CSR Ltd v Adecco (Australia) Pty Ltd

[2017] NSWCA 121

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

CSR Limited v Adecco (Australia) Pty Limited [2017] NSWCA 121

Hearing dates:

16 June 2016

Decision date:

31 May 2017

Before:

McColl JA at [1];
Macfarlan JA at [219];
Simpson JA at [220]

Decision:

(1)   Appeal allowed.

 

(2)   Set aside the judgment for Adecco (Australia) Pty Limited (as the cross-defendant) on the cross-claim brought by CSR Limited and Holcim (Australia) Pty Limited.

 

(3)   Judgment for CSR Limited on the cross-claim as against Adecco (Australia) Pty Limited.

 

(4)   Order that the Adecco (Australia) Pty Limited indemnify CSR Limited and Holcim (Australia) Pty Limited as regards:

 

(a)   CSR Limited’s liability under the judgment to the plaintiff and for the plaintiff’s costs.
(b)   CSR Limited’s liability under the judgment to Adecco Industrial Pty Ltd and for Adecco Industrial Pty Ltd’s costs.
(c)   CSR Limited’s costs and expenses incurred in defending the plaintiff’s claim and Adecco Industrial Pty Ltd’s cross-claim; and
(d)   Holcim (Australia) Pty Ltd’s costs and expenses incurred in defending the plaintiff’s claim and Adecco Industrial Pty Ltd’s cross-claim.

 (5)   Order that Adecco (Australia) Pty Limited pay CSR Limited and Holcim (Australia) Pty Limited’s costs of the appeal and the proceedings below.

Catchwords:

CONTRACT – implied contract – expired fixed term labour supply contract – where labour continued to be supplied and paid for – whether implied contract on same terms as expired contract – whether reasonable bystander would regard parties’ conduct, including silence, as signalling to other party that relationship continued on terms of expired contract

 

CONTRACT – indemnity – labour supply contract – contractual indemnity – construction – claim by worker injured at labour hirer’s premises – indemnity claimed by hirer from labour supplier

 

CONTRACT – contractual indemnity – construction – whether strictissimi juris principle enlivened

 

CONTRACT – construction – use of definitions

  WORDS AND PHRASES – “employed by” – “arising out of” – “in connection with”

Legislation Cited:

Corporations Act 2001 (Cth)
Statute of Frauds 1677 (UK)
Supreme Court Act 1970 (NSW)
Workers Compensation Act 1987 (NSW)

Cases Cited:

Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549; [1987] HCA 15
Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28
Apache Oil Australia Pty Ltd (now known as Quadrant Oil Australia Pty Ltd) v Santos Offshore Pty Ltd [2016] WASCA 213
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588; [2000] HCA 25
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36
Australian Securities and Investments Commission (ASIC) v Hellicar (2012) 247 CLR 345; [2012] HCA 17
Beaufort Developments (NI) Ltd v Gilbert-Ash (NI) Ltd [1999] 1 AC 266
Big River Timbers Pty Ltd v Stewart [1999] NSWCA 34; (1999) 9 BPR 16,605
Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195; [1990] 3 All ER 25
Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61
Brambles Ltd v Wail; Brambles Ltd v Andar Transport Pty Ltd (2002) 5 VR 169; [2002] VSCA 150
Brogden v Metropolitan Railway Co (1877) 2 App Cas 666
Bullock v Wimmera Fellmongery and Woolscouring Co Ltd (1879) 5 VLR (L) 362
Cawsand Pty Ltd v Normans Wines Pty Ltd (Supreme Court (Vic), Brooking J, 21 June 1989, unrep, BC8900640)
CGU Insurance Ltd v Porthouse (2008) 235 CLR 103; [2008] HCA 30
Chan v Cresdon Pty Ltd (1989) 168 CLR 242; [1989] HCA 63
Cinefot International Corp v Hudson Photographic Industries 13 NY 2d 249; 196 NE 2d 54 (1963)
Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337; [1982] HCA 24
Cohen v iSoft Group Pty Limited [2012] FCA 1071
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 322
Commonwealth Superannuation Scheme Board of Trustees v Kitching (2004) 139 FCR 272; [2004] FCAFC 299
Davis v The Commissioner for Main Roads (1968) 117 CLR 529; [1968] HCA 10
Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500; [1987] HCA 49
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 91 ALJR 486
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Energy World Corporation Ltd v Maurice Hayes and Associates Pty Ltd [2007] FCAFC 34; (2007) 239 ALR 457
Erect Safe Scaffolding (Australia) Pty Ltd v Sutton (2008) 72 NSWLR 1; [2008] NSWCA 114
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8
Empirnall Holdings Pty Ltd v Machon Paull (1988) 14 NSWLR 523
Fabre v Arenales (1992) 27 NSWLR 437
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407
Halford v Price (1960) 105 CLR 23; [1960] HCA 38
Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310
Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503; [1932] All ER Rep 494
HP Mercantile Pty Ltd v Hartnett [2016] NSWCA 342
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11
Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44
Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36
Manly Council v Byrne [2004] NSWCA 123
Minister for Immigration & Ethnic Affairs v Guo (1997) 191 CLR 559; [1997] HCA 22
Modahl v British Athletic Federation Ltd [2002] 1 WLR 1192; [2001] EWCA Civ 1447
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
New York Telephone Co v Jamestown Telephone Corporation 282 NY 365; 26 NE 2d 295 (1940)
Newey v Westpac Banking Corporation [2014] NSWCA 319
Optus Networks Pty Ltd v Gilsan (International) Limited [2006] NSWCA 171
Paul’s Retail Pty Ltd v Sporte Leisure Pty Ltd (2012) 202 FCR 286; [2012] FCAFC 51
Pavlis v Wetherill Park Market Town Pty Ltd [2014] NSWCA 292
Perrett v Commissioner for Superannuation (1991) 29 FCR 581
Rava v Logan Wines Pty Ltd [2007] NSWCA 62
Re CSR Ltd [2003] FCA 82; (2003) 45 ACSR 34
Re CSR Ltd [2003] FCA 285; (2003) 45 ACSR 107
Re Day [2017] HCA 2; (2017) 91 ALJR 262
Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989; [1976] 3 All ER 570
RHG Mortgage Limited v Rosario Ianni [2015] NSWCA 56
RHG Mortgage Corporation Ltd v Ianni [2016] NSWCA 270
Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; [2002] HCA 5
Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53
Segelov v Ernst & Young Services Pty Ltd (2015) 89 NSWLR 431; [2015] NSWCA 156
Simic v New South Wales Land and Housing Corporation [2016] HCA 47; (2016) 91 ALJR 108
Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) 23 WAR 291; [2000] WASCA 408
State of NSW v Tempo Services Ltd [2004] NSWCA 4
Steed v Busby 268 Ark 1; 593 SW 2d 34 (1980)
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; [1988] HCA 11
TNT Australia Pty Ltd v Christie (2003) 65 NSWLR 1; [2003] NSWCA 47
Victoria v Tatts Group Ltd [2016] HCA 5; (2016) 90 ALJR 392
Viva Olives Pty Ltd v Origin Olives Australasia Pty [2012] FCA 545
Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9
Westina Corporation Pty Ltd v BGC Contracting Pty Ltd (2009) 41 WAR 263; [2009] WASCA 213
Zhang v BM Sydney Building Materials Pty Ltd [2016] NSWCA 166
Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56

Texts Cited:

A L Corbin, J M Perillo, Corbin on Contracts, (Rev ed, 1993), Vol 1
Cheshire and Fifoot, Law of Contract (10th Aust ed, 2012, LexisNexis Butterworths)
Cross on Evidence, LexisNexis
Halsbury’s Laws of England (4th ed reissue), Vol 9(1)
H G Beale, Chitty on Contracts, (32nd ed, 2015 Sweet & Maxwell), Vol 1, “General Principles”
Lewison and Hughes, The Interpretation of Contracts in Australia, (2012, Lawbook Co)

Category:

Principal judgment

Parties:

CSR Limited (First Appellant)
Holcim (Australia) Pty Limited (Second Appellant)
Adecco (Australia) Pty Limited (Respondent)

Representation:

Counsel:
DT Miller SC and HJ Neal (Appellants)
JE Sexton SC and DA Lloyd (Respondents)

  Solicitors:
Colin Biggers & Paisley Pty Limited (Appellants)
RGS Law (Respondent)

File Number(s):

2015/340786

Publication restriction:

No

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Common Law

Citation:

[2015] NSWSC 1568

Date of Decision:

23 October 2015

Before:

Adamson J

File Number(s):

2013/21653

HEADNOTE

[This headnote is not to be read as part of the Judgment]

This appeal arises from a decision that the respondent, Adecco (Australia) Pty Limited (Adecco Australia), was not liable to indemnify the first and second appellants, CSR Limited (CSR) and Holcim (Australia) Pty Limited (Holcim) (collectively referred to as CSR, save where context otherwise requires), in respect of their liability in damages arising from a personal injury claim brought by the plaintiff, Mr David Frewin.

Mr Frewin was a truck driver employed by Adecco Industrial Pty Ltd (Adecco Industrial), a member of the Adecco group of companies, who suffered personal injury as a consequence of driving a defective truck (Truck 619) at a CSR concrete plant in Batemans Bay from approximately September 2002 until March 2003. Mr Frewin continued to work at the Batemans Bay plant until his dismissal in December 2004. Subsequently, Mr Frewin suffered back pain, requiring surgery.

Mr Frewin’s services were supplied by Adecco Australia, according to CSR, pursuant to a “Supply Agreement for Labour Hire Services” (Agreement) entered into for a 2 year term on 1 April 2000. Pursuant to an indemnity clause in the Agreement, cl 23.2, Adecco Australia agreed to indemnify CSR against “any claim by Temporary Staff for personal injury…arising out of or in connection with the performance of Assignment duties” and “any liability to any person…in respect of or in connection with such personal injury”. “Temporary Staff” was defined as “an individual employed by [Adecco Australia] to work in an Assignment for CSR.” “Assignment” meant the task(s) “to be undertaken…by Temporary Staff…as specified in the Order.”

Following the expiry of the Agreement on 31 March 2002, it was extended by agreement until 30 June 2002 initially, and then until 31 July 2002. From 31 July 2002 until about May 2004, Adecco Australia and CSR sought to negotiate the terms of a new agreement but were ultimately unsuccessful. During this period Adecco Australia continued to supply labour to CSR which continued to pay it, according to the primary judge, at least until October 2002. The latter date was based upon evidence given by an employee of Adecco Australia who left the company at that time.

Mr Frewin commenced proceedings against Adecco Industrial, seeking damages for personal injury caused by driving Truck 619. He subsequently joined Holcim and CSR as the second and third defendants. They cross-claimed against Adecco Australia, claiming indemnity pursuant to cl 23.2 of the Agreement. On 14 October 2015, Mr Frewin’s claim was settled, leaving CSR’s entitlement to be indemnified by Adecco Australia to be determined.

CSR’s case at trial was that, following the formal expiry of the Agreement, the parties’ relationship continued on the basis of an implied contract containing the same terms and conditions as the expired Agreement until at least the end of March 2003 when Mr Frewin ceased to drive Truck 619.

The primary judge rejected CSR’s contention. Her Honour held that CSR had failed to establish that cl 23.2 formed part of any agreement with Adecco Australia for the supply of labour during the period in which Mr Frewin’s cause of action arose. In the event that this conclusion was incorrect, her Honour held that cl 23.2 nevertheless did not apply as Mr Frewin was not “Temporary Staff” within the meaning of the Agreement because he was not “employed by” Adecco Australia nor was he working “in an Assignment for CSR”. Her Honour rejected Adecco Australia’s submission that cl 23.2 did not extend to claims contributed to or caused by CSR’s fault.

The principal issues on appeal were:

(i)   Whether the primary judge erred in finding that the Agreement had not by agreement (inferred from the parties’ conduct) continued in existence beyond its expiry of 31 July 2002 to at least March 2003 (when Mr Frewin stopped driving Truck 619) and that the indemnities in cl 23 were not part of the continuing legal relationship between the parties.

(ii)   Whether, on the premise that the indemnities in cl 23 continued to form part of the parties’ continuing legal relationship, the primary judge erred in finding that Mr Frewin was not “Temporary Staff” within the meaning of that provision (and therefore CSR was not entitled to an indemnity) for two reasons:

a.   first, on a narrow construction of the words “employed by” in the definition of “Temporary Staff”, Mr Frewin was employed by Adecco Industrial, not Adecco Australia; and

b.   secondly, in the absence of any evidence of an “Order”, CSR had not established that Mr Frewin (at the time of sustaining his injuries) was working “in an Assignment for CSR”.

(iii)   Whether cl 23.2 extended to claims contributed to or caused by CSR’s fault.

