Fitzpatrick v Job t/as Jobs Engineering - [2007] WASCA 63

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: FITZPATRICK -v- ROBERT NORMAN JOB AND WENDY BARBARA JOB T/AS JOBS ENGINEERING & ORS [2007] WASCA 63

CORAM: STEYTLER P
PULLIN JA
BUSS JA

HEARD: 23 & 24 AUGUST 2006, 26 SEPTEMBER 2006 & 8 MARCH 2007

DELIVERED : 20 MARCH 2007

FILE NO/S: CACV 61 of 2005

BETWEEN: PAUL ANDREW FITZPATRICK
Appellant
AND
ROBERT NORMAN JOB AND WENDY BARBARA JOB T/AS JOBS ENGINEERING
First Respondents
V & D RIDOLFO PTY LTD
Second Respondent
GIO GENERAL LTD
Third Respondent

FILE NO/S :CACV 118 of 2005

BETWEEN :GIO GENERAL LTD
Appellant
AND
ROBERT NORMAN JOB AND WENDY BARBARA JOB T/AS JOBS ENGINEERING
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :FRENCH DCJ
Citation  :FITZPATRICK -v- ROBERT NORMAN JOB AND WENDY BARBARA JOB T/AS 'JOBS ENGINEERING' & ANOR [2005] WADC 89
File No  :CIV 2098 of 2000
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :FRENCH DCJ
Citation  :FITZPATRICK -v- ROBERT NORMAN JOB AND WENDY BARBARA JOB T/AS 'JOBS ENGINEERING' & ANOR [2005] WADC 161
File No  :CIV 2098 of 2000

Catchwords:

Tort - Product liability - Manufacturers liability - Wood processing machine partly manufactured by first defendant and completed by the second defendant - Machine used by second defendant for its own purposes - Not completed with a view to resale - Second defendant approached by plaintiff with an offer to purchase - Machine sold to plaintiff

Duty of care - Duty of first defendant - Whether duty to advise second defendant about safety features to guard against risk of injury - Whether risk of injury obvious

Obviousness of risk - Whether relevant to formulation of duty or relevant to standard of care

Causation - Onus of proof - Legal onus remains with plaintiff throughout the trial - Shift of evidentiary onus - Whether first defendant's breach caused the plaintiff's loss - Whether plaintiff's conduct unreasonable and constituted a supervening event

Insurance - Product liability insurance - Whether exclusion clause relating to claims arising out of a breach of duty owed in a professional capacity applied - Whether defective design exclusion clause applied - Whether costs extension clause applied

Legislation:

Nil

Result:

CACV 61 of 2005

Appeal against first respondents allowed
Appellant's damages reduced by 70 per cent for contributory negligence
Appeal against second respondent dismissed

CACV 118 of 2005

Appeal dismissed

Category: A

Representation:

CACV 61 of 2005

Counsel:

Appellant:     Mr C L Zelestis QC & Mr T Lampropoulos
First Respondents         :     Ms F C E Davis
Second Respondent       :     Mr M J McCusker QC & Mr I R Freeman
Third Respondent         :     Ms A M I Schoombee

Solicitors:

Appellant:     Tydde & Co
First Respondents         :     D G Price & Co
Second Respondent       :     Lavan Legal
Third Respondent         :     Minter Ellison

CACV 118 of 2005

Counsel:

Appellant: Ms A M I Schoombee
Respondent: Ms F C E Davis

Solicitors:

