Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : WESTINA CORPORATION PTY LTD -v- BGC CONTRACTING PTY LTD & ANOR [2008] WADC 183

Negligence - Collision between two road trains - Whether sufficient evidence to support trial judge's finding as to the cause of the collision - Inferring negligence - Turns on own facts

Contracts - Indemnity clause in hire contract - Wet hire - Construction of indemnity clause - Doubt as to the construction of the clause - Doubt may arise from the clause's apparent breadth of possible application - Doubt to be resolved in favour of the indemnifier

Contracts - Whether benefit conferred on non-party - Section 11(2) of the Property Law Act 1969 (WA) - Whether indemnity clause in hire contract expressly in its terms purported to confer a benefit directly on the non-party

Property Law Act 1969 (WA), s 11(2)

AMEV Finance Limited v Mercantile Mutual Insurance (Workers' Compensation) Limited (No 2) [1988] 2 Qd R 351

Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424

BI (Contracting) Pty Ltd v AW Baulderstone Holdings Pty Ltd [2007] NSWCA 173; (2008) Aust Contract R 90-267

Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 83 ALJR 1210

Canberra Formwork Pty Ltd v Civil & Civic Ltd (1982) 41 ACTR 1

CSR Ltd v Amaca Pty Ltd [2008] NSWCA 329

Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500

Davis v The Commissioner for Main Roads [1968] HCA 10; (1968) 117 CLR 529

Doonan v Beacham [1953] HCA 38; (1953) 87 CLR 346

EE Caledonia Ltd v Orbit Valve Co Europe [1994] 1 WLR 1515

Ellington v Heinrich Constructions Pty Ltd [2004] QCA 475; (2005) 13 ANZ Ins Cas 61-646

Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114; (2008) 72 NSWLR 1

F & D Normoyle Pty Ltd v Transfield Pty Ltd [2005] NSWCA 193; (2005) 63 NSWLR 502

Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235; (2008) Aust Contract R 90-274

Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd [1973] 1 QB 400

International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151

Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166

Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451

Qantas Airways Ltd v Aravco Ltd [1996] HCA 12; (1996) 185 CLR 43

Smith v South Wales Switchgear Co Ltd [1977] UKHL 7; [1978] 1 WLR 165

The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 225 FLR 1

The Government Insurance Office (NSW) v Fredrichberg [1968] HCA 54; (1968) 118 CLR 403

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

Westralian Farmers Co-operative Ltd v Southern Meat Packers Ltd [1981] WAR 241

2 BUSS JA: The appellant (Westina) owned a 2004 model Mack Titan prime mover (the Jamieson Truck) and three trailers that were towed by the truck. It hired the truck and trailers and a licensed operator to the first respondent (BGC) for use in transporting ore and materials.

3 On 11 June 2005, the Jamieson Truck was being driven by Hamish Ingold (Mr Ingold), the licensed operator hired by Westina to BGC. The Jamieson Truck collided with a Kenworth C50 prime mover (the BGC Truck) which was owned by BGC and being driven by its employee, the second respondent (Mr Keys). The Jamieson Truck disintegrated on impact. Mr Ingold was killed.

4 Westina as plaintiff commenced proceedings in the District Court against BGC as first defendant and Mr Keys as second defendant. It claimed damages for loss it had allegedly suffered as a result of the collision. This loss was, primarily, the loss of the Jamieson Truck and associated equipment.

5 The District Court action was tried before Goetze DCJ. His Honour dismissed Westina's claim. Westina appeals to this court against the judgment of the trial judge. BGC and Mr Keys have cross-appealed.

6 At all material times, Westina carried on the business of a haulage contractor under the name 'Jamieson Transport'.

7 At all material times, BGC carried on the business of transporting ore and materials at, relevantly, the Mount Jackson and Windarling mine sites in Western Australia. BGC had contracted with Portman Iron Ore Pty Ltd (Portman), the operator of the mine sites, to transport iron ore from those mines to a railway siding at Koolyanobbing. The iron ore was transported by truck on Portman's private road (the Haul Road). BGC also contracted with Portman to maintain the Haul Road.

8 At all material times, Mr Ingold was an employee of Westina and Mr Keys was an employee of BGC.

9 By a written agreement dated 21 March 2005 (the Hire Agreement) made between Westina and BGC, Westina agreed, for reward, to provide the Jamieson Truck and trailers (together with a licensed operator) to

BGC for use by BGC in transporting ore and materials under its contract with Portman.

10 Pursuant to the Hire Agreement, Westina provided the Jamieson Truck and trailers, and the services of Mr Ingold, to BGC.

11 On 11 June 2005, the Jamieson Truck was being driven by Mr Ingold in a northerly direction on the Haul Road. At that time, the BGC Truck was being driven by Mr Keys in a southerly direction on the Haul Road. Mr Keys was acting in the course of his employment with BGC.

12 The Jamieson Truck and the BGC Truck approached each other. As the vehicles commenced to pass, the third or 'dog' trailer being towed by the BGC Truck swung into the path of the Jamieson Truck. The Jamieson Truck collided head on with the upturned underside tri-axle section of the third trailer. As I have mentioned, the Jamieson Truck disintegrated on impact and Mr Ingold was killed.

13 In the District Court action, Westina claimed that BGC owed it a duty to exercise reasonable care to avoid conduct in the course of its haulage operations and management of the Haul Road that may cause property damage to the Jamieson Truck and trailers. Westina also claimed that Mr Keys owed it and Mr Ingold a duty to exercise reasonable care in the driving of the BGC Truck.

14 Westina alleged that the collision was caused by Mr Keys' negligence and that BGC was 'responsible for' his negligence. Alternatively, Westina alleged that if Mr Keys was not negligent then the collision was caused by BGC's negligence in relation to the management of the Haul Road. Westina pleaded that it had suffered loss as a result of the collision. As I have mentioned, the alleged loss was, primarily, the loss of the Jamieson Truck and associated equipment. Damages were agreed between the parties in the sum of $313,997.03 together with interest on that amount pursuant to s 32 of the Supreme Court Act 1935 (WA).

(a) Mr Keys was negligent in his driving of the BGC Truck, his negligence caused the collision, and BGC was vicariously liable for the negligence of Mr Keys as its employee.

(b) The alternative claim in negligence against BGC was not made out.

(c) BGC was entitled to an indemnity from Westina under cl 9(e) of the Hire Agreement in respect of BGC's vicarious liability for Mr Keys' negligence.

(d) Mr Keys was entitled to an indemnity from Westina under cl 9(e) of the Hire Agreement, read with s 11(2) of the Property Law Act 1969 (WA) and the Hire Agreement as a whole, in respect of his liability in negligence.

16 The trial judge therefore dismissed Westina's claims against BGC and Mr Keys.

17 Westina appeals to this court against the trial judge's decision. BGC and Mr Keys cross-appeal in respect of the trial judge's finding that Mr Keys was negligent.

18 The Hire Agreement contained a Schedule and numerous clauses described as 'terms and conditions of plant hire'.

19 In item 2 of the Schedule, there was a description of the Jamieson Truck as the equipment to be hired. The other material provisions of the Schedule are these:

Insurance Protection and/or Journey Insurance (if req'd under the head contract)

Note: A copy of the insurance certificate is to be provided to BGC

20 The term 'SUP' in the Schedule refers to 'the Supplier', namely Westina.

21 The material provisions of the 'terms and conditions of plant hire' are as follows:

Plant: Means the Plant stated in the Schedule including tools, accessories and parts supplied to BGC

The hire period shall start from the time the Plant commences operation on the BGC site and conclude where the Supplier is informed by BGC that the Plant is no longer required and shall exclude the period of time that the Plant was not available for use by BGC for reasons beyond the control of BGC, including but not limited to breakdown, major servicing, safety matters, mobilization and demobilization of the Plant, wet weather and in the case of Wet Hire, it shall also exclude the Operator's crib time, smoko time, inductions, toolbox/safety meetings and meal breaks.

