Zhang v ROC Services - [2016] NSWCA 370 - NSWCA 2016 case summary — Zoe

NSWNSWCA

Zhang v ROC Services

[2016] NSWCA 370

Court of Appeal (NSW)|2016-10-21|Before: Macfarlan JA, Leeming JA, Adam P

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2016-10-21

Before

Macfarlan JA, Leeming JA, Adam P

Source

Original judgment source is linked above.

Judgment (46 paragraphs)

[1]

0 CLR 513 Beefeater Sales International Pty Ltd v MIS Funding No 1 Pty Ltd [2016] NSWCA 217 Calvo v Ellimark Pty Ltd [2016] NSWCA 136 Carlingford Australia General Insurnace Ltd v EZ Industries Ltd [1988] VR 349 CGU Insurance Ltd v Pettit [2009] SASC 187; (2009) 53 MVR 105 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Computer Edge Pty Ltd & Suss v Apple Computer Inc (1984) 54 ALR 767 Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176 Crowley v Glissan (1905) 2 CLR 402 at 404 CSR Ltd v Eddy (2008) 70 NSWLR 725; [2008] NSWCA 83 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Davis v Swift [2014] NSWCA 458; 69 MVR 375 Deputy Commissioner for Taxation v Bowen [1999] NSWSC 881 Distillers Co Bio-chemicals (Australia) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 Dodson v Peter H Dodson Insurance Services [2001] 1 Lloyd's LR 520 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 G L Nederland (Asia) Pty Ltd v Expertise Events Pty Ltd [1999] NSWCA 62 Gan Insurance Co v Tai Ping Insurance Co Ltd (No 2) [2001] EWCA Civ 1047; [2001] 2 All ER (Comm) 299 Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 Gibson v Drumm [2016] NSWCA 206 Gould v Vaggelas (1985) 157 CLR 215 Hope v RCA Photophone of Australia Pty Ltd (1937) 59 CLR 348 HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Johnsons Tyre Foundry v President, Ratepayers and Councillors of the Shire of Maffra (1948) 77 CLR 544 Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd [2014] NSWCA 257 Maharahah Moheshur Sing v The Bengal Government (1859) 7 Moo Ind App 283 Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 McLennan v Insurance Australia Ltd [2014] NSWCA 300 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 [2011] HCA 48 Murray v Sheldon Commercial Interiors Pty Ltd [2016] NSWCA 77 Nominal Defendant v Duntroon Holdings Pty Ltd [2008] 2 Qd R 465; [2008] QCA 183 Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 Peregrine Mineral Sands Pty Ltd v Wentworth Shire Council [2014] NSWCA 429 Port Macquarie Hastings Council v Mooney [2014] NSWCA 156; [2014] Aust Torts Rep 82‑172 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Prenn v Simonds [1971] 1 WLR 1381 Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 Rava v Logan Wines Pty Ltd [2007] NSWCA 62 Re Sigma Finance Corp (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571 Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 Sahade v Bischoff [2015] NSWCA 418 Sheonath v Ramnath (1865) 10 Moo Ind App 413 Smith v Tabain (1987) 10 NSWLR 562 Stead v State Government Insurance Commission (1986) 161 CLR 141 Symphony Group Plc v Hodgson [1994] QB 179 Sze Tu v Lowe (No 2) [2015] NSWCA 91 Tannous v Mercantile Mutual Insurance Co Ltd [1978] 2 NSWLR 331 Todd v Alterra at Lloyds Ltd (2016) 239 FCR 12; [2016] FCAFC 15 Victoria v Tatts Group Ltd [2016] HCA 5; 90 ALJR 392 Wheeler v Somerfield [1966] 2 QB 94 Whishaw v Stephens [1970] AC 508 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297 Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 Zhang v Popovic [2010] NSWSC 1019 Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 Texts Cited: J Carter, The Construction of Commercial Contracts (Hart Publishing, 2013) M Clarke, The Law of Insurance Contracts (Informa, 2009, 6th ed) Lord Grabiner, "The iterative process of contractual interpretation" (2012) 128 Law Quarterly Review 41 R Quirk et al, A Comprehensive Grammar of the English Language (Longman, 1985) Category: Principal judgment Parties: 2016/140032 Mr Cheng Nian Zhang (Appellant) ROC Services (NSW) Pty Ltd (Respondent)

[5]

Headnote [This headnote is not to be read as part of the judgment] The plaintiff, Mr Zhang, was seriously injured when the weld attaching a hydraulic ram supporting a metal ramp to a stationary trailer failed. Mr Zhang sued (a) Mr Popovic, the driver of the truck pulling the trailer, (b) Calabro Real Estate Pty Ltd, the owner of the trailer, (c) NTI, the fleet insurer of Mr Popovic's deregistered employer, and (d) ROC Services (NSW) Pty Ltd, which had installed the hydaulics. NTI's principal defence was an exclusion clause relating to defects, cl 2(b)(8), which provided that the insurer would not pay: "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, but in Queensland only if it causes loss of control of the vehicle whilst it is being driven". Following a trial confined to liability, Mr Zhang succeeded against Mr Popovic, Calaro and NTI, but failed against ROC. NTI's application for a third party costs order against a former director of Mr Popovic's employer was dismissed, and a Sanderson order was made against NTI in respect of ROC's costs. NTI sought leave to appeal, and Mr Zhang appealed against the judgment in favour of ROC. Construction of the exclusion clause Held, by Leeming JA and Sackville AJA, Macfarlan JA dissenting, granting leave to appeal but dismissing NTI's appeal:

The primary judge was correct to hold that the exclusion clause was not available to NTI: at [145] and [262].
It was necessary to have regard to the text, context and purpose of the policy, including relevant surrounding circumstances, in order to determine whether it was capable of bearing more than one meaning: at [79]-[80] and [254]. Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, Victoria v Tatts Group Ltd [2016] HCA 5; 90 ALJR 392, Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184, Calvo v Ellimark Pty Ltd [2016] NSWCA 136, Todd v Alterra at Lloyds Ltd (2016) 239 FCR 12; [2016] FCAFC 15 and WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297, followed and applied. Apple and Pear Australia Ltd v Pink Lady America LLC [2016] VSCA 280, not followed.
The policy was to be read as a whole, and a congruent operation given to its components: at [89] and [254]. Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17, applied.
The language of the policy should ordinarily be construed so as to give a businesslike operation and so as to avoid a commercially absurd result: at [86]-[87] and [254]. Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56, Todd v Alterra at Lloyd's Ltd (2016) 239 FCR 12; [2016] FCAFC 15, applied.
Punctuation will inform the legal meaning, but its significance is reduced if used inconsistently or haphazardly: at [73] and [254]. Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184, applied.
Consideration by Leeming JA of the relationship between literal or grammatical meaning, legal meaning, and application to the facts, and the admissibility of extrinsic evidence: at [53]-[80].
Consideration by Leeming JA and Sackville AJA of the conflicting considerations in construing the clause, and the importance of the clause having work to perform: at [86]-[87], [121]-[124] and [256]-[261]. Per Macfarlan JA (dissenting on this issue):
NTI's construction was supported by the punctuation of the clause, the fact that the contrary construction would be curiously expressed, and the relationship with mandatory insurance in Queensland which closely resembled the text: at [4]-[8]. Challenge by NTI to liability of its insured to the plaintiff Per Leeming JA, Sackville AJA agreeing, Macfarlan JA not deciding, refusing leave to NTI to challenge Mr Popovic's liability to Mr Zhang
There was no error in the formulation of risk of harm and the conclusion of breach and causation: at [1], [160]-[166], [263].
Consideration by Leeming JA of the effect of an application for leave to appeal from an interlocutory judgment when another defendant does not seek leave to appeal: at [155]-[159]. Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48, Crowley v Glissan (1905) 2 CLR 402, Smith v Tabain (1987) 10 NSWLR 562, considered and applied. Challenge by plaintiff to liability of ROC Held, per curiam, dismissing Mr Zhang's appeal against ROC
No error was shown in the conclusion that Mr Zhang had not shown that any breach by ROC had caused the injury: at [1], [185]-[192], [263]. Challenge by NTI re costs Held, per curiam, refusing leave to NTI to challenge the orders as to costs
An appeal did not lie as of right from the failure to obtain a costs order against a third party: at [1], [198]-[200], [263]. Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276, explained.
Nothing could turn on a claimed denial of procedural fairness in relation to a pure question of contractual construction: at [1], [217]-[218], [263]. CSR Ltd v Eddy (2008) 70 NSWLR 725; [2008] NSWCA 83, Peregrine Mineral Sands Pty Ltd v Wentworth Shire Council [2014] NSWCA 429, applied.
A Sanderson order did not require finding that a party encouraged or induced a plaintiff to sue a defendant: at [1], [229], [263]. Johnsons Tyre Foundry v President, Ratepayers and Councillors of the Shire of Maffra (1948) 77 CLR 544, Gould v Vaggelas (1985) 157 CLR 215, Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176, Sze Tu v Lowe (No 2) [2015] NSWCA 91, considered and applied. Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 at [110], not followed.
Leave ought not to be granted to challenge the refusal to make a third party costs order against a witness who was disbelieved: at [1], [231]-[236], [263]. Symphony Group Plc v Hodgson [1994] QB 179 followed.

[6]

Judgment Macfarlan JA: Judgment [1] Leeming JA: Judgment [10] NTI and its policy [20] Reasons of the primary judge [29] NTI's submissions on construction [38] Submissions of the other parties on construction [46] The construction of cl 2(b)(8) [52] The grammatical structure of cl 2(b)(8) [56] The grammatical ambiguity of cl 2(b)(8) [66] The use of commas and the word "but" [72] The ambiguity is not resolved by meaning [77] The determination of legal meaning [85] Reading the contract as a whole and exclusion 4(d) [89] Regard may be had to legislative context [93] Queensland compulsory third party insurance [102] New South Wales [112] Other States [116] Conclusions on legislative context [117] Arguments not advanced [118] Conclusions on construction of cl 2(b)(8) [125] Contra proferentem [136] Summary [142] Mr Zhang's notice of contention [146] NTI's submission that Mr Popovic was not liable [150] Mr Zhang's appeal against ROC [167] Mr Zhang's primary case against ROC [168] Mr Zhang's alternative case against ROC [171] Mr Zhang's appeal [175] Ground 4 [193] Costs [195] The requirement of leave [198] The role of Mr Tabuso - procedural history [201] Exclusion 7(f) - the reasons of the primary judge [208] Exclusion 7(f) - NTI's submissions [211] Mr Tabuso's conduct is not attributed to Mr Popovic or Calabro [216] The partial Sanderson order [226] The failure of NTI's application that Mr Tabuso pay the costs occasioned by the joinder of ROC [231] Remaining points [237] Orders and costs [247] Sackville AJA: Judgment [253]

[7]