Appellant: Minter Ellison
Respondent: D G Price & Co

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

Adelaide Chemical and Fertiliser Co Ltd v Carlyle (1940) 64 CLR 514
Bell v Lever Brothers Ltd [1932] AC 161
Bennett v Minister of Community Welfare (1992) 176 CLR 408
Betts v Whittingslowe (1945) 71 CLR 637
Bird Constructions v United States Fire Insurance Co (1985) 24 DLR (4th) 104
Boston Clothing Co v Margaronis (1992) 27 NSWLR 580
British Fame (Owners) v MacGregor (Owners) [1943] AC 197
Brodie v Singleton Shire Council (2001) 2006 CLR 512
Bull v Samson & Rover Mowers (Aust) Pty Ltd [1984] 2 Qd R 489
Burwood Council v Byrnes [2002] NSWCA 343
Chappel v Hart (1998) 195 CLR 232
Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754
Clarke v Coleambally Ski Club Inc [2004] NSWCA 376
Coca Cola Amatil (NSW) Pty Ltd v Pareezer (2006) A Tort Rep 81‑834
Commissioner of Main Roads v Jones (2005) 79 ALJR 1104
Consolidated Broken Hill Ltd v Edwards (2005) Aust Torts Reports 81‑815
CSR Ltd v Della Maddalena (2006) 80 ALJR 458
Daniels v Anderson (1995) 37 NSWLR 438
Davis v Council of the City of Wagga Wagga [2004] NSWCA 34
Donoghue v Stevenson [1932] AC 562
Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317
Edson v Roads & Traffic Authority (NSW) (2006) Aust Torts Reports 81‑839
FAI General Insurance Co Ltd v Gold Coast City Council [1995] 2 Qd R 341
Fitzpatrick v Robert Norman Job and Wendy Barbara Job t/as 'Jobs Engineering & Anor [2005] WADC 161
Forbes v Selleys Pty Ltd [2004] NSWCA 149
GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558
Gold Ribbon (Accountants) Pty Ltd (in liq) v Sheers [2006] QCA 335
Government Insurance Office of New South Wales v Council of the City of Penrith (1999) 102 LGERA 102
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540
Hadley v Hazian Pty Ltd, unreported; FCt SCt of WA; Library No 950334; 13 July 1995
Ham v Somak Travel Ltd [1998] EWCA CIV 153
Hill v Van Erp (1997) 188 CLR 159
Jaensch v Coffey (1984) 155 CLR 549
Karenlee Nominees Pty Ltd v ACN 004 312 234 Ltd (1994) 8 ANZ Ins Cas 61‑236
Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44
Langham v Connells Point Rovers Soccer Club Inc [2005] NSWCA 461
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506
Marsden v Ydalia Holdings (2006) Aust Torts Reports 81‑840
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579
MDIS Ltd v Swinbank [1999] 2 All ER (Com) 722
Medlin v State Government Insurance Commission (1995) 182 CLR 1
M'Kew v Holland & Hannen & Cubitts (Scotland) Ltd [1970] SC (HL) 20
Modbury Triangle Shopping Centre Pty Ltd v Anzil (2005) 205 CLR 254
Mulligan v Coffs Harbour City Council (2005) 223 CLR 486
Nagle v Rottnest Island Authority (1993) 177 CLR 423
Naxakis v Western General Hospital (1999) 197 CLR 269
Neindorf v Junkovic (2005) 80 ALJR 341
New South Wales v Council of the City of Penrith [1999] 102 LGERA 102
Newcastle City Council v GIO General Ltd (1997) 191 CLR 85
Onetech Pty Ltd v Shaw [1999] WASCA 289
Overseas Tankship (UK) Ltd v The Miller Steamship Co Pty; The Wagon Mound (No 2) [1967] 1 AC 617
Pennington v Norris (1956) 96 CLR 10
Pringle v Everingham (2006) 46 MVR 58
Richmond Valley Council v Standing (2002) Aust Torts Reports 81‑679
Rosenberg v Percival (2001) 205 CLR 434
Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262
Sherlex Pty Ltd v Thornton & Ors [2003] QCA 461
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
Sullivan v Moody (2001) 207 CLR 562
Suncorp Metway Insurance Ltd v Landridge Pty Ltd (2005) 12 VR 290
Suosaari v Steinhardt [1989] 2 Qd R 477
Sutherland Shire Council v Henshaw [2004] NSWCA 386
TC by his tutor Sabatino v The State of New South Wales [2001] NSWCA 380
Temora Shire Council v Stein (2004) 134 LGERA 407
Teoh v Minister for Immigration and Ethnic Affairs (1994) 49 FCR 409
Thompson v Woolworths (Q'land) Pty Ltd (2005) 221 CLR 234
Thornton Springer v NEM Insurance Co Ltd [2000] 2 All ER 489
Todman v Victa Ltd [1982] VR 849
Toomey v Scolaro's Concrete Constructions Pty Ltd (in liq) (No 5) (2002) 12 ANZ Ins Cas 61‑519
University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481
Vairy v Wyong Shire Council (2005) 223 CLR 422
Van der Sluice v Display Craft Pty Ltd [2002] NSWCA 204
Vosten v The Commonwealth [1989] 1 Qd R 693
Water Board v Moustakas (1988) 180 CLR 491
West Wake Price & Co v Ching [1957] 1 WLR 45
Wilkins v Council of the City of Broken Hill [2005] NSWCA 468
Wynbergen v Hoyts Corporation Pty Ltd (1997) 72 ALJR 65
Wyong Shire Council v Shirt (1980) 146 CLR 40