Held, allowing the appeal per McColl JA (Macfarlan and Simpson JJA agreeing):

As to issue (i)

(1) The question whether an implied contract following upon the expiry of an express fixed term contract may be inferred is an evidentiary or factual one, turning on the application of an objective, or reasonable bystander, test. Finding exactitude in performance of the expired contract in the post-expiry conduct of the parties prior to drawing this inference is not required: [120].

(2) The primary judge erred in failing to apply the objective, or reasonable bystander, test: [124].

(3)   It should be inferred from CSR and Adecco Australia’s conduct that the expired Agreement continued in existence on the same terms and conditions (including cl 23.2) beyond its agreed expiry until at least March 2003, save that the agreement was terminable on reasonable notice: [5](1), [119].

Brambles Ltd v Wail; Brambles Ltd v Andar Transport Pty Ltd (2002) 5 VR 169; [2002] VSCA 150 applied.

Empirnall Holdings Pty Ltd v Machon Paull (1988) 14 NSWLR 523; Viva Olives Pty Ltd v Origin Olives Australasia Pty Ltd [2012] FCA 545 referred to.

As to issue (ii)(a)

(1) Applying a commercial construction of cl 23.2, construed in the context of the Agreement, the words “employed by” in the definition of “Temporary Staff” should be construed broadly, to mean in the sense of “used by”, rather than narrowly, in the sense of referring to the employment relationship. Accordingly as Mr Frewin was employed by, in the sense of “used by”, Adecco Australia to work in an Assignment for CSR, he fell within the definition of Temporary staff: [5](2), [181] – [186], [190].

As to issue (ii)(b)

(1) It should be inferred from the circumstances in which Mr Frewin worked at the Batemans Bay plant that his services were supplied by Adecco Australia pursuant to an Order, notwithstanding the absence of production at the hearing of a written “Order” as defined in the Agreement: [5](2), [195], [198].

As to issue (iii)

(1) On its proper construction, cl 23.2 was sufficiently clear to indicate an objective intention to cover all claims, whether contributed to or caused by CSR’s own fault: [5](3), [205], [211] – [214].

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

**********

Judgment

Judgment

Factual background

The Agreement

CSR’s corporate structure

Mr Frewin’s claim

Primary judgment

Issues on appeal

Implied contract

Implied contract: authorities

Implied contract: determination

Construction of the indemnity provision

Temporary staff

Absence of an Order

Ambit of the indemnity provision

Orders

1. McCOLL JA: The appellants, CSR Limited (CSR) and Holcim (Australia) Pty Limited (Holcim), [1] appeal from a decision of Adamson J that Adecco (Australia) Pty Limited (Adecco Australia) was not liable to indemnify them in respect of their liability in damages arising from a personal injury claim brought by the plaintiff, David Frewin, a truck driver employed by Adecco Industrial Pty Ltd (Adecco Industrial) who was injured as a result of driving a defective truck in the course of his employment at a CSR concrete plant. [2] Her Honour reached that decision substantially because she held that the indemnity provision CSR sought to enforce (cl 23.2) did not form part of an agreement between CSR and Adecco Australia for the supply of labour during, relevantly, the period in which Mr Frewin’s cause of action arose. [3]

   1.    For convenience I refer to the appellants as CSR save where the context otherwise requires.

   2. Frewin v Adecco Industrial Pty Ltd [2015] NSWSC 1568 (Primary judgment).

   3.    Primary judgment (at [125](i)).

2. A formal contract for labour supply (Agreement) between the parties had expired prior to the relevant period, however it had first been continued by agreement to a specified date, following which Adecco Australia continued to supply labour and CSR continued to pay for it. CSR’s central submission at trial was that the primary judge should find that after the Agreement expired, there was an implied contract between the parties for the supply of labour hire services by Adecco Australia to CSR on the same terms and conditions (including the indemnity) as had previously been the subject of the Agreement, save only as to duration and term.

3. The primary judge also held that, in the event cl 23.2 did form part of an implied contract between the parties, nevertheless it did not apply as CSR did not prove that Mr Frewin was “Temporary Staff”, nor that he was working “in an Assignment for CSR” at any relevant time within the meaning of that provision. Her Honour rejected the other bases upon which Adecco Australia contended cl 23.2 did not apply.

4. By notice of contention Adecco Australia challenges her Honour’s findings that, if cl 23.2 did apply, construed objectively, it covered all claims, including those caused, or contributed to, by CSR’s own fault and, further, that CSR’s liability to Mr Frewin otherwise fell within the terms of the indemnity provision. [4]

   4.    Ibid (at [112], [118]).

5. For the reasons that follow the appeal should be allowed with costs. In my view, the Court should hold:

1. That the primary judge erred in failing to infer from the conduct of CSR and Adecco Australia that the expired Agreement continued in existence on the same terms and conditions (including cl 23.2) beyond its agreed expiry until at least the end of March 2003 (at which time Mr Frewin ceased driving the defective truck, and any cause(s) of action he had arising from that activity had accrued) save that the agreement was terminable on reasonable notice.

2. That during the period Mr Frewin’s cause of action accrued, he was “Temporary Staff” working “in an Assignment for CSR” within the meaning of cl 23.2.

3. That CSR’s liability to Mr Frewin fell within the terms of the indemnity provision, such that Adecco Australia is liable to indemnify it in that respect.

Factual background

6. The trial proceeded on the basis of statements relevantly from Gail Miller, Adecco Australia’s National Account Director between February and October 2002 (prepared by Adecco Australia, but tendered by CSR) and Mr Frewin, and undisputed documents.

7. Ms Miller “was responsible for the contractual and business relationship between Adecco Australia and its major clients, including CSR.” [5] She was not cross-examined. The primary judge accepted her evidence as to the respective functions of Adecco Australia and Adecco Industrial, which her Honour identified as follows:

“The function of Adecco Industrial was solely to provide labour hire services. Adecco Australia was responsible for the day to day operational management of the Adecco Group. It managed the various arms of the Adecco group of companies, including Adecco Industrial. The Adecco group would often not distinguish between the different entities in correspondence with clients.” [6]

There was no evidence CSR was aware of the internal arrangements of the Adecco Group.

5.    Ibid (at [21]).

6.    Ibid.

8. As the primary judge explained, the Agreement was the product of Adecco Australia successfully responding to CSR’s request in 1999 for proposals to supply “casual labour (also referred to as contract labour) for its operations in both metropolitan and country areas” (Proposal). [7] One of the country areas listed in an attachment to the Proposal included a concrete plant at Batemans Bay of which a Mr Geoff Whitfield was identified as “the engaging manager”. This was where Mr Frewin worked. [8]

   7.    Ibid (at [7] ff).

   8.    Ibid (at [8]).

9. In the Proposal, CSR summarised its requirements as follows:

“During the course of its operations, CSR Construction Materials [a trading name used by CSR] requires contract labour to supplement its workforce. The requirement may be within the Metropolitan or Country areas of Australia where CSR Construction Materials operates. Contract labour is hired on a causal or fixed term basis and may range from a period of a few days to many months. Labour hire personnel are required to perform duties as requested by and under the supervision of CSR Construction Materials’ site representative.” [9]

9.    Ibid (at [7]).

10. The primary judge noted the following matters in the Proposal:

“[9]   CSR annexed to its proposal a document headed: ‘Part B-Terms and Conditions.’ It included a provision, cl 18, entitled ‘Insurance’, cl 18.3 of which provided that the ‘Supplier’ would be obliged to arrange insurance cover for its full liability under applicable laws relating to workers’ compensation and that such insurance shall be endorsed to fully indemnify CSR against any liability which it may incur as Principal under any workers’ compensation legislation; and any common law liability (however arising) in relation to such employees.

[10]   Clause 23 of Part B provided for the Supplier to indemnify CSR in respect of certain identified matters. Clause 23.2 provided in part:

‘23.2.   Notwithstanding any other provision of this Agreement, the Supplier indemnifies CSR Construction Materials against

23.2.1.   any claim by Temporary Staff for personal injury and/or property damage arising out of or in connection with the performance of Assignment duties where, if that person had been an employee of CSR Construction Materials at the time, such claim could have been made against CSR Construction Materials under the applicable workers compensation legislation; and

23.2.2.   any liability to any person (including the Supplier and any workers compensation insurer claiming in the name of the Supplier) in respect of or in connection with such personal injury and/or property damage.’”

11. It should also be noted for convenience at this point that under the same “Indemnity” heading in the Proposal, the following appeared:

“Indemnity

23.1   The Supplier indemnifies CSR Construction Materials against any cost, liability, loss or damage incurred or suffered by CSR Construction Materials arising out of or in connection with:

…

23.1.5   any loss of or damage to property of CSR Construction Materials, real or personal caused or contributed to by the Supplier or its employees, agents, sub-contractors or Temporary Staff. If such injury, death loss or damage results from the contributory negligence of the Supplier, then the Supplier shall be liable under this indemnity only in proportion with its relative degree or fault.”

12. By letter dated 17 December 1999 CSR accepted Adecco Australia’s offer to provide casual labour and confirmed that the letter constituted the full agreement pending the execution of a formal contract document. The letter contained a term, cl 4, that the agreement was non-exclusive and that CSR was entitled to obtain labour hire services from other providers. Appendix 1 to the letter set out the “General Conditions of Supply”, which included cl 18.3 (the requirement for insurance) and cl 23.2 (indemnity) in the same form as in the Proposal. [10]

    10.    Ibid (at [11] – [12]).

The Agreement

13. On 1 April 2000 Adecco Australia entered into the Agreement with CSR. [11] It was entitled “Supply Agreement for Labour Hire Services”.

    11.    Ibid (at [13]).

14. Clause 1.1 of the Agreement defined the following terms:

“‘Assignment’ means the task or tasks to be undertaken, at the Place of Delivery on behalf of CSR, by Temporary Staff with the Classification, as specified in the Order.

‘Classification’ means the Award classification and attendant minimum level of skills and competencies of the Temporary Staff to be provided by the Supplier.

‘Commencement Date’ means 1st April 2000.

‘CSR’ means CSR Limited (ACN 000 001 276) including any affiliates or joint ventures in which CSR has a 50% or more holding.

‘Order’means the order CSR places with the Supplier under Part 4 of this Agreement.

‘Place of Delivery’ means the location or specified in the Order. [sic, as in original.]

‘Temporary Staff’ means an individual employed by the Supplier to work in an Assignment for CSR.

‘The Supplier’means Adecco Australia Pty Ltd (ACN 006 253 336).”

15. Clause 2 of the Agreement provided:

“2. TERM OF AGREEMENT

2.1.    Initial Period

This Agreement commences on the Commencement Date and continues for the Initial Period of two years unless otherwise terminated in accordance with provisions of this Agreement.

2.2.    Extension of Agreement

CSR at it’s [sic, as in original] option may extend the term of this Agreement for a maximum of two years.”

16. Clause 3 provided:

“3. GENERAL RESPONSIBILITIES OF THE PARTIES

3.1. The Supplier

The Supplier agrees to supply Temporary Staff at the Places of Delivery in accordance with this Agreement.

3.2. CSR

CSR will place Orders with the Supplier for the provision of Temporary Staff at the Places of Delivery in accordance with this Agreement. CSR may in its absolute discretion source Temporary Staff from another Supplier when it has a business requirement to do so.”

17. Clause 4 relevantly provided:

“4.   ORDERS

4.1.   Order Authority

An Order is required to order Temporary Staff. Orders shall be written and given by an Engaging Manager. The Supplier agrees only to act upon written Orders given by an Engaging Manager.

4.2. Notice

4.2.1.   For an initial Assignment the Engaging Manager and Supplier shall agree an appropriate period during which the Supplier is to provide the Temporary Staff. In the absence of any agreement the period shall be 3 days.

…

4.3. Requirements of an Order

An Order shall specify for each Assignment:

4.3.1.   a description of the Classification to be supplied;

4.3.2.   the number of Temporary Staff of the Classification to be supplied;

4.3.3.   the Place of Delivery;

4.3.4.   the date and time the Temporary Staff will first attend an Assignment;

4.3.5.   the anticipated duration of the Assignment;

4.3.6.   the basis of assignment be it daily or weekly; and

4.3.7.   any special physical requirement.

The Supplier shall promptly notify CSR in writing as to whether it can fulfil an Order.

4.4. Time of and Place for Delivery

The Supplier shall ensure that Temporary Staff services are delivered in accordance with the Order.”

18. Clause 5 required Adecco Australia, if requested by the Engaging Manager (a CSR employee responsible for the work location at which an Assignment was executed), to ensure a suitably qualified representative attended safety and toolbox meetings at a place of delivery.

