty Ltd [1967] 1 NSWR 29 at 31, 44; Todman v Victa Ltd [1982] VR 849 at 851-2. For these reasons, the doctrine, in my opinion, has no place in Australian law." (Some citations omitted) 76 Wilson and Dawson JJ considered the argument at somewhat more length. They had, at 40, some difficulty in working out what should count as extra-hazardous activities and in particular doubted "whether logging operations can be so categorised", but assumed for the purpose of the argument that the logging operations were extra-hazardous. 77 The argument as their Honours saw it was that Brodribb was liable because Stevens' injuries (at 39-40): "… were sustained as a result of the extra-hazardous operations in which Stevens and Gray were engaged at the time of the accident. In these circumstances, it was said, Brodribb was under a duty to take special precautions to safeguard Stevens against injury and it was a duty which could not be delegated by the employment of independent contractors." 78 It is not clear, from the argument as so formulated, whether the "duty to take special precautions" is more extensive than a duty to take reasonable care. However, a reading of their Honours judgment as a whole suggests that they understood the argument as being that Brodribb was under a duty to ensure that reasonable care was taken. I say that not only because of the way the argument had been put by counsel, but also because, at 40, their Honours quoted from Honeywill and Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191, at 199-200 the principle that they were considering as being: "… if a man does work on or near another's property which involves danger to that property unless proper care is taken, he is liable to the owners of the property for damage resulting to it from the failure to take proper care, and is equally liable if, instead of doing the work himself, he procures another, whether agent, servant or otherwise, to do it for him." 79 Wilson and Dawson JJ went on to say that the cases relied upon in Honeywill and Stein did not support a proposition of such width, and it is "inconsistent with the ordinary principles regarding vicarious liability and liability for the acts of independent contractors". They approved the statement of "those principles" by Jordan CJ in Torette House v Berkman, at 170 where his Honour said: "A person who procures the doing of an act is liable for its actual consequences and for anything necessarily involved in its being done whomsoever he may have procured to do it. He is liable for the acts of any agent of his acting within the scope of his employment. For the actual breach of any duty owed by himself he is responsible whatever steps he may have taken or agency he may have employed to endeavour to prevent a breach. In certain special circumstances, if he causes an act to be done he incurs a liability to see that care is used to prevent injury from being caused by methods incidentally used to produce the result, whomsoever he may employ to produce it. But there is no general rule that if a person employs an independent contractor to do an inherently lawful act, he incurs liability for injury to others occasioned by the methods incidentally employed by the contractor in the course of its performance (these not being methods necessarily involved in the doing of the act and necessarily injurious), by reason only of the fact that the act is 'dangerous', 'hazardous', or 'extra-hazardous'." 80 After considering further authority, Wilson and Dawson JJ said, at 42-43: "The direction taken in this Court has also been away from strict liability for tortious behaviour. There is a preference for a view which is more in harmony with the ordinary principles governing liability for negligence, namely, that the extent of a duty of care will depend upon the magnitude of the risk involved and its degree of probability: Adelaide Chemical & Fertilizer Co Ltd v Carlyle (1940) 64 CLR 514 at 522-3; Swinton v China Mutual Steam Navigation Co Ltd (1951) 83 CLR 553 at 566-7; Thompson v Bankstown Corporation (1953) 87 CLR 619 at 645. Thus the standard of response required is that of a reasonable man placed in the relevant circumstances: see Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47-8. If that means, in the words of Lord Simonds, an ultra-cautious response to an ultra-hazardous operation, it nevertheless falls short of the imposition of strict liability. In our view it would be inconsistent with this approach to follow the decision in Honeywill and Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191, and the view of Jordan CJ in Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 is to be preferred." 81 Deane J, the other judge who sat in Stevens v Brodribb, said nothing about the significance of extra-hazardous activities. 82 Mason J and Wilson and Dawson JJ all referred to the doctrine they were rejecting as one involving "strict liability". However, in the context in which the argument was put, that involves rejecting a proposition that a principal who engages an independent contractor to engage in an extra-hazardous activity is liable, even in the absence of personal fault in the principal, for failure of the independent contractor to take reasonable care in carrying out that activity. 83 In other words, four of the five judges in Stevens v Brodribb expressly reject the proposition that a person has a non-delegable duty to ensure that reasonable care is taken by an independent contractor who is employed to engage in an extra-hazardous activity. That rejection is part of the ratio of the case. Thus, even if it were the fact that the activity to be carried out by ATS was extra-hazardous, that by itself would not suffice to impose liability on Transfield. 84 Mr Campbell SC, counsel for the Respondent, reminded us of Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520. It is a case that has significance concerning both liability for extra-hazardous activities, and the basis on which non-delegable duties exist. Burnie was a joint judgment of Mason CJ, Deane, Dawson, Toohey and Gaudron JJ, in which the defendant was a building owner who retained an independent contractor to carry out work on the defendant's premises. Those premises contained some highly inflammable material, that was ignited when welding activities carried out by the contractor caused sparks or molten metal to ignite the material. The plaintiff was an occupier of adjacent premises whose goods were ruined when the fire spread. The court held that the defendant was in breach of a non-delegable duty of care. 85 At 550 the majority judgment referred with approval to the judgment of Mason J in Kondis, and said, at 550-551: "In most, though conceivably not all, of such categories of case, the common "element in the relationship between the parties which generates [the] special responsibility or duty to see that care is taken" is that "the person on whom [the duty] is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised" : Kondis v State Transport Authority (1984) 154 CLR at 687; see also, Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR at 33, 44-46. It will be convenient to refer to that common element as "the central element of control" . Viewed from the perspective of the person to whom the duty is owed, the relationship of proximity giving rise to the non-delegable duty of care in such cases is marked by special dependence or vulnerability on the part of that person: The Commonwealth v Introvigne (1982) 150 CLR 258 at 271, per Mason J." 86 Their Honours said that the ordinary situation where liability of the type recognised in Rylands v Fletcher (1868) LR 3 HL 330 would arise was such a situation: "One party to that relationship is a person who is in control of premises and who has taken advantage of that control to introduce thereon or to retain therein a dangerous substance or to undertake thereon a dangerous activity or to allow another person to do one of those things. The other party to that relationship is a person, outside the premises and without control over what occurs therein, whose person or property is thereby exposed to a foreseeable risk of danger. In such a case, the person outside the premises is obviously in a position of special vulnerability and dependence. He or she is specially vulnerable to danger if reasonable precautions are not taken in relation to what is done on the premises. He or she is specially dependent upon the person in control of the premises to ensure that such reasonable precautions are in fact taken. Commonly, he or she will have neither the right nor the opportunity to exercise control over, or even to have foreknowledge of, what is done or allowed by the other party within the premises. Conversely, the person who introduces (or allows another to introduce) the dangerous substance or undertakes (or allows another to undertake) the dangerous activity on premises which he or she controls is "so placed in relation to [the other] person or his property as to assume a particular responsibility for his or its safety' '." (at 551-552) 87 Their Honours also held, at 558-559, that: "… the character of "dangerous" is not confined to those classes of things, such as poison, a loaded gun or explosives, which are "inherently dangerous" or "dangerous in themselves" … [F]or the purpose of determining whether the duty of a person in occupation or control of premises to take care to avoid injury or damage outside the premises is or is not a delegable one … [i]t suffices … that the combined effect of the magnitude of the foreseeable risk of an accident happening and the magnitude of the foreseeable potential injury or damage if an accident does occur is such that an ordinary person acting reasonably would consider it necessary to exercise special care or take special precautions in relation to it." 88 The expression "collateral negligence" is used to refer to negligence of a contractor in the way in which the contractor chooses to perform the work, and that is not inherent in the task he or she has been asked to perform. In accordance with the principles governing when a person who engages an independent contractor is liable for negligence of that independent contractor that were stated by Jordan CJ in Torette House, the employer is liable for anything that is necessarily involved in performance of the task that has been given to the contractor, but not for collateral negligence of the contractor. For example, a defendant is not liable if an employee of an independent contractor, engaged to install windows in a building, accidentally leaves a tool in a position from which it falls on a passer-by: Padbury v Holliday & Greenwood Ltd (1912) 28 TLR 494. And it has been held that if a defendant engages an independent contractor to deliver beer to a hotel, and an employee of the contractor chooses to do so by delivering it through a cellar flap in the footpath that he negligently leaves open, causing a passer-by to fall in, the defendant is not liable if it was an available alternative for the employee to deliver the beer by means that did not create that risk: Wilson v Hodgson's Kingston Brewery Co (1915) 85 LJ KB 270. In Burnie their Honours pointed out that in some circumstances a defendant could be liable for collateral negligence of an independent contractor: "Similarly, a substance or activity entrusted to an independent contractor or other agent may be relevantly dangerous notwithstanding that foreseeable injury or danger will arise only in the event of what is commonly described as "collateral'' negligence. If X engages an independent contractor to separately move two chemicals, which will cause a major explosion if they come into contact with one another, into separate storage areas, there may be no real risk of injury or damage at all if the independent contractor does what he or she is engaged to do. The activity is, however, obviously fraught with danger unless special precautions are taken to ensure that the independent contractor does not, through "collateral'' negligence, transport the two chemicals together and in a way which causes contact between them." (at 559) 89 I would not regard that statement as providing any justification for holding an employer liable for the collateral negligence of an independent contractor in any circumstances other than those where a dangerous activity carried out within certain premises by or at the instruction of a person who is in control of those premises causes reasonably foreseeable damage to a person or property outside the premises. The concern of the court in Burnie was to restate on a coherent basis the ancient law concerning damage caused by the spread of fire from premises, and the case law that stemmed from Rylands v Fletcher. The previous law in those two areas had both involved strict liability. Burnie replaced that strict liability with a liability based on a non-delegable duty of care of the person in control of the premises. If the liability of the person in control of the premises did not extend to liability for collateral negligence of that person's independent contractors the law, on that new basis, would provide for liability in a substantially narrower field of circumstances than the previous law had provided. As I understand it, it was to preserve the commonality of coverage of the newly restated law and the old law concerning spread of fire, and Rylands v Fletcher, that the remarks in the paragraph I have just quoted were made. The ratio in Burnie does not apply in the present case, because the present is not a case where Transfield occupied any relevant premises, nor did any dangerous activity carried out on its premises cause damage to someone outside the premises. 90 I have quoted a passage at para [87] above from page 558-559 of Burnie, that contemplated that there could be a non-delegable duty in relation to things or activities that were "dangerous", in a wider sense than "inherently dangerous" or "dangerous in themselves". For similar reasons to those I have mentioned in the last paragraph, I do not regard that passage as intending to suggest that there could be a non-delegable duty concerning such dangerous things or activities outside the context with which Burnie was concerned, of activities formerly covered by the ancient law concerning spread of fire, and Rylands v Fletcher. Burnie has recognised a new category of non-delegable duty, that can be owed by the occupier of premises to a person outside the premises, concerning the activities carried on within the premises. It is not necessary for the purpose of this judgment to set out in detail the precise circumstances in which that new category of non-delegable duty arises. What matters for present purposes is that in the circumstances where that duty exists, it can apply in relation to the conduct of dangerous activities (not merely extra-hazardous activities) within the premises. But, outside its proper sphere of operation, broadly coextensive with that occupied by the former law concerning spread of fire and Rylands v Fletcher, Burnie has not detracted from the principle decided in Stevens v Brodribb, that there is no general doctrine in Australian law that a person has a non-delegable duty to ensure that reasonable care is taken by an independent contractor who is employed to engage in an extra-hazardous activity. 91 My reasons for taking this view of the two passages involve not only a reading of Burnie itself. As well, subsequent remarks in the High Court concerning non-delegable duties provide no support for extending the scope of the operation of the concept of non-delegable duties beyond existing categories. I turn now to consider those subsequent cases. 92 Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313 was a claim brought by a child who had been electrocuted as a result of the combined effect of two defects in the electrical system of a house that the defendant had rented to her parents. One of the defects was an inadequate repair of the stove. That repair had been carried out by an electrician, Mr Briggs, who was an independent contractor engaged by the landlord, after the tenants had entered into possession of the premises. The other was a defect in the earthing system, arising from an earth wire in the neutral link of the fuse box being inadequately connected. 93 A majority in the High Court (Brennan CJ, Toohey, Gaudron and McHugh JJ) held that the landlord was liable, but differed in the reasons why that liability arose. What is relevant for present purposes is that five of the seven judges held that the landlord was not under a non-delegable duty such as made it liable for the negligence of the electrician who had repaired the stove, Mr Briggs. Brennan CJ said, at 333: "The fact that negligence on the part of Mr Briggs might foreseeably cause injury to [the child] or to some other member of the tenants' family or to the tenants' visitors was not enough to impose a "non-delegable" duty of care on the landlord. Nor was the relationship between the landlord and the tenants and their family sufficient to impose on the landlord a non-delegable duty of care in effecting repairs to the premises or to equipment in the premises that were needed because of ordinary wear and tear during the tenancy or because of some other reason apart from the landlord's own default. The repair of the stove did not carry any inherent risk of injury unless it were negligently done. There was no want of due care on the part of the landlord in selecting Mr Briggs to repair the stove. Apart from the landlord's duty to exercise reasonable care in the selection of a licensed electrician to repair the stove, no further duty in respect of the repair of the stove arose from the circumstances." 94 Gaudron J at 361-363 said: "There are two matters which tell against a non-delegable duty on the part either of an occupier or of a landlord with respect to electrical installations and the remedying of electrical defects. First, the law only imposes a duty to take steps which, in the circumstances, a reasonable person would take to prevent a foreseeable risk of injury: See Hackshaw v Shaw (1984) 155 CLR 614 at 663 per Deane J; Australian Safeway Stores Pty Ltd v Zaluzna (1987) 162 CLR 479 at 487-8 per Mason, Wilson, Deane and Dawson JJ. It seems to me impossible to say that a reasonable occupier or landlord would ordinarily do more than seek the services of an apparently competent electrician to carry out electrical work. In this regard, it is sufficient to observe that, short of engaging a second electrician to check on the first, it is not apparent that there is any other precaution that might profitably be taken to guard against risk of injury as a result of carelessness on the part of an electrician. The second matter which tells against a duty to do more than engage an apparently competent electrician is that electrical work requires special skill and expertise. The very essence of work that requires skill and expertise is that the person engaged to carry out the work has control over that work, not the person on whose behalf it is carried out. In other relationships, notably those involving hospital and patient and employer and employee, the control involved is that exercised by one person in relation to the other and it is that control coupled with the special vulnerability of patients and employees that justifies the imposition of a non-delegable duty. And in the case of dangerous activities and substances, it is the occupier's control over the carrying out of those activities or the presence of those substances that justifies a special non-delegable duty of the kind identified in Burnie Port Authority ." 95 Kirby J at 399-404 rejected the existence of a non-delegable duty, in the course of which he explained, at 401, why the case he was considering did not fit within the general criteria of control and vulnerability for the existence of a non-delegable duty that the High Court had laid down. "… the respondent herself, as a young child, was vulnerable. She was in need of protection. But it would not normally be the landlord who would provide it. The "vulnerability" to which the legal test is addressed, in this context, relates to the relationship and not to particular individuals within it. Whereas, as a class, landlords might generally be in a better position than tenants, to carry the risk of unexpected harm in demised premises, this would not always be so. In commercial tenancies, the opposite might be the case. Specifying in a satisfactory way a sub-class of residential tenancies and then extending common law protection to all tenants within that sub-class, their families and visitors, presents significant challenges of definition. The appellant was not in actual occupation of the premises. Although it had a right, as landlord, to enter and inspect, generally speaking it lacked the entitlement to control, or even to know, what was done or allowed to be done within the premises: cf Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520 at 551. The tenant had a greater opportunity to observe and report defects. The appellant did not profess expert knowledge in the field in which the risk arose: cf Kondis v State Transport Authority (1984) 154 CLR 672 at 688 . Both by law, and as a matter of practicality, the task required skill and expertise. It was at once necessary and reasonable that the tenants, their family and visitors, should rely on the skill, knowledge and expertise of a qualified electrical contractor such as was engaged by the appellant: cf Voli v Inglewood Shire Council (1963) 110 CLR 74 at 84; Bryan v Maloney (1995) 182 CLR 609 at 619-620. There was thus absent from this relationship the "central element of control" referred to in Burnie Port Authority (1994) 179 CLR 520 at 551. There was no special dependence or vulnerability in the relationship of the kind that exists in a hospital or school. It is true that electricity can be hazardous. However, its supply to a domestic dwelling does not ordinarily involve an element of extraordinary danger such as to attract the non-delegable duty. Within the formulations previously offered by this court, there was no other feature of the case which pointed to the existence of a "special" duty, as distinct from the general duty of care which the appellant accepted."