MACFARLAN JA: Subject to the following, I agree with the judgment of Leeming JA.
The point upon which I disagree with Leeming JA is the proper construction of exclusion clause 2(b)(8) of the National Transport Insurance ("NTI") insurance policy, which is in the following terms: "(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, but in Queensland only if it causes loss of control of the vehicle whilst it is being driven;"
In my view, the words "whilst it is being driven" at the end of that clause only qualify the words "but in Queensland only if it causes loss of control of the vehicle" rather than the first part of the clause. Thus, the clause excludes "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" subject to the qualification that in respect of Queensland accidents the exclusion only applies "if it causes loss of control of the vehicle whilst it is being driven". My reasons are as follows.
First, this construction is supported by the punctuation of the clause. There is a comma before the word "but", separating what follows from the earlier part of the clause and suggesting that the whole of the latter part is a self-contained qualification. There is no comma between "vehicle" and "whilst" to suggest that the words "whilst it is being driven" relate back to the beginning of the clause. I recognise that caution should be used in relying on punctuation but the clear indication of meaning that it provides in respect of exclusion 8 is a factor to be taken into account.
Secondly, the contrary construction would produce a curiously expressed provision. Thus the operative part of the clause would read as an exclusion: "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 whilst it is being driven". A lucid expression of the concept that would seem to be behind such a provision would require the addition of a reference to the defect causing something such as injury or loss of control. Such lucidity appears if the contrary construction is adopted and the final part of the clause is therefore accepted to operate according to the words that are used, in the order in which they are used: "but in Queensland only if [a defect in the vehicle] causes loss of control of the vehicle whilst it is being driven".
Thirdly, it can be inferred from the language used in exclusion 8 of the policy that the qualification to the clause (commencing "but in Queensland") was intended to reflect s 5(1)(a)(iv) of the Motor Accident Insurance Act 1994 (Qld), quoted in [102] of Leeming JA's judgment. Bearing in mind that "it" in exclusion 8 undoubtedly refers to a defect in the relevant motor vehicle, it can be seen that the wording of the last part of the exclusion precisely mirrors the language of s 5(1)(a)(iv): "a defect in the motor vehicle causing loss of control of the vehicle while it is being driven". The connection to the Queensland statute is reinforced by the prefatory words in that part of the policy exclusion ("in Queensland") and by the absence of any similarly worded legislation in any other state or territory. The existence of an interrelationship between the policy and relevant statute law is also indicated by references to such statute law in other exclusions (see (4) and (7)).
For the reasons given by Leeming JA, reference may be made to the statutory context, including this Queensland statute, to aid in the construction of the policy exclusion. The language used in the Queensland statute supports the construction of the policy exclusion at which I have arrived because the words in that statute "while it is being driven" unequivocally relate to the words "a defect in the motor vehicle causing loss of control of the vehicle" which immediately precede them. There is no alternative possibility, as there is in the case of the policy exclusion, that those words relate to something else such as the concept referred to in the first part of the policy exclusion: "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". The use in the policy of the same language as in the Queensland statute is a strong indication that the same meaning was intended
It follows from the conclusion that I have reached on construction that NTI was entitled to deny liability under the policy because Mr Zhang's injuries arose out of a defect connected with the subject vehicle and exclusion 8, therefore applied. The qualification to exclusion 8 applying in respect of Queensland accidents was not attracted because the accident occurred in New South Wales.
This conclusion is relevant also to questions of costs dealt with by Leeming JA as, in dealing with those questions, his Honour proceeds upon the assumption that NTI wrongly denied liability under the insurance policy. As mine is a dissenting view on the insurance question, it is unnecessary for me to address those cost questions.
LEEMING JA: On 16 September 2007, Mr Cheng Nian Zhang was badly injured when a large metal ramp attached to a trailer at Port Botany fell on top of him. The immediate cause of the ramp falling was that the weld on the trailer which held a "clevis mount", to which was attached a hydraulic ram supporting the ramp, failed.
The primary judge heard and determined a trial, limited to liability, over five days in March 2016, and promptly delivered judgment on 12 April 2016: Zhang v Popovic [2016] NSWSC 407. Her Honour found three parties liable. The first was Mr Vlado Popovic, who had been the driver of the truck pulling the trailer, whom Mr Zhang had been assisting when the ramp fell upon him. The second was Calabro Real Estate Pty Ltd, the registered owner of the trailer. The third was "National Transport Insurance by its manager NTI Ltd", which had issued a fleet motor policy in favour of Interfreight (Australia) Pty Ltd. Mr Popovic had been an employee of Interfreight, which was vicariously liable for his negligence. Interfreight had originally been joined, but a liquidator was appointed to it a few weeks after proceedings had been commenced, and it had been deregistered by the time of the hearing. Mr Zhang relied on s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) to make a claim directly against the insurer, and obtained leave to do so in September 2010: Zhang v Popovic [2010] NSWSC 1019. The primary judge found that the policy responded to the liabilities of each of Mr Popovic, Calabro and Interfreight.
The primary judge dismissed Mr Zhang's claim against ROC Services (NSW) Pty Ltd, which had installed the hydraulics which supported the ramp. The primary judge rejected what was described as Mr Zhang's "primary case" against ROC, namely, that it had also installed the clevis mount, and also rejected his "fall back case" to the effect that, speaking generally, ROC should have been aware that the clevis mount was unsuitable to support the hydraulic ram.
There were two other potentially liable companies which were not parties to the judgment. First, Calabro's trailer was registered in New South Wales, and originally a compulsory third party insurer had been joined. However, the claim against that insurer had been dismissed well before the hearing, on the basis that the accident happened while the trailer was stationary and therefore was outside the application of the compulsory insurance required under the Motor Accidents Compensation Act 1999 (NSW): see s 3A. I return below to consider s 3A, which is relevant to the principal question of construction raised on appeal.
Secondly, the verified statement of claim alleged that Mr Zhang had, at the date of the accident, been employed by Yun Cheng Transport Pty Ltd, and stated that he was its director and sole employee. Neither the workers compensation position, nor the status of that company, appears to be disclosed by the evidence.
The primary judge gave a separate judgment on costs: Zhang v Popovic (No 2) [2016] NSWSC 666. In overview, and so far as is presently relevant, her Honour ordered that Mr Zhang pay ROC's costs, but that NTI pay most of the costs which Mr Zhang was liable to pay pursuant to that order - in other words, a form of Sanderson order. Her Honour also dismissed NTI's application for a third party costs order against Mr John Tabuso, who had been a director and majority shareholder of Interfreight, and rejected NTI's submission that a policy exclusion, cl 7(f), meant that it was not liable to indemnify Mr Popovic and Calabro Real Estate.
There has been no hearing as to quantum, but it was common ground that Mr Zhang's entitlement to damages is a large one.
Mr Zhang has appealed, as of right, against the dismissal of his claim against ROC. NTI has sought leave to appeal against the judgment against it, principally on the basis that her Honour wrongly rejected its submission that exclusion cl 2(b)(8) applied. It also claims that it can, with leave, appeal against those aspects of the judgment by which Mr Popovic was held liable. Mr Popovic has not himself sought leave to appeal from the judgment against him. NTI has also sought leave to appeal from aspects of the judgment as to costs, including its defence based on exclusion cl 7(f), the Sanderson order and the failure of its application that Mr Tabuso be liable for costs. Mr Zhang's appeal, and NTI's application for leave to appeal, were heard concurrently.
Although the issues in this Court are numerous, they fall considerably short of reagitating all of the issues at the five day trial. Mr Popovic and Calabro did not seek leave to appeal from the judgments entered against them, although they were joined (properly) to NTI's summons seeking leave to appeal. No party sought to disturb the credit-based assessments of the primary judge, which were favourable to the witnesses called by ROC and unfavourable to Mr Tabuso. Mr Zhang's appeal against ROC was confined to a challenge to the rejection of his fall back case. Mr Zhang also relied on a notice of contention to support his judgment against NTI, but it did not contest all of the issues decided adversely to him by the primary judge.
The confined, and relatively discrete, nature of the issues in this Court makes it convenient to follow the order of oral submissions, and to deal with, to the extent necessary, the evidence, findings and submissions in turn, as they arise, issue by issue. I first address NTI's application for leave based on exclusion cl 2(b)(8), then its claim that Mr Popovic was not liable, then Mr Zhang's notice of contention, then Mr Zhang's appeal against ROC, and finally NTI's application for leave to appeal against aspects of the costs judgment.

[8]

NTI and its policy

NTI is described in the policy as a joint venture of CGU Insurance Ltd and Vero Insurance Ltd in equal shares. The policy also states "NTI Limited (ABN 84 000 746 109) (AFSL 237245) is the manager for National Transport Insurance (ABN 84 000 746 109)". The description of "joint venture", the absence of any indication in the name "National Transport Insurance" that the joint venture is incorporated, the fact that the policy identifies the same Australian Business Number for NTI Ltd and the joint venture, as well as what is recorded in CGU Insurance Ltd v Pettit [2009] SASC 187; (2009) 53 MVR 105 at [4], lead to the inference that "National Transport Insurance" is not a legal person. The Court raised this with the parties, by letter dated 9 December 2016. In response, a letter was provided signed by Chief Financial Officer and Company Secretary of NTI Ltd, confirming that in 2001 "an unincorporated equally shared joint venture for the conduct of heavy motor vehicle insurance business" was formed, and that "NTI Limited in this relationship with Joint Venturers, and under its own licence provisions 'issue[s]' the insurance policies, as agents of the Joint Venturers. NTI Limited is also wholly responsible for the management of claims relating to the issued policies of insurance". Prima facie, it would seem that because the underlying claim is contractual, the applicants for leave should be the insurers which issued the policy (which is what occurred in the South Australian case referred to above). It seems that one of the initial joint venturers has subsequently been acquired by another insurer; the materials provided to the Court do not establish whether that affects the question of parties. The identity of the insurer(s) bound by this judgment is of importance to all parties, not least Mr Zhang. The orders I propose will allow time for the proper parties to be joined, and grant liberty to the existing parties to apply in the event there is an issue. For present purposes, it is convenient to continue to refer to "NTI" as the insurer.
For the purposes of grounds 1, 2 and 3 of the application for leave, there was no dispute that the fleet motor policy issued by NTI responded, on the findings made by the primary judge, to Mr Popovic's liability for the injury suffered by Mr Zhang. These grounds challenged the construction given by the primary judge of an exclusion clause, cl 2(b)(8), in the policy.
Sections 1, 2, 3 and 4 were headed "Loss or Damage", "Legal Liability", "Law Costs" and "Principal or Employer Indemnity". Section 2, the only section of coverage presently relevant, provided that: "In this section, where we refer to Your Motor Vehicle, we mean Your registered Motor vehicle [sic]. We will also mean Your unregistered Motor Vehicle where it is described in the Schedule as a Class 9a, 9b, 9d type Motor Vehicle. ... (a) We will pay any amount up to the Liability limit shown in Parts 1 or 2 below (whichever applicable) for any number of claims arising out of one event, which You are held legally responsible to pay as a result of an accident, for damages in respect of: (A) bodily injury (fatal or non-fatal) to Another Person (B) damages to or loss of property of Another Person caused: (1) by You using Your Motor Vehicle; or (2) by and during loading or unloading merchandise onto or off Your Motor Vehicle direct to or from a fixed place or rest beside Your Motor Vehicle ..."
The trailer whose ramp fell on Mr Zhang was described in the Schedule as a "1999 Krueger 45 Flat Top Trailer", and its registration number and class (8AL) were given. It was common ground that it answered the description of "Your Motor Vehicle". "Accident", although not capitalised in cl 2(a), was defined to mean "an unintended, unforeseen, unlooked-for happening or mishap, which is not expected or designed". It was common ground that the facts which gave rise to Mr Zhang's injury fell within that definition.
It is plain from cl 2(a)(B)(2) that the policy extended (subject to exclusions) to claims when the Motor Vehicle was stationary and being loaded or unloaded.
In section 2, cl 2(b)(4), (7) and (8) provided: "(b) We will not pay: (4) for any claim in respect of which insurance is required according to law. ... (7) 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. (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, but in Queensland only if it causes 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 which is not designated as a road according to law, or in a public place."
The policy contained definitions of "You, Your" and "We, Us, Our". Motor Vehicle was defined to mean, inter alia, a trailer. For the most part, "Motor Vehicle" was capitalised throughout the policy, although in at least two places (the introductory words to section 2, and in cl 2(b)(10)), the policy referred to "Motor vehicle". I have already noted that "Accident" was defined by the policy. The uncapitalised word was used in cl 2(a), and the capitalised term was used in exclusion cl 2(b)(2).
An unnumbered section on pages 4 and 5 of the policy was headed "Exclusions to the Policy". Two of those exclusions are presently relevant: cll 4(d) and 7(f). They provided: "We will not pay for ... 4. Loss, damage liability and or compensation for damage caused to or by Your Motor Vehicle whilst Your Motor Vehicle is ... (d) being used in an unsafe or unroadworthy condition, unless such condition could not be readily detected by You. ... 7. Loss or damage or liability caused by ... (f) an act or connivance by You or any person acting for You or on Your behalf, that is either wilful, deliberate or criminal."
The balance of the policy contained sections dealing with "Conditions" (pp 6-7), "Fleet Motor Policy Additional Insuring Clauses" (pp 8-9) and "Endorsements" (pp 10-12). The trailer whose ramp fell on Mr Zhang was identified as one of the thirty vehicles and trailers in the policy schedule.

[9]

Reasons of the primary judge

The primary judge addressed the construction of NTI's fleet motor policy extensively, at [164]-[245]. Her Honour first determined a factual question as to which of two forms of policy was in place, and other issues relating to the making of the claim. No challenge was made to those findings. Her Honour noted that NTI had admitted that each of the first to fourth defendants was entitled to indemnity pursuant to the policy, that the trailer came within the definition of "Your Motor Vehicle" and that the facts which led to Mr Zhang's injuries met the definition of "Accident" in the policy. Her Honour then addressed, and rejected, NTI's reliance upon other exclusions (cll 4(d) and 7(i)) concisely, and again no challenge was made to those aspects of the judgment.
Paragraphs [190]-[231] addressed the construction of exclusion cl 2(b)(8). After dealing with this, her Honour rejected the submission in the alternative that s 46 of the Insurance Contracts Act 1984 (Cth) applied in terms, and whether, if it did apply, it was excluded because the fleet motor policy was a "broad form" policy. Again, those matters were not disputed on appeal.
Her Honour identified the competing submissions as to the operation of the concluding words "whilst it is being driven". Her Honour noted that NTI contended that there was no ambiguity, and that the parties opposed to it contended that there was. Her Honour found that there was ambiguity: "In my view, exclusion 2(b)(8) contains the ambiguity referred to above, since it is not clear whether the words 'whilst it is being driven' apply to all preceding words or just to the words after the comma. Although it might be said that the construction for which the opposing parties contended would be stronger if there were a second comma before the word 'whilst', the clause itself shows that the draftsperson has not used commas in either a consistent or orthodox way. For example, the penultimate comma in the concluding words of the clause does not appear to serve any purpose. Moreover the last two commas do not serve as parenthesis for the words between them" (at [193]).
Her Honour then considered the compulsory third party schemes in New South Wales, Queensland and the Northern Territory. I will deal with these below. Her Honour noted that if the policy were construed as the opposing parties submitted, then double insurance with the statutory compulsory third party schemes was avoided (at [200], [206] and [211]). Her Honour rejected a submission made by ROC that the commercial motor vehicle policy formed part of the "surrounding circumstances", regard to which could be had, on the basis that it was not established that it was a circumstance "known to both parties".
Her Honour inferred that the wording in the second part of cl 2(b)(8) appeared to come directly from s 5 of the Queensland legislation. However, her Honour regarded the legislative backdrop as equivocal, saying at [217]: "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."
Her Honour regarded a construction of cl 2(b)(8) which applied the words "whilst it is being driven" to all vehicles, not just those in Queensland, would advance the assumed commercial purpose of the parties to provide cover complementary to the cover provided by statutory third party insurance.
Her Honour applied a liberal interpretation of the policy, favourably to the insured, referring to what Gibbs CJ had said in Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 at 520-521, as well as the contra proferentem maxim (it was not disputed that the policy had been drafted by NTI). Her Honour noted that NTI had accepted that, in the event of ambiguity, the construction which favoured the insured would prevail. Her Honour's conclusion was expressed at [222]-[223]: "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."
At [227]-[231], her Honour addressed, and rejected, submissions advanced by ROC, which were reiterated in Mr Zhang's notice of contention. ROC had submitted that Mr Popovic on any view fell outside the scope of the exclusion, because his liability for Mr Zhang's bodily injury was not "arising out of or in any way connected with a defect in" the trailer. The submission was that because Mr Popovic was only the driver, and had no responsibility for the defect, he would not be liable in respect of the defect. He was liable instead for negligently asking Mr Zhang to assist him when the ramp had ceased to function, and that liability was not excluded by cl 2(b)(8).
The primary judge rejected that submission on the basis that the words "arising out of" and "in any way connected with" were words of wide import, and that Mr Popovic's liability arose because of his failure to take steps not withstanding his knowledge of the defect.