STEYTLER P: I agree with Buss JA.
PULLIN JA: Two appeals are being heard together. The first, CACV 61 of 2005, was instituted by the appellant "Mr Fitzpatrick" and the second appeal, CACV 118 of 2005, was instituted by the appellant "GIO", which is also the third respondent in the first appeal.
The appeals both arise out of proceedings concerning an injury to Mr Fitzpatrick which he suffered on 5 January 1999.
Mr Fitzpatrick was injured when his left leg had to be amputated after his foot was trapped in a wood processing machine. Mr Fitzpatrick had operated the machine for four months. His business had bought the machine from the second respondent "Ridolfo" in August 1998 for $55,000. Ridolfo had bought the machine from the first respondent "Jobs Engineering" in September 1996. The machine had been custom made in Tasmania by Jobs Engineering for Ridolfo and it was manufactured without a cabin. Ridolfo's people inspected the machine when it was built and were instructed in its safe use by Mr Job. Ridolfo brought the machine to Western Australia and had the cabin custom made by a local fabricator. It used the machine until it was sold to Mr Fitzpatrick's business. Ridolfo instructed Mr Fitzpatrick in the safe use of the machine.
After he was injured, Mr Fitzpatrick sued Jobs Engineering and Ridolfo, claiming that they were negligent and liable to pay him damages. There were also some claims under the Trade Practices Act 1974 (Cth), but they are no longer relevant. Both Jobs Engineering and Ridolfo sought contribution from the other in the event that Mr Fitzpatrick succeeded in the action. The trial Judge dismissed all claims against the defendants. Mr Fitzpatrick has appealed in the first appeal against the dismissal of the claims against both defendants.
GIO was Jobs Engineering's insurer, and provided product liability cover under a policy which GIO had issued. Jobs Engineering claimed a declaration about its entitlement to indemnity from GIO under the policy in the event Mr Fitzpatrick's claim succeeded against it, and claimed the costs of defending the action under a costs extension clause in the policy. The trial Judge upheld both claims. GIO has appealed against this decision in the second appeal.

The wood processing machine

To understand the issues in the case and how Mr Fitzpatrick was injured, it is necessary to explain, by reference to undisputed evidence and

findings made, how the machine operated, how it was constructed and who constructed it. Much of the description and the evidence about the dimensions of the machine come from the evidence of Dr Chew, a mechanical engineer called as an expert by Mr Fitzpatrick.