See also per Dawson J at 344-347. Gummow J at 370 agreed with Dawson and Kirby JJ concerning the application of the law of negligence to the case. 96 Toohey J at 350, and McHugh J at 366-369 held there was a non-delegable duty of care owed in relation to Mr Briggs' work, but an important element of the reasoning of both these judges was (as McHugh J put it at 369) that the landlord "undertook to have an electrical stove repaired in circumstances where the plaintiff and her parents might reasonably expect that due care would be exercised in repairing the stove." 97 Since Northern Sandblasting, no decision in the High Court has suggested any more expansive view of the circumstances in which a non-delegable duty can arise. 98 In Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166 it was argued that a landlord of residential premises owes a non-delegable duty to members of the tenant's household to take reasonable care for their safety by putting the premises in a safe state of repair (at 169), but the significance of it being a non-delegable duty rather than an ordinary duty of care was, on the facts, "merely rhetorical" (per Gleeson CJ at [55]). However some remarks of more general application were made. Gummow and Hayne JJ, at [191] said: "The content of the principle by which this characterisation [of a duty as being non-delegable] is effected remains unclear, notwithstanding what was said by Mason J, after a review of the authorities, in Kondis v State Transport Authority (1984) 154 CLR 672 at 687. The relationships referred to by his Honour turn more on the nature of the relationship than on the characteristics of the individuals within it. For example, patients in hospitals and children in schools manifest a dependence or vulnerability which, while it may trigger a non-delegable duty, is not necessarily to be seen in the relationship of landlord and tenant." 99 Gummow J returned to that theme in Scott v Davis [2000] HCA 52; (2000) 204 CLR 333 at [248], where his Honour said: "Further, with respect to any doctrine of "non-delegability" , there is a difficulty in identifying any principle which dictates an expansion of liability such that the defendant becomes, in effect, the insurer of some activity even when it is performed by another. The explanation of the cases given by Mason J in Kondis was accepted in Burnie Port Authority v General Jones Pty Ltd . (1994) 179 CLR 520 at 550-2. In Kondis , Mason J identified (i) cases where the defendant "has undertaken the care, supervision or control of the person or property of another" and (ii) cases where the defendant is so placed in relation to the person or property of the plaintiff as "to assume a particular responsibility" for the plaintiff's safety, in each case where the plaintiff might reasonably expect the exercise of due care: Kondis (1984) 154 CLR 672 at 687. Such an approach requires some caution in its general application. It may explain the cases on "non-delegability"; but many other cases not decided on that basis also may have answered the criteria stated by Mason J. How then does the court decide a fresh case where the preferred criteria are historically descriptive but not normatively predictive? Some caution is required because the characterisation of a duty as non-delegable involves, in effect, the imposition of strict liability upon the defendant who owes that duty."