[10]

NTI's submissions on construction

In support of its application for leave to appeal, NTI submitted that the primary judge had erred in finding ambiguity in the exclusion clause, such that her Honour's analysis was based on a false premise. It submitted that on a fair reading of the words by a reasonable person there was a single meaning, which was that the words "whilst it is being driven" applied only "in Queensland". NTI submitted that the meaning upheld by the primary judge was not even one which was grammatically open: "LEEMING JA: ... Do you accept that the words 'whilst it is being driven' are grammatically capable of applying not merely to the words after 'but' but to the earlier words, in other words, qualifying the whole clause, as a matter of grammar? MCCULLOCH: No." NTI did not elaborate why that was so.
Relying on a passage from the 6th edition of Professor Clarke's work The Law of Insurance Contracts (Informa, 2009) at p 444, NTI submitted that it was wrong to apply the contra proferentem maxim unless first there was "genuine ambiguity". NTI invoked what had been said in the text that "The maxim should 'not be used to create the ambiguity it is then employed to solve'", and submitted that that was an error into which the primary judge had fallen. NTI submitted that the "trial judge erred in searching for an ambiguity, particularly by an overly critical analysis of the use of punctuation". NTI further maintained that only if there was ambiguity was the Court entitled to go outside the terms of the contract.
NTI's contention that the exclusion clause was unambiguous was said to be based on three things: the comma before "but", the word "but", and the semantic connection between "causes loss of control" and "whilst it is being driven".
NTI acknowledged, by reference to Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [105], that its reliance on punctuation turned on the Court "being satisfied that it has been used consciously and not haphazardly". NTI contended that that was so, although it made no attempt to explain just why that was so having regard to the use of commas later in the clause, or to address what the primary judge had recorded at [193].
NTI's primary submission was that the Court should not resort to the context, including the statutory regime. NTI's submission emerged from the following exchange: "SACKVILLE AJA: ... [I]f I understand what you're saying correctly you say you don't ask what the background might be, for example, is there Queensland legislation that would explain the insertion of this qualification having the meaning that you attribute to it. You don't ask that question. MCCULLOCH: I submit, your Honour, it's done in two stages. First of all, if the words make sense on their own and are clear, then there's no need for the inquiry. The inquiry as to context I respectfully submit arises only in circumstances where some greater understanding of the relevant background is required to understand what the parties may have intended to agree upon." T32
However, NTI had a fall back submission that part of the background against which the policy was written was the relevant statutory regime, as could be seen in exclusions 2(b)(4) and (7).
NTI did not indicate how, on its construction, exclusion cl 2(b)(8) applied in Queensland. Its primary and fall back submissions emerged as follows: "[T]he response to any questions such as the one Justice Sackville has asked is that if the clause makes sense on its own there is no need for that. If however there is a need to better understand the context for the purpose of interpreting the words used, then reference would be had in this example to what it is that is provided in Queensland. Your Honour, with great respect, that would be a barren exercise in a case with liability arising in New South Wales where the liability in our respectful submission clearly arose, as the trial judge found, or was some way connected with the defect in the registered motor vehicle."
Consistently with NTI's characterisation of the exercise being "barren", at no time did it explain how in its submission the clause operated in Queensland.

[11]

Submissions of the other parties on construction

Mr Zhang sought to maintain the construction given by the primary judge, for the reasons her Honour gave. He submitted that the clauses needed to be read in the light of the compulsory third party regimes in the various States, and that the purpose of the policy must have been to provide cover beyond the areas where there was compulsory cover. He said that there was a deal of clumsiness in the policy, pointing to the words "in Queensland", as well as the misplaced commas later in the clause. He submitted that the nature of fleet insurance was that it involved loading and unloading from stationary vehicles, something which was squarely within the insuring clause, but outside compulsory third party insurance in New South Wales, and so ought naturally be considered not to be excluded by 2(b)(8). He invoked Victoria v Tatts Group Ltd [2016] HCA 5; 90 ALJR 392 at [51] and acceded to the proposition that commercial contracts were to be construed by reference to their text, context and purpose.
Mr Popovic and Calabro failed to file written submissions notwithstanding two additional directions hearings before the Registar and two extensions of time. Ultimately, eight days before the hearing was to proceed, and doubtless conscious of the desirability of the Court receiving the benefit of submissions in reply from NTI, the Registrar declined to extend the time for written submissions any further. No application was made to review the Registrar's order. Even so, on the afternoon before the hearing, Mr Popovic and Calabro purported to file submissions electronically. No explanation was at any time given for the noncompliance with the rules and the Court's directions. NTI objected to the late submissions and the cavalier disregard of the Registrar's orders, and the Court did not receive them.
It is to be recalled that the solicitor on record, had not only appeared for Mr Popovic and Calabro at the trial on liability, but had also (on 18 August 2016) filed a notice of appearance in the proceeding in this Court commenced by NTI's summons seeking leave. Whatever be the position of, or the instructions from, Mr Popovic and Calabro, the solicitor owed a higher duty to the Court. It was quite wrong for the solicitor to fail to attend, to fail to explain the non‑attendance, and to cause submissions to be filed contrary to the Registrar's order on the afternoon before the hearing.
Counsel for Mr Popovic and Calabro appeared in this Court, but only on the second day of the hearing. He apologised for the contravention of the Registrar's order. He was permitted to make submissions in support of construction (their interests aligned with those of NTI on the questions of risk of harm and breach). The Court took this course because the litigation is very important for Mr Zhang and Mr Popovic and Calabro, because the submissions were confined to submissions on questions of law, and because what was put did not significantly overlap with what had been put by Mr Zhang in the same interest. The procedural history of what occurred should not be regarded as a precedent for the proper preparation and conduct of an appeal.
Over the objection of NTI, counsel for ROC made a very brief submission on construction. (The objection was ill-founded. If Mr Zhang's appeal succeeded, ROC had a direct interest in NTI's policy responding, and although ROC had not been joined as a party to NTI's application for leave, NTI could not prevent its joinder had ROC so applied.) Counsel for ROC made three points. First, he supported Mr Zhang's notice of contention, which is addressed below. Secondly, he observed that exclusion cl 2(b)(8) must be referable, at least in part, to the compulsory third party insurance regime in Queensland, because of the striking similarity in language. Thirdly, he made a submission invoking the absence of commercial purpose and intent in NTI's construction, as follows: "My final point on this insurance point is this: the effect of the insurer's approach is that where there is a defect and the accident happened in Queensland, the exclusion only operates when the accident occurs whilst the vehicle is being driven, because that is a liability, the type of which is covered under the Queensland CTP scheme, because that's what it seeks to do by adding those words and is only intending, therefore, to exclude defect type cases where it would be covered under Queensland, but the effect of the insurer's approach is to say but in other cases where accidents happen, as Mr King said perhaps a kilometre south of the border, we intend that the defect exclusion will apply even to accidents not covered by the statutory scheme such as this one. So it makes a huge difference, apparently, where the accident occurs as to how this policy operates. That can't be the commercial purpose and intent of the way in which this policy was intended to operate."
NTI made no submission in response.

[12]

The construction of cl 2(b)(8)

Given the nature of some of NTI's submissions, it is desirable to return to first principles.
Where as here the issue is the construction of a complex contractual provision, the starting point is to determine the literal or grammatical meaning or meanings of the clause. Secondly, one then determines the legal meaning of the clause. Thirdly, one applies that legal meaning to the facts as found by the court.
The first phase, determining literal or grammatical meaning, is a matter of English, not a matter of law. It does not turn on evidence. In many cases, there will be no great difficulty determining the literal or grammatical meaning, and in some accounts of the process of construction, this stage is omitted. But sometimes determining the literal or grammatical meaning will be difficult. One reason for that may be that the clause disregards ordinary rules of grammar: the trusts established by Mr Calouste Gulbenkian considered in Whishaw v Stephens [1970] AC 508 and the licence agreement drafted by Mr Arthur Coulls considered in Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 are examples. Another reason may be that the clause is long and complex and the grammar difficult and indeed ambiguous. That is the case here. Indeed, the difficulties in construing NTI's policy bring to mind Callinan J's statement in Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [51] to the effect that even a high level of literacy and commercial and legal sophistication would in any event provide no armour against the obscurities of this policy. Happily, it will not be necessary to resolve all aspects of the construction of the policy, or even of cl 2(b)(8).
Despite a vigorous and sustained exchange of submissions that cl 2(b)(8) was, or alternatively was not, ambiguous, no party undertook what seems to me to be the appropriate starting point, which is a grammatical parsing of this complicated English sentence. It will be seen that once the clause has been parsed, some of the parties' submissions fall away.

[13]

The grammatical structure of cl 2(b)(8)

The opening clause of exclusion cl 2(b)(8) identifies a form of liability (liability for death or bodily injury) with certain characteristics, namely, arising out of or in any way connected with a defect. It was accepted by all parties that the failure of the weld joining the clevis mount to the trailer was a "defect" within the meaning of the exclusion.
Clause 2(b)(8) contains two paragraphs, separated by a semicolon. The second paragraph commences with the words "except where" and it will be convenient to refer to it as "the exception".
The language of "except where", the precisely articulated list of mobile machines to which the exception applied, and the separate paragraphing, lead to the conclusion that the exclusion in the first paragraph in cl 2(b)(8) is subject to an exception constituted by the second paragraph in cl 2(b)(8). In other words, the exception is a carve-out from the exclusion. As will be seen below, that construction corresponds with the similar (but far from identical) words in s 5(3) of the Motor Accident Insurance Act 1994 (Qld) which excludes from the compulsory insurance required by that Act personal injury caused by a similar class of mobile machinery. (I am conscious that there appears, at least arguably, to be liability to which the "exception" applies which does not fall within the scope of the first paragraph. I do not express a concluded view on whether that is so. Nothing turns on this, save that, perhaps, it is not strictly an "exception".)
The first paragraph of cl 2(b)(8), when read with the opening words of the provision, contains three clauses. Each clause contains a finite verb ("pay" and "causes" and "is being driven"), connected by the words "but" and "whilst": 1. "We will not pay ... 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" but 1. "in Queensland only if it causes loss of control of the vehicle" whilst 1. "it is being driven".
Because of the importance attributed by NTI to the use of commas, I should note that "but" was preceded by a comma, and "whilst" was not.
The first clause identifies a class of liability which is excluded from the cover promised by cl 2(a). That class of liability is liability for a class of injury (death or bodily injury) where there is a sufficient connection ("arising out of or in any way connected") with a defect. A further requirement is that the defect be in one of two Motor Vehicles: either in "Your Motor Vehicle" or in "a Motor Vehicle". Such liability may conveniently be abbreviated as "defects liability". It will not be necessary to identify the legal effect of the words "a Motor Vehicle".
The second main clause is clumsy, as Mr Zhang observed. The words to which the prepositional phrase "in Queensland" applies are unstated. They probably refer to the "accident" in cl 2(a) in respect of which liability is, subject to the exclusions, promised. Other grammatical possibilities are that the words "in Queensland" apply to a defect which manifests itself in Queensland, or death or bodily injury in Queensland, or a liability which arises in Queensland. The latter seems unlikely (and would give rise to the possibility that the exclusion would not be available if the liability was that of a Queensland judgment). It will not be necessary to resolve precisely what "in Queensland" applies to (this illustrates two common phenomena: (a) many complex sentences are replete with potential ambiguities, especially where the language is somewhat garbled and (b) very often, the issue presented in litigation may be determined without fully resolving all aspects of the meaning of the clause).
The second clause contains the words "only if". Those words connote a necessary condition. In that way the second main clause qualifies the first clause. The exclusion for defects liability is available to the insurer, in the case of Queensland, only if the circumstances in the second main clause apply.
The pronoun "it" in the second main clause departs from the ordinary English presumption that a pronoun refers to the most immediately preceding noun. The sense of the words necessarily means that "it" is a reference to the defect, not the Motor Vehicle.
The third clause is introduced by "whilst". For that reason, this clause also qualifies something. This clause also contains the pronoun "it". That pronoun refers to the "vehicle" two words earlier in the sentence, and the "vehicle" is a short-hand expression for the vehicle (that is, "Your Motor Vehicle" or "a Motor Vehicle") in which there is the defect which engages the exclusion.

[14]

The grammatical ambiguity of cl 2(b)(8)

The point of each of the second and third clauses is to qualify something. There can be no doubt that the second clause qualifies the first main clause, thereby narrowing the scope of the exclusion for defects liability. There can also be no doubt that the third clause also qualifies something. The question of construction is whether the third clause imposes a further qualification upon the first main clause, thereby shrinking still further the scope of the exclusion for defects liability. The other possibility is that the third clause imposes a further qualification upon the second clause, thereby narrowing the qualification effected by that clause, with the result of expanding the scope of the exclusion for defects liability.
Despite NTI's submissions to the contrary, the third main clause can, as a matter of grammar, qualify either of the preceding clauses. That is the nature of English language. It is common, but far from inevitable, for a clause to qualify the immediately preceding clause. Contrast "Let's go to the shop and buy that shirt while it's still on sale" and "Let's go to the shop and buy that shirt while it's still open". The first sentence is unremarkable. While the second sentence is a little awkward, it is not ungrammatical; English does not insist that the words "while it's still open" immediately follow the clause "Let's go to the shop". That said, the meaning of both those sentences is clear, but that is not because of their grammar, but because of their semantic content: it must be the shirt that is on sale, and the shop that is open.
For the purposes of the first example, I have put to one side the grammatical possibility that it is the shop, rather than the shirt, which is on sale. However, if there were evidence that the shop was itself on sale, and the conversation was between two friends of the vendor wanting to create an exaggerated appearance of trading in the presence of a potential purchaser, the words "while it's still on sale" might perhaps refer to the first clause. This simply illustrates that the meaning of language is inevitably contextual. I have mentioned Lord Hoffmann's view that "No one has ever made an acontextual statement", and the relationship between meaning and context, in Mainteck at [73]-[77], and there is no need to reiterate it here. The example demonstrates that seemingly clear language may, in the light of evidence as to context, be ambiguous. The same point was recently made by Barrett AJA in WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297 at [59], and I will return to it below.
The immediate point, however, is a simple one. It is that one cannot conclude, merely as a matter of grammar, that the third clause necessarily qualifies the second clause, and not the first clause.
It should not ordinarily be necessary to resort to formal authoritative works in order to identify the grammatical meaning (or meanings) of contractual language. Being able to use and comprehend the nuances of formal English is essential for any competent legal practitioner. What is more, it is well understood that competent speakers apply and understand the subtle rules of grammar even though they may not realise it (adjective order is perhaps the most familiar instance: no competent English speaker would report buying a "silk second-hand green shirt"). But if there were any doubt about the grammatical ambiguity of the first paragraph of cl 2(b)(8), one could resort to R Quirk et al, A Comprehensive Grammar of the English Language (Longman 1985) (as did the High Court in Chew v The Queen (1992) 173 CLR 626 at 630) and observe that those authors describe at p 1042 the phenomenon of structural ambiguity, when a complex sentence contains two final subordinate clauses: "If a complex sentence contains two final subordinate clauses ... the last subordinate clause may be interpreted as subordinate (a) to the sentence as a whole or (b) to the preceding subordinate clause. ... The same ambiguities may occur with phrases as well as clauses."
The authors provide the following examples of ambiguity where there are two subordinate clauses or phrases: "I'll let you know whether I'll need you when the doctor arrives. Doris watched her children doing their homework for a short time." That is precisely the essence of the grammatical ambiguity presented by cl 2(b)(8).