No hire period estimate is given by BGC unless expressly stated so in the Schedule.

The Supplier warrants that the Plant is in sound mechanical condition capable of safe operation and complies with all relevant legislation, regulations, safe operating requirements affecting the use of such Plant and the Supplier agrees to defend, indemnify and hold BGC harmless against any injury, death, claim or other such loss arising out of the use of the Plant by BGC except to the extent caused by BGC's willful (sic) misconduct.

...

The Supplier accepts responsibility for the cost of fair wear and tear.

Insurance shall be maintained during the term of the Plant Hire Agreement in accordance with the responsibilities set out in items 4 and 5 of the Schedule. Where insurance is the responsibility of the Supplier, the Supplier shall provide evidence of such insurance as stated in items 4 and 5 of the Schedule to BGC prior to the commencement of Hire.

Where the Plant is hired on a Wet Hire basis, the Supplier shall:

(a) Provide a properly trained and appropriately licensed operator fully experienced in the safe operation of the Plant for the purpose it is hired; and

(b) Be solely responsible for the health, safety and welfare of its employees and agents and others and must strictly comply with all applicable health and safety rules including BGC 'Subby Pack' and any authority having jurisdiction over the operation of the Plant; and

(c) Comply with any decisions made by BGC regarding industrial relations and bear any losses, costs, expenses or damages it incurs as a result. The Supplier shall pay the rates of wages and observe and comply with the conditions that are provided for in the relevant award or industrial agreement as applicable to the BGC Site.

(d) Provide the appropriate apparel, attire and PPE for the operator(s) in compliance with the requirements of health and safety regulations pertaining to the BGC Site. These would include but not be limited to safety helmets, safety boots and jackets.

(e) Bear the risk of loss in the hiring of the Plant and must defend, indemnify and hold BGC harmless against any injury, death, claim or other loss arising from the hiring of the Plant; and

(f) Submit daily to BGC's nominated representative for verification and signature a pre-numbered docket setting out the period of hire together with any particulars requested by BGC; and

(g) Submit to BGC, where required, details of Pay As You Go deductions required by the Australian Tax Office.

(h) Ensure, where relevant, that the Plant is suitably equipped with a UHF 2-way radio for the purpose of communications with BGC personnel on Site.

22 The trial judge's findings and reasoning were, relevantly, as follows.

23 The collision occurred at about 8.20 pm on 11 June 2005 during BGC's nightshift operation. The day shift on 11 June 2005 had been cancelled as a result of heavy rain [8].

24 Mr Ingold and another driver, Dale Teague, had each driven a loaded road train on the Haul Road from one of the mine sites to Koolyanobbing. Each of them was returning in a northerly direction on the Haul Road to the mine site for the purpose of collecting another load. At the same time, Mr Keys was driving the BGC Truck, with three fully laden trailers attached, in a southerly direction on the Haul Road from the mine site to Koolyanobbing [9].

25 Mr Teague's road train was about 200 m - 300 m in front of Mr Ingold's road train. According to Mr Teague, he and Mr Ingold were travelling at a similar speed [10].

26 Mr Keys saw Mr Teague's road train and Mr Ingold's road train approaching. Mr Teague and Mr Keys passed each other without incident. However, in the course of passing Mr Keys, Mr Teague noticed that the third or dog trailer of Mr Keys' road train had swayed to the left and moved onto the shoulder of the Haul Road [11].

27 After Mr Teague and Mr Keys had passed, Mr Keys lost control of his road train. It rolled over and spilt part of its load. It then slid across the Haul Road into the path of the Jamieson Truck being driven by Mr Ingold. The collision then occurred [12].

28 The trial judge summarised Mr Keys' evidence in relation to the features of the Haul Road, and a phenomenon known as 'dog wagging':

Mr Keys gave oral evidence that the haul road was constructed of compacted gravel. He said that the shoulder was made of excess gravel and mud and sloped away from the road as can be seen from the photographs to which I have referred, such that there was a drainage channel on either side of the haul road.

Mr Keys also said that there was a significant difference between the appearance of the haul road and the shoulder in both texture and colouration during daylight, however at night, 'it looks as one'. He was aware that the shoulder was 'too soft' to drive on and that because of the recent rain, the shoulder may have been 'more softer' than usual. He therefore would neither attempt to drive, nor park, on the shoulder. His concern was 'getting bogged'.

Mr Keys did not have any problem in seeing the marker posts at night. On high beam, they could be seen from a distance of between 100 and 150 metres and on low beam they could be seen from approximately 50 metres. He also indicated, that, when passing an oncoming road train, he would aim to pass as close to the marker posts as he possibly could 'without running them down'. The reason for this was to leave the oncoming vehicle with as much room to pass as possible.

Mr Keys indicated that the BGC trucks were able to drive at a speed limit of up to 90 kilometres per hour, whilst the Jamieson Transport trucks were able to travel up to a speed of 70 kilometres per hour.

Importantly, Mr Keys was aware, that, the third trailer on haulage units may sway from side to side, especially on dirt roads. If that sway were to eventuate, then, in normal conditions, he would accelerate so as to cause the third trailer to come back into line with the rest of the unit. Braking might cause the trailer to slide and/or roll over. He knew that the third trailer is commonly referred to as the 'dog' trailer, because, like a dog's tail, it would 'wag'. Indeed, it is common ground that this sway, or the potential for this sway, is well known to the drivers of road trains.

In cross-examination however, Mr Keys indicated that he knew he should not drive off the edge of the road. He did not however, necessarily believe that he should not drive along the edge of the road. To the best of his knowledge, the edge of the road was delineated by guide posts. He also said that he should leave room between his truck and those delineators.

Driving on the shoulder was something Mr Keys said he would never do and he would not drive in such a manner that the third trailer might go onto the shoulder.

Further, in cross-examination, Mr Keys gave evidence that if the third or dog trailer were to go into the shoulder, then, it could become bogged and then it would be at risk of overturning. That could possibly also cause the second trailer to overturn. It could also be the case, that, the driver could lose control of the third trailer and then, as Mr Keys put it, 'I don't know what could happen'. He also conceded that if the trailer were to venture into the shoulder, and 'start to sink' then, it is possible that that could also cause sway.

Mr Keys then went on to say that there [are] a number of ways in which a trailer can sway into the shoulder, including:

(a) the driver positioning the prime mover, and hence the trailers, too close to the edge of the road;

(b) the driver performing a moving manoeuvre;

(c) a combination of speed and direction of movement; and

(d) other reasons, such as mechanical failure, movement of the product being transported in the trailers and road conditions [27] - [35].

29 His Honour also summarised Mr Keys' evidence as to the circumstances of the collision:

Mr Keys gave oral evidence that he was travelling in a southerly direction approaching the crest of a hill when he saw the oncoming headlights of a truck driven by Mr Teague. Accordingly, he manoeuvred his truck to the left using a marker post as a guide. He said that he 'lined myself up to the edge of the road'. The manoeuvre to his left was a slight movement to gradually bring his prime mover and trailers to the left. The haul road was straight.

As Mr Keys passed Mr Teague in their respective road trains, Mr Keys felt a 'slight jerking' motion. By this time, he had slowed his road train to about 50 kilometres per hour whereas, going up the crest of the hill, he had been travelling at about 75 kilometres per hour.

Mr Keys had not previously experienced this 'slight jerking motion'. He 'felt it was like a flat tyre'. He began to accelerate because the engine 'may have just started to labour'. This occurred just as he passed Mr Teague in his unit. The jerking movement then ceased.

