A Goninan & Co Ltd v Direct Engineering Services Pty Ltd [No 2]

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JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   THE COURT OF APPEAL (WA)

CITATION:   A GONINAN & CO LTD -v- DIRECT ENGINEERING SERVICES PTY LTD [No 2] [2008] WASCA 112

CORAM:   MARTIN CJ

McLURE JA
BUSS JA

HEARD:   10 DECEMBER 2007

DELIVERED          :   15 MAY 2008

FILE NO/S:   CACV 78 of 2006

BETWEEN:   A GONINAN & CO LTD (ACN 000 333 136)

Appellant

AND

DIRECT ENGINEERING SERVICES PTY LTD (ACN 008 700 178)
Respondent

ON APPEAL FROM:

Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA

Coram  :MURRAY J

Citation  :DIRECT ENGINEERING SERVICES PTY LTD -v- A GONINAN & CO LTD [2006] WASC 105

File No  :CIV 1098 of 2001

Catchwords:

Contract - Building contract between proprietor and head contractor - Head contractor obliged to effect and maintain various insurances throughout the term of the building contract - Whether head contractor's obligation extended to the provision of insurance cover for its subcontractors - Clause imposing obligation on head contractor ambiguous - Whether the deletion of an insurance clause from a standard or common form building contract may be referred to as an aid to construing the ambiguous clause

Insurance - Insurance policy - Subcontractors will be insureds under the policy only if they are persons, organisations or entities to whom the head contractor is in writing obliged to provide insurance - Whether the building contract between the proprietor and the head contractor imposed such an obligation on the head contractor

Legislation:

Insurance Contracts Act 1984 (Cth) s 48
Motor Vehicle (Third Party) Insurance Act 1943 (WA) s 4(1)
Occupiers' Liability Act 1985 (WA)
Workers' Compensation and Injury Management Act 1981 (WA) s 160, s 175

Result:

Appeal allowed

Category:    B

Representation:

Counsel:

Appellant:     Mr G R Hancy & Mr P K Walton

Respondent:     Mr M J McCusker QC & Mr L F A Nixon

Solicitors:

Appellant:     Jackson McDonald

Respondent:     Clayton Utz

Case(s) referred to in judgment(s):

260 Oxford Pty Ltd v Premetis [2006] NSWCA 96

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99

Burger King Corp v Hungry Jack's Pty Ltd (2002) 23(7) Leg Rep SL2

Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187

Centrepoint Custodians Pty Ltd v Lidgerwood Investments Pty Ltd [1990] VR 411

Co‑operative Retail Services Ltd v Taylor Young Partnership Ltd [2002] 1 WLR 1419

Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757

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

McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579

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

Petrofina (UK) Ltd v Magnaload Ltd [1984] QB 127

Postle v Sengstock [1994] 2 Qd R 290

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

Woodside Petroleum Development Pty Ltd v H & R‑E & W Pty Ltd (1999) 20 WAR 380

  1. MARTIN CJ:  I…

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Details
Case
[2008] WASCA 112
Decision Date

CaseChat Overview and Summary

In this appeal, A Goninan & Co Ltd sought to challenge the decision of Murray J, who had found the company liable for damages caused by a fire on the premises. The dispute centred on the extent of the head contractor's obligations under the building contract with the proprietor, specifically whether the contractor was required to provide insurance cover for its subcontractors. The court was required to determine whether the obligation to maintain insurance extended to include subcontractors and whether the deletion of an insurance clause from a standard building contract could be used to interpret an ambiguous clause. Additionally, the court had to consider whether the head contractor was obliged in writing to provide insurance to the subcontractors for them to be insureds under the policy.

The court held that the head contractor's obligation to effect and maintain insurances throughout the term of the building contract was ambiguous. The court found that the deletion of an insurance clause from a standard building contract could be referred to as an aid to construing the ambiguous clause. The court held that the building contract between the proprietor and the head contractor did not impose such an obligation on the head contractor to provide insurance to its subcontractors. As a result, the subcontractors were not insureds under the policy. The court set aside the orders made by the trial judge and dismissed the respondent's claim and the appellant's counterclaim. The respondent was ordered to pay the appellant's costs of the appeal.

This decision highlights the importance of clear contractual language and the potential consequences of ambiguous clauses. It also underscores the role of standard form contracts and their amendments in interpreting contractual obligations. The court's decision provides guidance to contractors and proprietors on the interpretation of insurance obligations in building contracts.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

JUDGMENT OF THE COURT: On 15 May 2008, the court delivered judgment in this appeal. On that date it made orders, relevantly, that:(a)the appeal be allowed; (b)the orders made by the learned trial judge, Murray J, in CIV 1098 of 2001, on 9 June 2006 and 20 July 2006, be set aside and in lieu thereof, relevantly, the respondent's claim and the appellant's counterclaim be dismissed; and(c)the respondent pay the appellant's costs of the appeal, including any reserved costs, to be taxed. On 15 May 2008, the court made programming orders for the filing of written submissions concerning the orders as to costs which should be made in relation to the proceedings at first instance. Counsel who appeared on that date agreed the court should make the relevant orders on the papers. Subsequently, the appellant filed written submissions and an affidavit of Robert Lelio Marando sworn 22 May 2008, the respondent filed written submissions and an affidavit of Yonnene Helena Pearce sworn 29 May 2008 and the appellant filed submissions in reply. Later, the respondent, with the agreement of the appellant and the leave of the court, uplifted Ms Pearce's affidavit and filed another affidavit of Ms Pearce sworn 11 June 2008. We have read and considered the written submissions, Mr Marando's affidavit, Ms Pearce's second affidavit and correspondence from the parties' solicitors, and it is unnecessary, in these reasons, to reproduce them. The background facts and circumstances are set out in the reasons of the learned trial judge (Direct Engineering Services Pty Ltd v A Goninan & Co Ltd [2006] WASC 105) and in this court's reasons on the appeal (A Goninan & Co Ltd v Direct Engineering Services Pty Ltd [No 2] [2008] WASCA 112). It is unnecessary to recount them yet again in these reasons. In the proceedings at first instance, AXA Colonia Versicherung, using the respondent's name and purported rights, by subrogated action alleged that the fire was caused by the appellant and claimed from the appellant a contractual indemnity, alternatively, damages for breach of contract and negligence. Quantum was not in issue. The appellant:(a)denied liability;(b)alleged contributory negligence in relation to the claim in tort;(c)contended that, in any event, the respondent's claim was not maintainable in that:(i)the action was brought in the name of the respondent by an insurer in exercise of a purported right of subrogation; and(ii)the insurer did not have a right of subrogation that it could exercise against the appellant;(d)sought to set off against the respondent's claim, the respondent's liability under the counterclaim to pay damages;(e)by its counterclaim, contended that if it was liable to the respondent:(i)the liability was caused by a breach of cl 11(d)(v) of the head contract by the respondent in that the respondent failed to obtain insurance for the benefit of the appellant; and(ii)the liability was caused by the respondent's breaches of cl 17 of the head contract and implied terms of the sub‑contract in that the respondent failed, amongst other things, to inform the appellant that the duct was lined with flammable material.

Ratio Decidendi

Legal Principle Established

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