[15]

The use of commas and the word "but"

One way of resolving structural ambiguity is by the use of punctuation. But in my opinion the commas in this policy do not assist.
Commas can, of course, control meaning. But, as Toohey J said in Chew v The Queen (1992) 173 CLR 626 at 648, the fate of Sir Roger Casement is a salutary warning against attaching too much significance to punctuation. (Whether Casement's conviction was indeed due to a misplaced comma may be doubted, but that does not detract from the point Toohey J was making.) As earlier noted, NTI agreed with what was said in Mainteck at [105] that: "punctuation informs meaning, and on occasion, can do so influentially. 'Punctuation is a rational part of English composition, and is sometimes quite significantly employed', as Lord Shaw of Dunfermline noted in Houston v Burns [1918] AC 337 at 348. Punctuation is essential to an understanding of 'just, quick and cheap' in s 56(1) of the Civil Procedure Act (whose structure resembles the title of Lynne Truss' work Eats, Shoots and Leaves: The Zero Tolerance Approach to Punctuation (Fourth Estate 2009)). The placement of commas was significant in AMCI Investments Pty Ltd v Rio Doce Australia Pty Ltd [2008] QCA 387 at [31]. However a prerequisite to relying on punctuation is being satisfied that it has been used consciously and not haphazardly. As much is plain from the reasoning of McMurdo P in AMCI Investments, and from what was said by Brennan and Deane JJ in Chalmers Leask Underwriting Agencies v Mayne Nickless Ltd (1983) 155 CLR 279 at 286 and by Lord Phillips in Sammut v Manzi [2008] UKPC 58; [2009] 2 All ER 234 at [8]."
I reject NTI's submission that there is no ambiguity in cl 2(b)(8) insofar as it is based on commas. I am far from persuaded that the drafter used commas consciously and not haphazardly. The use of commas was plainly wrong in the same sentence. No competent English speaker could regard the commas in the exception as correct: the comma after "is" in "whilst such Motor Vehicle is, on land which is not designated as a road according to law, or in a public place" is on any view wrong. The primary judge was correct to say as much. There is misuse of punctuation elsewhere in the policy (for example, in exclusion 4(d) reproduced above).
I do not consider that the legal meaning can be regarded as unambiguous by reason of the comma before "but" when in the same sentence, commas have been inserted where they should not be, and elsewhere in the policy, commas have been omitted where they should have been inserted. I am strengthened in that conclusion by the less than perfect use throughout the contract of other formal matters (such as the failure to capitalise all defined terms - there are as noted above two references to "Motor vehicle").
I also reject NTI's submission based on the word "but". "But" is a natural conjunction to use in light of the fact that the necessary condition imposed by the second clause qualifies the scope of the exclusion in the first clause. But the use of "but" is neutral on the question which matters, which is whether the third clause qualifies the first or the second clause. That is, with respect, obvious once one parses the words which comprise the first paragraph of cl 2(b)(8).

[16]

The ambiguity is not resolved by meaning

As already observed, grammatical ambiguity may be and often is resolved by meaning. This reveals that there is not a sharp line dividing the threshold stage of ascertaining grammatical or literal meaning and the subsequent stage of determining legal meaning. However, generally it will be vital to bear in mind the range of potential meanings which the clause is capable of sustaining, and to have some appreciation for how natural or strained those potential meanings are, at the time one turns to the balance of the contract and the surrounding circumstances and purpose and object.
There is however a sharp distinction between giving legal meaning to a contractual provision, and applying that legal meaning to the facts in a particular case. It has long been established that extrinsic evidence may be adduced at the application stage, at least in some cases. This is what Isaacs J referred to in Bacchus Marsh Concentrated Milk Co Ltd (in Liq) v Joseph Nathan & Co Ltd (1919) 26 CLR 410 at 427 when speaking of adducing extrinsic evidence "not to alter the contract but to identify its subject". Latham CJ referred to "latent ambiguity" in construing a legacy "to my nephew John" where the testator had two nephews named John: Hope v RCA Photophone of Australia Pty Ltd (1937) 59 CLR 348 at 356-367.
There has been a debate whether the effect of what was said in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 concerning the "true rule" that "evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning". The position has now been clarified by the High Court's decision in Victoria v Tatts Group Ltd [2016] HCA 5; 90 ALJR 392, as was recently observed by Barrett AJA in WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297 at [59]: "the notion that it may first be necessary to consider context when construing a contract is not inconsistent with Mason J's 'true rule'. On this footing, it does not follow that the task of assessing whether a phrase or expression is ambiguous or susceptible of more than one meaning must be undertaken without regard to evidence of surrounding circumstances. This position corresponds with the approach of the High Court in Victoria v Tatts Group Ltd where the relevant contract was construed by reference to its text, context and purpose without any anterior finding of ambiguity as a precondition to a consideration of surrounding circumstances as an aid to discovering or elucidating context and purpose."
The same point was also made in Calvo v Ellimark Pty Ltd [2016] NSWCA 136 at [55] and in Todd v Alterra at Lloyds Ltd (2016) 239 FCR 12; [2016] FCAFC 15 at [73]-[75]. A different view was expressed by one member of the Victorian Court of Appeal in Apple and Pear Australia Ltd v Pink Lady America LLC [2016] VSCA 280 at [91]-[138]. However (presumably because the hearing of that appeal predated it) no reference was made to Victoria v Tatts Group Ltd, and there is thus little to be gained from analysing that reasoning in any detail. Of course, on no view does it follow that the evidence of surrounding circumstances will be of assistance and therefore ultimately relevant: evidence of surrounding circumstances did not assist in Mainteck and in WIN Corporation. It is true that this may in some cases lead to an expansion of the evidence tendered on an issue of construction, although ordinarily it may be expected that parties will confine their tender to material which will bear on the meaning of the contract. Indeed, a party seeking to tender a document as evidence of surrounding circumsances and for no other purpose ought to be able, readily and precisely, to identify how it is said that its reception will bear on the process of ascertaining the legal meaning.
But this is not a case where there is any legal difficulty - whatever view be taken of Codelfa and ensuing decisions - in resorting to evidence of matters extrinsic to the contract. Indeed, it is not even a question of evidence. The only question raised by the parties is whether regard may be had to the legislation governing compulsory motor vehicle insurance, as to which evidence is not necessary: Evidence Act 1995 (Cth), s 143(1)(a) read with s 5. As will be seen below, binding authority requires regard to be had to that legislation.
The more natural reading of the words, as a matter of English, is that for which NTI contends. That follows from the semantic connection between "loss of control" in the second clause and the vehicle "being driven" in the third clause. It also accords with the more regular pattern of grammatical structure, whereby a qualifying clause qualifies that which immediately precedes it. But that does not mean that the legal meaning of the clause is as NTI contends. No differently from many complicated English sentences, there are a number of grammatical meanings to cl 2(b)(8), only one of which can be its legal meaning. The legal meaning is not inevitably the most natural literal or grammatical meaning. This is why it is essential to have regard to context and purpose.
But it is necessary to do so appropriately. Mr Popovic and Calabro contended that there were many ambiguities elsewhere in the contract ("there's a raft of ambiguities" and "it's patent in my respectful submission that there are ambiguities all over the place"). That is undoubtedly so, but it is not to the point. Ambiguities asserted to exist somewhere else in the contract do not much assist construing cl 2(b)(8). Nor is it necessary to resolve all aspects of cl 2(b)(8) (notably, the words "or in a Motor Vehicle" or the true meaning of the exception). The point is made by Professor Carter: "It is also obvious that, in engaging in construction, a court does not always determine the full scope of the words at issue. All that is required is a solution to a particular problem or set of problems. The only relevant purpose lies in resolving the particular dispute": J Carter, The Construction of Commercial Contracts (Hart Publishing, 2013), p 11.
However, regard may be had to the balance of the contract to identify matters which bear directly upon the nature of the grammatical ambiguity in cl 2(b)(8). Thus one may look elsewhere in the clause, and in the contract, to see that commas have been placed haphazardly, and on at least one occasion incorrectly.

[17]

The determination of legal meaning

I also reject NTI's submission that it was not necessary to address the legal meaning for which it contended. NTI's "barren exercise" submission amounted to asserting that the construction upheld by the primary judge was strained, and unduly influenced by a finding of ambiguity, and that because the accident did not happen in Queensland, there was no occasion to consider how the clause would apply to an accident in Queensland.
That is not how the legal meaning of a contract is determined. Nor is it supported by the passage from Professor Carter's work reproduced above. Where there is more than one available legal meaning, a court looks at the text, context and purpose, with a view to determining which potential meaning best accords with those considerations. Sometimes, text, context and purpose all point in the same direction, and all support the same conclusion as to the legal meaning of the contractual provision; that was the case in Victoria v Tatts Group Ltd [2016] HCA 5; 90 ALJR 392 at [51] and [75]. Sometimes, as here, text, context and purpose point in different directions. But it remains necessary to assess the potentially available legal meanings against those matters. I sought to describe this in HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342 at [134]: "it is trite that the contract must be construed as a whole, with a view to the legal meaning reflecting a measure of internal coherence: thus 'preference is given to a construction supplying a congruent operation to the various components of the whole': Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16]. In a case such as the present, where the difficulties are real, that involves what Lords Neuberger and Mance have described as an 'iterative process' - 'checking each of the rival meanings against the other provisions of the document and investigating its commercial consequences': see Re Sigma Finance Corp (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571 at [12], and see Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 at [28] and Richmond v Moore Stephens Adelaide Pty Ltd [2015] SASCFC 147 at [98]. Lord Grabiner has, in my view rightly, regarded this as 'fundamental': 'The iterative process of contractual interpretation' (2012) 128 Law Quarterly Review 41 at 45-49 and 61. The process of working through the consequences of the competing literal or grammatical meanings enables a court to assess whether either party's preferred legal meaning gives rise to a result that is more or less internally consistent and avoids commercial absurdity."
Assistance may be obtained from the reasons of Mance LJ, as he then was, in the following passage from Gan Insurance Co v Tai Ping Insurance Co Ltd (No 2) [2001] EWCA Civ 1047; [2001] 2 All ER (Comm) 299 at [16], in a passage quoted by a unanimous United Kingdom Supreme Court in Rainy Sky SA v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 at [26]: "in my judgment the subclause has no very natural meaning and is, at the least, open to two possible meanings or interpretations ... In these circumstances, it is especially important to undertake the exercise on which the judge declined to embark, that is to consider the implications of each interpretation. In my opinion, a court when construing any document should always have an eye to the consequences of a particular construction, even if they often only serve as a check on an obvious meaning or a restraint upon adoption of a conceivable but unbusinesslike meaning. In intermediate situations, as Professor Guest wisely observes in Chitty on Contracts (28th edn) vol 1, para 12-049, a 'balance has to be struck' through the exercise of sound judicial discretion."
In contrast with the clause considered by Mance LJ, based on the language alone, cl 2(b)(8) does have one more natural potential meaning, and one less natural potential meaning. But that does not mean that one disregards context and purpose. Binding authority, culminating in Victoria v Tatts Group Ltd, is to the contrary.

[19]

Regard may be had to legislative context

Contrary to NTI's primary submission, regard may be had to the legislative context in which the policy was written. There are at least two reasons why this is so.
First, the contract is to be construed as a whole, such that the scope of exclusion cl 2(b)(8) falls to be considered in light of the other exclusions. One of those exclusions is cl 2(b)(4). Another is the legislative regimes in exclusion cl 2(b)(7). Only by having regard to those regimes may the content of those exclusions be determined.
Secondly, having regard to the legislative context accords with what was said by Gleeson CJ in McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22], applied by Gleeson CJ, McHugh, Gummow and Hayne JJ in Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [15]: "A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure." [Citations omitted.]
As the High Court said in Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at [82]: "It was necessary to construe the [contract] so as to avoid it making commercial nonsense or working commercial inconvenience. Its commercial purpose - the purpose of reasonable persons in the position of TOC and the plaintiff - was relevant. That, in turn, required attention to 'the genesis of the transaction, the background, the context, the market' in which the parties were operating, as known to both parties." [Citations omitted.]
To similar effect, Allsop CJ and Gleeson J in Todd v Alterra at Lloyd's Ltd (2016) 239 FCR 12; [2016] FCAFC 15 said at [42]: "the policy is to be given a businesslike interpretation, paying attention to the language used by the parties in its ordinary meaning, and to the commercial, and where relevant, the social purpose and object of the contract, in the context of the surrounding circumstances, including the market or commercial context in which the parties are operating, by assessing how a reasonable person in the position of the parties would have understood the language." The third member of that Full Court, Beach J, wrote to substantially the same effect at [76], although emphasising the commercial as opposed to the social purpose or object.
The commercial purpose or object is that a fleet owner or operator wished to obtain motor vehicle insurance in Australia, where there is compulsory statutory third party motor vehicle insurance in all States and Territories. The existence of such cover is express in NTI's policy, in exclusion cl 2(b)(4). It is clear that the commercial purpose or object is not to achieve double insurance, but rather to supplement the compulsory statutory cover in cases to which it did not extend.
To the extent that NTI contended that it was necessary first to identify ambiguity before resort could be had to the legislative context against which NTI's policy was written, I reject the submission. In part, that submission relied on Professor Clarke's book. Professor Clarke's well-regarded book is predominantly written for an English audience. It would therefore be surprising were he to express a view which ignored the familiar developments associated with Prenn v Simonds [1971] 1 WLR 1381 and Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896. And indeed, the passage relied on by NTI (at p 444) was taken out of context. In the preceding pages, Professor Clarke addressed those developments, and in some detail, a few pages before the extract on which NTI relied, commencing with the following: "However, today it is well established that, before the process of construction can begin, the context 'must always be identified and considered' and it is 'wrong to say that the court may only resort to evidence of the contractual scene when an ambiguity has arisen'. All this is the result of the statement of the law by Lord Hoffmann in ICS." [Page 431, citations omitted.]
The passages illustrate that the "genuine ambiguity" that is required before applying the contra proferentem maxim is different. It was to that requirement that Professor Clarke had been referring, not a more general requirement for there to be ambiguity before resort could be had to context. I return to this below.
Given the references to Queensland, and the textual resemblance between parts of cl 2(b)(8) and Queensland legislation, it is convenient to turn to the position in Queensland immediately.