The jerking motion then started again after two seconds and after he had passed Mr Teague's road train when Mr Keys was approximately half way between the road trains of Mr Teague and Mr Ingold, which, Mr Keys said, were about 150 metres apart.

As he approached Mr Ingold's prime mover, Mr Keys looked to the left of the road, rather than into the head lights of Mr Ingold's prime mover. Nonetheless, Mr Keys was aware of Mr Ingold's headlights. He could not see the edge of the road. He thought that he was adjacent to or beside the marker post on the haul road and that that included the whole road train. He looked in the rear view mirror. This should have enabled him [to] see a flash of the side lights on his rig. He believed that he may have seen his third trailer on the shoulder of the road, but only for a brief second, when he felt a slight nudging motion. He thought that a tyre may have become loose and have become tangled in the wheels. He heard a slight thud. He brought his prime mover and trailers to a halt, over a distance of approximately 50 metres. He then exited the prime mover, saw the resulting devastation and radioed for help [36] - [40].

30 The trial judge referred to material inconsistencies between Mr Keys' oral evidence and written statements he gave to the police. His Honour found it was unnecessary to resolve the discrepancies because, in his oral evidence, Mr Keys indicated that:

(a) he knew where the edge of the road separated into the shoulder;

(b) he lined his prime mover up to the edge of the road;

(c) he knew that the shoulder of the road was much softer than the haul road itself;

(d) he should not drive on the shoulder;

(e) the third trailer can naturally sway, especially on dirt roads;

(f) he should not drive so that the third trailer might go onto the shoulder;

(g) if the third trailer went onto the shoulder, it could be bogged and then it was at risk of overturning;

(h) the second trailer could then possibly be 'brought down'; and

(i) he could lose control and then he did not 'know what could happen' [50].

31 His Honour noted that it was 'indisputable' that the third or dog trailer of Mr Keys' road train swayed to the left. Initially, the two left wheels and then the two right wheels of this trailer entered the shoulder of the Haul Road before the crash [70]. His Honour also noted:

(a) Mr Keys' statement in evidence-in-chief that he 'lined [himself] up to the edge of the road' [71]; and

(b) his statement in cross-examination that he knew he should not drive off the edge of the road, even though he did not necessarily believe that he should not drive along the edge of the road (which, according to his Honour, seemed to be contradicted by his evidence that he should leave a gap between his road train and the delineators) [71].

32 The trial judge noted Mr Keys' concession that he knew there can be a natural sway of the third or dog trailer and that he knew the shoulder of the Haul Road at the material time was soft and should not be driven on [72].

It seems to me, that, by reason that there can be natural sway of a dog trailer or a third trailer on a road train then, a reasonably competent operator should make allowance for that natural sway when driving, especially when on a dirt road. The reasonably competent operator should not drive on the edge, or so close to the edge, of the road by reason that if such natural sway were to occur, and if it were to occur to the left, then that would necessarily result in the trailer entering the shoulder, as in this case, which shoulder was known to Mr Keys to contain some water and be 'too soft' for safe driving purposes. That is because a reasonably competent operator might not, in those circumstances, be able to take evasive action, such as accelerating, in order to overcome the sway, before the third trailer swayed so far as to be off the road pavement and on the shoulder in what would be a potentially dangerous situation, as ultimately happened here. The reason is obvious. As Mr Keys put it, 'possibly I could lose control and then I don't know what could happen'.

Thus, Mr Keys' act of having lined his road train 'up to the edge of the road' amounts to a negligent act which was the primary cause contributing to the crash, even if the sway into the drain was a natural event without negligence. But it was the positioning of the prime mover on the edge of the road which is the relevant starting point.

This then seems to fit within particular 5 of the particulars of negligence in that Mr Keys 'failed to ... position the BGC truck or the third trailer on the roadway so as to prevent the third trailer leaving the roadway, running out of control and causing the collision'. This does not require me to draw any inference at all.

However, if necessary, the inference of negligence in this case can be based on the pleaded particulars of negligence as a whole and drawn from the facts as I have found them to be. Such inference is not merely speculation or conjecture ...

...

I do not know whether the sway was caused by the manoeuvre to the left from the centre of the road or by natural causes. As mentioned, there has been no expert evidence as to the movement from the centre of the road causing sway, if it did sway, and nobody gave any evidence as to the cause of the third trailer being in the shoulder. Mr Teague only saw the third trailer off the road in the shoulder area. The photographs reveal that the trailer had been in the shoulder area. However, it has not been proved what caused the sway, but it does not appear to matter. What is important is where Mr Keys positioned his prime mover in the circumstances of the haul road, its edge and, as he knew it to be the fact, the 'slushy' or 'too soft' shoulder into which he should not allow the trailer to pass, such that if and when sway occurred, and if it was to left and into the shoulder, that could foreseeably lead to the crash [73] - [76], [78].

34 On the basis of this reasoning, the trial judge found that Mr Keys had been negligent and that BGC was vicariously liable for his negligence. It is unnecessary to recount his Honour's reasons for dismissing Westina's alternative claim against BGC in negligence. Westina does not challenge his Honour's finding on this issue.

35 The trial judge examined several authorities relating to the proper construction of indemnity clauses and then construed the indemnity in cl 9(e) of the Hire Agreement. His Honour decided that cl 9(e) was not ambiguous and that it required Westina to indemnify BGC in respect of any claim or other loss including any claim or other loss attributable to BGC's negligence. His Honour reasoned as follows:

In this case, it is plain from the natural and ordinary meaning of the language of cl 9(e), when construed strictly in the context of the wet hire agreement as a whole, that, Jamieson Transport agreed to bear the risk of loss and to indemnify BGC against 'any ... claim or other loss'. This wide term necessarily includes its own negligence and in order to cover that eventuality, Jamieson Transport was required to insure the prime mover and its licensed operator.

It is here pertinent to note that cl 3 of the hire agreement warrants that the prime mover 'is in sound mechanical condition capable of safe operation and complies with all relevant legislation, regulations, safe operating requirements affecting the use of such Plant' and an indemnity is given 'arising out of the use of the Plant except to the extent caused by BGC's willful (sic) misconduct'.

This indemnity in cl 3 is necessarily tied to the warranty to which it is joined however, had the draftsman considered it appropriate to exclude BGC's wilful misconduct or negligence from the indemnity in cl 9(e), then, he could have done so, in the same way he excluded BGC's wilful misconduct from cl 3. Further, the draftsman did not exclude BGC's negligence from either cl 3 or cl 9(e).

Mr Hancy submitted that there is ambiguity in cl 9(e) as to indemnity for BGC's negligence. However, to arrive at a construction of that clause which results in an ambiguous interpretation requires a straining of the natural and ordinary meaning of the words contained in cl 9(e). That clause is better understood when regard is had to the insurance arrangements of items 4 and 5 to the Schedule. It is not appropriate to try and establish ambiguity where none exists and the natural and ordinary meaning of cl 9(e) in the context of the agreement as a whole, including the Schedule, is clear. There is nothing ambiguous about cl 9(e), such that an ambiguity should not be sought out and detected [120] - [123].

