Commonwealth of Australia v Chubb Security Australia Pty Ltd

[2004] NSWCA 77

CITATION:	Commonwealth of Australia v. Chubb Security Australia Pty Ltd [2004] NSWCA 77
HEARING DATE(S):	19 February, 2004
JUDGMENT DATE:	19 February 2004
JUDGMENT OF:	Handley JA at 1; Beazley JA at 2; Palmer J at 3
DECISION:	Appeal allowed with costs; judgment in the District Court set aside and judgment entered for appellant.
CATCHWORDS:	CONTRACT - CONSTRUCTION - Contract for performance of work required - respondent to procure insurance cover for appellant - whether insurance cover limited to workers' compensation type cover. - HELD: Respondent was required to provide insurance cover for all types of risks.
LEGISLATION CITED:	Suitors Fund Act (1951) (NSW)
CASES CITED:	Patricia Lyons v Fondi Investments Pty Limited & Ors [1998] SCACT 76
PARTIES :	Commonwealth of Australia - Appellant Chubb Security Australia Pty Limited - Respondent
FILE NUMBER(S):	CA 40282/03
COUNSEL:	Ms C. Guilfoyle (Sol) - Appellant D.J. Russell SC - Respondent
SOLICITORS:	Australian Government Solicitor - Appellant Minter Ellison - Respondent

LOWER COURTJURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	9104/01
LOWER COURT JUDICIAL OFFICER :	Garling DCJ

Ex tempore judgment

: I agree with Palmer J.

2    BEAZLEY JA : I agree with Palmer J. 3    PALMER J : The appellant, the Commonwealth, appeals from a judgment of Garling DCJ delivered on 13 March 2003. The appellant was the defendant/cross claimant in the Court below and the respondent, Chubb, was the cross defendant. The facts are straightforward: the issue is one of construction of a contract. 4    The Commonwealth was the occupier of premises at 100 Market Street, Sydney (“the ATO building”). By a contract dated 10 March 1998, Chubb was engaged by the Commonwealth to provide security services at the ATO Building (“the Security Contract”). 5    On 13 January 1999, Ms Uma Manning, an employee of Chubb, was working as a security guard at the ATO Building in performance of the Security Contract. She was asked by an employee of the ATO to adjust a TV monitor which was fixed to a wall. As she went to do that, the monitor fell off the wall, striking her and causing her injury. Ms Manning sued the Commonwealth in the District Court for damages. Her sole cause of action was founded on the Commonwealth’s liability as occupier of the ATO building. The Commonwealth cross claimed against Chubb, alleging a breach of the Security Contract, the terms of which I will come to in a moment. Ms Manning settled her claim against the Commonwealth, and judgment in an amount of $105,375 plus costs was entered by consent against the Commonwealth. The sole issue remaining for determination by Garling DCJ was the Commonwealth’s cross claim against Chubb. 6    The Commonwealth sued for damages for breach of clause 9.1 of the Security Contract. That clause provided:

9. INDEMNITY

9.1 Contractor’s employees

9.1.1 Before commencing to perform the service the contractor shall ensure that a suitable insurance policy is taken out giving cover to himself against any liability, loss, damage, claim, demand, action, suit or proceeding, cost and expenses whatsoever arising at Common Law or under any statute or other legislative provision, including any statute or such provision relation to workmen’s compensation as a result of personal injury to or the death of any person employed by the contractor in or in connection with the performance of the service or the performance of the contract.

9.1.2 The insurance effected by the contractor pursuant to subclause 9.1.1 shall be extended to cover all liabilities of the Commonwealth at Common Law and under any applicable statute or other legislative provision.
7    The Commonwealth contended that clause 9.1.2 required Chubb to provide the Commonwealth with insurance cover under a policy which Chubb covenanted it would take out to cover the risks described in clause 9.1.1. The cover which the Commonwealth was to have under the policy, it said, was in respect of any liability whatsoever at common law or statute which the Commonwealth might have as a result of personal injury or death suffered by any employee of Chubb in connection with the performance of Chubb’s Security Contract. 8    It was common ground that no such insurance cover had been taken out by Chubb for the benefit of the Commonwealth. The Commonwealth claimed that Chubb’s failure to do so was a breach of clause 9.1.2 and it claimed damages, being the loss of the benefit of insurance cover which would have indemnified it in respect of the judgment obtained against it by Ms Manning. 9    Chubb contended that the kind of policy required by clause 9.1.1 of the Security Contract is a workers’ compensation type of policy with a common law extension. Clause 9.1.2, it said, required that the same type of policy be provided for the Commonwealth, that is, a workers’ compensation type of policy with a common law extension which would provide cover to the Commonwealth only in the event that an employee of Chubb sued it, alleging that the Commonwealth was his or her employer or deemed employer as a matter of law and was liable as such employer or deemed employer. The cover was not to extend, it was said, to any other sort of liability which the Commonwealth might have to Chubb’s employees while in the performance of their duties under the Security Contract. In the present case, Chubb said, Ms Manning had sued the Commonwealth not as her employer or deemed employer, but as occupier of the ATO building in which she was injured. That was not a liability in respect of which clause 9.1.2 of the Security Contract required Chubb to provide insurance cover to the Commonwealth. 10    In his judgment, Garling DCJ set out briefly the facts and circumstances giving rise to the issue of construction. He recounted the principal submissions of the parties and referred to a case cited by Chubb, Patricia Lyons v Fondi Investments Pty Limited & Ors [1998] SCACT 76, which concerned a contract containing words which are materially different from those in clauses 9.1.1 and 9.1.2 in the Security Contract. The words in the contract in Patricia Lyons specified that a workers’ compensation insurance policy had to be taken out, which clauses 9.1.1 and 9.1.2 of the Security Contract do not do. His Honour then proceeded to consider the construction of clauses 9.1.1 and 9.1.2. The following is the whole of his Honour’s reasoning and conclusions.

