Zhang v Popovic - [2016] NSWSC 407 - NSWSC 2016 case summary — Zoe

NSWNSWSC

Zhang v Popovic

[2016] NSWSC 407

Supreme Court of NSW|2016-03-31|Before: Adamson J

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Source facts

Court

Supreme Court of NSW

Decision date

2016-03-31

Before

Adamson J

Source

Original judgment source is linked above.

Judgment (86 paragraphs)

[1]

89 Government Insurance Office of NSW v RJ Green & Lloyd Pty Ltd (1966) 114 CLR 437 McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; 203 CLR 579 Nelson v The Holland Insurance Company Pty Ltd [2010] NSWSC 199; 77 NSWLR 313 Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64 Prasad v Minister for Immigration, Local Government and Ethnic Affairs (1991) 101 ALR 109 Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989; 3 All ER 570 Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 Todd v Alterra at Lloyds Ltd (on behalf of the underwriting members of Syndicate 4000) [2016] FCAFC 15 United Church in Australia Property Trust (NSW) v Miller; Miller v Lithgow City Council [2015] NSWCA 320 Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530 Zotti v Australian Associated Motor Insurers Limited [2009] NSWCA 323 Texts Cited: Second reading speech for the Motor Accidents (Compensation) Amendment Bill, Legislative Assembly of the Northern Territory, (Hansard) 21 February 2007 Merkin and Enright, Sutton on Insurance Law (4th ed, 2015, Lawbook Co) Sutton, Insurance Law in Australia (3rd ed, 1999, LBC) Category: Principal judgment Parties: Cheng Nian Zhang (Plaintiff) Vlado Popovic (1st Defendant) Calabro Real Estate Pty Ltd (2nd Defendant) Interfreight (Australia) Pty Ltd (3rd Defendant) Popovic Haulage Pty Ltd (4th Defendant) Insurance Australia Limited t/as NRMA Insurance (5th Defendant) National Transport Insurance by its manager NTI Ltd (6th Defendant) ROC Services (NSW) Pty Ltd (7th Defendant) Representation: Counsel: L King SC/CJM Palmer (Plaintiff) P Barham (1st and 2nd Defendant) M McCulloch SC/PR Stockley (6th Defendant) RA Cavanagh SC/OJ Dinkha (7th Defendant)

[2]

[15]

The fifth cross-claim

On 19 November 2015 ROC filed a notice of motion seeking leave to proceed against NTI pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 and repeated the relevant allegations from the sixth amended statement of claim. The motion was heard by Harrison AsJ on 4 February 2016. NTI opposed the grant of leave on the basis that ROC had not established that Mr Popovic and Calabro would be unable to meet any judgment in favour of the plaintiff.
Associate Justice Harrison dealt with the issue in the following way, as appears from the following extract from her Honour's reasons: "[12] I propose to grant leave to the seventh defendant to file the cross-claim against the sixth defendant once the seventh defendant provides evidence that indicates that the first and second defendants are unlikely to be able to satisfy any judgments made against them. The evidence is to be served by the seventh defendant on the sixth defendant within seven days. [13] Once the evidence is provided to the sixth defendant, if the parties agree, I will make the order I have proposed granting leave to the seventh defendant to file and serve a cross claim against the sixth defendant."
By 22 March 2016, NTI had accepted that ROC had established that the first, third and fourth defendants could not meet a judgment in favour of the plaintiff. On this basis NTI accepted that ROC was entitled to leave to file the fifth cross-claim (against NTI) in respect of any liability of those defendants. ROC tendered a statutory declaration made by Mirjana Tabuso, a director of Calabro, in which she deposed that Calabro would not be able to meet any judgment against it in the proceedings. Mr McCulloch SC, who appeared with Mr Stockley on behalf of NTI, objected to the form of the evidence on the basis that Ms Tabuso expressed a conclusion rather than annexing relevant business records in the form of Calabro's financial statements. This evidence was not augmented. Accordingly, the leave to file the fifth cross-claim does not extend to the joinder of Calabro as cross-defendant. On 24 March 2016 I granted leave to ROC to file the fifth cross-claim against NTI in respect of the liability of the first, third and fourth defendants.
The Court ordered that issues relating to liability and indemnity be determined as a separate question.

[17]

Hoxton Truck and Trailer Repairs Pty Ltd

During at least part of 2006 Hoxton Truck and Trailer Repairs Pty Ltd (Hoxton) carried out some (but not all) repairs and maintenance on vehicles used by Interfreight. Its sole director was Mr Sanchez, Jose's brother. Mr Sanchez was the only person who did any work on behalf of Hoxton. He held qualifications in Auto Electrical and Welding.
Mr Tabuso described Mr Sanchez as "my mechanic". He clarified this description by saying that Hoxton was subcontracted to Interfreight to perform mechanical work. Mr Tabuso gave evidence that he, or one of his employees, recorded in an exercise book (one book for each truck or trailer) the work that had been performed on each of his vehicles.
It appears from the limited number of invoices in evidence that Hoxton issued weekly invoices to Interfreight. According to Mr Tabuso (whose evidence I accept on this point) Interfreight paid Hoxton on presentation of each invoice. I note that all invoices issued by Hoxton that are in evidence (dated 29 May, 5 June, 12 June, 19 June, 26 June and 3 July 2006) were issued after Hoxton's deregistration on 7 May 2006. Mr Sanchez was unable to provide a satisfactory explanation for this circumstance, which may be explained by his ignorance of the fact of deregistration of Hoxton and its legal consequences.
In about May 2006 Mr Tabuso asked Mr Sanchez to remove the old set of ramps from the trailer and make and install a new set. Interfreight provided the material for the ramps to Hoxton. In May and June 2006 Mr Sanchez made the ramps and attached them to the trailer. Work referable to that task appears on the weekly invoices for that period which were submitted to Interfreight for payment.
There is a substantial issue as to the identity of the person who, or corporation which, installed the clevis mounts attached to the rear of the trailer. There are three possibilities open on the evidence: 1. Mr Sanchez or Hoxton installed the clevis mounts at the same time as he manufactured and fitted the new ramps onto the trailer; 2. Interfreight attached the clevis mounts itself; or 3. ROC installed the clevis mounts when the trailer was delivered to it in August 2006 for manufacture and installation of the hydraulic system to raise and lower the ramps.
I am satisfied for reasons given below that (3) has been excluded by the evidence of the ROC witnesses whom I accept. The choice between (1) and (2) is more difficult.
Mr Sanchez, who was not a reliable witness, denied installing them. I do not accept his denial, but this is not a situation where non-acceptance of a denial can prove the opposite: Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694 per Gibbs J. There is no entry in the weekly invoices he submitted to Interfreight that indicates that he installed the clevis mounts. Although not every task performed was scrupulously documented in the invoices, I consider that if Mr Sanchez had installed the clevis mounts, there would probably have been some reference to the job in the invoices.
Mr Tabuso told Doug Rolland, a WorkCover inspector, in the course of an interview in May 2008 that Hoxton installed them (although there is some ambiguity about his statement) and also represented to Steven Hall, a welding expert retained by NTI, at a site visit in November 2010, that Hoxton installed them (although there is also some ambiguity about his representation). However, Mr Tabuso was not a reliable witness. His statements that Hoxton did the welding might simply have been an attempt to deflect the blame for the weld away from Interfreight, which might otherwise have been regarded as responsible for the condition of the trailer and the failure of the weld. Interfreight employed at least one welder, who would have been capable of installing the clevis mount. After all, when the right clevis mount was damaged in August 2007 (see further below) it was repaired in-house by a welder employed by Interfreight.
I am satisfied the clevis mounts were installed on the trailer, probably in about May or June 2006 when the ramps were installed, but in any event at some time before late August 2006 when the trailer was delivered to ROC for the installation of the hydraulic system. I consider it more probable than not that it was Interfreight which welded the left clevis mount to the trailer, at least when it was installed before late August 2006.
Whether the mount was removed or re-welded between that time and the time of the accident will be addressed further below. The evidence leaves open the possibility that the left clevis mount was removed and replaced between about mid- 2006 (when it was installed) and the date of the accident. This possibility has not been excluded by the evidence. This matter is relevant to the question (which bears on ROC's potential liability) whether the plaintiff has established the condition and appearance of the left clevis mount at the time it was delivered to ROC in August 2006.

[19]