The machine cut and split logs of wood into a size suitable for burning in fireplaces. Large logs were placed onto a log bed and held in position and then short sections of the log were cut off by a chain saw. The short logs were then dropped onto the floor of a splitter box. The logs were there clamped between two metal plates forming the sides of the splitter box. These plates were moveable and were powered by hydraulic rams, and they forced the log onto steel splitter knives. This split the log along its grain, breaking off firewood‑sized pieces from the bottom half of the log. The metal plates then retracted and this freed up the top half of the log which dropped down onto the splitter box floor. The plates were again moved by the rams, clamping the top half of the log which was then forced onto the splitter knives, thereby completing the splitting of the log into firewood sized pieces. The pieces were carried off by a conveyer belt and dropped into a truck. Another short log was cut by the chainsaw and dropped into the splitter box to repeat the process.
The process was controlled by levers located inside the operator's cabin. The cabin was located adjacent to the splitter box. The splitter box was below the level of the cabin floor, although the nearside plate of the splitter box projected above the level of the cabin floor. The control levers were located on a control panel 440 mm above the cabin floor. There was a key operated switch on the side of the console which worked like a car switch and which could turn the engine of the machine on or off. The operator sat on a chair in the cabin facing the control panel with his left hand side facing out of an opening which overlooked the splitter box.
There were a number of control levers on the panel, only one of which I need mention. It was the splitter control lever and it had three settings, namely "forward", "reverse" and "neutral". As manufactured, the lever could be locked into neutral by a bar which could be pushed forward to lock the lever into position and then released by pulling the lock bar back. At the time of the accident this lever was broken but, in its broken state, it was still possible to put it into neutral by reaching under the top of the control panel.
When the splitter control lever was set in the "forward" position, the two metal plates moved towards the knives and the plate nearest the cabin would move away from the cabin. When the process went into reverse the two plates moved away from the knives and the plate nearest the cabin moved back towards the cabin. When set in "forward" and left in that position, the movement became automatic (providing a log did not jam), which meant that the plates would move forward and towards the knives and then back and away from them. The cycle took eight seconds forward and eight seconds back. When the lever was put into neutral, the splitter box plates would stop operating.
From time to time a log would misalign when it fell into the splitter box. The splitter box was designed to split logs along the grain and it would not work when the log misaligned. Sometimes the logs would jam on the knives and it was necessary for operators to turn off the machine, get down into the splitter box and to free the jammed wood. The operator had to watch the process to try and prevent the jamming from occurring.
Mr Fitzpatrick gave evidence that, when he acquired the machine, it came with a metal bar with a hook on the end which was designed to be used to move the wood around in the splitter box.
Before turning to the circumstances of the manufacture of the machine, I should refer to some other dimensions on the machine. From the splitter box floor to the top of the plate closest to the cabin was 680 mm. The splitter knives were 180 mm from the floor of the splitter box. The kick plate to prevent slipping was 240 mm high and the near metal plate of the splitter box extended a further 65 mm above that plate. According to Dr Chew, when fully retracted, the near metal plate of the splitter box was approximately 150 mm from the side metal plate at the edge of the cabin floor. Mr Job said that was not correct. I will have to refer to that evidence when considering a point raised in the GIO appeal (ground 2(c)).When fully extended, the near plate of the splitter box was approximately 640 mm from the side metal plate at the edge of the cabin.

Manufacture of the machine and purchase by Ridolfo

Machines of this general type were manufactured by Jobs Engineering in Tasmania. They were not a standard product because they were made to specific order and specifications, but the wood splitting mechanism did not vary. Jobs Engineering manufactured machines in the early days without cabins, but by the time of the sale to Ridolfo, a cabin was usually built onto his machines.
Ridolfo operated a firewood retailing business. In July 1996, having become aware of the machines manufactured by Jobs Engineering, he travelled to Tasmania to inspect them. Having done so, Ridolfo ordered a machine for use in his business. The order was for a machine without a cabin, because he decided that it would be easier to transport the machine without the cabin. Ridolfo took over the responsibility for the construction of the cabin, and Jobs Engineering did not participate at all in its design or construction.