19. Clause 7 provided:

“7.   PRICES & REBATES

7.1.   Basis of Contract Prices

Contract Prices are based on the following:

7.1.1.   applicable annual salary/wages of the Temporary Staff for the Classifications as determined from time to time under the relevant Award or site based agreement approved in writing by the Engaging Manager; plus

7.1.2.   Statutory on Costs as prescribed by the relevant law but limited to Superannuation, Payroll Tax and Workers Compensation Insurance; plus

7.1.3.   the Supplier’s margin of 9.5%

For certainty a sample calculation is set out in Appendix 2.

…

7.5.   Permanent Placements

7.5.1.    In the event that CSR requests the Supplier to provide Permanent Staff but excluding Executive Staff being Staff graded 10 and above in accordance with CSR’s policy then the following fees shall apply: [there followed a table setting out Adecco Australia’s fee calculated by reference to the annual base salary and superannuation only of the Permanent Staff.]” [12]

12.    There was no definition of “Permanent Staff”.

20. Clause 11 dealt with Recording of Attendance. Temporary Staff were required either to clock on or off the CSR Card System where available or, where that system did not exist, to fill in the “Supplier Time Sheet which shall be approved by the Engaging Manager prior to submission of any related claim for payment by the Supplier”.

21. Clause 14 relevantly provided:

“14.   THE SUPPLIER’S RESPONSIBILITIES

14.1 General

…

The Supplier will be responsible at all times for establishing and maintaining its relationship as employer with its Temporary Staff on Assignment to CSR. The Supplier shall indemnify CSR against all compensation payments, costs and expenses paid by CSR in connection with any claim by any person that the Temporary Staff are employed by a person other than the Supplier.”

22. Clause 18 relevantly provided:

“18.   INSURANCE

The Supplier shall effect and at its cost with a licensed and reputable insurer at all times during the term of this Agreement, all insurances required to be effected by the Supplier by law in connection with the performance of its obligations under this Agreement.

Without limiting the generality of the above clause, the Supplier shall arrange:

….

18.2.   Public Liability Insurance

18.2.1.   Public Liability Insurance for an amount not less than ten million dollars ($10,000,000) for any one occurrence in respect of bodily injury, death, loss and damage to property arising out of the provision of the services under this Agreement PROVIDED THAT, and without limiting the generality of the foregoing, such insurance shall expressly include: loss or damage to property of others in the physical or legal control of the Supplier.

18.3.   Workers’ Compensation Insurance

18.3.1.   insurance coverage for its full liability under any applicable laws relating to workers’ compensation and such contract of insurance shall be effected in accordance with all such applicable laws; and

18.3.2.   insurance coverage for any liability, loss, claim or proceedings whatsoever and whether arising at law or in equity or by virtue of any relevant statute relating to employer’s liability by any person employed by the Supplier or any subcontractor in or about the provision of the Services with cover for an unlimited amount and with endorsements as appropriate under the relevant State and Territory Laws; and …”

23. Clause 21 of the Agreement provided:

“21.   SUB-CONTRACTING

The Supplier shall not, without the prior consent in writing of CSR, sub-contract the whole or any part of the supply of Temporary Staff provided under this Agreement.”

24. Clause 22 of the Agreement provided:

“22.   EMPLOYMENT OF WORKERS

All persons employed by the Supplier under this Agreement shall be engaged with regard only to their suitability for the relevant Assignment. Before putting any person to work on an Assignment, CSR may require the Supplier to submit personal details of employees who will be engaged on an Assignment. If CSR should not approve of such person then such person shall not be employed by the Supplier for the purpose of the relevant Order.”

25. Clause 23 of the Agreement provided:

“23. INDEMNITY

23.1.   In the event that the Supplier or its employees or its agents wilfully disregards any:

•   instruction given by an authorised CSR person

•   any CSR safety policy, procedure, or work method statement; or

•   fails to act in a responsible and workman like manner

And such behaviour results in loss, damage or injury then the Supplier shall indemnify CSR against any cost, liability, loss or damage incurred or suffered by CSR arising out of or in connection with:

23.1.1.   any breach of this Agreement or any Order by the Supplier;

23.1.2.   any wilful, unlawful or negligent act or omission of the Supplier or its employees, agents, sub-contractors or Temporary Staff;

23.1.3.   any injury to or death of a natural person, and any loss of or damage to a third party’s property, real or personal caused or contributed to by the Supplier or its employees, agents, sub-contractors or Temporary Staff

23.1.4.   any claim, action or proceeding by a third party against CSR caused or contributed to by the Supplier or its employees, agents, sub-contractors or Temporary Staff

23.2.    Any loss of or damage to property of CSR, real or personal caused or contributed to by the Supplier or its employees, agents, sub-contractors or Temporary Staff. [13]

13.    The words emphasised first appear to have been transposed from cl 23.1.5 in the Proposal see (at [11]) above and inserted before the words which next appeared and, in the Proposal, were the chapeau to cl 23.2; there was no cl 23.1.5 in the Agreement.

Notwithstanding any other provision of this Agreement, the Supplier indemnifies CSR against

23.2.1.    any claim by Temporary Staff for personal injury and/or property damage arising out of or in connection with the performance of Assignment duties where; [14] and

14.    The words “if that person had been an employee of CSR Construction Materials at the time, such claim could have been made against CSR Construction Materials under the applicable workers compensation legislation;” which appeared at this point in the form of the indemnity clause in the Proposal do not appear in the Agreement.

23.2.2.    any liability to any person (including the Supplier and any workers compensation insurer claiming in the name of the Supplier) in respect of or in connection with such personal injury and/or property damage.

23.3.   CSR indemnifies the Supplier against: any cost, liability, loss or damage incurred or suffered by the Supplier arising out of or in connection with:

23.3.1.   any breach of this Agreement or any Order by CSR;

23.3.2.   any negligent act or omission of CSR or its employees;

23.3.3   any injury to or death of a natural person, and any loss of or damage to a third party’s property, real or personal caused or contributed to by CSR or its employees.

23.3.4.   any claim, action or proceeding by a third party against the Supplier caused or contributed to by CSR or its employees.

23.4.   Nothing in the indemnity by CSR in clause 23.3 shall affect or limit CSR’s entitlement to insurance cover under clause 18.” [Emphasis added.]

26. Clause 32 provided:

“32.   SURVIVAL OF INDEMNITIES

Each indemnity in this Agreement is a continuing obligation, separate and independent from the other obligations of the parties and survives termination of this Agreement.” [15]

15.    Neither party referred the Court to this provision; nor, would it appear, was it drawn to the primary judge’s attention.

27. The Agreement expired on 31 March 2002. It was common ground at trial that it was extended, initially until 30 June 2002, and then until 31 July 2002. [16] According to an internal Adecco email dated 27 August 2002, it was “renewed verbally until end July”. There was no evidence of the discussions which led to the extensions. [17]

    16.    Primary judgment (at [24]).

    17.    Ibid.

28. Ms Miller’s statement relevantly said: [18]

“17.   The option to extend the 2000 Agreement was not exercised by CSR in writing … CSR also paid Adecco Australia according to the same terms and conditions as the 2000 Agreement.

18.   In order to avoid having to re-tender for CSR’s business upon the expiry of the 2000 Agreement, Adecco Australia continued to supply labour hire services to CSR … In my experience in the industry, this practice is very common. It allows labour hire companies to avoid the risk of competition involved in a public tender while a new agreement is negotiated with the client.” [19]

18.    I have omitted parts of Ms Miller’s statement the primary judge rejected as involving legal conclusions: ibid (at [26]). CSR drew attention in its written submissions to the second sentence in paragraph 23 of Ms Miller’s statement which described how the parties “continued to operate” at the time her employment with Adecco Australia ceased in October 2002. Counsel for Adecco Australia objected to that statement at trial, however her Honour did not specifically rule on that objection in her judgment. In this Court, Adecco Australia submitted that, consistently with her Honour’s ruling in relation to a like sentence in paragraph 18, the second sentence should be treated as having been rejected. CSR did not cavil with that proposition either in its reply submissions or orally and I have approached that evidence on that basis.

19.    Primary judgment (at [25]). The primary judge appeared to say that these parts of Ms Miller’s statement went to the extensions until the end of July 2002: primary judgment (at [24] – [25]). Ms Miller’s statement does not include any such temporal limitation. Rather, I would understand it to express her knowledge of Adecco Australia’s continuance of the relationship with CSR until when she left Adecco Australia’s employ in October 2002. That interpretation of these paragraphs of the primary judgment appears to be at odds with her Honour’s finding (at [61](3)) which finds CSR established, without any temporal limitation, “[t]here was a commercial benefit to Adecco Australia in its continuing to provide labour hire services after the date of expiry of the Agreement, notwithstanding the lack of express extension by CSR”, I have proceeded on that basis.

29. Between June 2002 and May 2004, the parties sought to negotiate the terms of a new agreement. The primary judge recorded the negotiations in detail, it is unnecessary to reproduce. [20] It was also common ground that those negotiations, which were ultimately abandoned, did not result in the execution of a new agreement. [21] The primary judge expressed the view that it was “not … determinative, one way or the other, that the parties were endeavouring to negotiate a new agreement which was different from the Agreement.” [22]

    20.    Primary judgment (at [27] – [48]).

    21.    Ibid (at [27], [48]).

    22.    Ibid (at [89]).

30. Of the evidence adduced concerning this period, it is relevant to note that, during the period from April 2002 to the end of January 2003, CSR paid Adecco Australia 77.62 per cent of its total labour hire spend, an amount of $13.285 million.

31. In respect of the general negotiations for a new Agreement post July 2002, Adecco Australia emphasises that the parties were “in dispute” about the inclusion of any new arrangement of an indemnity expressed in like terms to cl 23.2 of the Agreement.

CSR’s corporate structure

32. In respect of CSR and its subsidiaries, Readymix Holdings Pty Ltd (Readymix) was incorporated on 27 February 2002. It was a wholly owned subsidiary of CSR. Readymix changed its name to Rinker Australia Pty Ltd on 5 September 2005, to Cemex Australia Pty Ltd on 29 February 2008 and to Holcim on 2 October 2009.

33. On 28 March 2003, CSR’s construction materials businesses (including its concrete plants) underwent a demerger, as a result of which Holcim (then known as Readymix) ceased to be wholly owned by CSR. [23] The significance of this, according to Mr D T Miller of Senior Counsel who appeared on appeal, but not at trial, with Mr H J Neal, was that Readymix remained a subsidiary of CSR until the end of March 2003, which coincided with when Mr Frewin ceased to have any involvement with the subject vehicle. Thereafter, employees were transferred from CSR to the Rinker Group Limited, which was a wholly owned subsidiary of CSR. [24]

    23. Ibid (at [22] – [23], [40]); see also Re CSR Ltd [2003] FCA 82; (2003) 45 ACSR 34 (CSR 1); Re CSR Ltd [2003] FCA 285; (2003) 45 ACSR 107 (CSR 2), both decisions of Conti J.

    24.    CSR 1 (at [4]).

Mr Frewin’s claim

34. The indemnity issue, the subject of the primary judgment, fell for determination consequent upon the settlement of Mr Frewin’s personal injury proceedings.

35. Mr Frewin applied for a job as a truck driver at CSR’s Batemans Bay concrete plant on 5 September 2001. He spoke with Mr Whitfield and filled in an employment application which bore a CSR/Readymix header. On 14 September 2001, he filled in a document entitled “Candidate Declaration” (Declaration), on the letterhead of Adecco. The formal names and ACN numbers of Adecco Australia, Adecco Industrial and a company called Adecco Projects Aust Pty Ltd appeared at the bottom of the Declaration. The form did not identify which of the Adecco companies there identified was the company which engaged Mr Frewin.

36. By signing the Declaration, which he did, Mr Frewin agreed that he understood the terms and conditions to which the document referred. They included that he was to be “engaged by Adecco as a casual (hourly) employee”, was to be “paid weekly upon Adecco’s receipt of a correctly completed timesheet …authorised by the client” and that “Adecco will offer you assignments for which you are qualified…”. The primary judge found the Declaration was apparently provided by Adecco Industrial, which was consistent with her Honour’s finding that, at all material times, Mr Frewin was an employee of Adecco Industrial. [25]

    25.    Primary judgment (at [49], [51]).

37. In one of his two statements admitted at trial, Mr Frewin said he “commenced working for Adecco Industrial Pty Limited in about 2001 [and] was immediately asked to work as a truck driver for Readymix.” He was inducted onto the Batemans Bay site by CSR. [26]

    26.    Ibid (at [50]).

38. At all times, Mr Frewin worked under CSR’s direction and control. He described himself as being “casually employed” at the Batemans Bay plant, saying he was “called to work on a day to day basis” at CSR’s direction. At the end of the week, he “would complete a timesheet and my boss would send it up to Adecco” which paid him. He also said that he “worked for Adecco at Readymix in Batemans Bay … until 5 December 2004.”