36 A little later in his reasons, the trial judge said that Westina bore the risk of loss, insured for that loss, and under cl 9(e) of the Hire Agreement indemnified BGC against 'any injury, death, claim or other loss arising from the hiring of the Plant'. Clause 9(e) was a 'risk allocation clause'. Its intention was to allocate liability for risk 'for all liability arising from the hiring by [Westina] to BGC of the prime mover and licensed operator' [148]. His Honour added:

It is the performance of the 'hiring of the Plant' to which the indemnity relates and that indemnity applies to 'any' loss. There is therefore a causal link between BGC's vicarious liability for Mr Keys' negligence and the performance by Jamieson Transport in the 'hiring of the Plant' [149]. (original emphasis)

37 His Honour held that, by reason of s 11(2) of the Property Law Act, Mr Keys was able to claim the benefit of the indemnity in cl 9(e) of the Hire Agreement. His Honour's reasoning in support of this conclusion was brief:

I can draw the inference, if that be necessary, that the real commercial intent of Jamieson Transport was to indemnify BGC against the negligent actions and defaults of its employees and in so doing, to include those employees of BGC in the protection of the cl 9(e) indemnity, particularly when regard is had to the fact that BGC is vicariously liable for the negligence of its employees, including Mr Keys. Further, the loss in this case is the same loss for each of Mr Keys and for BGC. Jamieson Transport could not twice recover its loss from each of Mr Keys and BGC. Further, Jamieson Transport was required by the hire agreement to insure its prime mover and that should cover any loss incurred by it.

It is therefore appropriate to find that cl 9(e) by its terms, confers a benefit directly on Mr Keys, who is not named therein. That benefit is the indemnity - see Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; [1988] 165 CLR 107 at 122 - 123.

The subject matter of cl 9(e) is not excluded from the scope of s 11(2), as it is not 'a conveyance or other instrument to which subsection (1) applies'. Further, the requirements of s 11(2)(a), (b) and (c) have been met and s 11(3) does not apply [161] - [163].

1. The learned trial Judge erred in law by holding in effect that by virtue of section 11(2) of the Property Law Act 1969 (WA) the second respondent was entitled to take the benefit of cl 9(e) of the plant hire agreement between the appellant and the first respondent, in that the plant hire contract did not expressly in its terms purport to confer a benefit directly on the second respondent.
2. The learned trial Judge erred in law in holding that by virtue of cl 9(3) [sic: cl 9(e)] of the plant hire agreement the respondents were in effect exempted from liability for negligence in that the clause, on its proper construction, did not apply to destruction of or damage to the hired plant that arose from negligent conduct of BGC or its employees.

39 Section 11 of the Property Law Act provides:

(1) A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he is not named as a party to the conveyance or other instrument that relates to the land or property.

(2) Except in the case of a conveyance or other instrument to which subsection (1) applies, where a contract expressly in its terms purports to confer a benefit directly on a person who is not named as a party to the contract, the contract is, subject to subsection (3), enforceable by that person in his own name but -

(a) all defences that would have been available to the defendant in an action or proceeding in a court of competent jurisdiction to enforce the contract had the plaintiff in the action or proceeding been named as a party to the contract, shall be so available;

(b) each person named as a party to the contract shall be joined as a party to the action or proceeding; and

(c) such defendant in the action or proceeding shall be entitled to enforce as against such plaintiff, all the obligations that in the terms of the contract are imposed on the plaintiff for the benefit of the defendant.

(3) Unless the contract referred to in subsection (2) otherwise provides, the contract may be cancelled or modified by the mutual consent of the persons named as parties thereto at any time before the person referred to in that subsection has adopted it either expressly or by conduct.

40 The explanatory memorandum to the Property Law Bill 1969 which, upon enactment, became the Property Law Act said in relation to cl 11 which, upon enactment, became s 11:

Clause 11 provides that a person may take an interest in land or other property or the benefit of any covenant although he is not named as a party in the instrument concerned. Subclause (1) is in substance a re-enactment of section 5 of the Real Property Act 1845 (8 and 9 Vict C 106) which is to be repealed by this Bill. That section has been held to have a very limited effect and is in practice confined to what are known as 'covenants running with the land'. There has been a great deal of judicial argument on the question as to whether persons who are not parties to a contract should have the right to enforce the contract when it has been made for their benefit. See Coulls v Bagots Executor and Trustee Co Ltd [1967] HCA 3; 40 ALJR 471 and Beswick v Beswick [1967] UKHL 2; (1967) 3 WLR 932. The result of the cases is that the Courts have refused to recognise third party rights except in limited categories of cases and not always on logical grounds. For example, in general, in the absence of any trust it can be said that a policy of insurance taken out by A and expressed to be payable to B is not enforceable by B. Similarly where two partners agree that on the death of one, the survivor will pay an annuity or other sum to the widow, such an agreement cannot be enforced by the widow. The manifest injustice caused by the rigid application of the third party rule has led to suggestions for reform. As long ago as 1937 the Law Revision Committee in England in its Sixth Interim Report stated:

'The common law of England stands alone among modern systems of law in its rigid adherence to the view that a contract should not confer any rights on a stranger to the contract, even though the sole object may be to benefit him.'

The Committee recommended (at para 48) legislation to provide that:

'Where a contract by its express terms purports to confer a benefit directly on a third party, it shall be enforceable by the third party in his own name subject to any defences that would have been valid between the contracting parties. Unless the contract otherwise provides it may be cancelled by the mutual consent of the contracting parties at any time before the third party has adopted it either expressly or by conduct.'

This proposal is advocated in 'Law Reform Now' published in 1964 and edited by the present Lord Chancellor and is among the subjects in Item 111 of the first programme of the English Law Commission of July 1965. It is also advocated in a leading text book, Cheshire and Fifoot's Law of Contract 6th Ed p 391-2. It is therefore felt that there is ample authority to justify the inclusion of a measure of law reform in the Bill by substantially adopting the wording of the Law Revision Committee's recommendation in subclauses (2) and (3) (Explanatory Memorandum, Property Law Bill 1969 (WA) 3 - 4).

41 The UK Law Revision Committee, Sixth Interim Report (1937) emphasised that proposed statutory recognition of third party rights should be carefully limited. It said:

The first and most important provision ought to be that no third party right can be acquired unless given by the express terms of the contract. A third party right ought not to be acquired by implication, e.g. merely because the performance of the contract will benefit the third party [47].

42 This recommended limitation on the statutory recognition of third party rights was embodied in s 11(2). The rights conferred on third parties by that provision apply only where a contract 'expressly in its terms purports to confer a benefit directly' on a person who is not named as a party to the contract.

43 Section 11(2) does not apply unless the person who seeks to enforce a benefit conferred under the contract in question is identified in the contract as the conferee of that benefit. See Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166 [146] (Gummow & Hayne JJ). The identification may be by name, but it is not essential expressly to name a third party beneficiary before the beneficiary can invoke s 11(2). It is sufficient if the beneficiary can be ascertained by reference to an existing and identifiable class, or if the beneficiary answers a particular description, expressly referred to or identified in the contract. See The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 225 FLR 1 [3365] (Owen J).

44 Mr Keys was not named as a party to the Hire Agreement.

45 In my opinion, the Hire Agreement did not, in terms of s 11(2), 'expressly in its terms [purport] to confer a benefit directly on [Mr Keys]'. Mr Keys was not identified in the Hire Agreement as the conferee of a benefit. First, he was not named in the contract. Secondly, he was not identified in the contract as an individual. Thirdly, he was not identified in the contract by reference to membership of an existing and identifiable class or as within a particular description. The contract did not refer to BGC's employees. Fourthly, it is apparent from my examination of the Hire Agreement and its express provisions that the contract did not purport to confer a benefit directly on any person or entity except Westina and BGC. Fifthly, none of the relevant references in the contract to BGC included, either expressly or by implication, BGC's employees. Generally, compare Westralian Farmers Co-operative Ltd v Southern Meat Packers Ltd [1981] WAR 241, 245 - 246 (Burt CJ, Wallace J agreeing), 247 - 250 (Kennedy J).