The work done by ROC

In August 2006 (some time after the HVIS inspection at Minto on 11 August 2006) Interfreight engaged ROC to install hydraulic cylinders to raise and lower the ramps. These hydraulic cylinders (otherwise known as rams) are welded at one end to the clevis mounts (also known as lugs) which form part of the structure of the rear of the trailer and at the other to the ramp. The rams work as pistons to raise and lower the ramp using hydraulic force.
ROC was established in 1999 by Nabil Fahmy (a motor mechanic by trade) and Adrian Hall (a qualified fitter machinist by trade) who purchased a business with a similar name which had been conducted previously at Silverwater. In its first years of operation up to and including 2006, ROC's business was focussed on hydraulic cylinders. It did not install clevis mounts.
On 15 August 2006 ROC raised a Job Card for the job it had been retained to do by Interfreight. The job description on the card, which I am satisfied was an accurate description of ROC's retainer by Interfreight, was as follows: "Low loader/ Step deck. Supply fit hydraulics for rear ramps - with Honda engine."
The Job Card nominated "parts as [per] job sheet". The job sheet, also dated 15 August 2006, identified the parts used for the job and recorded that the fitter was Dion, which was a reference to Dion Matsaniotis, who was at that time a third-year apprentice hydraulic fitter employed by ROC. Interfreight obtained some material from EZI Metal to do the job as recorded in the sales orders dated 17 and 18 August 2006.
I am satisfied that ROC attached the bases of the hydraulic cylinders on both the right and left hand rear of the trailer to clevis mounts, which were already on the trailer when it arrived at ROC's premises. Once ROC had performed this work, it followed its usual practice and tested the hydraulic system by raising and lowering the ramps between 15 and 20 times. I am satisfied that at no time while the trailer was in its custody and control did ROC remove the ramps in order to install the hydraulic system. I accept the explanation given by Adrian Hall that ROC had an overhead crane with a winch on it which was capable of raising and lowering the ramps while the work on the hydraulic system was being done.
On 24 August 2006 ROC issued an invoice to Interfreight in the sum of $4,174.50 inclusive of GST for installing the hydraulic system on the trailer.
I accept the evidence of Robert Cox (a hydraulic fitter who had been employed by ROC and its predecessor) that he never welded lugs on a truck (or trailer) while he was at ROC. He was adamant that ROC would not have done such work. I accept his evidence generally, including his explanation of what occurred in the following passage: "Q. From time to time did you also have to weld mounting lugs for hydraulic systems? A. On cylinders I would, yes, on the actual cylinder, but not on the actual truck. Q. When you say you wouldn't weld on the actual truck, was there any particular reason why you wouldn't weld on the actual truck? A. Yes, because we'd, if it needed a, a, a structural weld, like a lug welded on for a structural reason, we would send it to a body builder who built, who would build trucks, and that was their trade, to weld structural stuff on, on trucks, big heavy lugs, eg 25 mil plate on trucks would be done by a body builder. Q. Did you always use the same - when I say you, I mean ROC - did you always use the same body builder? A. No, we'd just say to the customer, "Take it to a body builder, up to your choice, and get it by done by those, those people." Q. And you're not aware of any situation at all where ROC has sent for example a trailer off to somebody else for welding? A. We used to tell them if it needed structural work done, we would say, "We don't do it. Take it to a body builder to get it done correctly, by a body builder." But we wouldn't specifically use anyone. We'd just say, "Take it to whoever you like.""
In the following exchange, Mr Cox also rejected the proposition that ROC would remove mounting lugs from a truck or trailer: "Q. Would you have occasion, from time to time, to remove mounting lugs which had been previously installed on a truck or trailer or other item of equipment? A. No, 'cause if we were to remove it you had to put, one had to be put back on, so we'd tell them to go to a bodybuilder and have one put on. If it was of those dimensions that you would because it was structural we'd tell them to go to a bodybuilder and get it done by a bodybuilder 'cause that was their trade, not mine."

[20]

The primary case against ROC: that it installed the clevis mounts

ROC did not bear the onus of proving that it did not weld the left clevis mount (that ultimately failed) to the trailer. However, I am satisfied that ROC did not weld the clevis mounts to the trailer for the following reasons: 1. Although none of the ROC employees or principals who were called to give evidence could recall the job, the business records produced by ROC in relation to the job (which I accept, on the basis of Adrian Hall's evidence were "complete and scrupulously accurate") did not record that any such work (installation of the clevis mounts) had been done by ROC. Nor were there any drawings to suggest that such work was undertaken by ROC. The absence of business records can be used to draw a negative inference: s 69(4) of the Evidence Act 1995 (NSW). 2. ROC did not usually perform such work (welding of a clevis mount to a trailer) except in defined and specialised situations. Had Interfreight requested ROC to do such work in the present case, I am satisfied that ROC, in accordance with its usual practice, would have directed Interfreight to go to a body builder to have the clevis mount welded to the rear of the trailer. 3. The clevis mount was welded using a stick welder. ROC had one welder, a MIG (metal inert gas) welder, which it used exclusively. It did not have a stick welder on the premises. I accept Adrian Hall's evidence that: "Any backyard place has got a stick welder." 4. The clevis mount was comprised of 25mm metal. Had ROC required metal of that thickness it would have obtained the clevis mount from another company known as Flame-Cut. There is no record of ROC's having ordered any such metal to perform the work for Interfreight or having charged Interfreight for such metal. Moreover ROC neither retained leftover or used metal; nor did it "cannabalise" metal that had been used for other purposes. Rather, it disposed of such metal into a scrap bin, the contents of which were sold at regular intervals (usually monthly) to a scrap metal merchant. 5. I do not accept the evidence of either Mr Tabuso or Mr Sanchez in these proceedings except where against interest or corroborated (see below where credibility of witnesses is addressed).
It was not necessary for ROC to prove who welded the clevis mount to the trailer. In any event I am satisfied that ROC did not install either of the clevis mounts on the trailer. Accordingly, the plaintiff's primary case against ROC has not been made out.
There was a suggestion that Interfreight had provided two second hand rams to ROC to be used in the installation of the hydraulic system. These rams were not in fact used as ROC installed new rams. It was put by Mr Cavanagh SC, who appeared with Ms Dinkha on behalf of ROC, that Mr Sanchez had tried to install the hydraulic system when he installed the ramps in about May 2006 but had found the task beyond him. I am not satisfied that Mr Sanchez made any such attempt. Accordingly it is not necessary to consider the two second hand rams further. I note that there is no suggestion that the accident was caused by a defective hydraulic system, as opposed to the failure of the defective weld which attached the left clevis mount to the back of the trailer.

[27]

The subject accident: 16 September 2007

At about this time, the plaintiff was nearby as he, too, had driven a truck and trailer to the Patrick Terminal at Port Botany. He was employed by Yun Cheng Transport Pty Ltd, a company of which he was sole director, which was in the business of collecting and delivering shipping containers. His work involved driving the truck to a nominated depot for the collection of a shipping container and then delivering the container to the nominated destination.
While he was waiting for his number to come up on the board, the plaintiff noticed that Mr Popovic was having difficulty getting the left hand ramp into a position where he could fasten the chain. The plaintiff's evidence was that Mr Popovic saw that he was watching him and motioned to him to help him with the ramp. Mr Popovic denied that he asked the plaintiff to help him with the ramp. For the purposes of determining liability it is not necessary to decide this question. Whether Mr Popovic intended to ask the plaintiff to help him, or whether this was what the plaintiff understood his intention to be, the plaintiff went to help him. The plaintiff realised that Mr Popovic was not permitted to drive his truck away unless and until the load was secured and the ramps were secured in an elevated position by a dog and chain. Accordingly, the plaintiff appears to have felt some obligation to go to his assistance in order that the loading of containers on the various trucks in the terminal, including the plaintiff's, could continue.
At the time the plaintiff went to help Mr Popovic, Mr Popovic knew that he was having difficulty with the left ramp. On at least one prior occasion Mr Popovic had had a similar difficulty but had been able to chain the ramp by exerting some force on the ramp to push it closer to the chain. I am satisfied that Mr Popovic appreciated that the hydraulic system which was connected to the left ramp was not operating as it should have been. In these circumstances he ought to have known that it was particularly dangerous for anyone to be standing underneath it.
Both men tried to get the ramp to a sufficiently upright position to enable Mr Popovic to fasten the dog and chain to the ramp to secure it. The plaintiff stood underneath the left ramp trying to push it up while Mr Popovic, who was at the side, attempted to fasten the dog and chain. According to the plaintiff, there was nowhere else for him to stand since he needed to apply force to the left hand ramp to push it up so that it could be attached by the chain to the dog to secure it. Mr Popovic tried to work the lever for the hydraulic system to elevate the left ramp. It is not clear from the evidence whether, at the time the ramp collapsed, he was pulling the ramp from the side, or attempting to elevate it using the hydraulic lever.
Suddenly the weld by which the clevis mount (to which the left hydraulic ram was affixed) was attached to the rear of the trailer failed. The cylinder dropped, taking the ramp with it.
Mr Popovic went to the office at Patrick Terminal to call an ambulance. He was interviewed by police later that evening at about 10.10pm.

[28]

The WorkCover investigation

On 18 September 2007 Mr Rolland took the left-hand clevis mount for the purposes of inspecting and testing it as part of the WorkCover investigation. He also took possession of the exercise book in which Interfreight recorded the work carried out on the trailer. At some later stage, he returned both items to Mr Tabuso. The left clevis mount was in Mr Tabuso's possession at the time Steven Hall and Neil Travers, an insurance loss adjuster, made a site visit to Interfreight's premises in 2010 on instructions from the solicitors for NTI (referred to in more detail below).
On 15 May 2008 Mr Rolland interviewed Mr Tabuso for the purposes of the WorkCover investigation. Mr Tabuso said that the ramp collapsed because the ram bracket (the clevis mount) sheared off when the weld "let go". He said that a few weeks before the accident, Interfreight had done some work on the trailer because he noticed some structural damage to the rear of it, which he inferred had been sustained when another vehicle (such as a forklift) ran into the back of it. Mr Tabuso explained to Mr Rolland that work was done to give extra support to the bottom bracket (clevis mount) of the hydraulic ram for the right side ramp because the "breakage on that side was structural". I do not accept this explanation or the distinction he sought to draw.
When Mr Rolland asked Mr Tabuso whether Interfreight had considered adding extra support to the bracket on the left side hydraulic ram, Mr Tabuso said that it had not considered it because there was no apparent damage to the left hand side. I do not accept the truth of Mr Tabuso's statement that there was no apparent damage to the left hand side. Mr Tabuso's statements and evidence have not excluded the possibility that the left clevis mount was re-welded in August 2007 at the same time as the right clevis mount was reinforced by Mr Perish. This matter is relevant to causation, which is addressed further below in the context of the case against ROC.
Mr Tabuso was asked by Mr Rolland when work was last done on the lower brackets of the hydraulic rams that lift the ramps. He answered that "it was all rebuilt about two years ago" and that the work was done by Hoxton. I note that this timing corresponds with the evidence of Mr Tabuso and Mr Sanchez that Hoxton rebuilt the ramps in about May 2006. For the reasons given above I do not accept that, in so far as Mr Tabuso said that Hoxton installed the clevis mounts, he was telling the truth.