See also per Callinan J at [352]. 100 In State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511 the High Court held that the non-delegable duty owed by school authorities to pupils did not extend to make the authority liable for deliberate criminal conduct engaged in by a teacher against a pupil. McHugh J at [153], (though in the course of a dissenting judgment) referred with apparent approval to the remarks of Gummow J in Scott v Davis to which I have earlier referred. Gummow and Hayne JJ at [246] also referred to those remarks, saying: "… the doctrinal strength of the explanations of the cases [ Introvigne , Kondis , and Burnie ] has been questioned. A reading of the cases suggests perhaps no more than pragmatic responses to perceived injustices or other shortcomings associated with the doctrine of common employment, the rules respecting vicarious liability and the rule in Rylands v Fletcher . The leading United States text (Prosser and Keeton on Torts, 5th ed (1984), p 512) concludes: "It is difficult to suggest any criterion by which the non-delegable character of such duties may be determined, other than the conclusion of the courts that the responsibility is so important to the community that the employer should not be permitted to transfer it to another." The foregoing suggests the need for considerable caution in developing any new species of this genus of liability." 101 Kirby J, at [289] refers to his reluctance to expand the already identified categories of non-delegable duties, and says: "At the heart of my reluctance lies a concern that I feel about the doctrinal foundations of this exceptional principle of tortious liability." 102 It is convenient to mention here that Gaudron J in Lepore at [104] noted a common feature of the situations where a non-delegable duty has been imposed, namely that the duty is not merely to refrain from doing something that involves a foreseeable risk of injury, but is a duty of positive action - to take reasonable care to provide support to adjoining land, to take reasonable care to provide a safe system of work, to take reasonable care to provide proper nursing and medical care, or to take reasonable care to provide a safe school environment. 103 In Leichhardt Municipal Council v Montgomery [2007] HCA 6; (2007) 230 CLR 22 the High Court held that a local council did not owe pedestrians a non-delegable duty of care, to ensure that reasonable care was taken by independent contractors engaged by the council to carry out work on public footpaths. In the course of so deciding, Gleeson CJ said, at [18]: "We are not here concerned with the non-delegable duty that arises from the conduct of extra-hazardous activities. When, in Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520, this court decided that the rule in Rylands v Fletcher should be treated as subsumed in the ordinary law of negligence, part of the justification advanced for that decision was the protection afforded, within the law of negligence, by the concept of non-delegable duty: Burnie Port Authority at 550-4. Road works could in some circumstances involve an extra-hazardous activity, but that is not this case."

That remark gives no encouragement to recognising a non-delegable duty as arising from the conduct of extra-hazardous activities. 104 Kirby J, at [31]-[32] set out an extended list of academic castigations of the lack of any sound conceptual basis for the law governing non-delegable duties. He said, at [33]: "Special leave was granted in this appeal, in the hope of clarifying the underlying rationale of tort liability for non-delegable duties beyond the somewhat Delphic endeavours offered by this court in the past, notably by Mason J in Kondis v State Transport Authority ."

A reading of the judgment in Montgomery shows that that hope was disappointed. 105 Hayne J at [156] said, "There is no sound doctrinal basis for the notion" of non-delegable duties. 106 Nothing in these decisions of the High Court provides reason to believe that the law has changed from that stated in Stevens v Brodribb, to the effect that employing an independent contractor to carry out extra-hazardous activities is not sufficient to impose on the employer a non-delegable duty of care concerning the carrying out of those activities. 107 I also observe that, even as the doctrine concerning non-delegable duties concerning the carrying out of extra-hazardous activities was understood before it was rejected in this country, the present case does not come within it. That doctrine of extra-hazardous activities related only to "an act which in its very nature involves in the eyes of the law special danger to others". In Honeywill and Stein the dangerous act that the contractor was engaged to perform was to take a photograph of the interior of a theatre, using a magnesium powder flashlight that generated intense heat so there was an inherent risk (which materialised) of fire. In Matania the contractor was engaged to carry out building work that had an inherent risk (which also materialised) of creating noise and dust that would inconvenience neighbours. Even on that doctrine, the only thing that could even arguably be said to be extra-hazardous, or inherently dangerous, about the activity of inspecting the wire ropes is the fact that the person doing the inspection is working at a height. That is not "special danger to others", it is special danger to the contractor himself. As well, in the present case it is not that inherent risk that materialised. Even before Stoneman v Lyons and Stevens v Brodribb (and leaving aside Sir Frederick Jordan's judgment in Torette House as not determinative at a time when its reasoning had not been endorsed by the High Court) the present case would not have attracted a finding that there was a non-delegable duty of care by reason of there being extra-hazardous or inherently dangerous activities.

Control and Vulnerability 108 In the present case Mr Campbell submitted that a reason why there was a non-delegable duty of care was that there was not only particular prospect of danger to people who use the ropes course if it was not inspected carefully, but as well features of control and vulnerability were present. Though the trial judge has held that the present case does not exhibit features of control and vulnerability that give rise to a non-delegable duty, it is open to this court to review those findings. Doing so gives rise to a question of how the remarks in the majority judgment in Burnie at 550-551, that I have quoted at para [85] above, should be regarded. 109 I start with textual analysis. In the passage their Honours are observing some features that are common to cases where a non-delegable duty has been held to exist. They are not saying that all circumstances where A has control of some situation or state of affairs in which B is a vulnerable person are ones where A owes a non-delegable duty to B. As well, the "control" element is not even put forward as a universal concomitant of such duties - rather, it applies "in most, though conceivably not all, of such categories of case". 110 That reading of the passage is supported by some more general considerations. "Control" and "vulnerability" are imprecise concepts, that take their precise shade of meaning from the context in which they are used. Both control, and vulnerability, can exist to a greater or lesser extent. A continuum of situations ranging from significant influence to utter domination can fairly be called "control", as a matter of ordinary language. Control can exist concerning an enormously wide range of types of situation. Exercise of control over a situation can affect a wide range of matters that can be of importance to a person affected by the exercise of control. Some of those matters might be interests that are worthy of legal protection, some might not. "Vulnerability" means just that the vulnerable person is capable of being injured, as a matter of ordinary language. Even a great hero like Achilles had his point of vulnerability. The respects in which a person is vulnerable, the means by which a person can be injured in some particular respect, and the ease with which a person can be injured in some particular respect, all differ. In light of these matters, it would have been very surprising if the passage had intended to say that all situations where A has control of some situation or state of affairs in which B is a vulnerable person were ones where A owed a non-delegable duty to B. Thus, even if I were to come to the view, contrary to the trial judge, that present case is one where factors of control and vulnerability were present, that would not suffice to conclude that there was a non-delegable duty. 111 This view of the law is confirmed by the High Court's decision in Northern Sandblasting. In a sense, it could be said that the landlord in Northern Sandblasting had control of the situation in which Mr Briggs was working, because Mr Briggs only embarked on the work because the landlord asked him to do so, and the landlord was free to engage Mr Briggs on any terms he might think fit, and to carry out whatever checks of the adequacy of the safety of Mr Briggs' work he might think fit. Particularly when Mr Briggs was dealing with as dangerous a substance as electricity, it was reasonably foreseeable that someone in the position of the plaintiff in Northern Sandblasting could be killed or seriously injured if Mr Briggs did not carry out his work carefully, and in that sense the plaintiff was vulnerable. The relationship of Transfield and ATS in the present case exhibits closely analogous features. Yet there was no non-delegable duty of the landlord concerning the activities of Mr Briggs in Northern Sandblasting. 112 Mr Campbell is using the passage in question as the basis for an invitation to recognise a non-delegable duty, in circumstance where no previous case has been pointed to as closely analogous. He seeks to persuade the court to use the passage from Burnie as a basis on which to recognise factors of control by Transfield of the terms on which it engaged ATS to do the inspection and vulnerability of the Respondent to serious injury if the course was used in an unsafe condition, when combined with Transfield's contractual duty to the Commonwealth, as a reason for recognising a non-delegable duty. When the court is asked to embark on such an exercise it is necessary to consider the persuasiveness of the reasoning in the passage. If it were a question of simply applying law stated in the passage there would be no question of this course being open to me, as a judge of an intermediate court of appeal. But, when the passage is being pointed to as the basis for what seems to me to be an extension of the law, its persuasiveness can be considered. 113 There are two features that seem to me to detract from its persuasiveness as a basis for extending the law. Both derive from the fact that the passage exhibits a concern with proximity as the basis for the "non-delegable duty of care". 114 The first concerns the use of the concept of "proximity" at all. Since Burnie was decided, the High Court has rejected the direct application of the concept of proximity as a safe guide to when a duty of care exists. (Some relevant references concerning this rejection are collected in ACQ Pty Ltd v Cook [2008] NSWCA 161 at [100], and see now Imbree v McNeilly [2008] HCA 40 at [40]-[46], [109], [141], [181]). As I understand it, the High Court is not denying that proximity remains an element of those cases where a duty of care exists, merely denying that it is a useful analytical tool for finding new cases where a duty of care exists: Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 at [48]. As Imbree shows, the fact that a previous decision of the High Court made use of the concept of proximity is not seen, even by the High Court, as a sufficient reason for discarding that previous decision. But it does cause closer attention to be paid to whatever basis of principle there is in the judgment, other than proximity, for arriving at the result. 115 The second feature that detracts from its persuasiveness stems from using proximity as a reason for finding a non-delegable duty. Proximity was given its place in the modern law of negligence by the speech of Lord Atkin in Donoghue v Stevenson [1932] AC 562, at esp 580-581. His Lordship at 580 gave his classic exposition: "The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be -- persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question." 116 His Lordship at 581 explained proximity as existing when, between the plaintiff and the defendant, there are: "… such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act". 117 Thus, in its origin, the concept of proximity was intimately tied to the circumstances that call for a defendant to take reasonable care not to injure a person in the position of the plaintiff. To use the concept of proximity as an aid to deriving a "non-delegable duty" - a duty that imposes an obligation significantly more extensive than for the defendant itself to take reasonable care not to injure a person in the position of the plaintiff - is to use the concept for a different purpose to that for which it was originally formulated. That logical step requires close scrutiny. The logical step cannot be glossed over by using the partly oxymoronic expression "non-delegable duty of care". 118 Mr Campbell placed reliance upon the terms of the contract between Transfield and the Commonwealth, as showing that Transfield had undertaken a responsibility of ensuring that the work of its subcontractors was carried out in a proper and workmanlike manner. He drew attention to the remarks of Gaudron J in Lepore that I have mentioned at para [102] above, and submitted that they were attracted because Transfield had a positive duty, that pre-existed its engagement of ATS, to ensure that ATS, if engaged, carried out its work in a proper and workmanlike manner. 119 I doubt that the remarks of Gaudron J in Lepore are sufficient to lead to that conclusion. Like the majority in Burnie, her Honour was saying that cases where there was a non-delegable duty exhibited a particular characteristic, but was not saying that all cases that exhibited that characteristic were cases where there was a non-delegable duty. 120 It is true that Transfield had undertaken its contractual responsibility to the Commonwealth. That does not mean it has undertaken a responsibility to the Respondent, in the sense in which that expression is understood in tort law. 121 There are some cases that have recognised that a pre-existing statutory duty can sometimes give rise to a non-delegable duty. These provide the reason why Jordan CJ inserted the qualification "to do an inherently lawful act" in the statement of principle in Torette House that I have quoted in para [61] above. As well, sometimes a contractual obligation undertaken by A to B, even if it is unknown to C, can have an influence on a tortious duty owed by A to C. For example, in Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 a person injured by the collapse of a stage in a municipal hall sued both the architect who had designed the stage, and the Council that owned and operated the hall and had engaged the architect. Both the architect and the Council were held liable in negligence. In the course of considering the architect's liability Windeyer J (with whom Dixon CJ and Owen J agreed), said 85: "… neither the terms of the architect's engagement, nor the terms of the building contract, can operate to discharge the architect from a duty of care to persons who are strangers to those contracts. Nor can they directly determine what he must do to satisfy his duty to such persons. That duty is cast upon him by law, not because he made a contract, but because he entered upon the work. Nevertheless his contract with the building owner is not an irrelevant circumstance. It determines what was the task upon which he entered. If, for example, it was to design a stage to bear only some specified weight, he would not be liable for the consequences of someone thereafter negligently permitting a greater weight to be put upon it." 122 The duty that the architect was held to be under in that case was an ordinary duty of care, arrived at in accordance with the principles in Donoghue v Stevenson. The reason why the duty existed was that there was a relationship between the architect and potential users of the structure, whereby it was reasonably foreseeable that those potential users could be injured by the architect's negligence, and the nature of the relationship was such as to impose a duty of care. The task that the architect set about involved drawing up plans, and making them available to a builder in circumstances where it was readily foreseeable that the builder would construct a structure in accordance with those plans, that other people would ultimately use the structure, and that those people could be injured if the structure was not safe to use. It is facts such as those that created the particular relationship between the architect and the ultimate users, from which the duty of care sprang. One can recognise that the content of the duty of care is influenced by the terms of the contract between the architect of the client, in at least one respect, in that the duty is that the architect will take reasonable care to design the structure that will achieve the contractual performance characteristics. But the contract affects only the content of that duty of care, and is not the fundamental reason why it exists. The contract in the present case does not create a pre-existing duty owed by Transfield to the Respondent, which Transfield cannot escape by delegation. 123 Commonplace features of building contracts between a builder and a landowner are that the builder is permitted to subcontract, and that the builder will cause all the work to be carried out in a proper and workmanlike manner. If Mr Campbell's submission were right, then any head building contractor under a contract exhibiting these commonplace features would be likely to owe a non-delegable duty to persons who it was foreseeable could be affected in a serious way by the collateral negligence of the subcontractor. Recognising such a duty would involve, in my view, a radical alteration in the law. The argument in the present case does not provide a reason for making such an alteration in the law, even if it were open to me as a judge of an intermediate court of appeal to take such a radical step. 124 In my view the finding that Transfield owed a non-delegable duty to the Respondent was erroneous, and should be set aside.