46 The trial judge fell into error in finding that 'clause 9(e) by its terms, confers a benefit directly on Mr Keys, who is not named therein' [162]. Section 11(2) confers only limited recognition of third party rights; in particular, a third party right is not acquired by implication. It is necessary that the contractual provision relied on expressly in its terms purport to confer a benefit directly on the claimant.

48 The construction of a written contract is concerned with ascertaining what a reasonable person would have understood the parties to mean. Consideration should ordinarily be given not only to the language of the document, but also to the surrounding circumstances known to the parties, and the apparent purpose and object of the transaction. See Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, where Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:

This Court, in Pacific Carriers Ltd v BNP Paribas ([2004] HCA 35; [2004] HCA 35; (2004) 218 CLR 451), has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461 - 462 [22]) [40].

See also Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 [11]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22]; International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 [8], [53].

49 Where, however, the written contract is a contract of guarantee or indemnity, a doubt as to the construction of a provision in the contract must be resolved in favour of the guarantor or indemnifier. See Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424 [17] - [23] (Gleeson CJ, McHugh, Gummow, Hayne & Heydon JJ). The doubt may arise not only from the uncertain meaning of a particular provision, but also from its apparent breadth of possible application. See Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 83 ALJR 1210 [53] (Gummow, Hayne, Heydon, Kiefel & Bell JJ).

50 It is unnecessary to review the reasons of Australian intermediate courts of appeal in numerous cases decided after Andar but before Bofinger. See, for example, F & D Normoyle Pty Ltd v Transfield Pty Ltd [2005] NSWCA 193; (2005) 63 NSWLR 502; BI (Contracting) Pty Ltd v AW Baulderstone Holdings Pty Ltd [2007] NSWCA 173; (2008) Aust Contract R 90-267; Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235; (2008) Aust Contract R 90-274; Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114; (2008) 72 NSWLR 1. Although these cases discussed Andar and (except for Gardiner) the earlier decision of the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500, each case ultimately turned on its own facts. The principles to be applied in resolving any doubt as to the proper construction of any indemnity in the Hire Agreement, are those enunciated by the High Court in Andar and Bofinger.

51 A contractual indemnity is the obverse of an exemption clause. See Smith v South Wales Switchgear Co Ltd [1977] UKHL 7; [1978] 1 WLR 165, 168 (Viscount Dilhorne). An indemnity usually operates 'where one contracting party, A, may become liable to a third party, X, and the other contracting party, B, promises to indemnify A': Halsbury's Laws of England (4th ed reissue, vol 9(1)), [797] fn (2). See also Adams JN and Brownsword R, Key Issues in Contract (1995) 270, who point out that in addition to this kind of 'bare indemnity clause', there is a 'reflexive indemnity clause' which requires one contracting party, B, who has successfully sued another (but defaulting) contracting party, A, to indemnify A. A 'reflexive indemnity' is distinguishable from a 'bare indemnity' in that a reflexive indemnity is intended by the parties to apply to a liability which arises, as between them, from the indemnified party's own default (for example, a breach of duty or breach of contract). As noted in Gosewisch D, 'Difficulties with Indemnities between Business Entities' (2006) 34 Australian Business Law Review 89, in these circumstances a reflexive indemnity operates in relation to a liability stemming from the indemnified party's own default as both an indemnity and a release (90).

52 I turn, against the background of this discussion, to determine the proper construction of cl 9(e) of the Hire Agreement. This provision must, of course, be construed in the context of the Hire Agreement as a whole, the surrounding circumstances known to the parties, and the purpose and object of the transaction. Any doubt as to the construction of any indemnity in cl 9(e), including any doubt arising from its apparent breadth of possible application, must be resolved in favour of Westina as the indemnifier.

53 The Hire Agreement is in a standard form. The form was prepared by or for BGC and was used in the ordinary course of its business. The Schedule to the Hire Agreement was completed to reflect several important terms of the transaction between Westina and BGC. The 'terms and conditions of plant hire' were not, however, varied or supplemented.

54 Before this court, neither counsel for Westina nor counsel for BGC and Mr Keys pointed to any evidence of surrounding circumstances known to the parties (except, perhaps, that the Haul Road was a private road) which was relevant to and could properly be taken into account in construing the Hire Agreement.

55 The Hire Agreement was a 'wet hire' as distinct from a 'dry hire'. A wet hire involves the hire of plant with an operator. A dry hire involves the hire of plant without an operator. By the contractual arrangements between Westina and BGC, Westina made available the Jamieson Truck and three trailers to BGC on the basis that an employee of Westina (in the event, Mr Ingold) would operate the truck and trailers when they were in use. This was, in essence, the fundamental purpose and object of the transaction between the parties.

56 Clause 9(e) (and each other provision of cl 9) of the Hire Agreement applies only to wet hires. It does not apply to dry hires.

57 Clause 9(e) comprises one sentence with two parts. By the first part, Westina must bear 'the risk of loss in the hiring of the Plant'. By the second part, Westina must 'defend, indemnify and hold BGC harmless against any injury, death, claim or other loss arising from the hiring of the Plant'.

(a) the phrase 'the risk of loss' refers to any future event, certain or uncertain, which may occasion loss;

(b) the phrase 'in the hiring of the Plant' (in particular, the word 'in') requires some, unspecified, nexus between the event which may occasion loss, on the one hand, and the Jamieson Truck and three trailers or the Hire Agreement, on the other; and

(c) the word 'loss' refers to any detriment or disadvantage, including detriment or disadvantage as a result of damage to or the destruction of the truck or trailers.

59 The first part of cl 9(e) does not expressly state whether the 'risk of loss' that Westina must bear extends, without limit, to any future event, certain or uncertain, in connection with the Jamieson Truck and three trailers, which occasions loss to Westina or BGC, no matter how tenuous the connection and no matter how, by whom or in what circumstances the loss was caused. There is doubt or uncertainty, in my opinion, as to whether the 'risk of loss' extends to an event in connection with the Jamieson Truck and trailers (namely, the collision with the BGC Truck) which occasions loss to BGC (namely, its liability to Westina under the law of negligence for the destruction of or damage to the Jamieson Truck and trailers), even though the event in question (that is, the collision) was caused by the negligent act or omission of BGC's employee, Mr Keys. I will return to this issue later in my analysis of cl 9(e).

60 The second part of cl 9(e) contains an indemnity. This is apparent from the stipulation that Westina must 'defend, indemnify and hold BGC harmless'. The matters in respect of which the indemnity operates are then stated to be 'any injury, death, claim or other loss arising from the hiring of the Plant'. Some observations may be made about the stipulated matters in the context of the indemnity provision as a whole:

(a) the reference to 'any injury, death' connotes that Westina must indemnify BGC against any cause of action for a monetary sum, damages or other relief as a result of any injury or death 'arising from the hiring of the Plant';

(b) the words 'any claim' connote that Westina must indemnify BGC against any claim for a monetary sum, damages or other relief 'arising from the hiring of the Plant'; and

(c) the words 'any ... other loss' connote that Westina must indemnify BGC against any loss of any other kind or description (that is, other than the kind or description referred to in sub-pars (a) and (b) above) 'arising from the hiring of the Plant'.

61 The words 'arising from', in the second part of cl 9(e), require the existence of a causal or consequential relationship between the 'injury, death, claim or other loss', on the one hand, and the 'hiring of the Plant', on the other. These words have a broad connotation. However, if and to the extent that there is any ambiguity in relation to the words 'arising from' or their application, the ambiguity must be resolved in favour of Westina, as the party providing the indemnity. See F & D Normoyle [47] (Ipp JA, McColl JA agreeing); Erect Safe Scaffolding [11] (Giles JA); CSR Ltd v Amaca Pty Ltd [2008] NSWCA 329 [31] - [39] (Beazley JA, Giles JA & Young CJ in Eq agreeing).