[34]

The site visit conducted on behalf of NTI in November 2010

In November 2010 NTI's solicitors retained Steven Hall to attend Interfreight's premises at Prestons for a site visit with Mr Travers, for the purposes of investigating the claim.
Mr Tabuso, who was present at the site visit, produced the left clevis mount the failure of which had caused the accident (which I infer had, by that time, been returned to him by WorkCover which had taken possession of it after the accident as part of its investigation). Steven Hall and Mr Travers examined the failed bracket and returned it to Mr Tabuso. They did not remove it from Interfreight's premises. The bracket was not available to be produced to the other experts retained for the purposes of these proceedings. It was not suggested that its disappearance was other than accidental. The other experts called to give evidence in the proceedings were prepared to defer to Steven Hall's expertise in welding and his observation of the actual weld which Mr Tabuso had shown to him in the course of the site visit.
Steven Hall gave evidence that when he inspected the failed bracket he saw evidence of cutting and grinding marks on the bracket which was consistent with someone having previously cut the bracket off and ground it. He agreed with the proposition that its appearance was consistent with its having been cut and ground off on at least one occasion since its (assumed) installation in 2006.
In the course of the site visit in November 2010 Mr Tabuso told Steven Hall that both clevis mounts had been installed and welded into position by Hoxton. This statement accorded with what Mr Tabuso had told Mr Rolland at the WorkCover interview in May 2008 but was not, in my view, truthful.
However, at the site visit, (according to Steven Hall) Mr Tabuso "made continual reference to the strengthening of the brackets and surrounding area". Steven Hall had difficulty reconciling the statements Mr Tabuso made at the site visit with photographs of the trailer taken subsequently. He noted the following in his report: "The brackets in the photos appear to be of a different design than the one shown by Mr Tabuso during my site visit. . . . I am not fully convinced that the bracket produced by the owner [John Tabuso] has not been removed and replaced additionally to what had been mentioned at the time of the site visit. The bracket may have been removed and reused by the various companies carrying [out] the work on the trailer or by the owner himself if the bracket had in fact broken off in the time before the said accident involving Mr Zhang."
I accept Steven Hall's evidence that he prepared his report shortly after the site visit and that he could still recall the details of the site visit, including the substance of what Mr Tabuso said to him, when he prepared the report.

[37]

Mr Tabuso and Mr Sanchez

I propose to give reasons relating to the credibility of Mr Tabuso and Mr Sanchez together since their credibility is related in that they gave similar evidence which I am satisfied was false.
Neither Mr Tabuso nor Mr Sanchez was a reliable or truthful witness in the proceedings. There was a substantial inconsistency between Mr Tabuso's statements to WorkCover and Steven Hall (NTI's expert) that the left clevis mount that failed at the time of the accident and the right clevis mount (that was reinforced in August 2007) had been welded to the rear of the trailer by Hoxton in about May 2006; and his subsequent evidence that the work was done by ROC and that he had specifically observed that the trailer did not have clevis mounts installed when it left Interfreight's premises to be delivered to ROC in 2006.
In my view, once Mr Tabuso appreciated that NTI had declined indemnity, he got together with Mr Sanchez to concoct a story with a view to implicating ROC in these proceedings to which they both adhered in their sworn evidence in these proceedings.
Mr Tabuso gave evidence that he called ROC in June or early July 2006 to ask them to install a full hydraulic system for the ramps at the rear of the trailer. Mr Tabuso's evidence was that on 3 July 2006 someone from ROC rang to say that they were ready to do the work on the trailer. Mr Tabuso and Mr Sanchez gave evidence that they both recalled the day, 3 July 2006, on which Mr Tabuso asked Mr Sanchez to deliver the trailer to ROC to have the hydraulic system installed to elevate the ramps. They said that when the trailer left the premises of Interfreight, neither the right nor the left lugs (clevis mounts) had been installed at the rear of the trailer. I am satisfied that this evidence was deliberately false.
Neither Mr Tabuso nor Mr Sanchez was able to identify any document or other aide-memoire to support their corresponding recollection that the trailer was delivered to ROC on that day. Indeed Mr Sanchez agreed that he had written to this Court by letter dated 11 September 2015 saying that he had no documents to produce in answer to a subpoena seeking documents in his possession relevant to the proceedings (I note that the invoices referred to above were produced by Calabro in answer to a subpoena issued to it).
The objective contemporaneous documentary evidence is inconsistent with the trailer having been delivered to ROC on 3 July 2006. A defect notice was issued on 8 August 2006 at Penrith, which recorded that the loading ramps were not fitted at the time of inspection. The trailer was inspected at the HVIS location at Minto on 11 August 2006. On the basis of these documents, I find that the trailer was not delivered to ROC's premises until after 11 August 2006 and was probably delivered on or about 15 August 2006, being the date on which the job sheet in respect of the trailer was raised by ROC. I reject Mr Tabuso's evidence that he organised for the trailer to be dropped off at ROC's premises in early July 2006. Moreover, the entry added much later to the exercise book for the trailer, to indicate that the trailer was delivered on 10 August 2006 is inconsistent with the defect notice and record of inspection on 11 August 2006 as well as his evidence that it was delivered in early July 2006.
I note that Mr Barham endeavoured to support Mr Tabuso's credit by referring to the solicitor's involvement in preparing the affidavits of Mr Sanchez and Mr Tabuso in the following terms: "The reality is, your Honour, I've cross‑examined people and I've been told by judges everyone knows, solicitors prepare affidavits, they do it on instructions but they prepare the affidavits, people look at them and they sign them. There's a document which supports, those invoices support, that is, the Hoxton Truck & Trailer invoices, support that the work was done, and it was done I think in late June or early July, the last date was 3 July. That supports that the ramps were done. There's no question that Mr Sanchez made the ramps. He did a good job of it."
I reject the proposition (if this is what was meant by Mr Barham's submission) that a solicitor might draft an affidavit from contemporaneous documents rather than from the direct instructions of the deponent and simply put the draft in front of the deponent to have him read and sign it. Accordingly, although I assume that the affidavits were drafted by the defendants' solicitor, I would not infer, without evidence, that the date of 3 July 2006 came from the solicitor rather than from the deponents themselves. Neither Mr Tabuso nor Mr Sanchez said, when cross-examined about the provenance of the date of 3 July 2006, that it been suggested by Vincent Macri (Interfreight's solicitor) or that he had inserted it in the drafts of the affidavits which they ultimately swore or affirmed. Nor was Mr Macri called to give evidence to that effect.
In my view the provenance of the date of 3 July 2006 is likely to have been that it was the date of the last invoice issued by Hoxton to Interfreight and therefore the closest date in time to the invoice issued by ROC for the installation of the hydraulic system. I reject the hypothesis that Mr Tabuso and Mr Sanchez came up with the date independently. I infer that they discussed the matter and decided to give the same evidence on the topic, which they knew at the time to be false. For the reasons given above, I reject Mr Barham's submission that the date came from the defendant's solicitor.
Mr Tabuso said that when one of his staff members collected the trailer from ROC's premises and brought it back to Interfreight's premises, he noticed that lugs (clevis mounts) had been newly welded onto the rear of the trailer. Mr Sanchez said that when he observed the trailer on 4 September 2006 he noticed that the hydraulic rams were welded to lugs on either side of the rear of the trailer which had not been there previously. I reject this evidence as false.
Mr Tabuso gave evidence in cross-examination that when the trailer came back from ROC it was "all painted, it was all freshly done" and the whole back of the trailer was "all white". He embellished this evidence in the following exchange with Mr Barham (who appeared for the first two defendants who were, relevantly, in a similar interest to the plaintiff in attributing blame to ROC): "Q. You were asked a question about seeing a new clevis mount. In fact, you were asked a couple of times. What made you think that the clevis mount was new when it came back from ROC? A. Because they're, they're professionals. They wouldn't use second‑hand bits of course. It looked like it was all brand new, it was all painted. Why would they use a second‑hand bit? Q. When you say it was all painted, what were you able to see about the clevis mount? A. It was welder on the back of the trailer all painted. Q. Was it painted when you had sent - when I say "it" was the back of the trailer painted when you it off to ROC? A. It would have been the old paint but there would have been a lot of grinding marks because where little other - little bits and pieces was done, there's stone chips and all that, so then they freshly painted around where all of the actual cleat, the welding, all that section because the back of the trailer has got to be white by law."
Mr Tabuso confirmed that when the trailer came back from ROC its rear looked "brand new" because of the paint.
I am satisfied that this evidence was untruthful and given to add verisimilitude to Mr Tabuso's new version that ROC (and neither Interfreight nor Hoxton) had welded the clevis mounts to the trailer. I prefer the evidence of the ROC witnesses that they did not have any spray painting equipment on the premises and that the only painting they did was to spray the joint of a weld (once the weld had cooled) with a can of paint to protect it. I also accept Adrian Hall's evidence that ROC was not authorised to paint.
Mr Sanchez's preparedness to lie about apparently peripheral matters demonstrated his cavalier attitude towards the truth. For example, Mr Sanchez denied that he knew Mr Tabuso either personally or through his business before 2005. Mr Sanchez said that his only relationship with Mr Tabuso was as a result of his contacting him in 2005 to do some work. Mr Sanchez gave evidence that he operated Hoxton's business from a workshop in Yarrunga Road, Prestons. He agreed in cross-examination that Interfreight was also operating its business from those premises. However, he denied knowing Mr Tabuso. His evidence is to be contrasted with that of Mr Tabuso. Although Mr Tabuso's evidence is not entirely clear, it appears that he had been apprenticed to one of the two Sanchez brothers (probably Jose) as an eighteen-year old in 1992 and had also worked for Jose Sanchez in the business which Mr Tabuso later purchased through Interfreight. At all events, Mr Tabuso ultimately admitted in cross-examination that he had known Mr (Peter) Sanchez since at least 2003.
Mr Sanchez denied ever doing any welding work on any of Interfreight's trucks or trailers; he later admitted that he had done some welding work on the trailer when he installed the ramps.
Mr Sanchez also denied that he knew anything about the proceedings and denied that Mr Tabuso had ever told him that Interfreight was being sued. He swore that when he was asked about it in cross-examination was the first time he became aware that Interfreight had been sued. I do not accept this evidence.
Mr Sanchez said that he had not issued any invoices for work done by Hoxton after it was deregistered on 7 May 2006. However, all of the invoices tendered in these proceedings post-dated that date.
Mr Sanchez was vague about many things about which he was asked, such as: why Hoxton was deregistered; whether he continued to operate the company after it was deregistered; whether and what work he had done since Hoxton was deregistered (although he ultimately disclosed what he had done); and when he left the premises Hoxton shared with Interfreight.
When Mr Sanchez was cross-examined about his affidavit (which was sworn on 27 March 2014), he said that he was working at 395 Devonshire Road, Kemps Creek, which is the address recorded on his affidavit as his address. However, he later corrected his evidence by saying that the Devonshire Road address was Mr Tabuso's premises and that that was where he had manufactured the ramps for the trailer. He later said that it was merely the address that was on the affidavit and that it was where he had sworn the affidavit in the presence of Mr Tabuso's solicitor, Mr Macri. Mr Sanchez said that Mr Tabuso lived at that address, which was not only business premises but also a private home. He also said that he assumed it to be Mr Tabuso's private home although he denied that he had had any discussions with Mr Tabuso about the affidavit. Mr Tabuso confirmed in his cross-examination that the Kemps Creek address was not his private home; it was solely a transport depot.
Mr Tabuso was also vague about matters one would expect him to recall and reluctant to answer questions directly, particularly when he could not readily work out their apparent significance. When asked how many trucks Interfreight had, he answered: "Does it really matter?" When asked how many trailers Interfreight owned he said "several" although he was prepared to admit when the figure of 30 was put to him that the figure "could be" correct.
When Mr Tabuso was cross-examined about his statement in the WorkCover interview in May 2008 that Hoxton had done work that involved "defects and repairs to ramp brackets", he read out the word "bracket" in the singular. The following exchange ensued: "Q. You used the plural in your answer [in the WorkCover interview], didn't you? A. Well, I'm not really educated. I'm not really good at reading and writing. Q. You say you didn't understand the different between brackets and a bracket? A. Well, maybe he wrote down the wrong thing and he assumed brackets when I said maybe brackets ten years ago."
In my view, Mr Tabuso had an acute awareness of the significance of his having told WorkCover in May 2008 that Hoxton had installed both brackets (left and right) on the rear of the trailer. Mr Tabuso appreciated that his earlier statements which implicated Hoxton were inconsistent with his evidence at trial that it was ROC which installed them.