39. The primary judge found that “Adecco Industrial … invoiced Holcim or CSR for the provision of [Mr Frewin’s] services.” [27] In the course of the hearing in this Court, the parties agreed that there was no evidence which supported this finding, nor or any concession at trial, or submission to that effect. Following the hearing, the parties provided an agreed note in which they confirmed that there was no evidence adduced, or submission put by either party that Adecco Industrial ever directly invoiced CSR/Holcim. Rather, the only evidence as to payment by CSR to any Adecco entity was to the effect that there were payments to Adecco Australia as set out in paragraph 17 of Ms Miller’s statement (which was admitted without objection) and in CSR’s summary of its spend on casual labour including the reference to “Batemans Bay NSW Concrete”. CSR submitted the Court should correct this finding and, rather, find that it was Adecco Australia which invoiced it for Mr Frewin’s services. Adecco Australia did not oppose that submission. I have proceeded on that basis.

    27.    Ibid (at [51]).

40. Mr Frewin suffered injury as a consequence of driving a particular cement mixer truck, known as Truck 619, during the course of his employment at the CSR plant in Batemans Bay. The driver’s seat of Truck 619 lacked the suspension of other seats in similar vehicles, causing Mr Frewin to suffer pain in his lower back. [28] He complained to CSR that there was a problem with the suspension of the vehicle, but CSR directed him to continue to drive the vehicle. He drove Truck 619 from approximately September 2002 until March 2003, at which time he was directed to drive a different truck. He continued to work at the Batemans Bay plant until he was dismissed in December 2004. He subsequently experienced excruciating back pain and underwent surgery on his back. [29]

    28.    Ibid (at [52]).

    29.    Ibid (at [52] – [55]).

41. Mr Frewin was being paid by Adecco Industrial with Holcim described as the client, as late as 1 December 2004 for the week ending 28 November 2004.

42. CSR identifies the 8 month period for the purposes of its implied contract claim as from 31 July 2002 (following the express extension of the Agreement) to March 2003 when Mr Frewin last drove Truck 619 as the “true period of significance” and the “relevant period of uncertainty”, as after March 2003 he no longer drove the truck. Further, after the CSR and Holcim demerger took place, there were no relevant causal events insofar as Mr Frewin’s claim was concerned. I shall refer to this as the “critical period”.

43. Mr Frewin commenced proceedings in the Supreme Court of the Australian Capital Territory against Adecco Industrial, seeking damages for personal injury. The proceedings were subsequently transferred to the Supreme Court of New South Wales. By an amended statement of claim filed on 12 February 2013, Mr Frewin joined Holcim as the second defendant and CSR as the third defendant. On 19 April 2013, Holcim and CSR filed a cross-claim against Adecco Australia, claiming an indemnity pursuant to the Agreement. [30] It appears from the terms on which Mr Frewin’s claim was resolved, that Adecco Industrial cross-claimed against Holcim and CSR apparently pursuant to s 151Z of the Workers Compensation Act 1987 (NSW) to recover workers compensation payments made to Mr Frewin.

    30.    Ibid (at [1] – [3]).

44. Mr Frewin’s claim was settled on 14 October 2015, on the following basis:

“(1)    on the plaintiff’s claim, judgment against CSR in the sum of $800,000 inclusive of costs and judgment for both Adecco Industrial and Holcim with no order as to costs; and

(2)    on Adecco Industrial’s cross-claim against Holcim and CSR, judgment for Holcim with no order as to costs and judgment for Adecco Industrial against CSR in the sum of $160,000 inclusive of costs.” [31]

31.    Ibid (at [3]).

45. Accordingly, the only matter that remained to be determined by the primary judge was Holcim and CSR’s cross-claim seeking indemnity from Adecco Australia.

Primary judgment

46. The primary judge identified the central issue for her consideration as “whether the indemnities in the Agreement continued to apply, in circumstances where there [was] no particular reason to suppose that they were necessary to the continuing legal relationship between the parties”. [32] As I have said, although her Honour summarised at some length, negotiations between the parties for a new agreement, [33] in her Honour’s view, it was not “determinative, one way or the other, that the parties were endeavouring to negotiate a new agreement which was different from the Agreement.” [34]

    32.    Ibid (at [88]).

    33.    Ibid (at [27] – [48]).

    34.    Ibid (at [89]); although this finding was not expressly challenged by Adecco Australia, it devoted considerable submissions both in writing and orally to contend that the negotiations manifested an intention on the parties’ part that the Agreement did not continue to bind them.

47. Her Honour found that CSR’s evidence established the following facts:

“(1)    The Agreement was extended by informal agreement to 31 July 2002;

(2)    CSR continued to pay Adecco Australia according to the same terms and conditions as in the Agreement until October 2002;

(3)    There was a commercial benefit to Adecco Australia in its continuing to provide labour hire services after the date of expiry of the Agreement, notwithstanding the lack of express extension by CSR: it would thereby circumvent the public tendering process that would be likely to apply if there was a fresh contract;

(4)    Although CSR and Adecco Australia endeavoured to negotiate a new agreement for provision of labour hire services which was not on the same terms as their prior agreement, no such agreement was ever entered into and, ultimately, the attempt to do so was abandoned;

(5)    CSR, in March 2003, divested itself of its interest in the concrete plants which it had formerly operated through subsidiaries, including Holcim.” [35]

35.    Ibid (at [61]).

48. In her Honour’s view, those facts gave rise, at least theoretically, to the following three possibilities:

“(1)    Either CSR exercised its option to extend the Agreement or the parties agreed, by their conduct, to extend the Agreement pending further agreement;

(2)    The parties allowed the Agreement to expire at the end of July 2002 but Adecco Australia continued to provide labour to CSR and its associated companies for a period thereafter, at least until March 2003, on terms which involved a quantum meruit payment for the labour, the value of which was accepted to be that provided for in the Agreement, which had lapsed;

(3)    The parties by their conduct agreed to continue to comply with some of the terms of the Agreement, notwithstanding that it had not been formally extended. These terms related to payment for labour hire services, but did not include indemnities.” [36]

36.    Ibid (at [62]).

49. In support of its argument that the Agreement had been extended by the parties’ conduct, CSR relied on the decision of the Victorian Court of Appeal in Brambles Ltd v Wail; Brambles Ltd v Andar Transport Pty Ltd. [37] The primary judge summarised Brambles in the following terms.

    37. (2002) 5 VR 169; [2002] VSCA 150 (Brambles).

“[67]    … Brambles Ltd (Brambles) provided laundry services to various hospitals. It provided large trolleys to these hospitals which were filled with soiled linen, which was loaded onto trucks and taken away to be laundered. Until 1990, Brambles employed the drivers of these trucks. In 1990, Brambles entered into an agreement with Andar Transport Pty Ltd (Andar), which expired on 3 April 1993, pursuant to which Andar employed the drivers of the trucks who performed this work for Brambles. The contract between them contained an express indemnity whereby Andar agreed to indemnify Brambles in respect of loss, damage or injury caused or contributed to either by Andar’s conduct of the delivery round, or its acts or omissions. One of Andar’s employees, Wail, was injured while loading a trolley in July 1993 (after the formal agreement had expired). He sued Brambles, which claimed an indemnity from Andar. A jury awarded Wail damages for his claim against Brambles. The primary judge dismissed Brambles’ claim on the indemnity.

[68]    Brambles appealed. The Victorian Court of Appeal (Winneke P, Charles and Batt JJA) found that the evidence warranted a finding that, after the written agreement between Brambles and Andar expired on 3 April 1993, the parties proceeded as though they were still governed by the terms of the original agreement, except that, as the agreement had expired, either was entitled to terminate the agreement on reasonable notice. …

[69]    The Victorian Court of Appeal also appeared to have regarded as significant the circumstance that the formal agreement between the parties was lengthy and detailed and, at [58], referred to Cawsand Pty Ltd v Normans Wines Pty Ltd (Unreported, Brooking J, 21 June 1989) in the following terms (which were relied on by CSR in the present case):

‘In … Cawsand Pty Ltd v Normans Wines Pty Ltd the expired written agreement was a short one which did not contain all the terms agreed upon. In those and other special circumstances of the case Brooking J declined to infer agreement as to a term for a particular period of notice of termination in the implied replacement agreement. Significantly for present purposes, however, his Honour distinguished the case ‘of a lengthy written agreement containing numerous terms governing the relationship between the parties, including one concerning notice, where the parties have so acted as to lead to the inference that notwithstanding the expiration of the term they regard the provisions of the agreement as still governing their relationship’.’

[70]    The Victorian Court of Appeal, at [61], described the question whether an implied or tacit agreement to continue dealing on the same terms (apart from that it be terminable on reasonable notice) is to be inferred is ‘an evidentiary or factual question’. It allowed the appeal and gave judgment for Brambles on the indemnity.” [38]

38.    Primary judgment (at [67] – [70]).

50. On appeal to the High Court, the majority held that the indemnity did not cover Brambles’ claim against Andar and, accordingly, held that it did not need to determine the extent to which the expired agreement remained in force. [39] Callinan J, who dissented on the construction of the indemnity, was the only member of the Court to consider whether the agreement continued to govern the parties’ relationship. His Honour agreed with the Court of Appeal’s conclusion that the expired agreement remained in force, such that the indemnity continued to bind the parties. [40]

    39. Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28 (Andar) (at [29]) per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ.

    40.    Andar (at [108] – [111]).

51. The primary judge distinguished Brambles for the following reasons. First, there was no evidence in Brambles that there were any negotiations for a new agreement between the parties during the relevant period or that any extensions had been expressly agreed. Conversely, in the present case, the parties appreciated that the Agreement had expired. They had agreed to extend it informally on two occasions. However, on the evidence, they refrained from expressly addressing the status of any further extension beyond 31 July 2002, notwithstanding their several communications about the negotiation of a new agreement. [41]

    41.    Primary judgment (at [75]).

52. Secondly, the Court of Appeal in Brambles was satisfied that the agreement was performed “in exactly the same way and on exactly the same basis, notwithstanding its expiry.” In the present case, her Honour considered that “[a]ll that [could] be taken from [Ms Miller’s] evidence [was] that Adecco Australia continued to supply labour to CSR and was paid for that labour on the same terms as had applied, at least from February 2002.” [42]

    42.    Ibid (at [76]).

53. Thirdly, the evidence in the present case did not extend beyond October 2002, when Ms Miller left Adecco Australia. The primary judge considered that CSR bore the onus of proving that the performance of the arrangement between the parties continued in the same way in the period from 31 July 2002 until March 2003, when, as I have said, Mr Frewin stopped driving Truck 619. [43] As a question of actual, rather than hypothetical, fact this could have been the subject of evidence. It was not. In such circumstances, her Honour was not prepared to draw the inference that the situation to which Ms Miller deposed continued after her departure. Accordingly, CSR had failed to discharge its onus of proof. [44]

    43.    Ibid (at [77]).

    44.    Ibid.

54. The primary judge concluded that Brambles “establishes … that, in some circumstances, it is appropriate to conclude that parties remain bound by the terms of an agreement that has expired. I do not regard the circumstances of the present case as giving rise to such a conclusion.” [45]

    45.    Ibid (at [81]).

55. CSR also submitted that the parties had agreed to an extension of the Agreement on the basis that its right under cl 2.2 to extend the Agreement for a maximum of another two years was not subject to any formal requirement, such that it give written notice. It argued the primary judge should draw that inference, as her Honour said, “because of the improbability of two large commercial entities, which had previously conducted their commercial relationship (which involved annual expenditure well in excess of $10m) by reference to a detailed agreement which made specific provision for such matters as insurance and indemnity. [sic, as in original]”. [46]

    46.    Ibid (at [90]).

56. I infer that the balance of this submission concerned the improbability in such circumstances of the parties “abandoning that agreement and operating on an ad hoc basis”. This is consistent with the submission from CSR her Honour next recorded as being that “CSR contended that there would be considerable uncertainty created by a conclusion that they had not done so and, accordingly, the inference that they had extended the Agreement ought be drawn,” relying on what Callinan J said in Andar,[47] that his Honour “doubt[ed] whether it would ever have occurred to the parties that their arrangements were governed other than by the terms of the written contract.” [48]

    47.    (at [111]).