62 The second part of cl 9(e) does not expressly state whether the indemnity extends, without limit, to any future event, certain or uncertain, in connection with the Jamieson Truck and three trailers which occasions loss to BGC, irrespective of the identity of the person or entity whose act or omission caused the event and the connected loss, and irrespective of the nature and character of the conduct in question (for example, whether the act or omission was negligent or a breach of duty). There is doubt or uncertainty, in my opinion, as to whether the indemnity should be characterised as a 'reflexive indemnity'; that is, whether the indemnity was intended by Westina and BGC to apply to a liability which arises, as between them, from BGC's own default (in particular, its breach of duty under the law of negligence).

63 The critical point raised by ground 2 of the appeal is whether the second part of cl 9(e):

(a) should be construed so as to oblige Westina, in substance and effect, to release BGC from its liability to Westina under the law of negligence for the loss that Westina has suffered as a result of BGC's negligence through its employee, Mr Keys; or

(b) should not be construed so as to oblige Westina, in substance and effect, to release BGC from that liability.

64 In Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd [1973] 1 QB 400, the English Court of Appeal construed an indemnity clause in a contract between forwarding agents (who were the 'trader' referred to in the clause) and carriers. The clause provided:

The Trader shall save harmless and keep the Carrier indemnified against all claims or demands whatsoever by whomsoever made in excess of the liability of the Carrier under these conditions (418).

It is ... a fundamental consideration in the construction of contracts of this kind that it is inherently improbable that one party to the contract should intend to absolve the other party from the consequences of the latter's own negligence (419).

65 Similarly, in Davis v The Commissioner for Main Roads [1968] HCA 10; (1968) 117 CLR 529, the High Court considered whether a contractual provision under which a contractor indemnified the Commissioner for Main Roads extended to a claim for damage to the property of a third person, caused by a collision with the contractor's motor vehicle, where the Commissioner's negligence was a cause of the damage. Kitto J (Windeyer J agreeing), who was in dissent, said:

I do not doubt that damage caused by negligence is included; but the question is: whose negligence? It seems to me impossible to suppose that the parties were intending that [the contractor] should indemnify [the Commissioner] against claims based upon [the Commissioner's] negligence (534).

See also Canberra Formwork Pty Ltd v Civil & Civic Ltd (1982) 41 ACTR 1, 23 (Blackburn CJ); Ellington v Heinrich Constructions Pty Ltd [2004] QCA 475; (2005) 13 ANZ Ins Cas 61-646 [18] - [22] (Chesterman J, McMurdo P & Davies JA agreeing).

66 By contrast, in Qantas Airways Ltd v Aravco Ltd [1996] HCA 12; (1996) 185 CLR 43, the contractual provision, the subject of the dispute between the parties, made plain, by express and specific language, that it was to operate as a reflexive indemnity; that is, the provision undoubtedly conveyed the intention of the parties that the indemnity applied to liabilities arising from the default or breach of duty of the indemnified party. The clause in question read:

The Operator agrees regardless of any negligence on the part of Qantas to release, hold harmless and indemnify Qantas from and against all liabilities ... of whatever nature, howsoever occurring which may accrue against or be suffered by Qantas arising out of or in any way connected with the performance of the said services (46 - 47).

67 Plainly, a contractual provision will be enforceable as a reflexive indemnity if the court is satisfied the parties intended that the provision should apply to liabilities as between the parties which arise from the indemnified party's own default. In each case, whether a contractual provision should be characterised as a reflexive indemnity will depend on the proper construction of the provision, as determined in accordance with the principles I have identified.

68 As I have mentioned, cl 9(e) applies only to wet hires. The indemnity in the second part of cl 9(e) must therefore be construed in the context that the Plant (in the present case, the Jamieson Truck and three trailers) is to be operated by the Supplier's (Westina's) employee, not BGC's employee. The evident intention of the parties was to protect BGC from any liabilities it may incur to third parties (that is, to persons or entities other than Westina) as a result of any injury, death, claim or other loss arising from the hiring of the Plant, in circumstances where those liabilities will invariably be incurred as a result of some negligent act or omission by Westina or its employee as the operator of the Plant. The confinement of cl 9(e) to wet hires suggests it was not intended that the second part of cl 9(e) should operate as a reflexive indemnity.

69 In my opinion, the doubt or uncertainty attending the proper construction of the second part of cl 9(e) is not resolved favourably to BGC, for the purposes of this appeal, upon an examination of cl 9(e) in the context of other material provisions of the Hire Agreement.

70 Clause 8 is concerned with insurance. It provides that insurance shall be maintained during the term of the plant hire agreement in accordance with items 4 and 5 of the Schedule. It also provides that where insurance is the responsibility of the Supplier (in the present case, Westina), the Supplier shall provide evidence of the requisite insurance to BGC before the commencement of the hire.

71 Item 4 is headed 'Equipment Responsibilities'. It provides, relevantly, in the present case that:

(a) 'Minor Repairs', 'Major Repairs' and 'Tyre/Track Maintenance (Fair wear & tear)' are to be 'provided by' the Supplier (Westina) at its cost.

(b) 'Daily Servicing & Top Up Oils' and 'Major Servicing' are to be 'provided by' the Supplier (Westina) at its cost.

(c) 'Insurance Plant/Equipment' is to be 'provided by' the Supplier (Westina) at its cost.

72 Item 5 is headed 'Personnel Responsibilities (Labour/Wet Hire)' and provides, relevantly, in the present case that:

(a) 'Public Liability Insurance' is to be 'provided by' the Supplier (Westina) at its cost.

(b) 'Workers' Compensation Insurance' is to be 'provided by' the Supplier (Westina) at its cost.

(c) 'Income Protection and/or Journey Insurance (if req'd under the head contract)' is to be provided by the Supplier (Westina) at its cost.

73 The Hire Agreement does not expressly state that any insurance to be effected in accordance with cl 8 and items 4 and 5 must name BGC, in addition to the Supplier (Westina), as an insured for its insurable rights and interests (if any). This appears, however, by implication, to have been the intention of the parties. I base the implication on the obvious commercial interest of BGC in arranging insurance to protect its rights and interests under the hiring transaction and the obligation of the Supplier (Westina) under cl 8 to provide evidence of the requisite insurance to BGC before the commencement of the hire.

74 BGC, as the hirer of the Jamieson Truck and three trailers with an operator provided by Westina, would have had an insurable interest for the purposes of the public liability insurance, the workers' compensation insurance (see s 175 of the Workers' Compensation and Injury Management Act 1981 (WA)) and the income protection and/or journey insurance. Similarly, BGC would have had an insurable interest in the truck and trailers for the purposes of the plant and equipment insurance. See the observations of McPherson J (Connolly J agreeing) in AMEV Finance Limited v Mercantile Mutual Insurance (Workers' Compensation) Limited (No 2) [1988] 2 Qd R 351, 355 in relation to the insurable interest of a bailee. During the subsistence of the Hire Agreement, BGC had a legal right to retain possession of the plant in question.

75 It is not apparent from the Hire Agreement or any admissible evidence that any 'Insurance Plant/Equipment' policy taken out in accordance with item 4 would operate to indemnify Westina in respect of any loss, damage or destruction of the Jamieson Truck and three trailers where the loss, damage or destruction was caused by the negligence of BGC or its employee in the operation of other plant and equipment (relevantly, the BGC Truck), notwithstanding that Westina may have released BGC under the Hire Agreement or otherwise from any liability BGC may have to Westina in respect of the loss, damage or destruction.