Jobs Engineering demonstrates the use of the machine

When the machine had been constructed by Jobs Engineering (without the cabin), Mr Ridolfo, and other Ridolfo representatives, travelled to Tasmania to take delivery. Mr Job made it clear to the Ridolfo representatives that if anything had to be done inside the splitter box for maintenance, the mechanism should be locked off and the machine engine switched off. He explained that if a log had to be moved inside the splitter box, the mechanism could be locked off by means of the locking mechanism on the splitter box lever on the control panel so that the plates could not move Mr Job advised Ridolfo that if any wood had to be adjusted inside the splitter box, the splitter box mechanism should be locked off and the wood adjusted manually. Mr Job showed Mr Ridolfo how to use a metal rod to unjam blocks of wood (AB 379). Mr Job advised that if an operator needed to get inside the splitter box to release the logs jammed in the splitter knives, or to grease or oil the splitter knives, then the whole machine should be turned off.

Construction of the cabin and use of the machine by Ridolfo

Ridolfo took the machine back to Western Australia and arranged for an engineering contractor, G & G Welding, to construct the cabin. Between Mr Ridolfo and Mr Giancola of G & G Welding the cabin was designed and constructed. They had available to them some photographs of other machines manufactured by Jobs Engineering. The cabin, however, differed from those constructed by Jobs Engineering. Mr Ridolfo was conscious of safety, and he included a plate 240 mm high, placed on the floor of the cabin across the opening to the splitter box, to prevent an operator slipping from the floor of the cabin into the splitter box. He also arranged for some mesh to be placed on the cabin to protect the operator from wood chips from the chainsaw. A removable bar was also constructed to fit across the opening in the cabin adjacent to the splitter box. After the cabin had been constructed, Mr Ridolfo took photographs and sent them back to Jobs Engineering, who kept them in their records. The machine was then operated in Ridolfo's yard during the balance of 1996, all 1997 and in 1998 until September.
The machine was normally operated for Ridolfo by Mr Michael Harvey. From time to time the splitter box lever would break but it was easily repaired, and even in its broken state the lever could be put into neutral by reaching under the console control panel. The significance of the broken lever was contentious at the trial, but not so on this appeal.
The metal bar which was placed across the cabin opening next to the splitter box was removed and appears not to have been used by anyone.

Sale of the machine by Ridolfo to Mr Fitzpatrick

After Ridolfo had been using the machine for a little under two years and around September 1998 Mr Fitzpatrick, who was operating a business called "Kelly's Wood Yard", approached Mr Ridolfo and asked if Ridolfo would sell the machine. Mr Ridolfo had not thought of doing so, but was interested if the price was right. There were negotiations, the price was agreed and an agreement to sell the machine entered into.
Mr Ridolfo explained to Mr Fitzpatrick how the machine worked and explained how logs would sometimes become jammed in the splitter box and, if this occurred, how the splitter box mechanism should be locked off. Mr Ridolfo explained to Mr Fitzpatrick that wood should be adjusted with a hooked metal bar which he supplied with the machine. Mr Ridolfo explained that if this was not successful, then the engine should be switched off and the operator would then get into the splitter box to free the wood.

Demonstrations by Mr Harvey and Mr Fitzpatrick's awareness of the risk of injury from the splitter box

When the sale between Ridolfo and Mr Fitzpatrick was completed, Mr Harvey went to Mr Fitzpatrick's premises and remained there for several days demonstrating the safe use of the machine. Mr Harvey showed Mr Fitzpatrick how to adjust logs that were out of alignment in the splitter box using the metal hook. He told Mr Fitzpatrick to turn off the splitter box by putting the lever into neutral before doing so.
Her Honour also made an unchallenged finding that, from these instructions, Mr Fitzpatrick was well aware what the appropriate operating methods were and was well aware of the dangers of placing any part of his body in the splitter box while it was still operating.