Vicarious Liability 125 By a Notice of Contention, the Respondent seeks to support the trial judge's verdict on the basis that Transfield is vicariously liable for the negligence of ATS. 126 The alleged liability of Transfield had not been put to the trial judge on the basis of vicarious liability. However Mr Campbell submits that no possible additional evidence could have been required to deal with the vicarious liability point in the way in which the Respondent now wishes to put it. The way in which the Respondent seeks to put the point is that removal of the shrink wrap was a task that was necessarily delegated by Transfield to ATS, if the safety strop was to be visually inspected throughout its length. In accordance with the principles articulated by Jordan CJ in Torette House v Berkman, and referred to in the High Court in Stoneman v Lyons, someone who engages an independent contractor can be liable, it is submitted, because "the very act or omission which caused the plaintiff's injuries was necessarily involved in the performance of the contract with Transfield". 127 I do not accept that submission, for two reasons. 128 The first is that there was no issue at the trial about how SOP 801 fitted into the task that Transfield instructed ATS to perform. There is no mention of SOP 801 in any of the evidence of conversations or documentation passing between Transfield and ATS. Indeed, there is no evidence that Transfield even knew about the terms of SOP 801. There was evidence of discussion between ATS and Lieutenant Commander Astfalck about SOP 801, that ATS disagreed with SOP 801 being appropriate, and that in some fashion, the details of which were not explored, Lieutenant Astfalck agreed to ATS conducting its inspection other than in accordance with SOP 801. When this issue was not explored, and the reference to visually surveying the cable throughout its extremities arises only from SOP 801, it would not be appropriate to allow leave to raise the point on appeal, on Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 grounds. 129 The second reason is that, even if part of the task that Transfield required ATS to do was to visually survey the extremities of the cables, and surveying the extremities of the cables would necessarily involve removal of the shrink wrap, that does not bring the case within the principle adopted by Jordan CJ. Rather, that principle is concerned with a situation where a person directs an independent contractor to perform some act, and the doing of the very act that is directed to be performed causes damage. The principle has application in situations such as where a landowner directs a building contractor to build in accordance with a particular plan and method, and the carrying through of that plan and method (not some collateral act of negligence in the course of carrying it through) results in damage to the landowner's neighbour. Here, even if it were the case that Transfield had directed ATS to visually survey the extremities of the cable, it was the failure to remove the shrink wrap (thus, on this hypothesis, not carrying out the task that had been directed) that was a cause of the damage. Further, even if the shrink wrap had been removed, that would not have caused any damage - it is far more likely to have prevented the damage that actually arose. 130 Mr Campbell relied upon a remark of Windeyer J in Voli, that concerned the Council's liability for collapse of the stage. He drew attention to a remark that Windeyer J made, at 97, in the course of holding the Council liable: "The architect's negligence was not in some casual or collateral act. It was in the performance of the very work that he was employed to perform." 131 Similarly, Mr Campbell submitted, the negligence of ATS failing to remove the shrink wrap was in the very work that it was employed to perform. 132 The remark of Windeyer J needs to be understood in the context in which was made. In Voli, the Council was sued on the basis that it was an occupier of premises, and the plaintiff was an invitee. The context in which the remark was made was, at 96-97: "The standard of duty of an occupier towards an invitee is to use reasonable care to prevent his coming to harm from an unusual danger of which he, the occupier, knows or ought to know and of which the invitee does not. It was argued for the Council that, although admittedly the insecurity of the stage was an unusual danger, it was not something of which the Council knew or ought to have known: the Council had employed a competent architect: it could not be said it ought to have known that his work was faulty and that the stage might collapse. This is a plausible argument. But it does not meet the case. It depends upon an assumption that, because the architect was an independent contractor and an expert, not a servant of the Council, the Council could not be liable to an invitee for the consequences of his negligence, that it could not be said that the Council ought to have known what he ought to have known. But this is not so. The architect's negligence was not in some casual or collateral act. It was in the performance of the very work that he was employed to perform. It comes back to the same question. Is the case one of those in which there is vicarious liability for the fault of an independent contractor? In Thomson v Cremin [1953] 2 All ER 1185 Viscount Simon, with whom Lord Romer concurred, and Lord Wright expressly approved the decision of Luxmoore LJ in Wilkinson v Rea Ltd [1941] 1 KB 688 that the duty of an invitor to an invitee cannot be escaped by delegating its performance to an independent contractor". 133 Windeyer J went on to examine the subsequent treatment of Thomson v Cremin, and the diversity of English Court of Appeal decisions about whether an occupier of land had a non-delegable duty to an invitee (in one of which the occupier was held liable for negligence of an independent contractor, and in the other of which the occupier was held not liable for such negligence). He resolved the case before him, at 98 by reference to the facts: "The Council, of course, had to employ an architect. Its own engineer would not, one may assume, have been able to undertake the work even if the Council had wished it. Nevertheless the Council is not like a person who employs a contractor because he does not himself understand what is required and is unable to check what is proposed or examine what is done." 134 As I understand it, what Windeyer J was saying was that when the architect's negligence was in the act of design, which was the task he was engaged to perform, and the Council was the sort of client that had the capacity to check the plans and examine them critically, the Council ought to have known what the architect ought to have known, namely that the plans were deficient, and thus the principles (as then understood) on which an occupier can be held liable to an invitee were satisfied. 135 When that is the context in which Windeyer J made the remark, the statement that the negligence of the architect was "in the performance of the very act that he was contracted to perform" cannot, in my view, be used to argue that in the present case the negligence of ATS was "in the very act that it was contracted to perform", and hence that there is vicarious liability. The general test that Jordan CJ articulated for vicarious liability for the acts of an independent contractor is not satisfied in the present case, because the negligence of ATS was in applying the methods selected by the contractor for achieving the results contracted for. 136 In these circumstances, the finding that Transfield was liable for the injuries of the Respondent must be set aside. TOPIC 2 - LIABILITY OF QBE?