[20]

Queensland compulsory third party insurance

The words in the second clause "in Queensland only if it causes loss of control of the vehicle whilst it is being driven" match, almost precisely, the words in s 5(1)(a)(iv) in the Motor Accident Insurance Act 1994 (Qld). 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 ..."
The delineation of when the Queensland Act applies is critical to the operation of the statutory policy of insurance. Section 5(1) identifies prima facie necessary and sufficient conditions for the application of the Act and, therefore, the extent of the statutory policy of insurance (see s 23(1)(a) and cl 1(3)(a) of the Schedule).
Section 5 is not without its difficulties. Although subsection (1) states necessary and sufficient conditions for the Act applying, subsection (2) imposes a further requirement in the case of unregistered vehicles, and subsection (3) provides a further exclusion in the case of specified other classes of vehicles (irrespective of whether or not they are registered). In other words, the presence of subsections (2) and (3) inevitably detracts from the necessary and sufficient conditions identified in subsection (1). It will be seen that had the New South Wales approach of identifying necessary conditions, rather than necessary and sufficient conditions (that is to say, the language of "only if", rather than "if and only if") been followed, this difficulty would not arise. I mention this because although the Queensland legislation is drafted in terms of necessary and sufficient conditions ("if and only if), exclusion cl 2(b)(8) uses very similar language but employs a necessary condition ("only if").
The interrelationship of subsections 5(1), (2) and (3) may not be the only difficulty in construing subsection (1). On its face, paragraph (a) of subsection 5(1) is satisfied when any one or more of the subparagraphs is satisfied.
Unlike in New South Wales (see below), it would appear that in Queensland only a limited class of injuries caused where the motor vehicle contains a defect is covered. Injury where a defect causes loss of control of the vehicle while it is being driven is within the scope of the Queensland Act and therefore covered by the statutory policy. However, injury where a defect does not cause a loss of control of the vehicle while it is moving is more complicated. Such injury is outside the scope of subpar (iv). It may or may not be outside the scope of the Queensland Act and therefore outside the scope of the statutory policy. That will depend on (a) whether any of the other disjunctive subparagraphs are engaged, and (b) the construction of the Act.
Take a simple example. A vehicle is being driven through an intersection, but one of its passengers is wearing a defective seatbelt. Another vehicle wrongly enters the intersection and collides with the first vehicle. The passenger is injured as a result of the seatbelt failing. Plainly enough, the injury is caused by a wrongful act of the driver who wrongly entered the intersection. Plainly enough, the injury is a result of a collision. But does the Act not apply because the injury is also a result of a defect which did not cause loss of control of the vehicle, and is therefore outside of subpar (iv)?
Read literally, the necessary and sufficient conditions are disjunctive, and so the Act applies because s 5(1)(a)(ii) is satisfied. But if that is the proper construction of the Act, what is the content of subpar (iv)? Subparagraph (iv) contains two qualifications ("causing loss of control" and "while it is being driven").
Difficulties similar to that posed above were considered in Nominal Defendant v Duntroon Holdings Pty Ltd [2008] 2 Qd R 465; [2008] QCA 183, and it is not my intention to express any concluded view on how that aspect of the section applies (aside from anything else, this was not the subject of argument), save for one thing.
It is clear that the words "while it is being driven" in s 5(1)(a)(iv) are tied to defects which cause loss of control. Thus, each of the circumstances in subpars (i), (ii), (iii) and (iv) turns upon a vehicle which is moving, except where another vehicle collides with a stationary vehicle.
Subsection 5(3) broadly says that the Act does not apply to injury involving specified items of machinery unless the injury occurs on a road. Plainly there is some link between that subsection and the exception in cl 2(b)(8). However, why the enumerated lists of machinery differ, and why the exception refers to a place which is neither a road nor a public place, is unclear.

[24]

Arguments not advanced

I note for completeness three arguments not advanced by the parties. One argument is in favour of the construction preferred by NTI. It is that the Queensland statute speaks in terms of a vehicle defect "causing loss of control of the vehicle while it is being driven". Since that is (it may be inferred) the source of the wording in the exclusion, why, it might be asked, should a construction be adopted which severs the link between "loss of control" and "it is being driven"?
But I do not think that that consideration goes very far. If there had elsewhere in the clause been a careful or conscientious following of the Queensland statute, so as to delineate an additional class of liability outside compulsory third party claims, it would have more force. But NTI's policy departs, in the ways identified above, from the legislative text (in particular, introducing a test of "only if" rather than "if and only if", altering the list of mobile machinery, and introducing a "public place" element).
Secondly, the primary judge referred at [192] to a submission made at trial, based on the differently worded cl 2(b)(8) of NTI's Commercial Motor Vehicle Policy, which much more naturally bears the legal meaning for which Mr Zhang contends. Her Honour rejected the submission. In the absence of a notice of contention, regard may not be had to that wording, and so there is no occasion to consider whether that other policy is something to which regard could be had.
Thirdly, if on one construction cl 2(b)(8) had no work to do, in light of the other exclusions in the policy, that would be a powerful reason to reject such a construction. I have considered whether, assuming that cl 2(b)(8) is only available when a vehicle is being driven, it provides a basis for NTI to exclude liability in respect of a New South Wales accident over and above the other exclusions, notably, cl 2(b)(4). The position appears to be that it does. That is because exclusion cl 2(b)(4) permitted NTI to deny cover for accidents only if the injury was "a result of and [was] caused … during: (a) the driving of the vehicle" (s 3A(1), New South Wales Act), whereas cl 2(b)(8) is expressed more broadly. It permitted NTI to deny cover for any liability for bodily injury "arising out of or in any way connected with a defect [in the motor vehicle] … whilst it is being driven". The broader words of causality mean that there is work for cl 2(b)(8) to do.
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2005) 221 CLR 568; [2005] HCA 26 provides authoritative guidance as to the meaning of s 3A of the New South Wales Act (see also Leach v The Nominal Defendant (QBE Insurance (Australia) Ltd [2014] NSWCA 257 at [40] and [81]). In Allianz, Gummow, Hayne and Heydon JJ distinguished between the terms "a result of" and "is caused", saying (at [94]): "One criterion is that the injury be sustained during certain events, including the driving of the vehicle ... . The other criterion is that the injury be sustained as a consequence of those events. The phrase 'a result of' is linked to the first or temporal criterion; the phrase 'is caused' is linked to the second criterion."
The textual difference may readily be seen to have practical consequences. Suppose a truck with a large trailer was slowly reversing into a parking spot at a loading facility, while at the same time two employees of the owner of the truck were standing on the trailer preparing to unload cargo. Suppose further that a defect in the trailer, unrelated to the motion of the vehicle, causes some of the cargo to fall from one of the containers on top of an employee, causing bodily injury. Although the vehicle was being driven at the time, the injury was not caused by the driving of the vehicle. In these circumstances, it appears the claim would not be "in respect of which insurance is required" under the New South Wales Act, and so cl 2(b)(4) would not exclude liability NTI's liability to provide coverage. However, cl 2(b)(8) would appear to exclude NTI's liability because the injury "arose out of or was in any way connected with a defect" whilst the vehicle was being driven.
That is sufficient to establish that the construction favoured by the primary judge does not lead to cl 2(b)(8) having no work to do in the case of a New South Wales accident. I also agree with what Sackville AJA has written concerning the operation of these clauses to liability which is outside the scope of the New South Wales compulsory third party scheme.

[25]

Conclusions on construction of cl 2(b)(8)

NTI's construction is the more natural reading of the clause, as a matter of ordinary English. However, the Court is faced with a complex clause which is imperfectly drafted. "In Queensland" is clumsy. The punctuation is plainly erroneous, and cannot in my opinion be relied on to resolve the grammatical ambiguity. The construction upheld by the primary judge is a little awkward, but in my opinion it is an available construction. It is not precluded, either as a matter of grammar or semantics.
I turn to purpose. Plainly the policy provides cover beyond the compulsory third party policies required by statute. Plainly cover for third party liability during loading and unloading - something not ordinarily covered by compulsory third party policies - was one aspect of the liability which was insured by cl 2(a)(2).
Where two meanings are open, "it is proper to adopt that meaning that will avoid consequences that appear irrational and unjust": Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 350 (Gibbs J). The same judge also said that "in the event of an ambiguity in the instrument it is proper to give it a construction that would avoid irrational consequences that it is unlikely that the parties intended": Distillers Co Bio-chemicals (Australia) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 at 11. Those principles were applied, in construing an exclusion in an insurance policy, by Gobbo J, with whom Murray J agreed, in Carlingford Australia General Insurnace Ltd v EZ Industries Ltd [1988] VR 349 at 352-353.
To similar effect is the rule stated by Gibbs J in Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99 at 109: "if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious or the most grammatically accurate'".
Although Gibbs J was in dissent, the rule is well-settled: see for example Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 at [69]). As McColl JA there observed, "[t]he court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust". The question is always one of construing the contractual text, having regard to context and purpose. There will inevitably be questions of judgment as to what is impermissible rewriting and what is orthodox preference between two constructions both of which are open.
NTI's construction leads to a result which may fairly engage those principles based on irrationality and capriciousness. Injury caused by a defect in the vehicle when stationary in Queensland is not excluded by cl 2(b)(8), because on any view the second and third clauses of the exclusion are satisfied, and they subtract from the scope of the first clause. Why if NTI's construction be correct does the policy operate so differently in Queensland, as opposed to the rest of Australia?
NTI, because its submissions focussed on text and because it considered the part of the clause following "but in Queensland" (which is to say, the majority of the clause) to be a "barren exercise", advanced no commercial purpose that was served by such a divergent operation of the clause in Queensland as opposed to in New South Wales.
It is true that compulsory third party liability in Queensland, insofar as there is a vehicle defect, is somewhat different in Queensland from New South Wales. The drafting has obviously been influenced by the Queensland legislation, but has departed from the Queensland legislation in ways that are unexplained (in the list of machinery, the use of "only if" rather than "if and only if", and the introduction of "public place"). But there is nothing like the difference in legislative regimes to approximate the profound difference in legal meaning of the clause between Queensland and New South Wales.
In short, I can conceive of no sensible purpose served by a construction of a fleet motor policy which excludes stationary defect liability throughout Australia, except in Queensland. There seems no sensible reason based in the different statutory regimes for NTI's policy to respond to Mr Zhang's accident had it occurred in Queensland, but not to respond if it occurred in New South Wales, given that the compulsory third party insurance in neither place applies.
Conversely, the construction favoured by the primary judge produces a result which is less divergent between Queensland and the rest of Australia. It accords with the slightly more restrictive compulsory coverage in Queensland where there is a defect. It avoids the capriciousness and arbitrariness of different results for something which was squarely within the insuring clause, namely, liability when the vehicle is stationary and being loaded or unloaded. It is a result which is commercially sensible. It still leaves work for the clause to perform in the case of an accident in New South Wales. It is consistent with what was said by Gibbs CJ in Australian Casualty Co Ltd v Federico (1986) 160 CLR 513 at 520: "As in the case of any other commercial contract, a court may depart from the strictly literal meaning of a particular expression to place upon it an alternative construction which is more reasonable and more in accord with the probable intention of the parties if the words will bear that construction."
For those reasons, I think that the primary judge was correct to conclude that considerations of context and purpose outweigh the most natural textual meaning of this poorly drafted clause.

[26]

Contra proferentem

A further matter strengthens my conclusion that the construction adopted by the primary judge is the legal meaning of cl 2(b)(8).
All parties proceeded on the basis that cl 2(b)(8) was to be construed as an exclusion, rather than an inherent restriction upon the nature of occurrences to which the policy responded. That common approach appropriately focussed upon the substance of the matter, rather than the formal distinction that cl 2(b)(8) fell within section 2(b) as one of the classes of liability which the insurer "will not pay", as opposed to the "Exclusions" listed on pp 4 and 5 of the policy (which also used the language "will not pay"). I think that is right especially since the language of "will not pay" is the same whether or not the clause is located in the section of the policy described as "Exclusions".
As an exclusion clause, her Honour was with respect correct to apply the principles stated in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510: "[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."
It was not suggested that the proposition from Darlington was other than good law. Nor did NTI contend that anyone other than NTI had put forward the wording of cl 2(b)(8).
Outside the special area of contracts of guarantee, the rule is one of last resort: Rava v Logan Wines Pty Ltd [2007] NSWCA 62 at [53]-[56]; G L Nederland (Asia) Pty Ltd v Expertise Events Pty Ltd [1999] NSWCA 62 at [27]. For that reason, in Beefeater Sales International Pty Ltd v MIS Funding No 1 Pty Ltd [2016] NSWCA 217 at [66], Bathurst CJ stated that the rule would apply "only when ambiguity remains after all other avenues of construction have been exhausted". It was in this context that Professor Clarke required there to be "genuine ambiguity", or what the Court of Appeal, in a judgment delivered by Mance LJ, described as "real ambiguity": Dodson v Peter H Dodson Insurance Services [2001] 1 Lloyd's LR 520 at 531. I understand these to be merely different formulations of the same legal principle. If after ascertaining the literal or grammatical meanings and evaluating them against the text, context and purpose of the contract, there is still real doubt, then a clause is to be construed against the person who drafted it.
It is not necessary for me to rely upon this maxim, because I would reject NTI's construction for the reasons already given. However, were I wrong about that and those reasons were insufficient, then I think that this would be a case where there is the requisite genuine ambiguity, because there are two competing legal meanings, one of which is supported by textual considerations, the other by contextual and purposive considerations.