When one turns to this particular contract and turns to 9.1 he clearly sets out in my view what the parties had in mind, that is, that a suitable insurance policy is to be taken out giving cover to the cross defendant against any liability, loss, damage, claim or demand, action, suit or proceedings arising at Common Law or under any statute or other legislative provision which include Workman’s Compensation as a result of personal injury to the death of any person employed by the cross defendant or in connection with the performance or the service of the performance of the contract.

The next clause if one reads it literally would then require the cross defendant to extend that policy to cover anything that happens. That that insurance which is taken out for those purposes shall be extended to cover all liabilities of the Commonwealth at Common Law.

I do not believe that a fair reading of what was agreed between the parties would result in the contract being able to read to include a coverage for a person who happens to be employed by the cross defendant who is working on the cross claimant’s premises but through no fault of the cross defendant with nothing to do with the work being carried out or anything to do with anything the cross defendant has to do with the performance of the contract quite separate from any of that the plaintiff walks in the vicinity of a TV monitor and is injured.

I am not prepared to find that this contract requires the cross defendant to extend coverage to that extent and accordingly there will be a verdict for the cross defendant. The cross claimant is to pay the cross defendant’s costs.
11    In this court the parties repeated the submissions which they had made below. I am unable to agree with the conclusion reached by the judge. With respect, it does not seem to me that the judge has paid sufficient attention to the precise words of clauses 9.1.1 and 9.1.2. If his Honour was influenced in the approach which he took by the decision in Patricia Lyons v Fondi Investments (although he does not refer again to that case in his reasoning) then, in my opinion, he was incorrect to do so: as I have observed, the relevant words to be construed in that case, although concerned with the same general subject matter as the present case, were materially different from the words in Clauses 9.1.1 and 9.1.2. It has repeatedly been said by the courts that, saving the case of terms of art, terms of accepted custom and usage or standard form contracts commonly used in a trade or industry, the construction placed by a court on the words of one contract are no precedent for the construction of similar words in another contract between different parties. That is because the intention of contracting parties as expressed in their contract is determined, where there is any ambiguity, according to the words they have chosen to use as coloured by the matrix of surrounding circumstances in which they happen to be placed at the time of making the contract. Accordingly, similar or even the same words in different contracts can have different meanings in different contexts. 12    In the present case, the words of clause 9.1.2 are tolerably clear when read in conjunction with clause 9.1.1. Clause 9.1.1 requires Chubb to obtain insurance cover for itself in respect of liabilities it may incur to its employees while they are performing services in connection with the Security Contract. Those liabilities are expressed to be any liabilities whatsoever for personal injury or death arising at common law or under statute, including under the workers’ compensation legislation. The clause is by no means limited to insurance cover in respect of liabilities under the workers’ compensation legislation. Indeed, the emphasis, if any, is upon liability under the common law or under statute, the liabilities arising under the workers’ compensation legislation being merely a species of liability arising under statute. It is important to observe that clause 9.1.1 does not specify what type of insurance policy is to be obtained; it merely specifies what risks of liability are to be covered. By what policy or policies that cover is to be obtained is left to Chubb. 13    Clause 9.1.2 commences with a reference to the “insurance” effected by Chubb under clause 9.1.1. The reference to “insurance” is, in my opinion, clearly a reference to insurance cover, not to any particular form or type of insurance policy. The clause requires the insurance cover obtained by Chubb in respect of the liabilities for personal injury or death referred to in clause 9.1.1 to be made available to the Commonwealth as well. Those liabilities may arise, as I have noted, either under the common law or under statute as long as the employee suffers injury or death in connection with the performance of the Security Contract. The Commonwealth would not normally be exposed to liability to an employee of Chubb as that person’s employer or deemed employer, although it is conceivable that such a claim could be made. What is far more likely is that the Commonwealth would be sued at common law as the occupier of premises in which Chubb’s employees are working in performance of the Security Contract, as happened in the present case. 14    When the judge said, at Red Book 28D, that clause 9.1.2, if read literally, would require Chubb to extend the workers’ compensation policy to cover anything that happened he was not, in my respectful opinion, giving sufficient attention to the opening words of that clause which, as I have said, define the type of cover, not the particular insurance policy of which the Commonwealth is to have the benefit. 15    In my opinion, the construction placed on clause 9.1.2 by the appellant is correct, and the appeal should be allowed. I propose that the Court hear the parties on the form of the orders to be made. 16    HANDLEY JA : I agree. 17    BEAZLEY JA : I agree. 18    HANDLEY JA : The following orders are made:


(1) Appeal allowed with costs.

(2) Judgment for the cross-defendant on the cross-claim set aside.

(3) In lieu thereof, substitute judgment for the Commonwealth on the cross-claim for $105,375 together with the costs payable by the Commonwealth to Uma Manning pursuant to the judgment in her favour of 3 March 2003.

(4) Order that the cross-defendant pay the Commonwealth’s own costs in the District Court of the action brought by Uma Manning, and its cross-claim.

(5) The respondent is to have a certificate under the Suitors’ Fund Act 1951 (NSW) if qualified.

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Last Modified: 04/05/2004