Entry of the Insurance Policy 137 ATS was incorporated on 5 March 1993. 138 On 22 July 1993 it made a proposal for public liability and products liability, that was accepted. The policy thereby resulting was renewed periodically until the events that are the subject of this claim. Though from time to time various underwriters shared the risk in any particular year of insurance, QBE has been one of the underwriters from the outset, and was the sole underwriter at the time the Respondent was injured. 139 The front page of the proposal form had attached to it a with compliments slip from a broker saying: "Please provide pr quotation asap. (This will replace policy for Rope-Tech P/L.)" 140 In the space on the form for stating "nature of business" the proponent wrote: "Fabrication, installation, sale and training of outdoor education activities." 141 In response to "how many years has your company been established?" was written "5 mths". In response to the space marked "occupation (provide full details of all work undertaken and attach latest Annual Report and Products Brochures)" the proponent wrote: "sale of adventure equipment (retail) ie packs, sleeping bags, rock climbing gear & sale installation & training of ropes confidence courses". 142 In response to question 10, a requirement to "state total estimated annual payroll" for "(a) installation, maintenance, repair … (ii) away from own premises" the figure of $25,000 was provided. Separate amounts of payroll were stated for "clerical" and "sales", and no amount was provided for "manufacturing". 143 In response to "if payments are made under item 10(a)(ii) above, please advise the nature of work upon which they are engaged (including any use of heat)" the proponent wrote "assembly & installation of ropes course activities". 144 Another question asked "if you employ subcontractors please state (a) the nature of the subcontract work, (b) estimated annual payments to them, (c) steps taken to ensure they have adequate insurance arrangements". An attachment that provided the answer to that question said: "In the 4 years as operating as Rope-Tech Australia we have had one occasion in which we have used contractors on our jobs. The work performed, by the company, was that of putting poles into the ground. We checked that this company had the required insurances before employing them to complete the work." 145 Other questions and answers were: "Please advise estimated annual turnover. Product Date First Marketed Australian Sales Ropes Course 1989 $150 000 Pulleys 1989 $ 10 000 Climbing Wall 1992 $ 10 000

Please state whether you … Issue any written guarantee or special conditions of sale in connection with any of the products? If yes please give details 'We give a guarantee/warranty on workmanship under certain conditions - See attachment'" 146 The warranty that was attached started by saying: "Adventure Training Systems Pty Ltd NEW ROPES COURSE WARRANTY ADVENTURE TRAINING SYSTEMS PTY LTD, HEREINAFTER RTA, WARRANTS THAT IT WILL REPLACE OR REPAIR ANY PART OF THE ROPES CONFIDENCE COURSES SUPPLIED BY RTA FOR THE PERIOD OF …….. MONTH(S) / YEAR(S) THE WARRANTY PERIOD IS FROM ……………. TO ……………. Provided 1. ATS determined that the defect complained is one of workmanship and is not caused by:" 147 There then followed a list of descriptions of possible causes of failure, many of which included the expression "ATS". 148 The proposal form also stated: "Please state whether you … Enter into any agreement to maintain or service any of the products after sale? If yes please give details 'We offer a maintenance inspection of the ropes courses we have installed.'" 149 A copy of the trading terms and conditions was attached to the proposal. It stated terms concerning when payment was due, who paid freight, and what the policy was concerning return of goods. It continued: "Note Rope Tech endeavours to offer you the best advise and equipment available at reasonable prices. If however you can purchase the same goods cheaper simply pick up the phone and call us." 150 The proposal also annexed the "terms of engagement". It set out a set of standard terms on which goods were sold, many of which made reference to "ATS", but one clause provided: "11. Insurance RTA shall have in effect during the currency of this agreement the following insurances:

And then listed various types of insurance and limits of indemnity. 151 On 8 February 1994 Jardines Underwriting Agency Pty Ltd issued a certificate of currency relating to public and product liability for ATS. It identified a policy number, the underwriters, the limits of indemnity, the excess, the premium, and stated: " Occupation FABRICATION, INSTALLATION, SALE AND TRAINING FOR OURDOOR [sic] EDUCATION."

Renewal certificates in that form were issued periodically (though eventually correcting the spelling mistake). 152 By January 2000 ATS had appointed a broker, JMD Ross Insurance Brokers Pty Limited, to act in connection with obtaining its insurance. On 6 January 2000 JMD Ross sent to JLT Underwriting Agency Pty Limited a closing instruction, saying, "We confirm that cover is required in accordance with the information hereunder." There followed a table that gave details concerning a public and product liability policy, including: "BUSINESS: FABRICATION, INSTALLATION, SALE AND TRAINING FOR OUTDOOR EDUCATION" 153 JLT Underwriting Agency Pty Limited sent back a renewal certificate dated 31 January 2000, in exactly the same format as the renewal certificates that Jardines Underwriting Agency Pty Limited had previously sent. In particular, it included a statement of the "occupation" of ATS, but had no heading relating to "business". 154 On 2 August 2000 JMD Ross sent to the underwriting agency a request for cover, in the same terms as it had requested on 6 January 2000. That pattern, of the broker sending the underwriting agent a request for a policy that identified the "business" of the insured, and receiving back a certificate of insurance that said nothing about the "business" of the insured, but identified an "occupation" of the insured, continued until the policy that was current at the time of the Respondent's injury. 155 The first change in the identification of the "occupation" stated in the certificate of insurance occurred in a certificate of insurance dated 14 June 2001 and relating to the period from 16 March 2001 to 20 August 2001. It identified the "occupation" as being: "RETAIL SALE OF ADVENTURE EQUIPMENT (PACKS, SLEEPING BAGS, ROCK CLIMBING GEAR) and SALE, INSTALLATION & TRAINING OF ROPES CONFIDENCE COURSES." 156 In other words, this wording differed from the previous by adding the reference to retail sale of specified types of goods, removing the reference to "fabrication", and narrowing the type of activity in relation to which sale, installation and training occurred to "ropes confidence courses". This change involved no longer using the wording that had been stated in the proposal form to identify the "nature of business", and using instead the precise wording that had been used in the proposal form to identify the "occupation" of the insured. 157 The public and product liability policy lapsed through non-payment of premium in the latter part of 2001. On 17 December 2001 JMD Ross sent a "notification to insurer" document to JUA Underwriting Agency Pty Ltd. It said: "We confirm that cover is required in accordance with the information hereunder. Closing instructions will be forwarded upon payment from the Insured." 158 It stated that what was required was "reinstatement of policy". It identified the "Business" as "fabrication, installation, sale and training for outdoor education". The premium was paid in the course of December 2001. 159 The underwriting agency issued a renewal certificate on 2 January 2002. That renewal certificate differed from previous renewal certificates in that it contained a condition: "WE REQUIRE A FULL UPDATE ON INSURED'S CURRENT ACTIVITIES" 160 The evidence does not disclose any update on the insured's current activities, whether full or otherwise, being provided. The renewal certificate issued by the underwriting agency identified "occupation" in the same way as the certificate of insurance dated 14 June 2001 had done, and did not explicitly identify any "business".

The Policy Wording 161 The policy of insurance that ATS had on foot with QBE had as its "general operative clause": "The Underwriter will pay to or on behalf of the Insured all sums which the Insured shall become legally liable to pay by way of compensation including claimants' costs and expenses (but excluding fines, penalties, punitive, exemplary and/or aggravated damages). This indemnity only applies to such liability arising out of the Insured's Business ("the Business") and as defined by each insured Section of this Policy, subject to the terms, conditions and exclusions of such Section and of this Policy as a whole." 162 The policy contained the following definitions: ""Product" means any commodity, article or thing (after it has ceased to be in a possession or under the control of the Insured) which is or is deemed (whether by law or otherwise) to have been manufactured, constructed, grown, extracted, produced, processed, assembled, erected, installed, treated, altered, serviced, repaired, sold, handled, supplied or distributed by the Insured or by others trading under the name of the Insured, including any container thereof but does not mean a motor vehicle. "Business" is the business shown in the Schedule." 163 Notwithstanding that the word is capitalised, the policy contains no definition of "Schedule". 164 The structure of the policy wording is that it contains some clauses that apply to the whole of the cover provided by it, a "section 1" that provides further definition of the indemnity and exclusions applicable to the public liability cover, a "section 2" containing an indemnity clause and exclusion peculiar to the product liability cover, some general exclusions applicable to both public liability and product liability cover, and some general conditions applicable to both types of cover. 165 ATS makes no claim against QBE under the public liability cover. 166 The scope of indemnity provided by the product liability section of the policy was: "The Insured is indemnified by this Section in accordance with Clause 1 of the General Operative Clause against claims arising out of or in connection with any Product in respect of Injury and/or Damage first happening during the Period of Insurance as the result of an Occurrence." 167 The general exclusions contained the following provision: "Sections 1 and 2 do not cover Liability: … 10.4 Caused by or arising out of, 10.4.1 The rendering of or failure to render professional advice or service by the Insured or any error or omission connected therewith. 10.4.2 Advice, design, formula or specification given for a fee." 168 It was common ground that on the proper construction of the policy wording a claim for product liability was within the scope of the cover only if both the "general operative clause", and the specific indemnity wording relating to product liability, were satisfied.