Mr Fitzpatrick adopts an unsafe system of work

Instead of following the way of dealing with misaligned logs as explained by Mr Ridolfo and Mr Harvey, and as demonstrated by Mr Harvey, her Honour found - and it is not challenged - that Mr Fitzpatrick began using his foot rather than the metal hook to realign log rings when they misaligned upon dropping into the splitter box. Her Honour also found, and it is not challenged, that, contrary to the instructions and demonstrations, he did not place the splitter box lever into neutral, so that when he used his foot, the splitter box mechanism was moving to and fro in the process of capturing and clamping log rings and forcing them onto the knives. Mr Fitzpatrick also abandoned the use of the metal hook as a means of manoeuvring the logs. After the accident, it was found under the machine covered with sawdust.
Her Honour found that, when Mr Fitzpatrick used his foot to attempt to align the log on the day of the accident, this was "not an isolated [act]"; it was "a manoeuvre he had done before in similar circumstances". As a result, her Honour made the unchallenged finding that Mr Fitzpatrick had adopted an "unsafe system [of work] and one that was contrary to the demonstrations and verbal instructions and advice that had been given to him".

The accident

Mr Fitzpatrick operated the machine for six months and then, on 5 January 1999, in accordance with the unsafe system that he had adopted, Mr Fitzpatrick used his left foot to try and adjust a log which had landed in the splitter box at an angle. He gave the wood a "quick shove kick" to cause it to drop flat on the floor of the splitter box. He said suddenly the machine grabbed his foot. He was not able to explain in what way his foot was caught. His foot was then forced through the knives. This action dragged him away from the cabin and he could not reach the controls until his foot had passed through the splitter box knives and the system went into reverse when he was then able to reach the controls and switch off the key. He then called for help on the telephone. Her Honour held that it was not possible to determine exactly what position Mr Fitzpatrick was in when his foot was caught.
Her Honour found that the accident was not the result of inadvertence but the result of a deliberate action pursuant to the unsafe system that Mr Fitzpatrick had developed. By this, her Honour must have meant that his foot was not inadvertently placed near the splitter box.
It is clear from evidence that Mr Fitzpatrick gave at the trial that he recognised the risk of injury from the splitter box. He said that a person would have to be a "madman" (his words) to contemplate standing in the floor of the splitter box when it was operating. He spoke to Mr Harvey and another of Ridolfo's employees sometime after the accident. Her Honour found that he stated to them that he had deliberately placed his leg into the splitter box.

Mr Fitzpatrick installs a barrier in the cabin after the accident

After the accident Mr Fitzpatrick installed a barrier across the opening in the cabin. It was constructed of metal pipe tube and lined with steel mesh. It was 830 mm high. It was fixed onto brackets which were already on the cabin to house the bar which had originally been placed across the opening and which had not been supplied with the machine when Mr Fitzpatrick purchased it. The barrier, like the bar, was removable because access to the splitter box (when not operating) was necessary for maintenance or to deal with blockages.