[45]

Inspection of the actual bracket

As referred to above Steven Hall inspected the mount when he visited Interfreight's premises in November 2010. He was the only expert (apart from Mr Travers who also saw the bracket but whom I was not satisfied was relevantly an expert) to do so, as the bracket disappeared thereafter. In his report he said: "I am not fully convinced that the bracket produced by the owner has not been removed and replaced additionally to what had been mentioned at the time of the site visit. The bracket may have been removed and reused by the various companies carrying the work on the trailer or by the owner himself if the bracket had in fact broken off in the time before the said incident involving Mr Zhang. The condition of the bracket in terms of welding is well below standards acceptable for such an operation. Also the bracket has appeared to have been damaged during one or several of its removal procedures thus resulting, in my opinion, to be unsatisfactory for its intended purpose. Any reputed company carrying such repair/modification to an existing trailer would have a code of ethics as to their quality of work and not reused any component deemed unsatisfactory. Therefore, the bracket in its current form would most likely to have been discarded and not used. 2.0 Defects The bracket indicates (visual examination) severe defects not only in the welding but also in the surrounding parent material. The defects/damage in the parent material is a direct result of the bracket been removed (it is possible to assume that it may have carried out on several occasions) from the trailer and reused to consolidate the repair/modification. Who undertook the removal at this stage is unclear. The welding of the bracket to the body of the truck has a number of visual defects. As a result of those defects, the mechanics (ramp going up and down) of the ramp/hydraulics has been severely disrupted. The ramp may have been working satisfactorily until placed in a position where extra force was required due to some unknown circumstance. (indicated by the owner when the ramp could not be relocated to its correct position) Partial failure may have occurred by the bracket being dislodged from the trailer with complete failure occurring when the bracket broke away causing the ramp to fall. 2.1 Type of defects. Visual inspection of the bracket has indicated a number of defects. Bracket material has been removed during the process of removing the bracket from the truck body. This has been carried out previously by the oxy acetylene gouging process where the removal of old weld metal is the objective. Once the weld metal had been removed, the bracket would have fallen off. Oxy acetylene gouging is commonly used in the metals industry as a method of salvaging component parts for reuse. Ill directed gouging will remove parent metal at the same time as weld metal severely weakening the bracket when relocating takes place. Tradespersons are trained to remove weld metal and not expose the parent metal to any form of damage. Weld metal must then fill the gap previously been removed by the gouging process as means of having a full fusion weld between the bracket and the trailer body. Added to the problem is that heavy grinding has also been carried out as a means of cleaning up the bracket of old weld metal before reattaching the bracket in its new position. This has also made it more difficult to obtain a fusion weld between the surfaces in question. The lack of fusion is evident on the bracket. . . . Whilst the design of the bracket has some question marks against it, the installation is of a very poor quality. The writer has little doubt that the welding of the bracket has contributed to the accident. The number and type of defects are severe to the point that failure was just a matter of time. It is apparent to the writer that a non-tradesperson has carried out the work. That is a person with little or no welding experiences and knowledge at the task at hand."
Each of the experts deferred to Steven Hall's observations of the failed weld since he had seen the actual piece whereas the other experts had only seen photographs.

[52]

Liability of Mr Popovic (the first defendant)

The facts which I have found which are set out in the narrative above include that the plaintiff was standing beneath the left ramp, endeavouring to push it upwards while Mr Popovic was either operating the hydraulic system to get it to lift or pulling it manually from the side so that he could attach the dog and chain to it to hold it in the vertical position so that the trailer could be driven away. The weld failed at this time and caused the left ramp to fall suddenly before the plaintiff had a chance to move out of the way. At the time Mr Popovic knew that the left ramp could not be elevated normally and required extra force, either through manual pushing or through additional force applied through the hydraulic system. Although he knew that there was a problem, he nonetheless permitted the plaintiff to stand under the ramp and enlisted his help in the task of raising the ramp.
In these circumstances, Mr Popovic (and through him, Interfreight) owed the plaintiff a duty to take reasonable care for his safety. Although the instructions Interfreight had given to Mr Popovic when he started as its employee were economical, they did at least include the injunction not to stand under the ramp. Mr Popovic not only permitted the plaintiff to stand under the ramp, but did so in circumstances where he knew the ramp was not operating normally and could not be elevated to its vertical position by the usual operation of the hydraulic system.
I turn to the characterisation of the risk of harm, bearing in mind the summary of principles in United Church in Australia Property Trust (NSW) v Miller; Miller v Lithgow City Council [2015] NSWCA 320 at [102]-[122] per Leeming JA (Basten and Simpson JJA agreeing). In my view, the risk of harm was that the left ramp, which was not able to be elevated normally by the use of the hydraulic system, would fall and cause injury to someone because of its weight. The likely seriousness of the harm was considerable and foreseeable. A person in Mr Popovic's position was reasonably required to take the precaution of ensuring that no one stood under a ramp, particularly in circumstances where he knew there to be a malfunction in the elevation mechanism for the left ramp. In failing to take such precautions (having regard to the principles referred to in ss 5B and 5C of the Civil Liability Act 2002 (NSW)), he was negligent. I am satisfied that Mr Popovic breached the duty he owed to the plaintiff by permitting the plaintiff to stand under the ramp which he knew was not operating normally, thereby exposing the plaintiff to the risk that the ramp would fall and injure him (being the relevant risk of harm).
I do not regard the risk of the ramp falling suddenly as having been an obvious one (within the meaning of s 5F of the Civil Liability Act), as far as the plaintiff was concerned. Although the plaintiff had observed the difficulty Mr Popovic was having with the ramp, he was not shown to have had any real appreciation of the condition of the trailer and the left ramp. Furthermore it was not put to him that the risk ought to have been obvious.
Factual causation in s 5D(1) is satisfied, since the plaintiff would not have been injured had Mr Popovic kept him away from the area under the ramp. It is appropriate that liability extend to the harm to the plaintiff as Mr Popovic was in a position of superior knowledge (since he knew that the elevation mechanism was not working as it should). He also relevantly controlled the vehicle as he was its driver for the relevant time.

[53]

Liability of Calabro (the second defendant)

Calabro, as the owner of the trailer, would ordinarily be expected to owe a duty to take reasonable steps to ensure that it was properly serviced and maintained and that any modifications to it were performed competently. The duty arises by reason of the control which is part of the incidents of ownership.
In the present case, the relationship between Calabro (the owner) and Interfreight (which used the trailer) was not established by the evidence. Importantly, it was not clear whether Calabro had relinquished its right to possession of the trailer (which would be an incident of ownership) to Interfreight, such that the obligation to keep it in good repair and to maintain it, might fall on Interfreight rather than Calabro. If Calabro had a continued right to possession of the trailer, then, in my view, it had a duty to others (arising from its control of the vehicle) to take reasonable care to repair and maintain it, which was co-extensive with that owed by Interfreight, such that it did not cause injury to others.
As a right to possession is a usual incident of ownership and as Calabro has not established that it had divested itself of its right to possession in favour of Interfreight, I consider that it owed a duty of care to the plaintiff to take reasonable precautions to keep the trailer in good repair and to have the work done on it performed competently.
The evidence of Steven Hall established that the left clevis mount was not properly attached to the rear of the trailer. Although its joinder to the trailer could have been compromised by impact, such as occurred in late August 2007 (in which case reasonable care required that it be reinforced, such as by plates as the right hand side mount had been), it also appears from the observations made by Steven Hall in November 2010 that it had been badly welded and re-welded, thereby compromising the integrity of the joint and that the clevis mount itself was probably second hand. The capacity of heavy machinery such as the trailer in the present case to cause serious injury and death by reason of the weight and momentum of their parts, even when they are not travelling, is such as to impose an obligation on their owners to take precautions against the risk of a part or joint failing so as to cause injury.
Although an owner can discharge a duty of care to repair and maintain a vehicle by engaging a competent sub-contractor, the evidence is insufficient to establish that it did so. Moreover, it is not clear whether the work that Interfreight did with respect to the clevis mounts in about May 2006 was altered subsequently (prior to the accident) or affected by the impact in August 2007. In these circumstances I am satisfied that Calabro was negligent in the maintenance or repair of its trailer and that its negligence was a relevant cause of the failure of the weld which resulted in the injuries to the plaintiff.