"Arising Out of the Insured's Business" 169 The trial judge held that the liability of Adventure Training to the Respondent did not arise out of the Insured's Business, within the meaning of the policy. By a cross-appeal against QBE, the Respondent seeks to reverse that finding. 170 The trial judge's reasoning on this topic took the following steps:

(a) Because the policy defined "Business" by reference to a non-existent Schedule, the policy needed to be construed contra proferentem .

(b) The notification to insurer dated 27 December 2001 classified the business as "Fabrication, Installation, Sale and Training for Outdoor Education" .

(c) The proposal form dated 22 July 1993 informed the insurer that ATS "offer a maintenance inspection of the Ropes Courses we have installed" . That statement in the proposal can be used as an aid to construction of the expression "Business" in the policy.

(d) "Taking these facts at their highest, and reading the provision contra proferentem , in circumstances where the insurer omitted to define the term "Business" , it should be construed to include the stated occupation and common business dealings of [ATS], which included maintenance inspection of ropes courses."

(e) It was not ATS but Rope Tech that had installed the course, and the expression "Business" did not extend to conducting a maintenance inspection of courses that ATS had not installed. 171 Mr Campbell supports the first four steps in this argument, but challenges the fifth. He submits that the proposal made clear that ATS was a continuation of the business of Rope-Tech Australia. He points to the specific and multiple mentions of "Rope Tech" or "RTA" in the proposal that I have set out at paras [139], [144], [146], [149] and [150] above. In particular, the terms of the warranty contemplate that ATS will repair or replace "any part of the ropes confidence courses supplied by RTA". In light of the fact that ATS had been incorporated only in 1993, the reference quoted in para [145] above to the product "Ropes Courses" having been first marketed in 1989 could only have been intended to refer to the product marketed by RTA. Mr Campbell submits that the expression "Business" should be construed as extending to carrying out maintenance inspections of rope courses that had been installed by Rope Tech Australia. 172 Mr Stevenson SC, counsel for QBE, submits that the "Business" for the purpose of the policy should be held to be that which is stated as being the "occupation" in the renewal certificate dated 2 January 2002. 173 The policy document was sent to ATS by its insurance broker under cover of a letter dated 16 November 2000 that stated: "I have pleasure in enclosing your policy schedule and policy booklet …" 174 While there was no explicit identification in the evidence of the enclosure in that letter, the evidence included a renewal certificate issued by the underwriting agency to the broker dated 13 November 2000, and bearing a receipt stamp of 16 November 2000. Mr Stevenson submits that it should be inferred that it was that renewal certificate that was the enclosure. 175 Mr Stevenson further submits that it should also be inferred that thereafter the objectively ascertained intention of the parties was that the business referred to in the "schedule" for any particular year was the "occupation" referred to in the renewal certificate for that year. 176 I am inclined to agree with that submission, but it does not carry Mr Stevenson very far. It means that the trial judge was mistaken in concluding that there was no schedule to the policy. 177 Even if, as I think is the preferable construction, "Business" in the policy should be construed as being the same as the occupation identified in the renewal certificate, that business still includes "sale, installation & training of ropes confidence courses." 178 If a person in the course of carrying on business as an X carries out a certain type of activities that are incidental to that business, those activities are part of carrying on business as an X, even if, were activities of that type to be the only activity that some other entrepreneur engaged in, the business of that entrepreneur would be characterised as something different to carrying on business as an X: Watts v Perry and the National Insurance Co of New Zealand Ltd [1972] 1 NSWLR 73 at 82-83. Thus, the fact that carrying out inspection of and reporting on ropes training courses does not of itself fall within the language "sale, installation & training of ropes confidence courses" is not enough to show that that inspection and reporting is not an incident of the business of selling such courses. 179 In my view, if a person has taken over the business of selling some particular type of product, and seeks to carry on the business and preserve its goodwill, it can in some circumstances be incidental to the carrying on that business to provide after-sales service to customers who have purchased goods from the previous owner of the business. Providing that service has a fairly obvious connection with preserving the goodwill of the business that the new owner is operating. 180 In the present case, the proposal form made clear that ATS had taken over the business of RTA, and that RTA had been a business operated by the same people as operated ATS. It expressly disclosed "we offer a maintenance inspection of the ropes courses we have installed". In my view, the liability that ATS incurred to the Respondent was one arising out of its Business.

Was the Rope that Failed a "Product"? 181 The trial judge held that the special indemnity wording of the public liability section of the policy prima facie applied, because the rope system was a Product, as it had been serviced, repaired or handled by Adventure Training. Though she did not elaborate on it, it is evident that the trial judge took the view that the act of inspection of the ropes course that resulted in the issue of the letter dated 17 December 2001 was itself servicing, repairing or handling the ropes course, and therefore the ropes course was a "Product" within the meaning of the policy. By a Notice of Contention, QBE disputes this finding. 182 Mr Stevenson submits that:

(a) the only candidate for being a "Product" is the safety strop that failed;

(b) the safety strop has not been shown to have been serviced, repaired or handled by the insured; and

(c) as a separate reason to (b), the definition of "Product" contemplates that a "Product" is something that was at one time in the possession or under the control of the Insured, and that the safety strop never had that characteristic. 183 I do not accept submission (a). I see no reason for defining the Product in question as narrowly as QBE's submission seeks to define it. The trial judge, in my view, correctly, regarded the relevant Product as being the ropes training course. It was to the ropes training course as a whole that the engagement of ATS related, and the report of ATS related. 184 In response to submission (b), in my view it can fairly be said that the course as a whole was serviced by ATS. The report of 17 December 2001 showed that that included not only inspection but cleaning of surface rust from all equipment, and treating of "all equipment" with a paint or oil. Some new parts (thimbles and strand-vices) were also installed. Carrying out those activities would necessarily have involved some incidental repair, and handling. 185 In respect to submission (c), I see no reason why the "possession" or "control" that is referred to need be an exclusive possession or control. In my view, it can suffice for there to be "possession" or "control" within the meaning of this definition that the Insured has the practical opportunity of dealing with the item in question to the extent that is involved in the Insured manufacturing, constructing, growing, extracting, producing, processing, assembling, erecting, installing, treating, altering, servicing, repairing, selling, handling, supplying or distributing that item. ATS had that degree of possession or control. 186 It follows that in my view the trial judge was right to regard the definition of "Product" as satisfied.

Exclusion Clause Re Professional Advice or Service 187 The trial judge found that the liability of Adventure Training was not one caused by or arising out of the rendering of professional advice or service. In her view, the nature of the "advice" or "service" provided is adequately described by the terms of the request for quotation dated 28 November 2001 (para [43] above), namely: "(1) Carry out assessment of course and certify. (2) Replacement of all strand vices to the high ropes course with new and hard eyes." 188 She accepted the account given by the British Columbia Court of Appeal in Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754 at 757, whereby professional services, in the context of an exclusion clause in an insurance policy, were: "… services, such as design of the plant, which could normally be expected to be provided only by a professional engineer." 189 She noted that in GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 Kirby P had referred (at 568-569) to "professional" as meaning no more than advice and services of a skilful character. However, she did not apply Kirby P's broader characterisation of "professional" for two reasons. One was that Kirby P had been concerned with construing an insuring clause, not an exclusion. Second, she noted that Kirby P's statement was made in the context of a policy written for a local government authority. She concluded that work in the nature of routine maintenance, such as ATS provided in the present case, did not amount to providing professional advice or service. 190 By a Notice of Contention, QBE disputes this finding. 191 No features of the particular insurance policy in question are pointed to as aids to construction of this phrase. In construing any exclusion, the language of which admits of more than one interpretation, the court takes into account both the contra proferentem principle (which is well established in insurance law, whatever its status might be in other areas of contractual interpretation: North v Marina [2003] NSWSC 64; (2003) 11 BPR 21,359), and the principle that it would not give effective business operation of a contract if an exclusion clause inappropriately circumscribed the cover provided by the insuring clauses: Fitzpatrick v Job [2007] WASCA 63; (2007) 14 ANZ Ins Cas 61-731 at [270]. This court has recently applied Chemetics and Fitzpatrick v Job, in Vero Insurance Ltd v Power Technologies Pty Ltd [2007] NSWCA 226; (2007) 5 DDCR 206 at [147]-[149]. The High Court refused special leave to appeal from the decision in Vero on 7 March 2008. 192 Upholding the trial judge's decision concerning construction of this exclusion is comfortably within the language of the clause, and would be in accordance with the contra proferentem principle. There is no relevant point of distinction between the present case and Vero, so far as the construction of the exclusion is concerned. In these circumstances there is no need to rely on the principle whereby exclusion clauses should not be construed so as to circumscribe inappropriately the insuring clauses. In my view the trial judge's decision on this question of construction was right.

Exclusion Clause Re Liability Caused By or Arising Out Of Advice … Given for a Fee 193 The reason the trial judge held the exclusion clause operative was because she found that the report of Adventure Training in December 2001 counted as "advice … given for a fee", and that the liability of ATS arose out of that advice. She noted that Hoeben J, when granting leave to join QBE in the present proceedings, had considered it open to argue that a literal construction of the exclusion: "… strikes fundamentally at the purpose of the policy. If the word "advice" in exclusion 10.4.2 were entirely unqualified it would, in my opinion, strike at the very purpose of the policy which was to provide product and public liability cover in respect of matters arising out of the insured's business. It is difficult to envisage selling, installation and training in respect of outdoor education activities without the provision of some advice." 194 The trial judge took the view that when ATS's report of 17 December 2001 expressly stated "an inspection was carried out on all elements and found to be in safe working order" that was a positive act of giving advice, that the giving of advice was for a fee, that the giving of the advice resulted in the re-opening of the course, and also that the giving of the advice resulted in the Respondent sustaining the injury that has led to ATS's liability. For that reason, she held the policy did not respond. 195 The Respondent, by cross-appeal, disputes that finding. 196 Mr Campbell submitted that:

(1) the inspection report did not provide advice, rather it set out findings on inspection. It was negligent inspection that was the cause of the damage.