    48.    Primary judgment (at [90]).

57. The primary judge rejected this submission. In her Honour’s view “[a]lthough no formal notice for an extension by CSR was required by cl 2.2, some outward objective intention to extend was necessary in order that the question whether the right had been exercised could be resolved.” [Emphasis added.] [49]

    49.    Ibid (at [91]).

58. Her Honour then turned to CSR’s implied contract case. [50] Her Honour attributed significance to the fact that “notwithstanding the many and varied communications between the parties, from 31 July 2002 until after April 2003, neither party confirmed the terms of their continuing relationship pending further agreement.” [Emphasis added.] [51] In her Honour’s view, the more probable explanation was that:

“… [The parties’] commercial relationship continued after 31 July 2002 on a more basic footing whereby Adecco Australia supplied the labour to CSR and, in return, CSR paid it the amounts stipulated in the (expired) Agreement. The finer points of insurance and indemnity (which were likely to be contentious) were left to be determined, if at all, on another day, which did not, as it happened, ever arrive.” [52]

50.    Ibid.

51.    Ibid (at [94]); it is unclear what evidence which “confirmed the terms of [the] continuing relationship pending further agreement” her Honour would have admitted. Insofar as the indemnity was concerned, her Honour said (at [59]) that any evidence Ms Miller gave about whether the indemnity clauses continued to apply would, inter alia, be “irrelevant, unless, possibly, some practice could be shown of Adecco Australia continuing to indemnify CSR in respect of such claims during the relevant period.”

52.    Ibid (at [95]).

59. The effect of this conclusion was CSR had failed to establish that cl 23.2 formed part of any agreement with Adecco Australia for the supply of labour after 31 July 2002. This conclusion is the subject of CSR’s first ground of appeal.

60. The primary judge then turned to consider whether, notwithstanding her conclusion that cl 23.2 did not apply to the legal relationship between CSR and Adecco Australia after 31 July 2002, cl 23.2 would have entitled CSR to be indemnified in respect of Mr Frewin’s claim. [53]

    53.    Ibid (at [97] ff).

61. Adecco Australia contended that it was not liable to indemnify CSR under cl 23.2 as first, CSR had not established that Mr Frewin was an employee of Adecco Australia. Rather, the evidence established that he was employed by Adecco Industrial and, accordingly, he was not “Temporary Staff” as defined in the Agreement. Secondly, CSR had not established that Mr Frewin was working on an “Assignment”, as defined, for the relevant period. Thirdly, Mr Frewin’s claim did not arise “out of or in connection with the performance of ‘Assignment’ duties” (as required to bring it within cl 23.2); rather, it arose out of Holcim’s/CSR’s breach of duty to Mr Frewin and fourthly, CSR had not established that Holcim was an “Affiliate”, as defined. [54]

    54.    Ibid (at [98]).

62. As to the first issue, the primary judge concluded the word “employed” as it appeared in the definition of Temporary Staff in cl 1.1 of the Agreement was ambiguous. This was because it had either a narrow sense as describing the relationship of employment or, a wider sense, merely meaning “used”. [55] Adecco Australia contended her Honour ought adopt the narrow sense as the provision being construed was an indemnity clause, and any ambiguity ought be resolved in the indemnifier’s favour. CSR submitted the expression should be construed so as to be consistent with the general commercial arrangement between the parties in the Agreement. [56]

    55.    Ibid (at [100]).

    56.    Ibid (at [101]).

59. The primary judge held that cl 23.2 was ambiguous and, accordingly, she could have regard to “the surrounding facts and circumstances, or the so-called Codelfa matrix” (referring to Codelfa Construction Pty Ltd v State Rail Authority). [57]

    57. (1982) 149 CLR 337 (at 352); [1982] HCA 24 (Codelfa) per Mason J; primary judgment (at [103]).

60. In that respect, her Honour took into account the following matters. First, that Adecco Industrial was solely a labour hire company and that Adecco Australia was responsible for the overall management of the Adecco group of companies. [58]

    58.    Primary judgment (at [103]).

61. Secondly, an internal CSR email of 10 February 2003 which Mr Simon Lillyman, CSR’s General Manager – Procurement, sent to Mr Davis, Project Manager, CSR Procurement, setting out CSR’s year to date expenditure on casual labour and “nominated Adecco Australia as a ‘labour hire company’, for which 77.62% of CSR’s total expenditure was referable and included the Batemans Bay concrete plant on the list of plants to which ‘Adecco Australia’ supplied ‘casual labour’”. [59]

    59.    Ibid (at [104]).

62. Her Honour observed that this tended “to suggest, as Ms Miller said in her statement, that those dealing with Adecco Australia, including CSR, would not distinguish between Adecco Australia and Adecco Industrial (by which [Mr Frewin] was actually employed) and that the internal group structure within the Adecco group was not material to the relationship between CSR on the one hand and Adecco Australia on the other.” [60]

    60.    Ibid.

63. However, her Honour concluded that this inference was “largely a matter of speculation” in circumstances “where the evidence [was] not sufficient to establish, for example, that Adecco Australia did not employ any people whose labour it hired to others, such as CSR.” Although her Honour accepted that “Adecco Industrial was, according to Ms Miller, ‘solely a labour hire company’”, in her Honour’s view “her evidence did not go so far as to say that it was the sole labour hire company in the Adecco group.” [61]

    61.    Ibid (at [105]).

64. In addition, her Honour had regard to the “more fundamental objection to the use of [Ms Miller’s] evidence for that purpose” which was that it post-dated “the making of the Agreement and its use would infringe the prohibition on the use of subsequent conduct for the purposes of interpretation, which is based on the principle that the context must be determined as at the date of the contract”, referring to Franklins Pty Ltd v Metcash Trading Ltd. [62]

    62. (2009) 76 NSWLR 603; [2009] NSWCA 407 (at [6]) per Allsop P.

65. Her Honour repeated that indemnities are to be construed against the indemnified. [63] She concluded:

“[107]   … That the definitions of ‘Supplier’ or ‘Temporary Staff’ appear to create a lacuna and exclude the plaintiff from their operation, although he would appear to have been part of the parties’ commercial relationship, is not sufficient to satisfy me that there is an ‘obvious error’ or that I would be entitled (much less correct) to conclude that ‘Supplier’ should include not only Adecco Australia but also Adecco Industrial.

[108]   In these circumstances, I am not persuaded that the term ‘Temporary Staff’ in cl 23.2 includes the plaintiff, who was employed by Adecco Industrial but not ‘the Supplier’ (Adecco Australia). Accordingly, CSR is not entitled to be indemnified by Adecco Australia in respect of his claim.” [Emphasis added.]

This finding is the subject of ground 2(a) in CSR’s amended notice of appeal.

63. Primary judgment (at [99], [107]); citing Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 (at 561); [1987] HCA 15 (Ankar) per Mason ACJ, Wilson, Brennan and Dawson JJ.

70. In light of this conclusion her Honour dealt briefly with Adecco Australia’s other arguments.

71. First, her Honour rejected Adecco Australia’s submission that cl 23.2 was ambiguous because of its possible ambit, literally construed, and the fact that “the inclusion of the word ‘where’ at the end of cl 23.2.1 indicated that the indemnity was not intended to be unconditional”. [64] Her Honour held that “the word ‘where’ at the end of the clause [was] obvious surplusage”, [65] and that, “[o]nce the word ‘where’ is excised, cl 23.2 is … sufficiently clear to indicate an objective intention to cover all claims, whether caused or contributed to by CSR’s own fault.” [66] This finding is the subject of grounds 1(a) and 2(a) in Adecco Australia’s notice of contention.

    64.    Primary judgment (at [110]).

    65.    Ibid (at [111]).

    66.    Ibid (at [112]).

72. Secondly, her Honour rejected Adecco Australia’s contention that Mr Frewin’s claim was one that arose from CSR’s breach of its duties to him and not one “arising out of or in connection with the performance of Assignment duties” and therefore was not covered by the cl 23.2.1 indemnity. Her Honour did not regard the circumstance that “the plaintiff’s liability [sic, claim] arose from CSR’s negligence as providing a warrant for concluding that the claim was not one ‘arising out of or in connection with the performance of Assignment duties’.” [67] This finding is the subject of grounds 1(b) and 2(b) in Adecco Australia’s notice of contention.

    67.    Ibid (at [113], [118]).

73. Thirdly, in addition to her finding that Mr Frewin was not “Temporary Staff” within the meaning of cl 23.2, her Honour also accepted Adecco Australia’s submission that CSR had failed to establish that Mr Frewin was relevantly employed “to work in an Assignment for CSR” as required by the definition of “Temporary Staff”, in that he was undertaking tasks at a location and a classification specified in an “Order”. In her Honour’s view, the absence of evidence of an Order (as defined in the Agreement), or adequate explanation for its absence was “an additional, and independent, basis for concluding that CSR has not established that the plaintiff, even had he been employed by Adecco Australia (which he was not), was ‘Temporary Staff’.” [68] This finding is the subject of ground 2(b) in CSR’s amended notice of appeal.

    68.    Ibid (at [120]).

74. Fourthly, her Honour rejected Adecco Australia’s submission that it was not liable to indemnify CSR in respect of Mr Frewin’s claim against Holcim because Holcim did not fall within the definition of “CSR” in the Agreement as it has not been shown to be an affiliate. [69] Her Honour had regard in this respect to CSR’s 2000 Annual Report, which showed that for the year ended 2000, Readymix was one of its wholly owned subsidiaries. In the Federal Court, on 7 February 2003, Conti J made orders for the demerger (which affected Holcim) to which I have earlier referred. Those orders foreshadowed an application for approval of the arrangement on 28 March 2003. [70] In these circumstances, her Honour was satisfied that Holcim fell within the definition of CSR at the relevant time and therefore, to that extent, Mr Frewin’s claim fell within cl 23.2. [71]

    69.    Ibid (at [121] – [122]).

    70.    CSR 1, Orders 4 and 5; Conti J approved the demerger on 28 March 2003: CSR 2 (at [10]).

    71.    Primary judgment (at [122]).

75. Fifthly, her Honour rejected Adecco Australia’s submission that Mr Frewin’s claim did not fall within cl 23.2 as Readymix was not incorporated until 27 February 2002, which post-dated the making of the Agreement, and the definition of “CSR” in the Agreement was in the present tense (that it “has” a 50% or greater interest). In her Honour’s view, the parties could not “have intended to exclude from the operation of the indemnity claims against wholly owned subsidiaries of CSR incorporated after the date of the Agreement”. [72]

    72.    Ibid (at [123]).

76. Finally, her Honour considered CSR’s claim pursuant to cl 23.2.2 to be indemnified by Adecco Australia in respect of its liability on the cross-claim to Adecco Industrial for $160,000. [73] This claim substantially failed for the reasons her Honour had given in respect of cl 23.2.1. Her Honour held that cl 23.2.2 did not apply as “[a]lthough CSR’s liability to Adecco Industrial [was] ‘a liability to any person’ within the meaning of cl 23.2.2, it [was] not ‘in connection with such personal injury’ [and] [t]he word ‘such’ in cl 23.2.2 imports the limitations in cl 23.2.1 concerning Temporary Staff and the performance of Assignment duties.” [Emphasis in original.] [74]

    73.    See (at [44](2)) above.

    74.    Primary judgment (at [124]); her Honour also relied on the same reasons given in respect of cl 23.2.1.

77. In summary, the primary judge concluded that CSR had not established any entitlement to be indemnified in respect of Mr Frewin’s claim because:

“(1)    [CSR] has not established that cl 23.2 formed part of any agreement with Adecco Australia for the supply of labour after 31 July 2002 and [Mr Frewin’s] claim arose after that date.

(2)    [Mr Frewin] was not ‘Temporary Staff’ as he was not employed by Adecco Australia and therefore cl 23.2 does not, in any event, apply.” [75]

75.    Ibid (at [125]).

78. The primary judge gave judgment for Adecco Australia on the cross-claim brought by CSR and Holcim and ordered that, unless an application for a different order was made in writing to her Honour’s Associate within seven days, CSR and Holcim should pay Adecco Australia’s costs.

Issues on appeal

79. As finally pressed, CSR relies on grounds 1 and 2 in its amended notice of appeal:

1. The primary judge erred in:

1. finding that the Agreement had not by agreement (inferred by the conduct of the parties) continued in existence beyond its agreed expiry of 31 July 2002 to at least the end of March 2003, being the time at which Mr Frewin ceased to drive the defective truck as earlier recorded; and

2. finding that from 31 July 2002, the indemnities in cl 23 of the Agreement were not part of the continuing legal relationship between the parties.

2. Further, on the premise that the primary judge ought to have found that the indemnities in cl 23 of the Agreement continued to form part of the parties’ commercial relationship for labour hire, the primary judge erred in:

1. construing “Temporary Staff” narrowly so as to find that CSR was not entitled to be indemnified by Adecco Australia, in circumstances where Mr Frewin’s contract of employment was with Adecco Industrial, and not Adecco Australia; and

2. finding, in the absence of the production at the hearing of a written “Order”, that CSR had not established that Mr Frewin (at the time of sustaining his injuries) was working “in an Assignment for CSR” when working at the site, with the consequence that CSR was not entitled to be indemnified by Adecco Australia under cl 23 of the Agreement.