[56]

Liability of ROC (the seventh defendant)

ROC performed the job it was retained to do: namely, to install the hydraulic cylinders and the Honda motor to elevate and lower the ramps on the trailer. There is no suggestion that it was negligent in performing this task or that any negligence associated with the installation of the hydraulic system caused the accident. The primary case against ROC is that it installed the left clevis mount. For the reasons given in detail above, I am not only not satisfied that ROC installed the clevis mounts, but I am satisfied that it did not. Accordingly, the primary case against ROC fails.
The alternative case against ROC is that it was negligent in its overall design and that it ought to have obtained an expert opinion as to the mechanism by which the clevis mounts (which it had not installed) could be tested to ensure that they were strong enough to bear the ramps and the hydraulic system for the life of the trailer.
ROC did not owe any contractual duty to perform work that it had not been retained to do. It did not, in my view, owe any duty of care to Interfreight to redesign and redo work to ensure that the clevis mounts (which I have found had already been welded to the trailer by the time it was delivered to ROC in August 2006) were able to support the hydraulic system for the life of the trailer. ROC's testing of the overall system 15-20 times when it had performed the work was sufficient, in my view, to discharge its duty of care.
Adrian Hall conceded that, had he observed anything untoward about the welding of the clevis brackets to the trailer that indicated that it would not be sufficient to hold the hydraulic system and bear the forces occasioned by its use for lifting and lowering the ramps, he would have been obliged to inform Interfreight and refrain from installing the hydraulic system until the defect or weakness had been properly rectified. To this extent, it can be inferred that he accepted that it was reasonable to expect ROC to report any such deficiency. In these circumstances, I am persuaded that the duty of care that ROC owed to Interfreight required it to inspect the clevis mounts with a view to determining whether each was an appropriate mount for the hydraulic system. I am satisfied that this was done, as part of ROC's performance of the work it was retained to do and as part of its usual practice.
Absent any visible deficiency in the weld in August 2006, ROC was, in my view, entitled to assume that the clevis mounts were part of the trailer and that they had been welded to the trailer to an appropriate standard which would permit them to last for the duration of the life expectancy of the trailer. I am not persuaded that ROC had any obligation to seek an engineer's opinion as to the structural soundness of the clevis mounts or to undertake any testing beyond that which was done (lifting and raising the ramps several times) after the work was completed.
However, the plaintiff contended that ROC was in breach of its duty by failing to notice the deficiencies in the welding of (at least) the left clevis mount, which ultimately led to its failure 13 months later. The difficulty with drawing this inference is that there is no reliable evidence to support the proposition that the appearance of the left clevis mount and the weld by which it was attached to the trailer would have been such as to give rise to any concern as at August 2006.
In any event, had the appearance of the weld been such as to give rise to concern in August 2006, it might be thought that an inspection in August 2007 (when the left clevis mount was inspected by reason of impact damage to the right clevis mount) would have revealed some defect. Yet there is no evidence as to when the defect became visible, if at all, before its failure. Mr Tabuso said that when he inspected it in August 2007 there was no discernible defect. My non-acceptance of his evidence generally does not permit me to infer the contrary.
Moreover, the evidence is not such as to engender any particular confidence that the appearance of the clevis mount did not change between August 2006 (when it was at ROC's workshop) and 16 September 2007 when it failed. A number of factors go against the drawing of an inference that there was no material change to the appearance or strength of the weld, including: 1. the potential that the left clevis mount was damaged in a collision, including the impact that led to the reinforcement of the right clevis mount in late August 2007; or 2. the possibility that the left clevis mount had been removed for some reason and replaced by another (given the evidence of Steven Hall that such a process might explain the appearance of the clevis mount when he inspected it in November 2010 at Interfreight's premises); or 3. that the defect in the left clevis mount was not discernible in August 2006.
The plaintiff has not excluded any of these factors on the balance of probabilities.
Liability in tort is to be determined with foresight, not hindsight. It is not a permissible method of reasoning in determining liability for tort to start with the accident and determine how it could have been prevented. It may well be the case that if ROC had removed the clevis mounts that were on the trailer and replaced them (or, more realistically, required Interfreight to send them to a bodybuilder to do the work, as it did not do such work), the weld by which the left clevis mount was attached to the rear of the trailer would not have failed (although this, too, would depend on what happened in the 13-month period between August 2006 and September 2007 to disturb or damage the weld). However, it does not follow that ROC was negligent in failing to arrange for the left clevis mount (which I am satisfied did not appear to be abnormal or deficient when ROC inspected it as part of its usual practice) to be replaced. That is not what it was retained to do. Reasonable care did not require it to be done.

[57]

Causation

For the reasons given above, I am not satisfied that ROC was negligent in any of the respects alleged, or at all. However, there is a further reason why the claim against ROC must fail: the plaintiff has failed to discharge the onus of proving that any act or omission by ROC caused the accident.
There is a real possibility that, whatever the strength of the weld by which Interfreight had attached the left clevis mount to the trailer, it was compromised by the impact in August 2007. After all, the impact was sufficiently serious to cause Interfreight to install reinforcing plates around the right clevis mount. It is possible that the left clevis mount was re-welded on that occasion and that the re-welding was insufficient to strengthen the damaged clevis mount (indeed, as Mr Gillies opined, re-welding could have compromised the strength of the attachment even further). Mr Tabuso's failure to account (in any credible way) for the appearance of the bracket as observed by Steven Hall has the effect that Interfreight has failed to exclude this possibility on the balance of probabilities. Accordingly, I cannot be satisfied that, even if (contrary to my finding) ROC was negligent in failing to replace the clevis mount when it installed the hydraulic system in August 2006, the weld would not still have failed in September 2007 because of the impact damage to the rear of the trailer in August 2007.
The plaintiff has failed to establish breach or causation in respect of its alternative case against ROC.
I note for completeness that it is alleged in the fourth cross-claim that ROC was in breach of the term implied by s 74 of the Trade Practices Act 1974 (Cth) into its contract to provide services to Interfreight with respect to the work performed on the trailer that the services would be rendered with due care and skill and that any materials supplied in connexion with those services would be reasonably fit for the purpose for which they were supplied. For the reasons given above, I am not satisfied that there has been any such breach by ROC of the implied term. ROC supplied the services of installing the hydraulic system with due care and skill and provided materials which were fit for the purpose.
For these reasons, there will be judgment in favour of ROC on the plaintiff's claims and on all cross-claims to which it is a defendant.

[63]

Whether the Commercial Motor Vehicle Policy claim form was provided by and later received by NTI

When Mr Tabuso told Mr Gelle, his broker, that he wanted to make a claim as a result of the injuries to the plaintiff he was provided with a document entitled "Commercial Motor Vehicle Claim Form". I infer that this form was provided by NTI to the broker at some stage. However, there is no sound basis for the inference that NTI provided it to Mr Gelle for the purposes of this particular claim as opposed to Mr Gelle's having in stock a range of forms and handing the (possibly incorrect) form to the insured. In any event, NTI submitted that it had established that the claim form as signed by Mr Popovic was not, in fact, received by NTI such as would have given it the opportunity to disabuse Interfreight of any misapprehension about the identity of the policy (this issue is considered further below).
NTI adduced evidence, which was not challenged, from Mr Levitt, who has had the conduct of the file, to the effect that the claim form (filled in by Mr Popovic and signed on 14 July 2008) is not on the NTI file. Mr Levitt stated that he examined the computer claims system maintained by NTI. The only claim form on the file is the NRMA Motor Accident Claim Form attached to a letter dated 9 March 2009 from Moray & Agnew (NRMA's solicitors) to Calabro. Mr Levitt attached to his statement a facsimile from W. D. Gelle Insurance & Finance Brokers Pty Ltd to NTI sent on 26 March 2009 to which was attached the correspondence referred to above and various other documents associated with the proceedings, including the amended statement of claim (filed on 17 March 2009 by which the NRMA was joined as a defendant to the proceedings) and a letter from the NRMA's solicitor explaining that the statutory policy did not apply. The explanation given was that the injuries were not caused during the driving of the vehicle, a collision (or action taken to avoid a collision) with the vehicle or the vehicle's running out of control and therefore the Motor Accidents Compensation Act 1999 (NSW) did not apply because of s 3A of the Act.
On the basis of Mr Levitt's evidence, NTI submitted that I could not be satisfied that the claim form filled in by Mr Popovic and signed by him on 14 July 2008 had ever been provided to NTI. NTI also relied on the insured's failure to call Mr Gelle as a witness. Mr McCulloch, who appeared on behalf of NTI, relied on the alleged non-receipt of the claim form filled in by Mr Popovic in support of the submission that NTI did not appreciate that the Commercial Motor Vehicle Policy was in contention and therefore did not disabuse the insured of any misapprehension as to the correct policy. He submitted that NTI only became aware of the claim by Interfreight (and Calabro) on the policy when the NRMA (which was joined as a party by the filing of the amended statement of claim) contended that the statutory compulsory third party policy did not cover the liability. According to Mr McCulloch, it was NTI's joinder to these proceedings, rather than receipt of any claim form, that triggered NTI's investigation of the claim (which led it to instruct Mr Hedges to retain Steven Hall and Mr Travers to attend the premises of Interfreight to investigate the claim).
Since I am satisfied that the Fleet Motor Policy is the relevant policy (for the reasons given below) it is not necessary to address this matter further, since Mr McCulloch confirmed that the issue (whether the Commercial Motor Vehicle Policy claim form was received by NTI) had no broader relevance.