(2) the exclusion must not excessively circumscribe the indemnity 197 I do not accept the first of those submissions. The task that Transfield requested ATS to embark on included two tasks, "carry out assessment of course", and "certify". In its quotation, ATS referred specifically to those two separate tasks. The expression "certify" carries with it not just the provision of an opinion or statement of fact, that might be off-the-cuff, but the giving of an opinion or statement of fact in writing, in circumstances where the subject of the certification is of sufficient seriousness to warrant being certified. The quotation stated ATS's recommendation as being to provide both "inspection and report". 198 The trial judge gave specific consideration to whether the report amounted to "advice". She observed: "The Macquarie Dictionary gives three meanings to the word "advice". The first is "an opinion recommended, or offered, as worthy to be followed", the second is "a communication, especially from a distance, containing information", and the third is "a formal or professional opinion given, especially by a barrister". The second is too broad to be capable of meaning in the present context. The third is an indication of how advice is often used in an every day context to convey a need for professionalism, and expertise. The first bears a similar meaning to the third, in that an opinion "worthy to be followed" indicates a belief in the expertise of the person imparting the information." 199 The report in the present case did not merely provide information. Significantly, it conveyed an opinion or evaluation concerning what had been observed on inspection. That opinion or evaluation was not merely a summary of the factual information concerning what had been observed. It measured the factual information that had been obtained on inspection by reference to a normative standard, namely whether the course was "in safe working order". That opinion was of a type that ordinarily could be reliably formed only by a person who had appropriate training and experience. It was given in a context where it would have been understood on both sides that it was likely to be acted on. The trial judge was right to regard it as being "advice" within the meaning of the policy. 200 Another submission is that ATS's invoice (para [48] above) does not even mention the giving of advice, let alone charge a fee for it. While that is clearly correct, whether something is "advice given for a fee" depends upon whether the advice is given in return for, or in exchange for, a fee. That requires the whole circumstances concerning the terms on which the advice is given to be examined, not merely an invoice that is issued after the advice has been given. In the present case, even though no separate price was allocated for the certification, as opposed to the inspection, the advice is given "for a fee" when it is a significant part of a package of services for the whole of which a fee is charged. 201 While negligent inspection was one of the causes of the Respondent's injuries, the giving of the report was another cause of those injuries. ATS's certification was requested in circumstances where the course was closed because it was feared to be dangerous. The report was not for the purposes of some private individual, but for the purpose of a large bureaucratic organisation, concerning which it is reasonable to infer that proper procedures and documentation are a matter of importance. The trial judge found that: "… Lieutenant Commander Astfalck was relying upon Adventure Training for its advice and its expertise to determine what maintenance and inspection procedures were required to be carried out to ensure the safety of the course." 202 She also found: "… the liability of Adventure Training must have arisen from the advice that they provided. The report must be considered to be advice when taken as a whole. The report states, "An inspection was carried out on all elements and found to be in safe working order". This is a specific reference to the safety of the course, and it is reasonable to assume that the course was reopened as a result of this statement in the report. It may not have been "professional advice" but it was "worthy to be followed", and therefore it was advice. The advice was followed, and as a result the plaintiff was injured." 203 It would have been open to the trial judge to make a stronger finding than "reasonable to assume" about the relationship between the report and the re-opening of the course. Lieutenant Astfalck, whose credit was in no way impeached, gave evidence: "Q. In this case the action that you in fact took having received that report was to direct that the course be reopened? A. Correct. Q. In taking that action you relied upon the advice given by Adventure Training Systems in the document I have just shown you? A. Yes, I did." 204 One can safely infer that, if the negligent inspection had been carried out, and the man who carried out the inspection promptly died or fled the jurisdiction without providing any report, the course would not have been reopened. The present is a case where the liability in question has one cause that falls within an insuring clause, another cause that falls within the exclusion, and those causes are concurrent in the sense that the co-existence of them is necessary to produce the loss. In that circumstance, the exclusion prevails: Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corporation [1974] 1 QB 57; McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28; (2007) 157 FCR 402. 205 It was common ground that an exclusion clause should not be interpreted so as to excessively circumscribe the insuring clauses. However, in my view treating the exclusion as applying the present case does not excessively circumscribe the insuring clause. 206 The trial judge correctly applied this principle when she rejected the second of the shades of meaning of "advice" identified by the Macquarie Dictionary, namely mere information, as the appropriate construction of "advice" in this exclusion. 207 I respectfully agree with Hoeben J's observation that "it is difficult to envisage selling, installation and training in respect of outdoor education activities without the provision of some advice." I would accept that in the ordinary course, a comparatively specialised type of item, like an adventure training course, would be purchased only after discussion between the vendor and the intending purchaser about matters such as the circumstances in which the purchaser was intending to use the course, the types of people who would be likely to use the course (which would influence its configuration and how physically challenging it would be), and the likely costs, both initial costs and for ongoing maintenance. Further, at least some of these topics would involve expert evaluation on the part of the vendor, and so could properly be described as "advice". If the exclusion related to "liability caused by or arising out of advice", there would be a very real question about whether, in the context of this particular business, the exclusion clause eviscerated the insuring clause. However, it is only "liability caused by or arising out of advice given for a fee" that is excluded. I would not assume, without evidence, that in this line of business it was only if they were paid for doing so that salesmen would be prepared to discuss with an intending customer how a product that the salesman was trying to sell would meet the intending customer's needs. In most lines of business, sales talk comes free. 208 Mr Campbell also submitted that application of the principle of construction should lead to the exclusion only applying to liability to the person to whom the advice was given, or the person who commissioned the advice. 209 In Vero a firm of engineers had a public liability policy, that excluded liability for "claims arising out of a breach of the duty owed in a professional capacity by The Insured …". The engineers designed and installed some boilers at a power station. The design and installation was in no way defective. However, the boilers incorporated some asbestos lagging. Asbestos dust and fibre were released in the course of carrying out maintenance work on the boilers, and came to be inhaled by a worker, Mr Barlow, giving him mesothelioma. Mr Barlow sued the operators of the power station, who claimed contribution from the engineers. The question at issue was whether the engineers' insurance policy responded. The trial judge held that the engineers were liable in tort to the worker, because they had failed to warn the Electricity Commission about the dangers of asbestos, and the necessity to adopt stringent precautions against workers inhaling the asbestos fibres when the fibres were disturbed. The trial judge found this to be a common law duty owed to Mr Barlow against the foreseeable possibility that the power station operator would be negligent, not a professional duty owed to the power station operator. Beazley JA, (with whom Harrison J and I agreed) held that the exclusion did not operate because (at [149]): "The respondent did not owe a professional duty to Mr Barlow. Rather, it owed him a duty of care as a third party in respect of whom it was reasonably foreseeable might suffer damage as a result of its negligence …." 210 In my view that decision does not result in the exclusion in the present case being narrowed in a way Mr Campbell contends. In Vero, the engineers had not breached any duty owed in a professional capacity at all - there was nothing wrong with the boilers that they designed and installed. Rather, the claim arose out of a duty of a different character, namely an ordinary common law duty of care. 211 The exclusion that is in question in the present case depends upon the manner in which the liability against which indemnity is sought arose (viz, from the giving of advice for a fee). It would involve narrowing the exclusion, in a way for which there is no textual support, if it were restricted to liability owed only to the narrow class for which Mr Campbell contends. 212 Mr Campbell also placed some reliance upon Leask Timber and Hardware Pty Ltd v Thorne [1961] HCA 73; (1961) 106 CLR 33. That case was an action for damages by the widow of a man killed as a result of the driving, by a person who did not hold the requisite certificate, of a power crane. The widow sued the employer of the driver, alleging the tort of breach of statutory duty. The statutory provision in question forbad an employer from allowing a person who was not the holder of a certificate of competency to drive a crane. Dixon CJ, Kitto, Taylor and Windeyer JJ held that the statutory provision in question did not create a private right of action. The use Mr Campbell seeks to make of it in the present case arises from some obiter observations of Dixon CJ, to the effect that if the essence of the offence was not the unlawful driving of the crane but the failure to hold a certificate of competency, he could not see how failure to hold the certificate of competency was a cause of the personal injuries (at 38-39). The same point was made by Kitto J at 45: "If a person is injured by the incompetent driving of a power crane, the cause of the injury is the incompetent conduct of the driver - that which he does or omits and would not have done or omitted if he had acted competently. The absence of a certificate, if he is uncertificated, is not the cause. And e converso the cause is still incompetent driving, even if he has a certificate." 213 In my view those observations do not bear upon the present case. Here, it was only because ATS gave its advice that the course was put back in service, with the consequent sustained injuries by the Respondent. 214 The trial judge was right in holding that the exclusion applies.