76 In the circumstances, there is no basis for concluding that construing the second part of cl 9(e) as extending to the release of BGC from any liability to Westina incurred as a result of BGC's own default, in the operation of other plant and equipment, would be consistent with the insurance arrangements provided for in or made pursuant to the Hire Agreement. In particular, there is no basis for concluding that any 'Insurance Plant/Equipment' policy taken out by Westina in accordance with cl 8 and item 4 would indemnify it against any loss, damage or destruction of the Jamieson Truck and three trailers caused by the negligence of BGC or its employee in the operation of the BGC Truck, notwithstanding any release by Westina of BGC under the second part of cl 9(e).

77 The indemnity in the second part of cl 9(e) in combination with the insurance arrangements did not operate as an allocation of risks between Westina and BGC, with Westina being contractually bound to bear the risk of its own negligence and the risk of BGC's negligence in any and all circumstances. Compare EE Caledonia Ltd v Orbit Valve Co Europe [1994] 1 WLR 1515.

78 In my opinion, the first part of cl 9(e) (by which the Supplier, Westina, must '[b]ear the risk of loss in the hiring of the Plant') refers to any future event, certain or uncertain, which may occasion loss as a result of damage to, or the destruction of, the Jamieson Truck and three trailers, but in the context of cl 9(e) as a whole the doubt or uncertainty to which I have referred at [59] above should be resolved in favour of Westina. The risk that Westina must bear in relation to the truck and trailers does not extend to the risk of loss caused by the negligent operation by BGC or its employee of other plant and equipment.

79 Like cl 9(e), cl 3 comprises one sentence with two parts. The first part is a warranty by the Supplier (Westina) that the Plant is, relevantly, 'in sound mechanical condition capable of safe operation'. The second part is an indemnity under which the Supplier (Westina) agrees 'to defend, indemnify and hold BGC harmless against any injury, death, claim or other such loss arising out of the use of the Plant by BGC except to the extent caused by BGC's willful [sic] misconduct'.

80 Clause 3 is not expressly confined to dry hires. There are, however, two features of cl 3 which indicate that it applies to dry hires, but not wet hires. First, by the second part of cl 3, Westina indemnifies BGC for loss arising out of 'the use of the Plant by BGC', (emphasis added). This phrase appears to refer to the sole and exclusive use or operation of the Plant by BGC's employees, which would be the case with a dry hire, but not a wet hire. Secondly, the second part of cl 9(e) is expressly confined to wet hires, that part covers risks and events similar to those covered by cl 3, and the second part of cl 9(e) is adapted in its language to the circumstances of a wet hire.

81 The exception in the second part of cl 3, namely that the indemnity does not apply to loss 'to the extent caused by BGC's wilfull [sic] misconduct', suggests that any loss caused by BGC's negligence (as distinct from its wilful misconduct) is within the scope of the indemnity. But it does not follow from the apparent inclusion of negligent conduct by BGC within the scope of the indemnity in the second part of cl 3, that the indemnity in the second part of cl 9(e) extends to a release of BGC from any liability to Westina.

82 In my opinion, the fact that the Haul Road was a private road is not a surrounding circumstance which has any material effect on the proper construction of the Hire Agreement; in particular, on whether the parties intended that the second part of cl 9(e) should operate as a reflexive indemnity.

83 I am satisfied that the trial judge erred in holding, in effect, that BGC and Mr Keys were released by cl 9(e) from liability to Westina for the loss suffered by Westina as a result of BGC's and Mr Keys' negligence in the operation of the BGC Truck. The doubt or uncertainty arising from the apparent breadth of possible application of the indemnity in cl 9(e) must be resolved in favour of Westina as the indemnifier.

1. The learned trial Judge erred in fact in finding that the second respondent positioned his prime mover at the edge of the road, such that if the third trailer swayed it would move from the road onto the shoulder, when there was no or no sufficient evidence to support that finding.
2. The learned trial Judge erred in fact and in law in finding that the second respondent was negligent by lining his road train up to the edge of the road and that that negligence was the primary cause of the accident when:

(a) the evidence of the second respondent was that he could not see the edge of the road and he could only differentiate between the road and the shoulder by using the delineators;

(b) the evidence of the second respondent was that he assessed his position on the left of the road by using the delineators as guide posts; and

(c) the evidence of the second respondent did not mean that he was driving his prime mover on the edge of the road.

1. The learned trial Judge erred in fact and in law in inferring that the second respondent was negligent on the basis of the pleaded particulars of negligence and the facts as he had found them to be, when:

(a) an inference cannot be drawn from pleaded particulars, unless the facts they contain are proved by evidence;

(b) the only particular of negligence which was found to have been proved was that the second respondent failed to position his prime mover on the road so as to prevent the third trailer from leaving the road;

(c) the finding which supported that particular was that the second respondent had positioned his prime mover on the edge of the road, such that if the third trailer swayed it would move from the road onto the shoulder, which finding was not supported by the evidence;

(d) there was no proper basis for the inference to be drawn.

86 Before turning to the grounds, I will set out relevant evidence of Mr Keys and Mr Teague, and relevant findings by the trial judge:

(a) Mr Keys thought that 'a skilful way to drive [was] to drive into the middle of the road' (ts 198); see also ts 167, 199. Shortly before the collision, he drove his vehicle up a hill. It may be inferred that, while doing so, he was driving in the middle of the road (ts 170 - 172, 222).

(b) After Mr Keys passed the crest of the hill, shortly before the collision, he saw headlights approaching and moved his prime mover and trailers from the centre of the road to the left (ts 172). When he moved his prime mover from the centre to the left, the trailers followed the direction of the prime mover (ts 203).

(c) Mr Keys had no difficulty in identifying the location of the edge of the road (ts 206; exhibit 1.4, par 6).

(d) Mr Keys saw the delineators (ts 167, 178) and lined up his prime mover and trailers with the edge of the road (ts 173; reasons [36]). His purpose was to be 'as close ... to the guideposts as possible without running them down' (ts 174; reasons [29]).

(e) It was unnecessary for Mr Keys to move his road train close to the edge of the road. As the trial judge found, there was ample room on the road for two road trains to pass each other with safety (exhibit 14, page 29, photograph 27; reasons [26]).

(f) Mr Keys knew that the manner in which he controlled his road train (in particular, if he made a jerking motion instead of a smooth motion with the steering wheel) could cause the trailers to 'whip' and roll over (ts 173; reasons [31]). He knew that he should not drive his prime mover and trailers across the edge of the road (ts 190; reasons [32]). Also, he knew that he should leave a safe gap between the left-hand side of his road train and the line between the delineators (ts 190; reasons [32]). Further, he knew that dog trailers were, in general, susceptible to swaying (ts 173; reasons [31]).

(g) Mr Keys accepted that '[p]ermitting [his] road train to be driven in a manner where a trailer might cross that edge ... is something that [he] would not ever do, exercising [his] skills as a road train driver' (ts 191; reasons [33]).

(h) Mr Keys accepted that if the dog trailer went onto the shoulder it could get bogged and there was a risk of it overturning (ts 191; reasons [34]). This, in turn, could bring down the trailer to which it was connected (ts 192). If the dog trailer went onto the shoulder and it sank to a degree, it could commence swaying (ts 192; reasons [34]).

(i) Mr Keys accepted that there were a number of ways of not driving with proper skill that might result in the dog trailer crossing the edge of the road (ts 193). They included driving too far to the left, the manner in which a turning manoeuvre was performed, and the direction of travel and speed of the vehicle (ts 193, 197; reasons [35]).

(j) Mr Keys had driven about 50 km from the mine site before the collision occurred (ts 207). During that distance, he did not notice any mechanical defect, any problem with the load he was carrying (until it spilled in the collision) or any difficulty with the condition of the road (ts 217 - 218).