[64]

The representation by Mr Hedges that the policy was the Commercial Motor Vehicle Policy in correspondence and the notice to admit facts

From the time of filing of the second amended statement of claim (being the first pleading in which allegations were made against NTI) the plaintiff consistently alleged that the contract of insurance between the first four defendants comprised the Fleet Motor Policy and the policy schedule. In its defences, NTI admitted that there was a policy of insurance but contended that it was not obliged to indemnify the first four defendants because of an exclusion. The exclusion pleaded corresponded with exclusion cl 2(b)(8) of the Fleet Motor Policy.
Notwithstanding the content of the pleadings, on 7 April 2015 Mr Hedges wrote to the plaintiff's solicitors and ROC's solicitors and represented in unequivocal terms (which were expressed to be as a result of instructions from the insurer) that the Commercial Motor Vehicle Policy was the applicable policy. He said in the correspondence to the plaintiff's solicitors, which was copied to ROC's solicitors: "In the circumstances it is our respectful submission that unless any party to these proceedings has any evidence in its possession which in [sic] intends to adduce at the Hearing which would challenge our instructions as regards the wording of the Policy which was in force as at the time of the Plaintiff's injuries, there is no justifiable reason why our client should be put to formal proof of the Policy by us having to call a witness from interstate. With the above in mind we now enclose herewith by way of service a Notice to Admit Facts and Authenticity of Documents which attaches a copy of the Policy Wording which were are instructed was in force as at the date of the Plaintiff's injuries and which was the Policy Wording issued to the First to Fourth Defendants by our client."
The attached notice to admit facts sought the following admissions: "The Sixth Defendant requires you to admit the following facts: 1. That as at the date of the Plaintiff's injuries, the wording of the Policy of Insurance issued by the Sixth Defendant to the First to Fourth Defendants inclusive was in accordance with the Commercial Motor Vehicle Policy, a copy of which is attached to this Notice. The Sixth Defendant requires you to admit the authenticity of the following documents: 1. The document annexed hereto headed "Commercial Motor Vehicle Policy"."
NTI objected to the letter and the notice to admit facts being tendered on the issue of the identity of the applicable insurance policy. I admitted these documents over NTI's objection. In my view where there is an issue whether the policy for which an insurer contends is the applicable policy, representations by a person authorised by the insurer (such as its solicitor on the record in the proceedings) are potentially relevant. Accordingly, the letter and notice are admissible pursuant to s 55 of the Evidence Act. ROC also relied on the Commercial Motor Vehicle Policy for the further purpose of establishing the meaning of exclusion clause 2(b)(8) in the Fleet Motor Policy (this question of construction will be addressed in further detail below).
When ROC sought leave (by motion filed on 19 November 2015) to proceed against NTI pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946, it annexed to the affidavit filed in support a copy of the Commercial Motor Vehicle Policy (that being the policy which Mr Hedges, on behalf of NTI, had asserted applied in the correspondence referred to above in April 2015). At no stage between service of the Notice to Admit Facts on 7 April 2015 and 18 March 2016 (the Friday before the hearing commenced) did NTI indicate to ROC or to the Court that it contended that the Commercial Motor Vehicle Policy was not the applicable policy of insurance. On 18 March 2016, NTI served an outline of submissions in which it contended that the Fleet Motor Policy No. 9637404 was the applicable policy.

[68]

The parties' submissions

NTI submitted that the liability of Interfreight and Calabro was plainly "arising out of or in any way connected with a defect in" the trailer and was therefore covered by the exclusion. NTI's argument is based on the text itself, which it submitted contained no relevant ambiguity. Mr McCulloch submitted that the effect of the comma before the words "but in Queensland" was to make the succeeding words irrelevant to a vehicle, such as the trailer, which is registered in New South Wales.
The plaintiff, the first and second defendants and the seventh defendant (the opposing parties) contended that the exclusion was limited by the concluding words of exclusion 2(b)(8) (prior to the exception) "whilst it is being driven". They submitted that the relevant effect of the exclusion in the present case was that NTI would not pay "for any liability for bodily injury arising out of or in any way connected with a defect in Your Motor Vehicle . . . whilst it is being driven". They contended that the clause was, at least, ambiguous, and that the relevant ambiguity was created by the words "whilst it is being driven", since it was not clear whether that qualification applied to the relevant motor vehicle or only to those motor vehicles in Queensland where the defect caused a loss of control.
The opposing parties (who relevantly adopted each other's submissions) contended that there were two matters which ought to be taken into account (in addition to the matters arising from a reading of the contract as a whole), which were as follows: 1. The statutory background against which the policy operated, which included the legislative provisions relating to the compulsory third party insurance scheme in various jurisdictions within Australia; and 2. The provisions of the Commercial Motor Vehicle Policy and, in particular clause 2(b)(8) in Section 2, which relevantly provides: "(b) We will not pay: . . . (8) for any liability for death or bodily injury arising out of or in any way connected with a defect in Your Motor Vehicle or in a Motor Vehicle causing loss of control of the vehicle whilst it is being driven; except where such Motor Vehicle is a Queensland registered backhoe, end loader, forklift, mobile crane or hoist or other mobile machinery, and the death or bodily injury occurs whilst such Motor Vehicle is, on land with is not designated as road according to law, or in a public place."

[72]

The regulatory compulsory third party scheme: the New South Wales provisions

At the time the insurance contract was made between NTI and the insured, the Motor Accidents Compensation Act (which was current for the period 4 December 2006 to 30 September 2007) provided as follows: "3 Definitions In this Act . . . driver means a person driving a motor vehicle, and includes: (a) a person riding and operating a motor cycle, and (b) a person for the time being in charge of a motor vehicle. . . . fault means negligence or any other tort. … injury means personal or bodily injury … . . . motor accident means an incident or accident involving the use or operation of a motor vehicle that causes the death of or injury to a person where the death or injury is a result of and is caused (whether or not as a result of a defect in the vehicle) during: (a) the driving of the vehicle, or (b) a collision, or action taken to avoid a collision, with the vehicle, or (c) the vehicle's running out of control, or (d) a dangerous situation caused by the driving of the vehicle, a collision or action taken to avoid a collision with the vehicle, or the vehicle's running out of control.[see below] . . . motor vehicle means a motor vehicle or trailer within the meaning of the Road Transport Act 2013. . . . 3A General restrictions on application of Act (1) This Act (including any third-party policy under this Act) applies only in respect of the death of or injury to a person that is caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle and only if the death or injury is a result of and is caused (whether or not as a result of a defect in the vehicle) during: (a) the driving of the vehicle, or (b) a collision, or action taken to avoid a collision, with the vehicle, or (c) the vehicle's running out of control, or (d) a dangerous situation caused by the driving of the vehicle, a collision or action taken to avoid a collision with the vehicle, or the vehicle's running out of control. [see below] . . . 10 Third-party policies (1) A third-party policy under this Act is a policy that is in the following terms: Third-party Policy The insurer insures the owner of the motor vehicle and any other person who at any time drives the vehicle (whether or not with the consent of the owner) against liability in respect of the death of or injury to a person caused by the fault of the owner or driver of the vehicle: (a) if the motor vehicle is not one to which paragraph (b) applies - in the use or operation of the vehicle in any part of the Commonwealth (whether or not on a road), or (b) if the motor vehicle is subject to an unregistered vehicle permit under the Road Transport Act 2013 - in the use or operation of the vehicle on any road in any part of the Commonwealth. In this policy, words and expressions have the same meanings as in the Motor Accidents Compensation Act 1999. . . . 16 Indemnification of insured persons A licensed insurer is, despite any other law, liable to indemnify the insured persons under a third-party policy of the insurer in respect of any liability which the policy purports to cover."
I note that subparagraph (d) was added to ss 3 and 3A of the Act by [2] and [3] respectively of Sch 1 to the Motor Accidents Compensation Amendment Act 2010 (NSW) in response to the decision in Zotti v Australian Associated Motor Insurers Limited [2009] NSWCA 323. Clause 38 of the Amending Act provided that these amendments extended to an incident or accident that occurred on or after 1 October 2006. Accordingly, subparagraph (d) (in ss 3 and 3A) was not part of the "surrounding circumstances" at the time the insurance contract was made.
The general effect of the provisions set out above is that, in order to establish the liability of the compulsory third party insurer, a claimant must establish that the injuries were caused by the negligence of the owner and driver of the vehicle; that the fault occur "in the use or operation of the vehicle"; and that the injury be "a result of and … caused … during … the driving of the vehicle".
If exclusion cl 2(b)(8) excludes liability arising out of or in connection with a defect in a vehicle "whilst it is being driven", the policy does not create double insurance with the New South Wales compulsory third party scheme which applies, in general terms, to vehicles which are being driven.

[73]