Negligence of Adventure Training 215 QBE, by Notice of Contention, disputes the factual finding of the trial judge that ATS had breached its duty of care. 216 Mr Stevenson's argument is put in two separate ways, both dependent upon the task that ATS was required to perform being defined by SOP 801 (though subject to a modification in that ATS was not to apply loads to the wires). Each argument is to the effect that SOP 801 defined ATS's task in a way that excluded having to remove the shrink wrap and inspect underneath it, and ATS could hardly have been negligent by failing to perform a task it was not required to perform at all. 217 Though the trial judge makes some reference at paras [39]-[41] and [45] of her judgment to SOP 801, she makes no clear finding that the task that ATS embarked on (whether at the request of Transfield or otherwise) was to inspect in accordance with SOP 801. The findings of the trial judge are (at [41]): "... What Adventure Training intended to do was to actually certify that the course was safe to use ... That is, Adventure Training was to use its expertise in evaluating whether the course was safe or not." 218 And, at [45]: "It is my view that Lieutenant Commander Astfalck was relying upon Adventure Training for its advice and its expertise to determine what maintenance and inspection procedures were required to be carried out to ensure the safety of the course. It was never the intention of Adventure Training or the Department of Defence that Adventure Training in conducting inspection, maintenance and certification of the course was limited to matters outlined in SOP 801." 219 That latter finding is an explicit denial that ATS's task was limited by the terms of SOP 801. There is no basis for reversing the finding. That is sufficient to dispose of QBE's argument that ATS was not negligent. 220 But QBE's argument fails for additional reasons. Even if ATS's task had been limited to carrying out an inspection in accordance with SOP 801, modified to leave out load testing of the wires, QBE's argument would still not succeed. The first way in which QBE puts the argument relies on the part of SOP 801 (set out para [33] above) requiring any assembly of wire or structural support not to be disassembled unless directed, and the trial judge's finding that Lieutenant Commander Astfalck gave no specific instructions to disassemble the strop and look under the shrink wrap cover. In those circumstances, QBE argues, ATS was positively forbidden to remove the shrink wrap cover. 221 I do not agree. 222 Removing the shrink wrap from the part of the loop of the safety strop that it covered would not, in my view, involve disassembling "any assembly of wire or structural support". The safety strop was an assembly of wire, but removing the shrink wrap would be exposing an assembly of wire, not disassembling one. 223 Further, the requirement was that the assembly of wire not be disassembled "for the purpose of the test" unless directed otherwise. That requirement appears in SOP 801 following a requirement that each item of (inter alia) steel wire rope: "shall be surveyed throughout its extremities, load tested, then surveyed again on completion of the test." 224 The "test" referred to in the requirement not to disassemble is the load test. The load test was not done, nor intended to be done, and hence the requirement not to disassemble "for the purpose of the test" unless directed otherwise did not speak to the circumstances in which ATS was carrying out its inspection. 225 The second way in which QBE puts the argument is that the requirement to visually survey the item throughout its extremities did not involve cutting off the shrink wrap. I disagree. Visually surveying the extremities involves examining the extremities with the naked eye. Thus, it involves doing whatever is necessary to be able to examine the extremities with the naked eye, whether it be getting oneself sufficiently close to the extremities to be able to examine them properly, or removing physical obstructions to a clear line of sight, like the shrink wrap. 226 QBE's challenge to the finding of negligence on the part of ATS fails. 227 In the result, the policy does not respond.

(2) Set aside the orders in the Court below in favour of the Respondent. In lieu thereof, enter judgment for the Appellant.

(3) Respondent to pay costs of the Appellant of the appeal and in the Court below.

(4) Cross-Appeal dismissed with costs. 229 McCLELLAN CJ at CL: I have had the benefit of reading the reasons of Campbell JA in draft. I agree with his Honour's conclusions with respect to the resolution of the appeal. However, my view of the cross-appeal differs in one significant respect from that of his Honour. 230 I agree with Campbell JA that the liability of ATS to the respondent was a liability arising out of its business. QBE was aware that although Rope Tech Australia Pty Ltd had installed the ropes course ATS had taken over the business of Rope Tech. For the purposes of the policy the ropes course was one that ATS had installed. I agree that the "business" of ATS for the purposes of the policy extended to maintenance inspection of the ropes course. I also agree with his Honour that the strop is a failed "product" and that the exclusion clause in relation to "professional advice or service" has no application with respect to the liability of ATS. 231 However, I have a different view to Campbell JA in relation to the application of the exclusion clause with respect to "advice … given for a fee". 232 Clause 1, the General Operative clause of the policy, provides an indemnity to ATS in respect of liability "arising out of" its business. Accordingly as Campbell JA has found indemnity extends to the maintenance inspection of the ropes course. Clause 10.4 excludes liability: "Caused by or arising out of, 10.4.1 the rendering of or failure to render professional advice or service by the Insured or any error or omission connected therewith. 10.4.2 advice, design, formula or specification given for a fee." 233 In my opinion the task which ATS was requested to carry out is not properly described as "advice … given for a fee". It was asked to assess the "course and certify" and replace "all strand vices to the high ropes course with new and hard eyes." ATS responded to the request by quoting for a task which included the following elements: "1. Carry out assessment of course and certify. 2. Replacement of all strand vices to the high ropes course with new and hard eyes. Adventure Training Systems recommends the following; 1. Inspection and report high and low ropes facilities. Cost $650.00 2. Replacement of all strandvices on high ropes course (excluding belay lines). Cost $1,148.00 (total of 13 strandvices with hard-eye thimbles). 3. Labour, Travel, Accommodation and Expenses. Cost $5,400.00." 234 Amongst the terms and conditions offered by ATS was the following: "One of our Project Managers will be assigned to carry out the upgrade of the Team Challenge Activities. He will be able to ensure the integrity of the constructions, and completion within the time period specified. You can be sure of the safety of your activities when you have fully insured experienced professionals from Adventure Training Systems install your Adventure Activities." 235 By its tender in response to the request from Transfield ATS was offering to do no more than a general maintenance check in the course of its ordinary business. 236 The nature of the task which ATS carried out is confirmed by the report which ATS made when the work had been completed. ATS reported on 17 December 2001 in the following terms: "An inspection was carried out on all elements and found to be in safe working order. On each element all cables, eyebolts (and nuts) strand-vices, wire rope grips, stays and belay pulleys were checked and found to be ok. Belay wire rope lines and belay pulleys are 20 months old at time of this report." 237 On the final page of the report, there are a number of recommendations about personnel belay span line equipment, which come after the signature of the report's author. Thereafter there is a "note" which states that "[t]he ropes course is safe to use, but the new standard [presumably in relation to the belay span lines] should be implemented as soon as resources are made available." Significantly, in the body of the report the author provides an extensive list of the works completed at the time of inspection. It reads as follows: " General works. At the time of this inspection the following works were completed: All equipment, (wire rope grips, Quick-links) showing surface rust were cleaned with a wire brush and treated with Cold Gal Paint, or Oil product. Multi-vine (1) New strand-vice and thimble installed on foot-line only. Vertical Playpen (2) New thimbles installed on each sport line for the cargo-net activity. All Maillon Rapide Quicklinks brushed and sprayed with Cold Gal paint. Hour Glass (4) New thimbles installed and (1) New strand-vice installed Activity leveled Balance Beam only general maintenance required. Wire rope below beam activity does not require thimble as only for additional course stability. Postman's Walk (1) New strand-vice and thimble installed on foot-line. (1) New thimble installed on hand-line. Burma Bridge (1) New strand-vice and thimble installed on foot-line (2) New thimbles installed on hand-lines. Flying Fox Test ride completed. Rider travelled to within 3 metres of the landing platform. This is an acceptable, safe end ride position. FF Pulley New pulley wheel is required as the sealed bearing unit has shifted resulting in the pulley wheel rubbing on the pulley side plate. The wheel was removed. A new wheel to be supplied. Trapeze (1) New Strand-vice bail and (1) New thimble installed. Green & Gold Pulleys Minor wear and tear occurring in pulley cheek plates. Pulley Maillon Quicklinks Surface rust occurring, recommend that the threads of the quick-links have marine lube applied before they are returned to the activities. Transfer Platforms Loose boards found on the platforms and the tower platform were securely nailed into position. The wire rope on hand and foot lines is currently showing significant rusting due to the location and age of the course. It is recommended that in the next 6 months a sample of wire rope be removed from the course and tested by a NATA Certified rigging/lifting supply company to determine the condition of such wire rope." 238 In these circumstances, certification by ATS that the course was "safe to use" was no more than confirmation that it had carried out the inspection and maintenance tasks as requested albeit that some further maintenance work was required. To the extent that the communication by ATS that the course was safe can be characterised as "advice" at all, it was advice so interwoven with and incidental to the insured business of ATS that to exclude it would strike fundamentally at the commercial purpose of the policy: Legal and General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 at 394 per Kirby P and at 405-7 per McHugh JA. 239 The word "advice" in the exclusion clause should be interpreted bearing in mind what was said by the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510: "The interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity."

The policy was effected for the purpose of indemnifying ATS with respect to risks in carrying out its business. That business included the maintenance of facilities which it had supplied. Excluded from the indemnity was any liability for professional advice or advice given for a fee. Also excluded are "design, formula, or specification given for a fee". Providing a "design, formula or specification" is to provide a specific form of advice. Common to each of the matters excluded is the provision of information in the nature of intellectual property. This is quite unlike the task involved in carrying out a maintenance inspection (which included various "repairs") of existing equipment and providing an assurance that it is safe for it to be used. The exclusion clause would only operate to exclude liability for advice given for a fee where that advice was given pursuant to a separate professional engagement of ATS in the nature of a consultancy distinct from its maintenance function. 240 The conclusion that ATS relevantly provided advice "for a fee" is also at odds with the tax invoice ultimately issued to Transfield by ATS. It particularised a single fee in respect of the work performed which was described as: "Inspection, Maintenance and up grade work for Endeavour Ropes Course". This description, which is appropriate to describe the work requested by Transfield and performed by ATS, is within the normal business of ATS insured by QBE and not excluded by the terms of the policy. 241 In lieu of Order 4 proposed by Campbell JA, I propose the following orders:

4. Cross-appeal upheld and order 2 made by Harrison AsJ set aside. 5. Judgment for the cross-appellant against the cross-respondent in the sum of $1,457,712 such judgment to date from 2 August 2007. 6. The order for costs made by Harrison AsJ in favour of cross-respondent set aside. 7. Order the cross-respondent to pay the costs of the cross-appellant both as to the appeal and as between those parties in the court below. **********

11/03/2010 - Correction of minor typographical errors - Paragraph(s) [128] and [191]

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