[29]

NTI's submission that Mr Popovic was not liable

NTI also sought leave to appeal from the characterisation by the primary judge of the relevant risk of harm, her Honour's finding that Mr Popovic had breached his duty of care, and her Honour's failure to find that there had been a sudden and unexpected defect in the weld. These were proposed grounds 4, 5 and 6 of the draft notice of appeal.
The primary judge found that Mr Popovic had been told by his employer, as part of his training, not to walk underneath the ramps. NTI accepted that finding.
These proposed grounds spawned satellite issues of some complexity, arising out of the fact that Mr Popovic did not himself seek leave to appeal from the judgment against him.
ROC maintained that, in the absence of any appeal by Mr Popovic, NTI was not permitted to submit that Mr Popovic was not liable to Mr Zhang, lest there be inconsistent judgments. For its part, NTI maintained that Mr Popovic, having not sought leave to appeal, was estopped, in accordance with Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 from bringing any appeal in the future.
Once again, in order to resolve this issue, it is convenient to return to first principles.
First, although judgments were entered against Mr Popovic and NTI, NTI's appeal required leave, because the order appealed from was interlocutory: Computer Edge Pty Ltd & Suss v Apple Computer Inc (1984) 54 ALR 767. As Gibbs CJ, with whom Murphy and Wilson JJ agreed, said of the position in that case, it was interlocutory "because it left undetermined the question whether any, and what, damages were payable". A judgment in a sum to be determined is regarded as an interlocutory order for the purposes of any appeal: Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [73]; Allianz Australia Insurance Ltd v Haddad [2015] NSWCA 186 at [1].
Secondly, a party need not appeal from an interlocutory judgment, but can wait until and unless final judgment is entered against it. Then, in an appeal as of right, it may generally appeal against any interlocutory order which affected the final result: Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 at [6]-[8]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [78]. (To that general principle, there are some exceptions, which need not presently be addressed.)
This has been settled for many decades. The contrary submission was roundly rejected by the Privy Council in Maharajah Moheshur Sing v The Bengal Government (1859) 7 Moo Ind App 283 at 302 and Sheonath v Ramnath (1865) 10 Moo Ind App 413 at 423. The latter advice said that the appellant "was not bound to appeal against every interlocutory order which was a step in the procedure that led up to the award". Both Privy Council decisions were applied by the High Court in Crowley v Glissan (1905) 2 CLR 402 at 404. More recently, Smith v Tabain (1987) 10 NSWLR 562 was on all fours with the present case. There had been separate trials on liability and quantum. The plaintiff obtained a verdict in his favour in 1985 after the first trial and a judgment was entered in his favour for $306,365 in 1986 after the second trial. The defendant's appeal contained grounds challenging both liability and damages. The plaintiff's objection to the competency of the appeal insofar as it challenged the verdict on liability was dismissed. All those cases were referred to in Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 at [4]-[5] and [43]-[51]. Those five decisions by no means exhaust the appellate authority on point.
Thirdly, I doubt that the decision of another party to bring an interlocutory appeal could bring about the result that a party is estopped from exercising a right of appeal if and when a final judgment is ordered against that party. The position is a fortiori when that other party has only been joined because it has wrongly declined cover to its insured. To the contrary, that might be a matter tending against the grant of leave. As it happens, in the present case no further steps appear to have been taken to progress the balance of the litigation, so as to quantify Mr Zhang's judgment. But there may be cases where the undetermined balance of the underlying proceedings has not been stayed. Such cases suggest that the proposition for which NTI contends is one that could operate harshly.
It is not necessary to express a concluded view on these issues, which were not in any event the subject of full submissions, because these proposed grounds of appeal may be dealt with concisely.
The entirety of NTI's written submissions on these grounds was contained in two paragraphs. NTI maintained that the correct risk of harm was the risk that the weld holding the clevis mount in place would fail causing the ramp to fall. NTI said that that risk was not foreseeable to someone in the position of Mr Popovic. Moreover, NTI said that there was no breach by Mr Popovic in allowing Mr Zhang to remain under the ramp, because (a) it was not clear that Mr Zhang understood sufficient English to obey any warning, (b) Mr Zhang had only been under the ramp for a matter of seconds, and (c) the warning which Mr Popovic had been given to stay away from under the ramps related to their orderly operation, rather than any sudden failure.
These submissions are readily rejected. The primary judge considered that the appropriate risk of harm was that the ramp would fail causing injury: at [136]. NTI's characterisation, which focusses upon the cause of the particular manifestation of a risk of harm, namely, the failure of the weld, is unduly narrow and appears to rely upon a hindsight approach to the question. It suffers from the defect to which Sackville AJA referred in Port Macquarie Hastings Council v Mooney [2014] NSWCA 156; [2014] Aust Torts Rep 82‑172 at [67]: the risk of harm is "not confined to the particular hazard that caused the respondent to suffer an injury."
Once it is seen that there is no error in the formulation of risk of harm, it is plain that the risk was foreseeable to Mr Popovic, particularly in circumstances where, as the primary judge held, although Mr Popovic "knew that there was a problem, he nonetheless permitted [Mr Zhang] to stand under the ramp and enlisted his help in the task of raising the ramp": at [134].
As for NTI's submissions based on breach, there is nothing in the submission based on Mr Zhang's proficiency in English. Non-verbal warnings may be (and very commonly are) given to avoid a person stepping into a position of danger. The fact that Mr Zhang was underneath the ramp for a relatively short time before it fell is not to the point when it is clear that Mr Popovic enlisted his aid to attempt to lift the ramp. The fact that Mr Popovic had been warned to stay away from the ramp in general terms did not excuse him from permitting Mr Zhang to stand under the ramp "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", as the primary judge found at [135].
In oral submissions, NTI advanced a further point based on causation. NTI submitted: "What her Honour found was that Mr Popovic was aware that the system wasn't operating properly, because the evidence demonstrated, as your Honours will be taken to in greater detail, that he used to manually push the ramp or pull it with the chain and he had Mr Zhang, the first respondent on this occasion, endeavouring to assist him with that task. This all happened instantaneously and we submit that that does not satisfy the connection required under s 5D. Those are the only submissions I wish to make about that, your Honour, apart from what we said in writing."
There is nothing in that point, either. This was not a case where the ramp fell upon Mr Zhang without warning. Mr Popovic knew there were problems with the ramp, which was why he had asked Mr Zhang to assist lifting it.
There is nothing in these proposed grounds. The lack of time devoted to them, both in writing and orally, is reflective of their absence of merit. I do not consider that leave should be granted to agitate them.

[32]

Mr Zhang's alternative case against ROC

The primary judge framed the alternative case as follows at [150]: "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."
Her Honour rejected this case. Her Honour considered that ROC did not owe a duty to perform work beyond its retainer. Her Honour did find that the duty of care ROC owed to Interfreight required it to inspect the clevis mounts, and if it noticed anything untoward about their welding, to report this to Interfreight and not to proceed with the job. However, her Honour considered that absent any visible deficiency, that duty would not have been breached. And, dispositively for the alternative case, her Honour was not satisfied that the Mr Zhang had shown that there was anything to give rise to a concern about the condition of the weld in August 2006, some 13 months before it failed.
Her Honour also concluded that Mr Zhang had failed to establish that any breach by ROC caused the accident in September 2007. Her Honour observed that there was a "real possibility" that the strength of the weld was compromised by the accident in August 2007, when reinforcing plates were installed around the right clevis mount. Her Honour observed that it was possible that the left clevis mount was rewelded then, and that Mr Tabuso had failed to provide a credible account for the bracket on the right mount. Her Honour concluded at [160] that: "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."
Her Honour also rejected a claim based on a breach of the term implied by s 74 of the Trade Practices Act 1974 (Cth). No appeal was brought from that aspect of her Honour's decision.

[33]

Mr Zhang's appeal

Mr Zhang advances five grounds of appeal. All were confined to a challenge to the rejection of Mr Zhang's secondary case. None was directed squarely at the adverse finding of causation. However, Mr Zhang's written submissions challenged that aspect of her reasoning, and ROC did not object to this expansion of the case.
Grounds 1, 2, 3 and 5 were directed to breach. Ground 1 was that her Honour erred in holding that, absent any visual deficiency in the weld, ROC was entitled to assume that the clevis mounts were sufficient to support hydraulic rams. Ground 2 was that her Honour should have found that the size of the clevis mounts was such that they needed strengthening or bracing. Ground 3 was that her Honour should have held that ROC had a duty to take reasonable care to strengthen or brace the clevis mounts, or alternatively to advise that that be done. Ground 5 was that her Honour should have held that ROC was negligent in using the existing clevis mounts because they were unsuitable and needed to be strengthened or changed to a stronger, more robust, type.
Some attention was given in submissions to how these points were far from the forefront of Mr Zhang's pleading. That said, ROC properly accepted that the way it was now contended that ROC was liable was at least obliquely raised in the pleadings. Moreover, Mr Zhang's opening submissions put the secondary case as follows: "In any event, ROC's outline ignores the plain implications of the fact that ROC installed the hydraulics, incorporating the use of the clevis mounts where they were, whether welded into position by ROC or anyone else. The evidence can be expected to be that the clevis mounts needed to be made more robust. It was for ROC, if installing the hydraulics in a proper and workmanlike manner, to do that."
Further, an affidavit sworn by a solicitor acting for ROC in an interlocutory application had identified as one of the three ways in which the case was put against it as "performing work on the trailer using an existing metal bracket which was inadequate". I would not regard the case sought to be advanced by Mr Zhang on appeal as foreclosed as being outside the pleadings or outside what was understood by the parties to be in issue. (To be fair, I do not consider that Mr Cavanagh, who appeared for ROC at first instance and on appeal, submitted that it was.)
Although the case that installing hydraulic rams on the clevis mounts was of itself negligent fell within the pleadings and the way the trial was opened, it was not squarely put by, or to, one of the experts that it was per se negligent to use the existing clevis mounts to support the hydraulic ram installed by ROC. There were however suggestions to that effect in the evidence.
There was also evidence from one of the two men who ran ROC, Mr Adrian Hall, which reflected the primary challenge which was made at trial: Q. Mr Hall, what I'm asking you is even if the welding had looked all right, with the mounts of the size they were, and positioned as they were, the only way you could confidently send the trailer back to the customer on the basis that the integrity of the connection would remain indefinitely and certainly longer than 13 months, would have been to strengthen them in some way? A. If they were the mounts, yes. ... Q. What do you mean by that? A. What I'm trying to say is the pictures I saw of the mount are not done with a MIG welder. They look like they were done with a stick welder. ... Q. The way to confidently send the thing back to the customer, so it would survive in ordinary use for much longer than 13 months, was to strengthen the mounts, wasn't it? A. Yes, yes."
The first two answers reproduced above reflected the witness' position that the mounts had been rewelded sometime in the 13 months between ROC's work and the accident. There was an application, to strike out the second answer, which mentioned the type of welding, but the evidence was admitted.
The evidence which supported that position, and which was ultimately supportive of the trial judge's rejection of Mr Zhang's primary case against ROC included (a) the hydraulics as well as the ramps themselves had been removed when the truck went through an RTA inspection centre around one month after ROC had done the work, (b) the right hand clevis mount had been involved in an accident, so much so that it had been strengthened by installing a brace, and (c) the nature of the welding, which, on the day of the accident, was irregular.
I consider that there was a basis in the evidence for finding that it would have been desirable for ROC to have advised that if the clevis mounts had been in place when the trailer was in ROC's workshop, then ROC should have advised that they were unsuitable, or alternatively strengthened them in some way before fitting the hydraulic rams to them.
That case would have required the primary judge to make a positive finding as to the mounts which were in place when ROC installed the hydraulics. That in turn gives rise to a problem on this appeal. This is a case where a small part of the plaintiff's alternative case has been the subject of exclusive focus on appeal. That is a recurring phenomenon in appeals, and it is important to bear in mind when assessing whether a case has been made out, and whether additional findings should have been made, whether such a case was squarely advanced before the primary judge: cf Murray v Sheldon Commercial Interiors Pty Ltd [2016] NSWCA 77 at [64].
All of that said, the appeal may and therefore should be resolved on the basis of causation. Paragraph 160 contained the reasoning of the primary judge on causation: "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."
In his written submissions, Mr Zhang had contended that the primary judge had erred in concluding that he failed on causation. He submitted that there was error in treating the matters on which the primary judge relied as more than speculation. He submitted that those matters "could not amount to probabilities or considerations of equal causal strength to the shortcoming of [ROC] in using inadequate clevis mounts". He submitted that it was "speculative and unsupported by evidence to suggest that anything happening to the other side of the trailer (the right clevis mount) affected the side involved in [Mr Zhang's] accident". He also submitted that if the left clevis mount had been rewelded when the right side was strengthened, that did not gainsay that the clevis mount needed to be stronger.
At all times, the onus lay upon Mr Zhang to establish any fact relevant to the issue of causation: Civil Liability Act 2002 (NSW), s 5E. That required showing that the failure by ROC to redesign the mount, or warn that the mount was incapable of supporting the hydraulic system, was a necessary condition of the occurrence of the harm, viz, the injury sustained by Mr Zhang some 13 months later.
No expert was asked to assume that the bracket had been properly welded, and to express the opinion that the design was so poor that the hydraulic ram would fail within the lifetime of the trailer if it was attached to that mount.
The difficulty facing Mr Zhang's submissions was put as follows in oral submissions: "Let's assume for the purpose of the argument that we owed a duty to do more than we are retained to do, we owed a duty to redesign or put bracings on these clevis mounts. On the evidence, her Honour would not have been in a position, in our submission, to find that if that had occurred the accident wouldn't have occurred, because there's so much uncertainty as to what happened to the back of the trailer and the clevis mounts and when they were re welded and what happened to the trailer in the intervening time. My learned friend would have to ask the Court to infer that, well, if there'd been brackets there, none of that would have occurred. That is, and also even though the welding might have failed if there had been a bracket, the accident wouldn't have occurred. If he was going to run that argument, with respect, he would need to put to an expert please assume that what happened was that sometime between August 2006 and the time of the accident in September 2007, something happened to this clevis mount which involved re welding. Then assume that the weld, the failure occurred through the welding. If there'd been a bracket there, would the accident have been prevented? He didn't raise that. It's not been raised and therefore causation has not been established."
There was no substantial response to the submission, save to say that given that it was agreed that the work should have lasted for the life of the trailer, it was a long bow to say there was no case on causation.
It was for Mr Zhang to make out his case in relation to all aspects of causation. The primary judge expressly resolved causation on the basis of a failure to be satisfied that Mr Zhang had done so. Her Honour was confronted by a witness (Mr Tabuso) who had lied about who had done the work upon the trailer, in a self-interested way once he appreciated that NTI was denying cover. And it is a remarkable thing that the trailer was in a collision a month prior to the accident which injured Mr Zhang, and as a result of that collision the clevis mount which did not fail was strengthened. It is of course possible that the accident damaged only the right side of the trailer, but "rear-end" accidents commonly damage the entirety of the rear of a vehicle.
In the circumstances, I consider that it was open to her Honour not to be satisfied that Mr Zhang had discharged the burden which he bore.