80. CSR did not pursue the argument advanced at trial that the parties had informally exercised the cl 2.2 right to extend the Agreement. [76]

    76.    Ibid (at [90]).

81. In its notice of contention, Adecco Australia contends that the primary judge’s orders should be upheld for reasons additional to those given by her Honour. Ground 1 contends that the primary judge erred in finding that:

1. on a proper construction of cl 23.2 of the Agreement, it was sufficiently clear to indicate an objective intention of the parties that Adecco Australia would indemnify CSR for claims caused or contributed to by CSR’s own fault; [77] and

2. on a proper construction of cl 23.2 of the Agreement, CSR’s liability arose out of or in connection with the performance of Assignment duties. [78]

   77.    Ibid (at [112]).

   78.    Ibid (at [118]).

82. Ground 2 in the notice of contention contends that the primary judge should have found:

1. cl 23.2 was ambiguous, and construed it strictly against CSR with the result that the clause did not require Adecco Australia to indemnify CSR for liability arising from CSR’s own negligence; and

2. on a proper construction of cl 23.2, the claim for indemnity failed because the liability was not one which arose out of or in connection with the performance of Assignment duties.

Implied contract

Implied contract: authorities

83. CSR’s central submission is that the primary judge ought to have found, in the sense of inferred, that after the Agreement expired, there was an implied contract between the parties for the supply of labour hire services by Adecco Australia to CSR on the same terms and conditions as had previously been the subject of a fixed term contract, save only as to duration and term.

84. The Court’s appellate jurisdiction is governed by s 75A of the Supreme Court Act 1970 (NSW). In exercising its jurisdiction to conduct an appeal “by way of rehearing” (s 75A(5)), it has the power to draw inferences and make findings of fact (s 75A(6)(b)) and to “make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires” (s 75A(10)).

85. In general, an appellate court is in as good a position as the trial judge to decide on the proper inferences to be drawn from facts which are undisputed, or which, having been disputed, are established on the findings of the judge. In deciding the proper inference that is to be drawn, the appellate court should give respect and weight to the conclusion of the judge, but, once having reached its own conclusion, it must give effect to it. [79]

    79. Warren v Coombes (1979) 142 CLR 531 (at 537); [1979] HCA 9 per Gibbs ACJ, Jacobs and Murphy JJ; see also Allesch v Maunz (2000) 203 CLR 172 (at 181); [2000] HCA 40 per Gaudron, McHugh, Gummow and Hayne JJ; CGU Insurance Ltd v Porthouse (2008) 235 CLR 103; [2008] HCA 30 (at [69]) per curiam (Gummow, Kirby, Heydon, Crennan and Kiefel JJ); Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 (at [43]).

86. Having regard to the significant role the drawing of inferences plays in this case, it is necessary to revisit the basis upon which an inference might be drawn, absent direct proof of a fact. In order to find a fact proved, including by inference:

“[18]   The tribunal must feel an actual persuasion of the occurrence or existence of a fact before it can be found. Where direct proof is not available and satisfaction of the civil standard depends on inference, ‘there must be something more than mere conjecture, guesswork or surmise – there must be more than ‘conflicting inferences of equal degrees of probability so that the choice between them is [a] mere matter of conjecture’. An inference will be no more than conjecture unless some fact is found which positively suggests, or provides a reason in the circumstances particular to the case, that a specific event happened or a specific state of affairs existed.” [Emphasis added; footnotes omitted.] [80]

80. Re Day [2017] HCA 2; (2017) 91 ALJR 262 (at [18]) per Gordon J.

87. The inherent unlikelihood of an occurrence of a given description is one consideration which must affect the answer to the question whether an issue has been proved to the reasonable satisfaction of the tribunal. [81] Further, “[i]n establishing an inference of a greater degree of likelihood, it is only necessary to demonstrate that a competing inference is less likely, not that it is inherently improbable.” [82]

    81. Ibid (at [15]).

    82. Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36 (at [94]) per Crennan J.

88. The continuing agreement for which CSR contends is the sort of implied contract to which Chitty on Contracts [83] refers as follows:

“Express and implied contracts. Contracts may be either express or implied. The difference is not one of legal effect but simply of the way in which the consent of the parties is manifested. … There may also be an implied contract when the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired. In such a case the court may infer that the parties have agreed to renew the express contract for another term or the court may infer an implied contract drawing on some of the terms of the earlier contract, but omitting others. Express and implied contracts are both contracts in the true sense of the term, for they both arise from the agreement of the parties, though in one case the agreement is manifested in words and in the other case by conduct. Since, as we have seen, agreement is not a mental state but an act, an inference from conduct, and since many of the terms of an express contract are often implied, it follows that the distinction between express and implied contracts has little importance. However:

‘One distinction exists … in relation to the ease with which an express or implied contract may be established. Where there is an express agreement on essentials of sufficient certainty to be enforceable, an intention to create legal relations may commonly be assumed. It is otherwise when the case is that a contract should be implied from the parties’ conduct. It is then for the party asserting a contract to show the necessity for implying it.’ ” [Emphasis added; footnotes omitted.] [84]

83.    H G Beale, Chitty on Contracts, (32nd ed, 2015 Sweet & Maxwell), Vol 1, “General Principles” (Chitty) (at [1-104]).

84. The first passage I have emphasised also appeared in like terms in the 28th edition of Chitty and was cited in Brambles (at [57]); the quotation in [1 ‑ 104] was from Modahl v British Athletic Federation Ltd [2002] 1 WLR 1192; [2001] EWCA Civ 1447 (Modahl) (at [102]) per Mance LJ.

89. The passage dealing with implied contracts as it appeared in the 28th edition of Chitty was referred to in Brambles, [85] in the context of the Court’s observation that “[i]t … is not easy to find much discussion in the books or case law, except in North America, of the question whether the terms of a detailed written agreement for a fixed term continue, after that term has expired, to govern the parties to it where they continue dealing with each other.”

    85.    (at [57]).

90. The position in the United States is summarised in Corbin on Contracts as follows:

“Parties who have made an express contract to be in effect for one year (or any other stated time) frequently proceed with performance after expiration of the year without making any new express agreement, of extension or otherwise. From such continued action a court may infer that the parties have agreed in fact to renew the one-year contract for another similar period. Illustrations can be found in leaseholds, employment transactions, and contracts for a continuing supply of a commodity.” [86]

86.    A L Corbin, J M Perillo, Corbin on Contracts, (Rev ed, 1993), Vol 1 (Corbin) (at 60 [§1.19]).

91. As I have said, the quotation in Chitty came from the reasons of Mance LJ, as his Lordship then was, in Modahl. [87] In Modahl, the question arose whether there was an implied contract between Ms Modahl, an 800 metre runner who had represented Great Britain in the Olympic Games, World Championships and European Championships and the British Athletic Federation (BAF). The Court of Appeal (Latham and Mance LLJ in separate reasons, Jonathan Parker LJ dissenting) held that, in all the circumstances, the necessary implication from Ms Modahl’s conduct in joining a club affiliated to the BAF (which, in turn was affiliated to the International Amateur Athletic Federation (IAAF)), in competing at national and international level on the basis stated in the IAAF and BAF rules and in submitting herself to doping tests both in and out of competition was that she became party to a contract with the defendant subject to the relevant terms of the rules.

    87.    (at [102]).

92. In addition to the passage Chitty reproduced, Mance LJ held that, absent any “conversation or document which [could] be identified as constituting an express agreement”, “[a]ny contract must be implied from conduct, in the light of the rules.” [88] His Lordship concluded that, despite the paucity of the material before the Court, Ms Modahl was “in a contractual relationship with the [BAF] on terms providing for eligibility, drug testing and … dispute resolution.” [89]

    88.    Ibid (at [103]).

    89.    Ibid (at [111]); Latham LJ also considered the Court “handicapped … by a lack of basic factual material” (at [49]). However, in his Lordship’s view (at [50]) the fact that Ms Modahl accepted that if she entered meetings under the auspices of the BAF or of the IAAF, she would be subject to the relevant rules and that it was a “proper inference that the [BAF] in its turn accepted the responsibility to administer those rules in relation to all subject to its jurisdiction who competed in those meetings”, meant there was “no difficulty … in identifying with certainty the basic obligations undertaken by both [parties]”.

155. In Andar the joint judgment recognised that guarantee provisions such as those considered in Ankar and indemnity clauses such as those at issue in Andar differed in form and effect, not least because the latter are not subject to s 4 of the Statute of Frauds 1677 (UK). Nevertheless, their Honours held that both are designed to satisfy a liability owed by someone other than the guarantor or indemnifier to a third person, such that the principles adopted in Ankar, and applied in Chan v Cresdon Pty Ltd,[197] are relevant to the construction of indemnity clauses. [198] Their Honours also recognised consistently with Mason CJ’s statement in Sunbird Plaza Pty Ltd v Maloney,[199] that an indemnity clause must be construed in the context of the contract in which it appears. [200]

     197. (1989) 168 CLR 242; [1989] HCA 63.

     198.    Andar (at [22] – [23]).

     199. (1988) 166 CLR 245 (at 254); [1988] HCA 11.

     200.    Andar (at [22], [25]).

156. In Bofinger, the Court described an indemnity, in its widest sense, as including a contract obliging one person to make good the loss suffered by another. [201] The proposition was illustrated in Halsbury’s Laws of England, [202] as follows: “[a]n indemnity usually operates ‘where one contracting party, A, may become liable to a third party, X, and the other contracting party, B, promises to indemnify A’.”

     201.    Bofinger (at [7]).

     202. (4th ed reissue), Vol 9(1) (at [797] fn (2)); cited in Westina Corporation Pty Ltd v BGC Contracting Pty Ltd (2009) 41 WAR 263; [2009] WASCA 213 (at [51]) per Buss JA (Wheeler and Newnes JJA agreeing).

157. I addressed the relevance of a contextual approach to the construction of guarantees and the application of the strictissimi juris principle of construction in Zhang v BM Sydney Building Materials Pty Ltd,[203] as follows:

“48   As Campbell JA pointed out in Rava v Logan Wines Pty Ltd, the strictissimi juris principle of construction ‘is an aspect of the contra proferentem rule.’ [204] It ‘needs to be used bearing in mind the fundamental purpose of construction of a document, namely, to ascertain the intention of the parties arising from the document as a whole and reading the document with such background information as was known by all the parties to it’ and ‘along with other aids that the law recognises for the construction of a document’. [205]

49   Further, ‘it is not a legitimate use of the contra proferentem rule to say that two meanings of a particular contractual provision are possible and hence the meaning unfavourable to the proferens should be chosen if one of those meanings is an unrealistic or unlikely construction of the contract … [r]ather, the contra proferentem rule is to be used only where the document is otherwise ambiguous, and it is a principle of last resort’. [206] Thus, the strictissimi juris principle of construction ‘does not involve preparing a list of all the possible meanings of a clause that the language can bear without breaking, and choosing the meaning that is most favourable to the guarantor or indemnifier. Rather, the choice is limited to choosing amongst meanings that are fairly open by reason of the application of other rules of construction.’” [Emphasis added; footnotes included.]

203. [2016] NSWCA 166 (at [48] – [49]) (Ward JA and Sackville AJA agreeing).

204. [2007] NSWCA 62 (at [51]).

205. Ibid (at [53] – [54]).

206. Ibid (at [55]).

164. Finally, I would observe that, as is the case of using definitions in statutory interpretation, [207] the words of definition in the Agreement have to be read into the operative text, save where the context or intent derived from the document construed as a whole indicates a contrary intention. [208] It is erroneous to construe the definition independently of the substantive enactment. [209]

     207. As to which see Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12 (Kelly) (at [103]) per McHugh J.

     208. Halford v Price (1960) 105 CLR 23 (at 26 – 27) per Dixon CJ; (at 33) per Fullagar J; [1960] HCA 38; Newey v Westpac Banking Corporation [2014] NSWCA 319 (at [104], [116]) per Gleeson JA (Basten and Meagher JJA agreeing); Segelov v Ernst & Young Services Pty Ltd (2015) 89 NSWLR 431; [2015] NSWCA 156 (at [88]) per Gleeson JA (Meagher and Leeming JJA agreeing); Apache Oil Australia Pty Ltd (now known as Quadrant Oil Australia Pty Ltd) v Santos Offshore Pty Ltd [2016] WASCA 213 (at [99]) per Newnes and Murphy JJA (Mitchell JA agreeing).