The regulatory compulsory third party scheme: the Queensland provisions

At the time the insurance contract was made between NTI and the insured, the Motor Accident Insurance Act 1994 (Qld) (the Queensland Act) provided as follows. The long title was: "An Act to provide for a compulsory third-party insurance scheme covering liability for personal injury arising out of motor vehicle accidents, and for other purposes"
Section 4 of the Queensland Act contained the following definitions: claim means motor vehicle accident claim CTP is an abbreviation of 'compulsory third-party'. CTP insurance policy means - (a) a policy of insurance under this Act for a motor vehicle insuring against liability for personal injury caused by, through or in connection with the motor vehicle; or (b) a policy of insurance, or a statutory indemnification, for a motor vehicle registered under the law of another State or a Territory, providing insurance, or indemnifying against liability, for personal injury caused by, through or in connection with the vehicle anywhere in Australia. injured person means a person who suffers personal injury because of a motor vehicle accident. insurance premium means the gross premium for a CTP insurance policy (including levies and administration fee). insured motor vehicle means a motor vehicle for which a CTP insurance policy is in force. motor vehicle means a vehicle for which registration is required under the Transport Operations (Road Use Management - Vehicle Registration) Regulation 1999 and includes a trailer. motor vehicle accident means an incident from which a liability for personal injury arises that is covered by insurance under the statutory insurance scheme. motor vehicle accident claim means a claim for damages based on a liability for personal injury arising out of a motor vehicle accident . . . statutory insurance scheme means the insurance scheme established by this Act.
Section 5 of the Queensland Act provided: "5 Application of this Act (1) This Act applies to personal injury caused by, through or in connection with a motor vehicle if, and only if, the injury - (a) is a result of - (i) the driving of the motor vehicle; or (ii) a collision, or action taken to avoid a collision, with the motor vehicle; or (iii) the motor vehicle running out of control; or (iv) a defect in the motor vehicle causing loss of control of the vehicle while it is being driven; and (b) is caused, wholly or partly, by a wrongful act or omission in respect of the motor vehicle by a person other than the injured person. (2) For an uninsured motor vehicle, subsection (1) applies only if the motor vehicle accident out of which the personal injury arises happens on a road or in a public place. (3) However, this Act does not apply to personal injury caused by, through or in connection with - (a) a tractor, backhoe, bulldozer, end-loader, forklift, industrial crane or hoist, or other mobile machinery, other than an agricultural machine; or (b) an agricultural machine; or (c) a motor vehicle adapted to run on rail or tram tracks; or (d) an amphibious vehicle; or (e) a motor vehicle of a class prescribed by regulation; unless the motor vehicle accident out of which the injury arises happens on a road . . ."
Section 23(1) of the Queensland Act provided: "23 Statutory policy of insurance (1) When transport administration registers or renews the registration of a motor vehicle - (a) a policy of insurance in terms of the schedule comes into force for the motor vehicle when the registration or renewal of registration takes effect; and (b) the licensed insurer selected under this part in or in relation to the relevant application is the insurer under the policy.
The Schedule to the Queensland Act provided: Schedule Policy of insurance section 23(1) 1 Extent of insurance cover (1) This policy insures against liability for personal injury caused by, through or in connection with the insured motor vehicle anywhere in Australia. (2) This policy extends to liability for personal injury caused by, through or in connection with a trailer attached to the insured motor vehicle or that results from the trailer running out of control after becoming accidentally detached from the insured motor vehicle. (3) The liability mentioned in subsection (1) or (2) - (a) is a liability for personal injury to which the Motor Accident Insurance Act 1994 applies; and . . ."
The same point can be made about the Queensland Act and the policy as was made with respect to the New South Wales Act. If the exclusion 2(b)(8) is read as the opposing parties contend, double insurance with the statutory compulsory third party scheme insurance is avoided.

[74]

The regulatory compulsory third party scheme: the Northern Territory provisions

The opposing parties also relied on the applicable Northern Territory legislation, Motor Accidents (Compensation) Act 1979 (NT) (the NT Act), which provided for a statutory compensation scheme for accidents in that jurisdiction and vehicles registered in that jurisdiction. Unlike in Queensland and New South Wales, the Northern Territory scheme was no-fault scheme.
Section 4A was inserted into the Act by the Motor Accidents (Compensation) Amendment Act 2007 (NT), which was assented to on 17 May 2007 and commenced on 1 July 2007. It relevantly provided: "4A Motor accidents (1) A motor accident is an occurrence: (a) caused by or arising out of the use of a motor vehicle; and (b) resulting in the death of, or injury to, a person. (2) A motor accident is caused by or arises out of the use of a motor vehicle if, and only if, it results directly from: (a) the driving of the motor vehicle; or (b) the motor vehicle moving out of control; or (c) a collision, or action to avoid a collision, with the motor vehicle (whether the motor vehicle is stationary or moving). . . ."
Before the commencement of the amendment, the previous definition of "accident" in the NT Act extended to occurrences on a public street "caused by or arising out of the use of a motor vehicle", but was not limited to use that involved driving, or the vehicle moving out of control or colliding or avoiding a collision.
The Second Reading Speech made on 21 February 2007 for the Motor Accidents (Compensation) Amendment Bill (NT) (which inserted s 4A) explained the principal features of the statutory scheme in force in the Northern Territory, as well as the effect of the amendments. It read in part as follows: "The MACA [Motor Accidents (Compensation) Act] scheme is premised on the no-fault principle, but with some exclusions introduced over time by successive governments to contain scheme costs. In other words, compensation benefits for Territory residents injured in a motor vehicle accident or for the dependents of persons killed in a motor vehicle accident are usually provided automatically regardless of who is at fault. No-fault-based motor accident compensation avoids the need for costly and potentially stressful litigation in order to obtain compensation. . . . MACA also provides equivalent statutory benefits for residents injured interstate in Northern Territory registered vehicles and indemnifies drivers of Territory registered vehicles against compensation claims by non-residents for accidents occurring outside the Territory. ... The substantive provisions in the bill are: · access to common law damages for accidents in the Territory is abolished. This means that a single system of statutory benefits will apply for all motor vehicle accidents in the Territory, regardless of the residency of the claimant;"
The Northern Territory Act is more nuanced since it applies differently to accidents in the Northern Territory and accidents elsewhere involving Northern Territory registered vehicles. Nonetheless the amendments had commenced by the date of the policy and limited the extent of the compulsory third party policy to vehicles which were being driven (whereas the Act had previously applied to the use of motor vehicles without that limitation). The Northern Territory Act would appear to complement the Fleet Motor policy through exclusions 2(b)(8) and 2(b)(10), if 2(b)(8) is interpreted in the way for which the opposing parties contended.

[76]

The parties' commercial purpose

The commercial purpose of the parties to the contract of insurance appears to have been to provide insurance cover on various bases for the vehicles listed in the schedule. Both the insurer and the insured can be taken to have appreciated that there was no need for NTI to provide cover to the insured for matters which were already covered by third party insurance provided by the statutory scheme that applied to registered motor vehicles and that there was no commercial utility in its doing so. This commercial purpose is consistent with the inclusion of other exclusions, which exclude from cover those matters covered by other statutory insurance or cover. For example, exclusion 2(b)(4) excludes liability: "for any claim in respect of which insurance is required according to law."
Exclusion 2(b)(7) provides that NTI will not pay: "for any liability imposed by the provisions of: (i) any worker's or workman's compensation legislation, or (ii) any accident compensation legislation, or (iii) any industrial award or agreement or determination."
Exclusions 2(b)(9) and (10) provide that NTI will not pay: "(9) for any liability for death or bodily injury by a Queensland or New South Wales registered trailer whilst that trailer is being towed by a Motor Vehicle or running out of control having become accidentally detached therefrom at the time the death or bodily injury occurs. (10) for death or bodily injury caused by or in connection with Your Motor Vehicle, if Your Motor vehicle is registered in the Northern Territory of Australia."
When exclusion 2(b)(8) is read against the background of the statutory framework, the wording referring to Queensland in that clause ("a defect in the motor vehicle causing loss of control of the vehicle while it is being driven") and the second part of the clause (referring to backhoes and so on) appear to come directly from s 5 of the Queensland Act.
It is not clear that the draftsperson of the Fleet Motor Policy had in mind the precise differences between the New South Wales, Queensland and Northern Territory legislation, although it can be inferred that he or she did have the wording of the Queensland legislation in mind when drafting exclusion 2(b)(8). A review of the legislation referred to by the opposing parties does not, in my view, adequately explain why exclusion 2(b)(8) has been worded as it has. I have been unable to discern a rationale that accounts for all the words in that exclusion and others contained in Section 2(b) of the Fleet Motor Policy.
However, an interpretation of cl 2(b)(8) which applies the words "whilst it is being driven" to all vehicles, and not just to those in Queensland, would, in my view, advance the assumed commercial purpose of the parties to provide/ obtain cover that is complementary to the cover provided by statutory third party insurance.

[77]

The construction of exclusion 2(b)(8)

In Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Mason, Wilson, Brennan, Deane and Dawson JJ said at 510, with respect to exclusion clauses: "[T]he interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the 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."
In Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; 217 CLR 424 at [17]-[23], the plurality (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ) considered the principle that ambiguous contractual provisions in a contract of guarantee are to be construed strictly in favour of the surety. After addressing the differences between guarantees and indemnities, the plurality observed that the common factor is that "both are designed to satisfy a liability owed by someone other than the guarantor or indemnifier to a third person" ([23]). On this basis, the plurality concluded that the principles applicable to contracts of guarantee (including the principle referred to above) are relevant to the construction of indemnity clauses: see also Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114; 72 NSWLR 1 (Erect Safe) at [11] per Giles JA. Although a contract of insurance is, in part, a contract of indemnity, in that the insurer may agree to indemnify the insured in respect of the insured's liability to a third person, it "has the object or purpose of sharing the risk of, or spreading loss from, a contingency": Todd v Alterra at Lloyds Ltd (on behalf of the underwriting members of Syndicate 1400) [2016] FCAFC 15 (Todd) at [38] per Allsop CJ and Gleeson J. As their Honours said in Todd at [40]: "From the nature, character and purpose of insurance there is no reason, and no precedent, for according an insurer the tenderness accorded to guarantors and indemnifiers as reflected in the general principle recently restated in Bofinger 239 CLR at 292 [53]."
A liberal interpretation in favour of the insured should be adopted as long as it is consistent with the words of the policy and the commercial purpose of the policy: Australian Casualty Co. Ltd v Federico (1986) 160 CLR 513 at 520-521 per Gibbs CJ. I infer that the insurer drafted the contract, which appears to be in a standard form (hence the need for the schedule which adapts it to each insured) and has a superior knowledge and expertise relating to principles of insurance to that of the insured. Accordingly, I consider it appropriate to use the contra proferentem maxim to assist in the resolution of the ambiguity created by the express words of the exclusion clause and the difficulties of making sense of them and reconciling them with the parties' commercial purpose. In the circumstances of the present case an ambiguous contractual provision such as cl 2(b)(8) is to be construed against the insurer. NTI accepted (and indeed specifically submitted) that, in the event of an ambiguity, the construction which favours the insured will prevail.
The insurer has failed to make clear that the exclusion in cl 2(b)(8) applies to the present case. I am not persuaded that the words "whilst it is being driven" were intended to be confined to vehicles in Queensland only. I prefer the construction where these words are to be read as if a comma preceded them, to indicate that the phrase limits the operation of the exclusion. On this construction the exclusion clause 2(b)(8) does not apply to the present case as the trailer was not being driven at the relevant time. This construction would advance the commercial purpose identified above, and take account of the statutory schemes for compulsory third party motor vehicle insurance which, for the reasons given above, I consider to form part of the surrounding circumstances that can be taken into account in the case of ambiguity.
Further, the construction which I prefer is consistent with the wording of exclusion 4(d) (which is contained in Section 6 of the policy). If exclusion 2(b)(8) were given the wide meaning for which NTI contended, it is difficult to see what work would be remaining for exclusion 4(d) in Section 6 to do.
I note for completeness that it was not suggested (nor could it have been in light of Insurance Commission of Western Australia v Container Handlers Pty Ltd [2004] HCA 24; 218 CLR 89 at [52], [133] and [153]) that the trailer was being driven at the time of the accident. The judgment in favour of the NRMA is consistent with an acceptance by the parties that the trailer was not being driven at the relevant time.
NTI accepted that the policy covers the incident, but for the exclusions. As I have found that none of the exclusions applies, there will be judgment for the plaintiff and the first and second defendants against NTI.