[36]

The requirement of leave

Orally, I understood counsel at one stage to float, albeit somewhat tentatively, the optimistic possibility that NTI enjoyed an appeal as of right against the dismissal of its application that Mr Tabuso pay ROC's costs, relying on Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276. This Court there left open (because the point had not been argued) whether a non-party against whom a costs order had been made could appeal as of right. Nothing in Yu v Cao could support the proposition that a party challenging its failure to obtain a non-party costs order to deflect costs which it had been ordered to pay falls outside s 101(2)(c) of the Supreme Court Act 1970 (NSW).
True it is that where there is an appeal as of right, there is authority, flowing from Wheeler v Somerfield [1966] 2 QB 94, to the effect that a party may without separate grant of leave challenge a costs order. That line of authority has not gone unquestioned: see for example Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell Street Theatre Pty Ltd (2011) 80 NSWLR 652; [2011] NSWCA 128 at [129] and Sahade v Bischoff [2015] NSWCA 418 at [166]. But NTI's appeal from the judgment against it is interlocutory and requires leave. There is no sound reason to extend the scope of any exception relating to costs where there has been a final judgment to an appeal such as this, which unquestionably requires leave. To do so would be contrary to the evident purpose of s 101(2)(c) which is to discourage appellate review of discretionary costs decisions.
Accordingly, as Mr Tabuso submitted, it was necessary for NTI both to obtain leave and to demonstrate House v The King error. It is of course ordinarily appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46], a formulation which has been very regularly applied (see for example the decisions in Gibson v Drumm [2016] NSWCA 206 at [19]).

[37]

The role of Mr Tabuso - procedural history

The relevant sequence of events is that Mr Zhang sued ROC after NTI had declined cover. The circumstances in which that occurred, which related to information flowing from Mr Tabuso, are central to the resolution of two of the three main issues sought to be raised by NTI.
NTI had instructed an investigator to interview Mr Tabuso in around mid 2010, and had been told by him that Hoxton Park Truck and Trailer Repairs Pty Ltd (Hoxton) had modified the ramps. Mr Tabuso said that Hoxton had in turn retained ROC.
By letter dated 20 December 2012, NTI's solicitor conveyed that advice to the plaintiff's solicitor. The letter stated: "We have no reason to disbelieve Mr Tabuso but even if we did, we have no way of determining any alternative entity that may have undertaken the work because as you are well aware, we act for National Transport Insurance Limited and our client has denied indemnity in relation to this accident and we therefore do not act for the First to Fourth Defendants inclusive. For well in excess of 12 months we have endeavoured to convince Mr Macri, the solicitor representing the First to Fourth Defendants that it would be in his clients' interest to join as a Cross-Defendant to these proceedings the entity(s) responsible for the design and installation of the ramps."
The letter stated that Hoxton had been deregistered in May 2006. An ASIC search in evidence confirmed as much. That was well before Mr Zhang's injury, as well as being slightly before (as was shown by the contemporaneous documents) ROC installed the hydraulic rams on the trailer.
The trial on questions of liability had been set down for hearing on 29 January 2013. In support of an application to vacate that hearing, Mr Zhang's solicitor swore an affidavit which recorded that senior counsel for the plaintiff advised that there was reason to doubt that any of the defendants, other than the insurer, were of sufficient financial substance to meet a judgment, so that it would be very much in Mr Zhang's interests to join the person responsible for the welding, provided that person could be identified. The affidavit continued: "The legal representatives of the defendants other than the insurer were asked to provide information if they could from their clients as to who had undertaken the welding work, and counsel for those defendants, Mr Peter Barham, informed Mr King SC and the replacement junior counsel briefed for the plaintiff, Mr Christopher Palmer, following a conference with his clients which took place on 16 January 2013 that the work was done by ROC Services (NSW) Pty Ltd trading as ROC Hydraulics, then of 13 Walker Place, Wetherill Park (but now of Arndell Park) and that he had been briefed with contemporaneous copies of records relating to the performance of and payment for that work."
The application to vacate the hearing date was granted, on 18 January 2013, and in due course the pleading was amended to join ROC, and still later further amended to include the "alternative case" referred to above.
The primary judge rejected Mr Tabuso's evidence. Her Honour found, for example, at [89] of the principal judgment that: "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 Sanchez was the other director, and minority shareholder, of Interfreight.

[39]

Exclusion 7(f) - NTI's submissions

In support of his application for leave, NTI focussed upon what it said was the "representation made by Counsel" on 17 January 2013, on behalf of Mr Popovic and Calabro. It even complained that it had not been invited to address on the issue whether Mr Tabuso could not have been acting on behalf of Interfreight when the representations which it made and others acted upon occurred after it was deregistered, such that it had not been accorded procedural fairness; it submitted that her Honour was required to "bring to the attention of the applicant the findings which she intended to make, so as to enable the applicant to make submissions". It also complained that the primary judge had failed to take into account the legal effect of the substitution of NTI for Interfreight by s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). It submitted that in order for an insurer to exploit its "rights": "it must take instructions where appropriate from former directors and officers of a corporation. In the present case Mr Tabuso instructed his own solicitors (as the trial judge found at [32]) in the way in which he might have instructed the applicant if it had the conduct of the proceedings. Thus those instructions represented part of the 'rights' of the applicant that were preserved under section 6(4). The only purpose for Mr Tabuso to give those instructions to his Counsel was to exculpate Interfreight (which by then no longer existed) and to inculpate ROC. Thus, from the point of view of the applicant and the operation of the exclusion, the representations which were made in January 2013 were representations which were capable of satisfying the words in the exclusion. For the purposes of s 6(4) and the application of the exclusion, the words of the exclusion were to be read as if Interfreight still existed to satisfy the definition 'You' or 'Your'."
NTI submitted orally that "when one has regard to the provisions of s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 that those provisions of the corporations law do not prevent a person who was formerly a director from giving instructions relevantly as the controlling mind of the party who claims to have the benefit of the insurance."
NTI also submitted that Mr Tabuso was the secretary and a director of Calabro as at 16 January 2013, as a result of which, Calabro was "complicit in the act of connivance found to have been committed by Mr Tabuso", such that Calabro was not entitled to its costs, or any indemnity for the Sanderson order made in favour of Mr Zhang.
NTI also submitted that the representations were made by counsel, who was said to be the authorised agent of "each of Mr Popovic, Calabro and Interfreight jointly ... The representations delivered by Mr Barham as a conduit had the same effect as if they were being delivered by each of Mr Popovic, Calabro and Interfreight, jointly and severally."
Finally, NTI challenged the finding that Mr Tabuso had not been acting on behalf of Mr Popovic, the employee of Interfreight before it had been deregistered. It maintained that Mr Popovic was only entitled to indemnity to the extent that Interfreight was entitled to indemnity, and that Mr Popovic was insured only by reason of the extension clause which covered employees of the Insured (relevantly, Interfreight).

[40]

Mr Tabuso's conduct is not attributed to Mr Popovic or Calabro

The primary judge recorded at [182] that NTI admitted that each of Mr Popovic, Calabro and Interfreight were entitled to indemnity under the policy, because Interfreight was the named insured and Calabro and Popovic Haulage because they were identified in the policy schedule. I did not understand that this was disputed in this Court, and it is consistent with what NTI elsewhere submitted (see for example Zhang v Popovic [2010] NSWSC 1019 at [9]).
NTI provided only limited materials to support its submissions. Insofar as there was a complaint about a denial of procedural fairness, it would be necessary to review the transcript of what took place before the primary judge, and the written submissions which (it may be inferred) her Honour granted leave to supply after that hearing. None of that material was included in the materials made available by NTI. However, it is not necessary to require NTI to supplement those materials, because the complaint leads nowhere. A denial of procedural fairness on the question of the construction and application of an exclusion clause cannot be an independent ground of appeal. It was not suggested that the evidence would have been different. If the construction is right, any denial is immaterial. If the construction is wrong, then it will be corrected on appeal. Either way, nothing turns on the complaint that the determination of a question of law is not procedurally fair. This is the point made in Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145. It has been repeatedly applied: see for example CSR Ltd v Eddy (2008) 70 NSWLR 725; [2008] NSWCA 83 at [42] and Peregrine Mineral Sands Pty Ltd v Wentworth Shire Council [2014] NSWCA 429 at [194]-[195].
The allegation that a judge has denied procedural fairness to a party is not to be made lightly. It should not be made in circumstances where (a) nothing can turn upon it, and (b) the appellate court is not provided with the materials necessary to determine it.
However, I would add that given there was an oral hearing, and written submissions after that hearing, and given that it was plain that the winding up and deregistration of Interfreight was central to the question whether Mr Tabuso's conduct could be relied on by NTI, it would seem highly unlikely that NTI was denied the opportunity to make all the submissions it wished to make in that respect.
Mr Tabuso told NTI about Hoxton performing the work in 2010, and counsel for Mr Popovic and Calabro passed on that information to counsel for Mr Zhang in January 2013.
It is to be recalled that a liquidator was appointed to Interfreight in March 2009, and the company was deregistered in April 2012. The consequences are that: 1. Mr Tabuso could not, after March 2009, perform or exercise, and was forbidden from purporting to perform or exercise, any function or power as a director or secretary of Interfreight, without the liquidator's written approval: Corporations Act 2001 (Cth), s 471A; 2. when Mr Tabuso spoke to NTI's investigator in 2010, he could not have been doing so in his capacity as a director of Interfreight; 3. when counsel for Mr Popovic and Calabro passed on his instructions as to the evidence of Mr Tabuso in January 2013, he could not have been representing Interfreight, which no longer existed: Corporations Act, s 601AD.
Nothing in s 6(4) of the Law Reform (Miscellaneous Provisions) Act could operate to alter, impair or detract from the inability of Mr Tabuso to perform or exercise functions or powers of an officer of Interfreight after March 2009 effected by federal law. Nor could it operate to alter, impair or detract from the non-existence of Interfreight after April 2012. In those circumstances, I do not see how Mr Tabuso's initial statements, still less their repetition after Interfreight had ceased to exist, can somehow be imputed to Interfreight, which is the named insured in the policy schedule.
Likewise, I do not see how Mr Tabuso's representations can be imputed to Mr Popovic. I cannot accept NTI's submission based upon Mr Tabuso's likely evidence being passed to the plaintiff by counsel retained to appear for Mr Popovic (and Calabro). Let it be accepted that counsel's instructing solicitors had obtained a statement from Mr Tabuso. The requisite "act or connivance" which must be "wilful, deliberate or criminal" in order to engage exclusion cl 7(f) must be that of Mr Tabuso. The connection is not satisfied because it was conveyed by counsel who, as it happened, was also retained to appear for Mr Popovic.
What is more, in the particular facts of this litigation, NTI's submission to the contrary sits ill with NTI's solicitor's own letter of 20 December 2012 to the plaintiff, passing on what it had been told about Mr Tabuso's evidence (which may well have been the impetus for the meeting between counsel in mid January). It surely cannot be the case that by NTI passing on to the plaintiff information, which the plaintiff later confirmed through counsel retained to appear for Mr Popovic, NTI can rely upon the later communication in order to engage the exclusion clause.
It is not necessary to analyse the position completely (and there is difficulty doing so, having regard to the limited materials made available by NTI). There is plainly no question of principle or general importance, or any other special circumstances warranting a grant of leave. At best, there is the question of the application of an exclusion clause in NTI's policy to the unusual facts of this litigation. NTI bore the onus of establishing that the exclusion applied. In order to obtain leave, NTI must demonstrate an injustice which is reasonably clear, in the sense of going beyond what is merely arguable. I do not consider that it has done so.