     209.    Kelly (at [103]).

Temporary staff

165. The first issue, raised by ground 2(a) of the notice of appeal is whether the primary judge erred in finding that cl 23.2 did not apply because Mr Frewin was employed by Adecco Industrial, not Adecco Australia.

166. CSR accepted that, although the Agreement was with Adecco Australia, by reason of the way in which the Adecco Group organised its affairs, and as the primary judge found, Adecco Industrial employed Mr Frewin at all material times. [210]

     210.    Primary judgment (at [51]).

167. CSR submitted that the words of cl 23.2.1, read with the definition of “Temporary Staff” supported a broad meaning of the clause. In particular it submitted the primary judge should have construed the expression “employed by” in the definition to have the meaning “use the services of”, rather than as referring to the employment relationship. On that approach, it argued Mr Frewin fell within the meaning of “Temporary Staff” because he was a person Adecco Australia “used” or “used the services of” and Mr Frewin was “employed by” CSR, again in the sense of “used”, for the purposes of cl 23.2.1. CSR submitted that the phrase “to work in an Assignment for CSR” qualified the expression “employed by” in the definitional phrase, “an individual employed by the Supplier”.

168. CSR contended that further textual support for a broad meaning of “employed by” in the definition could be found in cl 22, which refers to “persons employed by the Supplier under this Agreement”. CSR argued that this meant persons not actually employed by Adecco Australia, but, rather, taken to be employed, in the sense again of “used” by Adecco Australia for the purposes of the Agreement.

169. CSR submitted that the broad construction it advanced was consistent with authorities dealing with labour hire in which employees in the position of Mr Frewin may, depending on the extent of control vested in, or exerted by, the third party by the labour hire agreement, be found to be employees pro hac vice of the entity that has hired labour (CSR) from a third party (Adecco Australia or Adecco Industrial). It pointed out that Mr Frewin’s evidence was that, despite being employed by Adecco Industrial, while at CSR’s Batemans Bay plant, he acted under the directions of CSR’s employees.

170. CSR submitted that the primary judge’s application of the narrow use of “employed” created an evident commercial absurdity. It drew attention to cl 14.1 of the Agreement pursuant to which Adecco Australia was “responsible at all times for establishing and maintaining its relationship as employer with its Temporary Staff on Assignment to CSR.” It argued that on her Honour’s construction, Adecco Australia could circumvent the indemnity provision because persons in Mr Frewin’s position would be excluded from the definition of “Temporary Staff” simply by reason of an administrative arrangement within the Adecco Group whereby Adecco Industrial paid Mr Frewin’s wages and entitlements, and thus employed him in the narrow sense. This would occur without notice to CSR and in express breach of cl 21 of the Agreement which prohibited Adecco Australia from sub-contracting the whole or any part of the supply of Temporary Staff provided under the Agreement without CSR’s prior written consent.

171. Next, CSR submitted that the primary judge’s construction of the definition of “Temporary Staff” was apt to cause commercial inconvenience. This was because it inverted the express commercial or risk allocation in the Agreement. It argued that the obvious intended commercial outcome of the Agreement was for Adecco Australia to supply staff to CSR for a fee on terms that regulated that supply (including terms as to insurance and indemnities). It argued that the primary judge’s construction of cl 23.2 allowed the Agreement to be retrospectively re-written by dint of the Adecco Group’s internal administrative arrangements. It submitted that this approach to construing the definition was at odds with the principles of contractual construction, to which I have referred, and created evident commercial inconvenience.

172. Finally, CSR submitted that the narrow construction the primary judge preferred would enable a labour hirer in the position of Adecco Australia to unilaterally arrange its internal affairs so as to avoid indemnity and other clauses in the written labour hire agreement, without notice of that arrangement being given to the Principal, and in breach of the underlying agreement, by an administrative device of sourcing workers from a related entity that held the direct contract of employment with him or her.

173. Adecco Australia emphasised that “Temporary Staff” was defined in the Agreement “to mean (not ‘include’) ‘an individual employed by the Supplier to work in an Assignment for CSR’”, [emphasis in original] that “Supplier” was defined to mean “Adecco Australia” and that it was common ground that Mr Frewin’s employer at all times was Adecco Industrial, not Adecco Australia.

174. Accordingly, Adecco Australia submitted the primary judge was correct to reject CSR’s proposed broad construction of the words “employed by” in the definition to include workers supplied by Adecco Australia and used in CSR’s operations, even if they were not employees of Adecco Australia. It argued that the following matters supported the primary judge’s finding on this issue.

175. Adecco Australia submitted that on CSR’s submissions the definition of “Temporary Staff” was ambiguous, and the primary judge correctly held that the indemnity clause should be construed strictly against CSR.

176. Secondly, the primary judge was correct in holding that there was support in other parts of the Agreement for a narrow construction of “employed by”. In particular, cl 14.1 was a powerful indication that the parties intended the word “employed” to be used in a narrow sense.

177. Thirdly the parties’ choice to define “The Supplier” narrowly to mean Adecco Australia was highly significant. If the parties had intended that workers who were not employees of Adecco Australia were to be included as “Temporary Staff”, the parties could have included affiliates of Adecco Australia in the definition of Adecco Australia, a technique Adecco Australia observed the parties adopted in their definition of “CSR”.

178. In answer to CSR’s submission that the primary judge’s narrow construction of “employed by” should be rejected as inconsistent with the intended commercial outcome of the Agreement, Adecco Australia contends that one of the purposes of the Agreement was CSR’s desire to outsource its legal and statutory obligations as an employer with day-to-day control over workers at its sites, such as Mr Frewin. His legal employer, Adecco Industrial, had no role in supervising him. The evidence was that CSR inducted him to the site and directed him at work. Adecco Australia contended that the importance of the formal employment relationship was at the heart of the Agreement.

179. Secondly, Adecco Australia submitted that it was not correct for CSR to claim that Adecco Australia never supplied “Temporary Staff” as defined if the narrow construction is adopted, as there was no evidence to support that conclusion.

180. Finally, Adecco Australia contended that CSR’s reliance on cl 21 of the Agreement was misplaced. CSR had not alleged any breach of that clause below. Accordingly, Adecco Australia had no opportunity to call any evidence addressing whether consent was obtained as cl 21 of the Agreement required. It submitted that it was not open to CSR to raise this point for the first time on appeal.

181. In my view, when the definition of “Temporary Staff” is read into the Agreement, it can be seen that Adecco Australia’s responsibility as specified in cl 3.1, was “to supply [an individual employed by the Supplier to work in an Assignment for CSR] at the Places of Delivery in accordance with this Agreement.” CSR’s obligation, in turn, pursuant to cl 3.2, again reading in the definition, was to “place Orders with the Supplier for the provision of [an individual employed by the Supplier to work in an Assignment for CSR] at the Places of Delivery in accordance with this Agreement.”

182. The parties’ obligations, as so understood, did not have as their object, the employment relationship between the “individual” and the Supplier but, rather, that the “Temporary Staff” be a person Adecco Australia made available to CSR, in the sense of to be used by CSR, to work in an Assignment. As CSR submitted, further support for the broad meaning of the words “employed by” in the definition of “Temporary Staff” can be found in cl 22 of the Agreement referring to “persons employed by [Adecco Australia] under this Agreement ….”. This suggests, again, consistently with cl 3.1, the notion of utilisation of the people referred to.

183. Such an interpretation of the Agreement is, in my view, a businesslike one. A reasonable person, in my view, would have understood the words “Temporary Staff” where they appear in those provisions dealing with the procurement of labour under the Agreement for the express purposes of working on Assignments for CSR, to refer to those persons Adecco Australia provided for that purpose.

184. Similarly, when one comes to the indemnity provision, one would understand the term “Temporary Staff” to refer to those persons Adecco Australia had supplied to undertake that work for CSR. It would not, in my view, be a sensible commercial, or consistent, construction of the Agreement to read those provisions, as Adecco Australia submits, as referring to the employment relationship.

185. To so interpret “Temporary Staff” in cl 23.2 would make commercial nonsense of the indemnity provision which was clearly intended to oblige Adecco Australia to make good the loss suffered by CSR in relation to “any claim … for personal injury … arising out of or in connection with the performance of Assignment duties” made by those individuals Adecco Australia had supplied under the Agreement. The focus was on the nature of the activity the person had been carrying out.

186. When cl 23.2 is construed in the context of the Agreement, it is plain, in my view, that it intended to apply to the persons Adecco Australia supplied to CSR to work in an Assignment for CSR.

187. It was to Adecco Australia that CSR paid $13.285 million in the year April 2002 – January 2003, which almost covered the entirety of the critical period, for the supply of casual labour. The primary judge accepted that Mr Frewin, “appear[ed] to have been part of the parties’ commercial relationship.” [211]

     211.    Primary judgment (at [107]).

188. The evidence, in my view, was also consistent with him being Temporary Staff. He filled out a CSR employment application, and he signed a CSR acknowledgment of receipt of a CSR rule book. He was supplied by Adecco Australia, which invoiced CSR for his services. [212] He said he was “casually employed” at the Batemans Bay plant, in that he was “called to work on a day to day basis” at CSR’s direction. He worked at CSR premises in Batemans Bay, which was one of the locations included in CSR’s $13.285 million spend on casual labour in the period April 2002 – January 2003. He took direction from CSR employees. [213] He filled out time sheets which were sent to Adecco for payment.

     212.    See (at [39]) above.

     213.    Cf cl 15 of the Agreement; Mr Frewin gave evidence that he acted under the direction of CSR’s employees at Batemans Bay.

189. In my view, with respect, the primary judge’s construction was an unrealistic or unlikely construction of the indemnity provision which defeated its evident commercial purpose when construed in the context of the Agreement.

190. Applying a commercial construction to the indemnity provision, it is apparent that it was intended to oblige Adecco Australia to make good loss suffered by CSR in relation to any claim by an individual employed by, in the sense of “used by”, Adecco Australia to work in an Assignment for CSR. As CSR submitted in reply, Adecco Australia elevates the principle of contra preferentem to the paramount consideration of construction, and strives to find ambiguity, where none exists if the proper approach to construction is adopted.

191. I would allow ground 2(a) of CSR’s notice of appeal.

Absence of an Order

192. Ground 2(b) of the notice of appeal complains about the primary judge’s second reason for finding Mr Frewin was not Temporary Staff within cl 23.2: because CSR had failed to adduce any evidence of an Order as defined in the Agreement.

193. It will be recalled that the effect of cl 4.1 of the Agreement was that a written Order given by an Engaging Manager was required to order Temporary Staff. [214] A reference to an “Order” was to the Order CSR places under “Part 4 of this Agreement.” There was no “Part 4”. Rather the provisions concerning orders were found in cl 4.

     214.    See (at [17]) above.

194. The primary judge accepted that Mr Frewin was undertaking work at a location where CSR, or a subsidiary, ran a concrete plant, and inferred that such work was for the benefit of CSR or its affiliate. Nevertheless, her Honour concluded, that absent evidence of an “Order” such as referred to in cl 4, CSR has not established that Mr Frewin, “even had he been employed by Adecco Australia (which he was not), was ‘Temporary Staff’.” [215]

     215.    Primary judgment (at [120]).

195. In my view the primary judge erred in failing to draw the inference that the circumstances in which Mr Frewin worked at the Batemans Bay plant supported the inference that he was “Temporary Staff” within the meaning of the Agreement.

196. Adecco Australia emphasised the meanings in the Agreement of the definitions of “Assignment”, “Place of Delivery”, “Classification” and “Order”, the requirements of an “Order” in cl 4.3 and argued that the importance of adherence to the strict terms of an “Order” was apparent from cl 4.4. It contended that alternative possibilities included that Mr Frewin was supplied as “Permanent Staff” (cl 7.5, Agreement) or that he was provided to CSR outside the terms of the Agreement, or that he was initially supplied as “Temporary Staff” but ceased to be so characterised three days after he was provided (cl 4.2.1, Agreement) or at some time later and before September 2002 or for a number of other reasons to which Adecco Australia pointed had some other characterisation.

197. Adecco Australia did not draw attention to any evidence to support the theoretical possibilities as to Mr Frewin’s employment in a capacity other than as Temporary Staff. At least one, the notion that he was “Permanent Staff”, can be dispelled. As is apparent from Mr Frewin’s evidence, he was employed on a casual basis. Secondly, as is apparent from cl 7.5, permanent staff were paid on an annual basis. Mr Frewin was paid on the basis of weekly timesheets recording the hours he had worked.