(k) The first indication of anything unusual was a 'jerking motion' that he had not experienced earlier in the journey (ts 175 - 176). This occurred after he had passed Mr Teague's road train (ts 177). He accepted that from the moment when he first saw the two approaching road trains up to the moment when he experienced the jerking motion, 'the only thing that had happened in [his] personal experience, [was] that [he] had moved [his] road train from the centre to the left hand side of the road' (ts 210). This is consistent with his evidence that he had just come over a hill when he noticed the dog trailer commence swaying; it felt to him that the trailer was sinking (ts 214 - 215; exhibit 1.5, pars 26 and 27).

(l) Mr Teague thought that Mr Keys' road train was too far to the left and he wondered if it was on the road (exhibit 15.1, par 40; reasons [43]). Before the road trains passed, Mr Teague noticed that Mr Keys' road train was very close to a guide post (exhibit 15.1, par 43; reasons [45]). Mr Keys' dog trailer appeared to be 'slipping from the road' (reasons [43]). After the road trains passed, Mr Teague noticed that Mr Keys' dog trailer appeared to be 'off the road' (exhibit 15.1, par 51; reasons [45]).

(m) The trial judge found there was no doubt that Mr Keys' dog trailer swayed, left the road and entered the shoulder (reasons [70]).

(n) The swaying of Mr Keys' dog trailer commenced a series of events which culminated in Mr Keys losing control of his road train, and was associated temporally and circumstantially with his manoeuvre from the centre to the edge of the road and, therefore, with the manner in which he controlled his road train (exhibit 1.5, par 28 - 40; ts 219 - 221).

(o) Exhibit 4.1 indicates that Mr Keys' road train was driven along the edge of the road. See also photographs 15 - 23 on pages 20 - 22 of exhibit 14.

87 Mr Teague did not give oral evidence at the trial. Westina's counsel tendered his witness statement, without objection, as his evidence-in-chief. BGC's and Mr Keys' counsel did not require Mr Teague's attendance for cross-examination. The trial judge was entitled to accept his evidence.

88 As to ground 1 of the cross-appeal, I am satisfied there was sufficient evidence to support the trial judge's conclusion that Mr Keys positioned his prime mover at the edge of the road so that, if the third or dog trailer swayed, it would move from the road onto the shoulder. I refer, in particular, to the evidence and findings at subpars (b) - (d) and (j) - (o) of [86] above. Although there is a degree of sparseness in his Honour's reasoning, his Honour did find (and was entitled to find) at [73] that a reasonably competent operator of Mr Keys' road train would not drive so close to the edge of the road that, if a natural sway were to occur, the dog trailer would enter the shoulder. If the dog trailer entered the shoulder then there was a risk, especially where the shoulder was soft, that the operator might lose control and the trailer overturn. There does not appear to have been any other mechanism (for example, a mechanical defect in the road train or the road train having struck a mob of kangaroos) which might have accounted for what occurred with Mr Keys' trailer and the resulting collision. In the circumstances, his Honour was entitled to infer that, there being no other explanation for the trailer having left the road, Mr Keys lost control by positioning his prime mover at the edge of the road so that, upon the third or dog trailer swaying, it moved from the road onto the shoulder.

89 As to ground 2 of the cross-appeal, in my opinion the trial judge did not make an error of fact or law in concluding that Mr Keys was negligent by lining his road train up to the edge of the road or in concluding that this negligence was the primary cause of the collision. The evidence and findings I have set out at [86] above formed an adequate basis for these conclusions. The evidence of Mr Keys which counsel for BGC and Mr Keys relied on in support of ground 2 does not vitiate his Honour's conclusions. As I have mentioned, his Honour was entitled, in the circumstances, to infer negligence by Mr Keys and that his negligence was the primary cause of the collision. No material error has been established.

90 As to ground 3 of the cross-appeal, the trial judge did not err as alleged in inferring that Mr Keys was negligent on the basis of the particulars of negligence set out in the statement of claim and the facts as he found them to be.

91 Mr Keys' alleged negligence, as set out in par 12 of the statement of claim, was as follows:

12.1 Drove the BGC Truck and/or trailer on and along, or across, the eastern road edge.

12.2 Drove the BGC Truck and trailers in a manner that caused the third trailer to sway and leave the road.

12.3 Drove the third trailer into the path of the Jamieson Truck.

12.4 Failed to travel at a safe speed having regard to the condition of the Road.

12.5 Failed to break, decelerate, steer or otherwise adequately control or position the BGC Truck or the third trailer on the roadway so as to prevent the third trailer leaving the roadway, running out of control and causing the Collision.

12.6 Failed to stop or decelerate, and he continued to drive and he accelerated, when it was the fact and he knew or should have known that the trailer was swaying and travelling on and off the road but he did not know the condition of the third trailer, whether it was on the correct side of the road, or whether by accelerating he could safely keep it on the correct side of the road.

12.7 Continued to drive the BGC Truck and trailers when he was unable to see the edge of the Road or to determine where the truck or its trailers were positioned on the Road.

92 As I have mentioned, it was open to the trial judge, on the basis of the evidence and findings set out at [86] above, to conclude that Mr Keys was negligent. This conclusion reflected the allegations of negligence in, at least, par 12.1 of the statement of claim. It was unnecessary for Westina to prove all of the allegations of negligence or the specific nature of the negligence. In the circumstances, his Honour was entitled to infer negligence on the basis I have explained. As Williams ACJ (Webb, Fullagar, Kitto & Taylor JJ agreeing) said in Doonan v Beacham [1953] HCA 38; (1953) 87 CLR 346:

It was submitted to us, as it was submitted to the learned trial judge and to the Full Supreme Court, that if the evidence does not disclose any particular act or omission amounting to a failure to take reasonable care then the case cannot be left to the jury. I am quite unable to agree with this submission. In my opinion the jury are entitled to consider the evidence as a whole and if, on the whole of the evidence, the jury can reasonably infer that the accident was due to the negligence of the defendant, then they can find for the plaintiff. When I say the whole of the evidence I mean the whole of the evidence which is admissible within the scope of the particulars. This was the view taken by the majority of the Full Supreme Court and with this view I am in entire agreement. I think that it is succinctly and aptly expressed by Smith J in the following passage: 'A plaintiff in an action for damages for negligence must, it is true, make out his allegation for negligence within the limits of the particulars he has furnished, and any amendments thereto which he may be given leave to make. But if he adduces evidence upon which the jury can properly find, on the balance of probabilities and as a matter of reasonable inference, that the damage was caused by negligence on the part of the defendant which must have taken some form falling within the scope of the particulars, I do

not think that it is an answer in law to his claim that the evidence does not enable the jury to find more specifically the nature of the defendant's negligence'. His Honour proceeded to discuss a number of cases and then said: 'It follows that in my view the plaintiff in the present case had made out a sufficient case to go to the jury, in that she had adduced evidence upon which it was open to the jury to find, on the balance of probabilities, and as a matter of reasonable inference, that the collision was caused by negligence consisting either of a failure to keep a proper lookout or else of a failure to slow down or stop when danger arose'. With those remarks of his Honour I find myself in entire agreement and they are sufficient, I think, to dispose of the appeal (351 - 352).

See also The Government Insurance Office (NSW) v Fredrichberg [1968] HCA 54; (1968) 118 CLR 403, 405 - 409 (Barwick CJ, Kitto & Windeyer JJ agreeing).

93 Grounds 1, 2 and 3 of the cross-appeal are without merit.

94 I would allow the appeal and dismiss the cross-appeal. The judgment of the trial judge should be set aside. I would hear from counsel as to the precise form of the orders necessary to give effect to these reasons.