[41]

The partial Sanderson order

The primary judge addressed this at [36]-[44]. The relevant sequence of events is as follows. A claim was made on NTI. NTI was joined to the litigation in September 2010, and by its defence, NTI denied cover. In 2011, Mr Zhang accepted that his claim was not covered by the compulsory third party policy, and a judgment was entered by consent in favour of that insurer. The plaintiff thereafter sued ROC, fearing that if NTI's policy did not respond, and that if Mr Popovic and Calabro had insufficient assets, there might be no solvent judgment debtor.
Her Honour considered whether the conduct of the unsuccessful defendants contributed to Mr Zhang's decision to join ROC. Her Honour found that neither Mr Popovic nor Calabro was responsible. However, her Honour considered that if NTI had not declined cover, then Mr Popovic and Calabro would not have required separate representation, and concluded at [44] that: "in that event, the plaintiff would not have needed to join ROC at all since it would have had a solvent insurer (NTI) behind two defendants who were, on my findings of fact, plainly liable to the plaintiff. In all the circumstances I am persuaded that it is appropriate to make an order that NTI ought pay the plaintiff's liability to ROC for its costs, subject to the exception that arises from the consequence of the plaintiff's non-acceptance of the Offer of Compromise."
NTI submitted that its reliance on the exclusion clause "cannot be said to be in any way connected with the joinder of ROC". I do not agree. I entirely agree with the passage from her Honour's reasons referred to above. It was entirely reasonable, when faced with the prospect that there would be no solvent defendants because of (it is now established) NTI's wrongful denial of cover, for Mr Zhang to sue another defendant. Indeed, as already noted, the insurer by its solicitor had itself been encouraging the parties to join another defendant.
It is not necessary, in order to justify a Sanderson order, to show that a party encouraged or induced a plaintiff to join a defendant. As much is plain from Johnsons Tyre Foundry v President, Ratepayers and Councillors of the Shire of Maffra (1948) 77 CLR 544 at 572, on which NTI relied, where Williams J framed the question as whether it was reasonable for the plaintiff to sue the two defendants. It is sufficient to refer to what was said in Gould v Vaggelas (1985) 157 CLR 215 at 230, 247 and 260, and applied in Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176 at [15], namely, that two matters are usually considered relevant: that it was reasonable for the plaintiff to have brought proceedings against the second defendant, and that there must have been some conduct on the part of the unsuccessful defendant which would make it fair to impose liability on it for the costs of the successful defendant. Although there are statements in the authorities which on one view support the narrower approach for which NTI contended (see for example Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135 at [110]), the true principle is as stated in Turano and applied, recently, in Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [56]. I reject NTI's submission that it is necessary to show conduct which induced or encouraged the plaintiff to join ROC.
Once again, there is no question of principle or general importance, or an injustice which goes beyond what is merely arguable, or any other exceptional factors favouring a grant of leave. The decision to make a partial Sanderson order against NTI, in circumstances where NTI's wrongful denial of cover led to the joinder to ROC, was well within the wide discretion as to costs. There should not, in my view, be a grant of leave.

[42]

The failure of NTI's application that Mr Tabuso pay the costs occasioned by the joinder of ROC

The primary judge addressed this at [49]-[59]. After dealing with the evidence and submissions, her Honour reproduced and applied the principle taken from Symphony Group Plc v Hodgson [1994] QB 179 at 193 that "the normal rule is that witnesses in either civil or criminal proceedings enjoy immunity from any form of civil action in respect of evidence given during those proceedings. One reason for this immunity is so that witnesses may give their evidence fearlessly ... In so far as the evidence of a witness in proceedings may lead to an application for the costs of those proceedings against him or his company, it introduces yet another exception to a valuable general principle."
Her Honour concluded that "Mr Tabuso was, relevantly, little more than a witness who gave untruthful evidence", since, by the time he gave evidence which implicated ROC, Interfreight had been deregistered. Her Honour noted that NTI had a strong forensic interest in Mr Tabuso's evidence being accepted, and had to hand all, or substantially all, of the material which was ultimately used to discredit Mr Tabuso. Her Honour said that: "Notwithstanding the obvious inconsistencies in Mr Tabuso's accounts, NTI took the forensic chance that Mr Tabuso's evidence would be accepted and that ROC would be found to be liable on the basis of his evidence."
Her Honour added that: "It is telling that, even after ROC's evidence had been served, NTI repeated the allegations made by the plaintiff in his sixth amended statement of claim against ROC on the basis of the alternative case, which presupposed that Mr Tabuso's evidence that ROC had installed the clevis mount would not be accepted."
On that basis, her Honour concluded that she was not persuaded that it was in the interests of justice to make the third party costs order sought by NTI.
In its application for leave to appeal, NTI did not challenge any of the principles. It maintained that Mr Calabro was no mere witness, but instead was the guiding mind of Interfreight. It said that the wide costs discretion "serves to uphold the obligation of the parties to give truthful evidence and serves as a buttress to the proper administration of justice". NTI said that it should not be penalised for Mr Tabuso's lies, and that Mr Tabuso should not be permitted to walk away without any liability for costs.
Once again, NTI's difficulty is that it fails to identify a question of principle or general importance. There is no challenge to the way in which the primary judge articulated the principles. And there is no sufficiently plain injustice or other exceptional factor present where, in essence, NTI wrongly denied cover, leading to the other parties and NTI to advance a case based on the false evidence given by Mr Tabuso. NTI now seeks to burden Mr Tabuso with a liability as to costs, in circumstances where it was its own wrongful conduct which led to Mr Tabuso's evidence causing the incurring of costs. Again, I would refuse leave to appeal on this ground.

[43]

Remaining points

Finally, NTI complained about two discrete aspects. Both concerned applications to vacate the hearing. Neither was articulated, as they should have been, in a proposed ground of appeal, or in a proposed order in the draft notice of appeal.
The first was that on 18 January 2013, McDougall J ordered that Mr Zhang should pay the defendants' costs of the motion and the costs thrown away by reason of the adjournment. An order in general terms at the conclusion of proceedings does not impliedly vary an existing interlocutory costs order: see for example Deputy Commissioner for Taxation v Bowen [1999] NSWSC 881 at [3]. As much was conceded by Mr Zhang's written submissions filed on 8 August 2016. It is not necessary to say anything more.
The second concerned a hearing before Wilson J on 19 May 2015. All that was said by NTI in writing was that: "On 19 May 2015, Wilson J indicated that whatever be the case, NTI should have its costs. The trial judge was not permitted to and should not have varied that order."
In oral submissions, NTI said: "... another order made by Wilson J, which was not finalised but her Honour said that a party other than my client would have to pay the costs."
Mr Zhang's written submissions stated in response that: "Wilson J made an order reserving costs when adjourning the proceedings (at a time when all parties were involved) on the basis that they would be determined at a later date. The obvious later date was at the conclusion of the hearing proper when an order dispository of all the costs was being made. Adamson J dealt with them as so provided, and her discretionary decision betrays no error."
NTI sought and obtained leave to file written submissions in reply, but chose not to respond to this aspect of Mr Zhang's submissions.
Neither the transcript nor the orders made on that occasion were provided in the white folder assembled by NTI. NTI was given leave to supply a copy of the transcript and judgment, which it did (on 3 November 2016).
In the course of the hearing, senior counsel for Mr Zhang acknowledged that NTI was in no way at fault for the vacation of the hearing. No party said anything to the contrary. Wilson J indicated, twice, that her Honour regarded NTI not to have been responsible for the adjournment. However, the order made was that "Costs of all parties thrown away are to be determined at a later date".
NTI's submissions in this Court are wrong. No order was made on 19 May 2015 in favour of NTI. Indications from a judge during the course of argument do not constitute orders. Even if an order had been made, the primary judge was empowered to vary it, no differently from any other interlocutory order, at least if there were a material change in circumstances: see Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447-448 and Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178.
It is for NTI to establish House v The King error. Moreover, it is for NTI to establish a case for the grant of leave. Her Honour recorded NTI's submission at [15] but did not accede to it. It may be inferred that (no differently from the position in this Court) it was not given much prominence. Further, there is nothing in the materials to suggest that any substantial costs of NTI were in fact thrown away by vacating a trial set down on 1 June, or, if so, the magnitude of those costs. In those circumstances, no case for leave has been made out.

[44]

Orders and costs

For those reasons, Mr Zhang's appeal against ROC must be dismissed. Costs of that appeal should follow the event.
NTI's application for leave to appeal against the judgment against it should be the subject of a qualified grant of leave, confined to grounds 1-3 as formulated in the draft notice of appeal. Having regard to the time of year, and the unresolved question as to the proper parties, I propose that NTI be given a relatively extended period of time to file a notice of appeal, with provision for any party to apply in the event that there is a dispute as to parties. However, having been wholly unsuccessful, the appeal must be dismissed.
NTI must pay the costs of Mr Zhang and Mr Tabuso of its application for leave. Given the unexplained and sustained failure of Mr Popovic and Calabro to comply with this Court's directions, there should be no order as to their costs, with the intention that they bear those costs. Lest there be any doubt, none of the orders made today will displace the orders already made as to costs in this Court.
The formal orders I propose are as follows.
In proceeding 2016/140032 (Mr Zhang's appeal against ROC): 1. Appeal dismissed. 2. Mr Zhang to pay ROC's costs of the appeal as agreed or assessed.
In proceeding 2016/134168 (NTI's application for leave to appeal): 1. Grant leave in respect of grounds 1-3 of the draft notice of appeal, and otherwise refuse leave. 2. Direct NTI to file and serve a notice of appeal, limited to grounds 1-3, within 28 days. 3. Grant liberty to apply to a single Judge of Appeal, on three days' notice, in the event that any party wishes to apply as to the parties joined by the notice of appeal. 4. Appeal dismissed. 5. NTI to pay the costs of each of Mr Zhang and Mr Tabuso as agreed or assessed. 6. No order as to the costs of Mr Popovic and Calabro, with the intent that they bear their own costs.
SACKVILLE AJA: Any case that appears to turn on the placement of a comma in a provision of a statute or other instrument is apt to elicit a reference to the fate of Sir Roger Casement. The issue in the present case is not whether an Irish rebel should be sentenced to death for treason, but whether an injured worker is entitled to the benefit of coverage provided by an insurance policy. Nonetheless, the stakes are very high for the appellant (Mr Zhang), who suffered severe injuries through the negligence of a co-worker employed by a third party, Interfreight (Australia) Pty Ltd (Interfreight). Unless Mr Zhang is able to make a claim directly against Interfreight's indemnity insurer, it seems that he may not be entitled to compensation for the injuries he sustained without fault on his part. [1]
I have had the advantage of reading the detailed judgment of Leeming JA. I agree with a number of general propositions that inform his Honour's conclusion that the exemption in the Fleet Motor Policy (Policy) issued to Interfreight does not relieve the insurer (NTI) from liability to Mr Zhang. The propositions are as follows:

in determining whether the terms of an insurance policy are capable of more than one meaning it is necessary to consider the text, context and purpose of the provision, including relevant surrounding circumstances at [79]-[80]);
the policy must be read as a whole and a congruent operation given to the various components of the whole (at [89]);
the language should ordinarily be construed to give the policy a businesslike construction and avoids a commercially absurd result (at [86]-[87]); and
punctuation informs the meaning of a provision, but the significance of punctuation is reduced if the policy uses punctuation in an inconsistent or haphazard manner (at [73]).

I also agree with the following propositions that are particular to the circumstances of this case:

the language of cl 2(b)(8) of the Policy (and indeed much of the Policy) is complex, lengthy and difficult to follow (at [54]);
punctuation in cl 2(b)(8) is used haphazardly (at [74]);
regard may be had to the legislative context in which the Policy was written, particularly the legislative regimes governing compulsory third party insurance (at [93]);
one obvious purpose of the Policy, discernible from the exclusion in cl 2(b)(4) of any claim in respect of which insurance is required by law, is to provide coverage complementary to that provided by compulsory third party insurance policies and that Interfreight would be required by law to take out (at [98]); and
the source of much of the elaborate exclusion contained in cl 2(b)(8) of the Policy is s 5(1)(a)(iv) and s 5(3) of the Motor Accident Insurance Act 1996 (Qld) (at [117(1)]).

My initial impression in this case was that the general propositions formulated by Leeming JA supported a construction of cl 2(b)(8) of the Policy that limits the exclusion to liability arising out of or connected with a defect in the Motor Vehicle whilst it is being driven (whether in Queensland or anywhere else). However, the textual considerations identified by Macfarlan JA pointed to an alternative construction that would apply the exemption (otherwise than in Queensland) to any liability arising out of or connected with a defect in the Motor Vehicle even if the Motor Vehicle is not being driven. A difficulty with the alternative construction is that it does not give effect to the obvious purpose of the Policy to provide coverage complementary to that already provided by compulsory third party insurance.
Despite this difficulty, one important consideration appeared to me to favour the alternative construction of cl 2(b)(8). It seemed that if the exclusion in cl 2(b)(8) applied only to liability for personal injuries arising out of or connected with a defect whilst it was being driven, it added nothing to the exclusion in cl 2(b)(4) (excluding "any claim in respect of which insurance is required according to law"). A construction of cl 2(b)(8) that gave it no work to do would be difficult to justify.
Upon reflection, I think the answer is that even if the exclusion in cl 2(b)(8) of the Policy is limited to a liability arising out of or connected with a defect in the Motor Vehicle whilst it is being driven, there is still work for the provision to perform. The Policy indemnifies the insured against any number of claims arising out of one event in respect of which the insured is held legally responsible to pay damages for injuries to another person as a result of an "accident". "Accident" is defined broadly, if tautologically, to mean: "an unintended, unforeseen, unlooked-for happening or mishap, which is not expected or designed."
The Policy therefore responds to a claim in which the insured is held liable for damages for personal injuries by reason of a defect in the vehicle even if the insured is not at fault (in the sense that the insured has not been negligent or committed any other tort). The insured might be held liable, for example, if it has agreed to indemnify a contractor who suffers injuries while driving an insured Motor Vehicle, without the contractor having to prove fault. Any such liability would be in contract and would be outside the scope of the New South Wales compulsory third party scheme. [2]
There could be other circumstances in which the insured could be held liable to a driver or third party without fault on the insured's part. At the time the Policy was entered into, for example, s 75AD of the Trade Practices Act 1974 (Cth) imposed liability in damages on a corporation supplying defective goods, where a person suffered injuries by reason of the defects. Thus, if the insured manufactured parts for its fleet of vehicles and the parts were defective, the insured would be liable to any person suffering injuries because of the defects, regardless of the insured's fault. (Under the legislation, a person could be a "manufacturer" if it simply imported the goods. [3] )