[79]

Whether Mr Popovic's liability to the plaintiff was "arising out of or in any way connected with a defect in" the trailer

ROC argued that the exclusion did not apply to Mr Popovic in any event (irrespective of my conclusion on the construction question addressed above) because his liability for the plaintiff's bodily injury was not "arising out of or in any way connected with a defect in" the trailer. ROC submitted that Mr Popovic was only the driver and therefore had no responsibility for the defect and therefore would not be liable in respect of the defect. Mr Cavanagh relied on Erect Safe at [12] per Giles JA.
Erect Safe concerned a claim for damages brought by Mr Sutton, who was employed by Dalma, a formwork company which was subcontracted to Australand, the head contractor, who was engaged in the construction of a large multi-storeyed building. Erect Safe was also subcontracted to Australand and was responsible for erecting and maintaining scaffolding on the site. Mr Sutton sued Australand and Erect Safe for damages in negligence. Australand cross-claimed against Erect Safe on the basis of an indemnity clause in the subcontract between Erect Safe and Australand which, relevantly, provided that the subcontractor, Erect Safe, must indemnify Australand Constructions (the head contractor) against liability incurred by Australand Constructions arising out of the performance of the Subcontract Works and its other obligations under the Subcontract. The primary judge entered judgment against both defendants; found that Erect Safe was liable to indemnify Australand in respect of its liability to the plaintiff; and entered judgment for Australand on the cross-claim accordingly.
The judgment against Erect Safe on the cross-claim was overturned on appeal. The Court of Appeal (Giles JA and McClellan CJ at CL, Basten JA dissenting) accepted Erect Safe's argument that the indemnity clause did not extend to Australand's liability to Mr Sutton. Their Honours found that Australand's liability arose by reason of its own negligence, rather than the performance of the subcontract works by Erect Safe, which had merely been the occasion for the loss, not its cause (which was Australand's breach of the duty it owed to Mr Sutton) and that this was insufficient to engage the indemnity.
In the present case, I have found Mr Popovic liable for the plaintiff's loss because he, being aware that the elevation of the left ramp was compromised by a defect, failed to take reasonable steps to prevent the plaintiff standing under the left ramp and indeed permitted and encouraged him to stand there. The words "arising out of" and "in any way connected with" are words of wide import: see Government Insurance Office of NSW v RJ Green & Lloyd Pty Ltd (1966) 114 CLR 437 at 446-447. I am satisfied that Mr Popovic's liability arose out of and in connection with the defect because his failure to take steps notwithstanding his knowledge of the defect was what made him liable. That he was not responsible for the defect (and could not have identified the precise defect at the time) is not to the point. Accordingly, I do not regard the reasoning in Erect Safe Scaffolding (Australia) Pty Ltd as providing any real guidance in the circumstances of the present case.
It was not suggested that the reasoning in Erect Safe would be of assistance to Interfreight in bringing its liability outside the exclusion clause since, as was accepted by ROC, its liability arose on many bases, at least some of which could be said to be arising out of the defect.

[81]

Whether s 46 of the Insurance Contracts Act applies in terms

The opposing parties submitted that s 46 applies in terms because cl 2(b)(8) was a provision that had the effect of excluding the insurer's liability under the policy by reference to the condition, at a time before the contract was entered into, of the thing (in this case, the defect).
The relevant time the contact was entered into was the time the contract of insurance was renewed. Section 11 of the Insurance Contracts Act relevantly provides: "(9) Subject to subsection (10), a reference in this Act to the entering into of a contract of insurance includes a reference to: (a) in the case of a contract of life insurance--the making of an agreement by the parties to the contract to extend or vary the contract; (b) in the case of any other contract of insurance--the making of an agreement by the parties to the contract to renew, extend or vary the contract; or . . ."
In the present case, the contract was renewed as at 19 June 2007.
NTI submitted that s 46 did not apply because cl 2(b)(8) did not purport to exclude liability by reference to the condition of the vehicle at the time the contract was entered into. It relied on Nelson v The Holland Insurance Company Pty Ltd [2010] NSWSC 199; 77 NSWLR 313 (Einstein J) which it submitted that I was bound to follow unless satisfied that it was clearly wrong.
In Nelson v The Holland Insurance Company Pty Ltd, the insured (Nelson) argued that the effect of s 46 of the Insurance Contracts Act was that where a reasonable person in his position was not at the time of entry into the contract aware of, and could not reasonably have been expected to be aware of, the defect (in the vessel in that case), the insurer could not refuse to indemnify him. Justice Einstein accepted the insurer's arguments, including the following: 1. an exclusion of a particular event (or state) without reference to when it occurred does not engage s 46; and 2. the exclusion did not operate "by reference" to the condition of the thing at the time the contract was entered into.
His Honour followed the principle in Asteron Life Ltd (formerly Royal & Sun Alliance Financial Services Ltd) v Zeiderman [2004] NSWCA 47; 59 NSWLR 585 which was articulated by Spigelman CJ at [16] (Meagher JA and Bergin J agreeing on that point): "An insurer is entitled to exclude cover for particular events, irrespective ofwhen they occur, and an exclusionary provision of that character does not fallwithin the statutory preclusion in either s 46 or s 47 of the Act because it could not be said that a limitation or exclusion was made "by reference to" acondition of a thing or a sickness or disability at the time the contract wasentered into. When the time of entry into the contract is irrelevant to theexclusion, the sections do not apply."
The exclusion in cl 2(b)(8) does not operate by reference to whether there was a defect at the time the contract was entered into since it purports to exclude liability which arises out of or in connection with a defect in the motor vehicle whenever the defect arose. In the present case, the timing at which the vehicle was, or became, defective was irrelevant. On the basis of Nelson v The Holland Insurance Company Pty Ltd, s 46 does not apply to cl 2(b)(8). The opposing parties have not persuaded me that Nelson v The Holland Insurance Company Pty Ltd is plainly wrong. Accordingly, I am bound to follow it. In my view, s 46 does not apply to cl 2(b)(8) since the time of entry into the contract is irrelevant to the operation of the exclusion.

[82]

Whether, if s 46 otherwise applies, it is excluded because the Fleet Motor Policy is a 'broad form' policy

Regulation 30 of the Insurance Contracts Regulations 1985 (the Regulations) relevantly provides: "Classes of contracts of insurance in relation to which section 46 of the Act does not apply For the purposes of section 46 of the Act, each of the following classes of contracts is declared to be a class of contracts in relation to which that section does not apply: . . . (e) contracts of insurance commonly known as 'broad form' accidental loss and damage insurance contracts."
NTI contended that the Fleet Motor Policy was a "broad form" policy. Mr McCulloch submitted: "The word 'broad form' [sic] is well understood and covers those policies which include a number of different types of cover, as does the NTI policy."
He referred to Sutton on Insurance Law, 4th ed, at [23.1220], which I take to include a reference to [23.1210] where the authors said: "A public liability policy is designed to cover the insured's liability for personal injury and property damage to the "public". The core of the causes of the injury of damage is torts and similar wrongs. A product liability policy is designed to cover the insured's liability for personal injury and property damage caused by the insured's products. The policies are frequently sold together in an insurance product called a 'broadform' policy."
Although Mr McCulloch drew a distinction between 'broadform' (one word) in the texts and 'broad form' (two words) in the regulation, the significance and effect of the distinction was not developed.
Mr King SC, who appeared with Mr Palmer for the plaintiff, submitted that a broadform policy covered a much wider range of risks than the Fleet Motor policy in the present case, and referred to Sutton, Insurance Law in Australia, 3rd ed, at [9.24], which described so-called broadform policies in the following terms: "It is becoming an increasingly common practice for firms and corporations in a substantial way of business to have special forms of policies which have been specially negotiated on their behalf by insurance brokers and which are tailored to meet their particular requirements. These policies provide cover for a variety of risks such as loss or damage to buildings and property; burglary and loss of money insurance; personal injury (widely defined) to officers and other employees of the assured; public liability; products liability; consequential loss through business interruption following on property damage; fidelity guarantee; loss of or damage to electronic equipment; and machinery/boiler insurance. The certificate of insurance lists the parties, the period of insurance, the maximum liability and any excess (or "deductibles") payable by the assured in each section, a brief description of the property insured and the amount of the premium, while the schedule attached to the certificate provides full details of the cover. There are general conditions and general exclusions covering the whole of the various types of insurance (with the frequent inclusion of a waiver of subrogation rights against directors or employees of the assured), and these are supplemented by special clauses applicable only to a particular type of risk."
I have not found the submissions on what amounts to a broadform policy (much less a 'broad form' one) particularly helpful. The proposition that one can recognise one from common experience would appear to be undermined by the fact that it is an issue in the case. Suffice it to say that I am not persuaded that the Fleet Motor policy is a 'broad form' policy within the meaning of reg 30. Although it purports to cover a number of risks it would not appear to meet the description in the 3rd edition of Sutton, Insurance Law in Australia, set out above since the risks, although various, relate largely, if not exclusively, to motor vehicles. Accordingly, s 46 is not excluded although, for the reasons given above, it does not apply in terms to exclusion 2(b)(8) on the basis of Asteron and Nelson.