198. The evidence I have set out above, [216] in my view, positively supports the proposition that Mr Frewin was supplied by Adecco Australia to CSR in accordance with the Agreement, that is to say, that in the critical period (some 12 - 13 years prior to the trial), Mr Frewin’s services were supplied pursuant to an Order. As CSR submitted, the overwhelming inference was that an Order had been issued. Otherwise no sensible reason could be advanced to explain Mr Frewin’s presence at the CSR site, or to explain Adecco Australia receiving payments for Mr Frewin’s services (which, in turn, can be inferred from the fact he was paid), and those of other employees, amounting to a sum of approximately $13.285 million during a large part of the critical period.

     216.    See (at [187] – [188]) above.

192. I would allow ground 2(b) in the notice of appeal.

Ambit of the indemnity provision

200. Resolution of the notice of contention turns again on the ambit of cl 23.2, the indemnity provision which appeared in cl 23 headed “Indemnity”. [217] It is convenient to repeat it:

“23.2.    Any loss of or damage to property of CSR, real or personal caused or contributed to by the Supplier or its employees, agents, sub-contractors or Temporary Staff.

Notwithstanding any other provision of this Agreement, the Supplier indemnifies CSR against

23.2.1.   any claim by Temporary Staff for personal injury and/or property damage arising out of or in connection with the performance of Assignment duties where; and

23.2.2.   any liability to any person (including the Supplier and any workers compensation insurer claiming in the name of the Supplier) in respect of or in connection with such personal injury and/or property damage.” [Emphasis added.]

217.    Cl 1.2 of the Agreement dealt with Interpretation and relevantly provided that “except to the extent that the context otherwise requires … headings are inserted for convenience and do not affect interpretation.” I have not used it as an interpretative tool, rather as a convenient summary of the contents of cl 23, the sub-paragraphs of which each contains an indemnity provision.

201. Although the notice of contention appears to address two issues (whether cl 23.2 provided indemnity to CSR for claims caused or contributed to by its fault and whether CSR’s liability to Mr Frewin was one “aris[ing] out of or in connection with the performance of Assignment duties”), the proposition for which Adecco Australia contended it turned on ultimately was that while the performance of the Assignment duties provided the occasion for CSR's negligence, and therefore for the claim, it was not a claim which arose out of, or in connection with, the performance of Assignment duties.

202. At trial, Adecco Australia’s submission on this point was that the breadth of cl 23.2 raised doubt as to its meaning such that it was ambiguous and should be construed strictly against CSR. Similar arguments were advanced in this Court.

203. Adecco Australia also submitted that cl 23.2 was ambiguous because it did not make grammatical sense, commencing in a way which was nonsensical. In addition, it argued the word “where” at the end of the clause suggested an intention to qualify cl 23.2.1, but the sentence was left unfinished. These submissions were based on the inclusion in cl 23.2 of the words I emphasised earlier in these reasons. [218] Adecco Australia argued that, having regard to the surrounding circumstances, the nonsensical nature of the clause could not be dismissed as “plainly a typo” as CSR had submitted at trial and the primary judge had effectively accepted.

     218.    See (at [25]) above.

204. In my view the primary judge did not err in treating the word “where” as it last appeared in cl 23.2 as surplusage. Further, although Adecco Australia also complained at trial about the prefatory words in cl 23.2, a complaint with which the primary judge did not deal, her Honour would, in my view, have been entitled to treat those words in the same way. Although I accept that there is a presumption against treating any part of a contract as surplusage, [219] the presumption is not a strong one, [220] and excess words may be the product of clumsy draftsmanship. [221] It is manifest, in my view, that cl 23.2 is a product of such clumsiness.

     219.    See Lewison and Hughes, The Interpretation of Contracts in Australia, (2012, Lawbook Co) (at [7.03]).

     220. Big River Timbers Pty Ltd v Stewart [1999] NSWCA 34; (1999) 9 BPR 16,605 (at [16]) per Mason P (Handley and Giles JJA agreeing).

     221. Beaufort Developments (NI) Ltd v Gilbert-Ash (NI) Ltd [1999] 1 AC 266 (at 273 – 274) per Lord Hoffmann.

205. Adecco Australia also made submissions concerning the proper construction of cl 23.2 based on differences between cl 23 in the Proposal and its ultimate inclusion in the Agreement. The Court can only have regard to such material in the interpretation of the Agreement if the language is ambiguous or susceptible of more than one meaning. [222] In my view, when construed in the context of the Agreement as a whole, [223] cl 23.2 cannot be so characterised. Rather, as the primary judge held, cl 23.2 is “sufficiently clear to indicate an objective intention to cover all claims, whether caused or contributed to by CSR’s own fault.” [224]

     222.    Codelfa (at 352); per Mason J (as his Honour then was).

     223.    See generally the discussion (at [161] – [163]) above.

     224.    Primary judgment (at [112]).

206. The words “arising out of” are well recognised as being of broad import. [225] They require some causal or consequential relationship between the subject and the object, but do not require the direct or proximate relationship which would be necessary if the expression was “caused by”. [226]

     225. Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) 23 WAR 291; [2000] WASCA 408 (at [67]) per Ipp J; see also the digest of cases in Erect Safe Scaffolding (Australia) Pty Ltd v Sutton (2008) 72 NSWLR 1; [2008] NSWCA 114 (Erect Safe) (at [45] – [68]) per Basten JA.

     226. See Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500 (at 505); [1987] HCA 49 per curiam (Mason CJ, Wilson, Brennan, Dawson and Toohey JJ); Erect Safe (at [10] – [11]) per Giles JA.

207. The ambit of such words, and the manifest reason for their inclusion in an indemnity clause such as cl 23.2, can be seen from Davis v The Commissioner for Main Roads. [227] That case concerned the construction of a contract with the Commissioner for Main Roads which provided, inter aIia, that “[t]he Contractor shall undertake the whole risk of carrying out the contract, and without limiting the generality thereof, shall (a) hold the Commissioner indemnified against all claims arising out of (i) damage to the property of the Contractor or any third party; (ii) death of or bodily injury to the Contractor or his employees or employees of the Commissioner or any third parties … whether such damage, death or bodily injury is caused by the use of a motor vehicle or by goods projecting therefrom or otherwise howsoever .... The Contractor shall insure any motor vehicle used on the contract in the joint names of himself and the Commissioner under a policy unlimited in amount covering liability for damage to the property of third parties.”

     227. (1968) 117 CLR 529; [1968] HCA 10 (Davis).

208. The High Court held by majority (Menzies J, Barwick CJ and McTiernan J agreeing; Kitto and Windeyer JJ dissenting), that the indemnity clause extended to a claim for damage to the property of a third person caused by collision with the contractor’s motor vehicle where the negligence of the Commissioner was a cause of the damage. Menzies J rejected a submission that the clause could not be understood as conferring an indemnity upon the Commissioner against liability for its own negligence, saying, “[d]efault of this sort for which the Commissioner is liable seems to me the very subject matter of [the clause].” His Honour continued:

“Accordingly the only purpose, or at least the principal purpose, for taking such an indemnity, would be to protect the Commissioner against liability for its own fault. Furthermore, once it appears that the indemnity does extend to the Commissioner's fault, including negligence, there is no sound ground for limiting the indemnity to particular breaches of the duty of care. The indemnity should be allowed to operate in accordance with its terms which throw upon the contractor the whole risk of carrying out the contract.” [228]

228.    Davis (at 536 – 537).

209. In my view, Davis applies squarely to this case. In the course of the hearing, Adecco Australia was invited to, but did not, distinguish it.

210. Similarly the words “connected with” are “capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote”. [229] They do not require a causal connection between the matters said to be connected. [230] The phrase “connected with” is not conceptually different from “in connection with”.

     229. Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 (at 288); [1993] FCA 322.

     230. Perrett v Commissioner for Superannuation (1991) 29 FCR 581 (at 592); affirmed in Commonwealth Superannuation Scheme Board of Trustees v Kitching (2004) 139 FCR 272; [2004] FCAFC 299.

211. When one has regard to cl 23.2 in the context of the whole Agreement, it is apparent that one of the purposes of the Agreement was to ensure that Adecco Australia was legally responsible for the Temporary Staff it supplied pursuant to the Agreement. That is apparent, not least, from the fact that Adecco Australia was responsible for effecting insurances, including public liability insurance “for any one occurrence in respect of bodily injury … arising out of the provision of the services under this Agreement” (cl 18.2.1), workers compensation insurance “for its full liability under any applicable laws relating to workers’ compensation …. ” (cl 18.3.1) and “insurance coverage for any liability, loss, claim or proceedings whatsoever and whether arising at law or in equity or by virtue of any relevant statute relating to employer’s liability by any person employed by the Supplier or any sub-contractor in or about the provision of the Services … ” (cl 18.3.2). All insurances Adecco Australia was required to effect and maintain were to be arranged in such a manner as to name Adecco Australia and note CSR’s interest for their respective rights, interests and liabilities and, save for the limit of liability, apply as if there were a separate policy in force covering each of Adecco Australia and CSR (cl 18.6).

212. In addition, it is apparent that Adecco Australia was to have a role in ensuring the safety of Temporary Staff at any Place of Delivery. Thus, if requested by CSR, it was to ensure a suitable qualified representative attend at safety and toolbox meetings at a Place of Delivery (cl 5.1), instruct its Temporary Staff to abide by the CSR regime when on CSR’s premises and at the Place of Delivery (cl 14.1), ensure Temporary Staff had the requisite skills and competencies (cl 14.2) and ensure all Temporary Staff complied with all laws, including Occupational Health, Safety and Welfare laws and CSR’s Occupational Health, Safety and Environmental Policies and guidelines (cl 14.4). Adecco Australia was to provide training relevant to the Assignment to its Temporary Staff at no cost to CSR (cl 16) and was to warrant that such Staff possess the requisite skills, competencies, experience and capability duly to perform their Assignment duties (cl 17).

213. Adecco Australia submitted that on the primary judge’s construction, cl 23.2 required it to indemnify CSR in circumstances where CSR supervised and directed him effectively as his employer pro hac vice and “neither Adecco Australia nor Adecco Industrial had any involvement at the Batemans Bay plant”.

214. In the light of the provisions in the Agreement to which I have referred, a requirement that Adecco Australia indemnify CSR in such circumstances is hardly as surprising as Adecco Australia’s submissions appear to contend. Adecco Australia’s submissions were made with no reference to the responsibility of labour hire firms by virtue of the employer’s non-delegable duty of care where legal employment is not transferred to the hirer. [231]

     231. See generally TNT Australia Pty Ltd v Christie (2003) 65 NSWLR 1; [2003] NSWCA 47.

215. Next, Adecco Australia submitted that, applying Erect Safe,[232] Mr Frewin’s claim did not arise out of and was not in connection with his performance of “Assignment” duties. Rather, it arose out of, or was connected with, CSR’s negligent acts or omissions.

     232.    (at [12]) per Giles JA; (at [157]) per McClellan CJ at CL.

216. Each case must clearly stand and fall on the terms of the relevant provision construed in the context of the contract as a whole. This argument must also fail having regard to the width of the words in cl 23.2 in respect of which it was sufficient that the occasion for Mr Frewin being at the Batemans Bay plant was to carry out an Assignment as referred to in cl 23.2. [233] As in Davis, cl 23.2 should operate on its own terms.

     233. See State of NSW v Tempo Services Ltd [2004] NSWCA 4 (at [8]) per Meagher JA; (at [20]) per Hodgson JA (Giles JA agreeing).

217. The notice of contention should be rejected.

Orders

218. I propose the following orders:

1. Appeal allowed.

2. Set aside the judgment for Adecco (Australia) Pty Limited (as the cross-defendant) on the cross-claim brought by CSR Limited and Holcim (Australia) Pty Limited.

3. Judgment for CSR Limited on the cross-claim as against Adecco (Australia) Pty Limited.

4. Order that the Adecco (Australia) Pty Limited indemnify CSR Limited and Holcim (Australia) Pty Limited as regards:

1. CSR Limited’s liability under the judgment to the plaintiff, and for the plaintiff’s costs.

2. CSR Limited’s liability under the judgment to Adecco Industrial Pty Ltd and for Adecco Industrial Pty Ltd’s costs.

3. CSR Limited’s costs and expenses incurred in defending the plaintiff’s claim and Adecco Industrial Pty Ltd’s cross-claim; and

4. Holcim (Australia) Pty Ltd’s costs and expenses incurred in defending the plaintiff’s claim and Adecco Industrial Pty Ltd’s cross-claim.

5. Order that Adecco (Australia) Pty Limited pay CSR Limited and Holcim (Australia) Pty Limited’s costs of the appeal and the proceedings below.

219. MACFARLAN JA: I agree with the orders that McColl JA proposes and with her Honour’s reasons.

220. SIMPSON JA: I agree with McColl JA.

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Endnotes

Decision last updated: 31 May 2017