Mr Fitzpatrick's appeal

Mr Fitzpatrick, in his proposed amended grounds of appeal, claims that her Honour erred by failing to make any finding about the duty of care owed by both Jobs Engineering and Ridolfo (grounds 1 and 2) and erred by finding that neither of them breached any duty of care (grounds 3, 4 and 6) and erred in relation to her findings on causation (grounds 8 to 12). The proposed amended grounds of appeal read:
"1.The learned trial Judge erred in law and fact in failing to find that the first respondent owed potential users of the machine, such as and including the appellant, a duty to take reasonable care in accordance with the standards of a competent and experienced machine designer/engineer to:
(a)incorporate in the machine such safety features as were necessary to enable the machine to be operated safely and to provide a manual which identified hazards; and
(b)ensure (by providing advice and information) that the person completing the manufacture of the machine was made aware of the safety features which should be installed, and written instructions which needed to be provided, to enable the machine to be operated safely.
2.The learned Trial Judge erred in law and fact in failing to find that the second respondent, which had undertaken the responsibility of completing the machine, and which had imported and supplied the machine to the appellant, owed a duty of care to potential users of the machine to install appropriate safety barriers and emergency stop switch, in accordance with the standards of a competent and experienced machine designer/engineer and relevant Australian Standard and WA regulations, and in accordance with appropriate safety criteria.
3.The learned Trial Judge erred in law and fact in failing to find that each respondent breached their duty of care, in the case of the second respondent, by failing to incorporate relevant safety features in the machine as referred to in ground 2, and in the case of the first respondent, by failing to provide adequate information and advice to the effect referred to in ground 1(b).
4.The learned Trial Judge erred in law in applying a subjective, rather than objective, test to the issue of breach of the duty of care on the part of the first and/or second respondents (including whether the respondents should have been aware of relevant design criteria, Australian Standards and regulations, and applied the same).
5.[Abandoned]
6.The learned Trial Judge erred in fact in failing to find that the first respondent could and should have installed an emergency switch in the vicinity of the splitter box, and if that had been done, that the injuries to the appellant would have been avoided.
7.[Abandoned]
8.The learned Trial Judge erred in law in applying an incorrect test of causation, and in particular, in applying a retrospective test by reference exclusively to what the appellant actually did, rather than assessing whether the respondents' wrongful conduct had generated the risk of injury, and whether or not the accident would have occurred if the respondents had not breached their duties.
9.The learned Trial Judge erred in law and fact in finding that the respondents' acts or omissions were not a cause of accident, because the action of the appellant in putting his leg in the splitter box was a deliberate and conscious act whereas the purpose of safety barriers was to protect against negligent as well as inadvertent acts on the part of an operator.
10.The learned Trial Judge erred in law in approaching the issue of causation on the basis that it was either the conduct of the respondents or the conduct of the appellant which caused the accident without adequately considering whether there were concurrent causes in the circumstances of this case. The learned Trial Judge should have found that the respondents' breaches of duty caused or contributed to the accident, and then considered whether or not the appellant was guilty of contributory negligence, and if so, her Honour should then have considered the appropriate reduction of damages recoverable on account of that contributory negligence.
11.The learned Trial Judge erred in law and fact in finding that even if a barrier had been installed, it is just as likely that the appellant would either have climbed over the barrier, or removed the barrier, when that was mere speculation, and in any event, there would not have been sufficient time to climb over the barrier to prevent a misaligned log becoming jammed, and the appellant would have suffered certain and serious injuries if he actually stood in the bottom of the splitter box whilst it was operating."
There was a ground 12, but senior counsel for Mr Fitzpatrick informed the Court that it was repetitive of grounds 8 and 9.
Ground 1 relates only to Jobs Engineering and ground 2 relates only to Ridolfo. I would grant leave to permit the amendments to the grounds of appeal. Although grounds 1(b) and 3 introduce claims that were not pleaded, evidence relevant to the claims was led without objection. No prejudice will be suffered by the other parties if the amendments are allowed.

Duty of care and breaches of duty alleged at trial and on appeal - Jobs Engineering

Mr Fitzpatrick alleged that Jobs Engineering was a manufacturer and that it owed a duty to users of the machine to take reasonable care to design and construct the machine to avoid risk of foreseeable injury. The pleaded case was that Jobs Engineering breached its duty by failing to design and manufacture and supply the machine with warning signs and with components such as a fixed barrier or interlocking barrier over the splitter box to make the machine safe to use and operate. It was also alleged that there was a defect in the splitter box lever. These were the allegations on which the parties concentrated. These allegations were all dismissed, and in the appeal by Mr Fitzpatrick no attempt has been made to renew them.
By the end of the hearing of the appeal, the sole allegation against Jobs Engineering in the grounds of appeal and the proposed grounds of appeal was that it owed a duty to Mr Fitzpatrick to take reasonable care to ensure that "the person completing the manufacture of the machine" (ie Ridolfo) was given certain advice and information concerning the construction of the cabin, and that Jobs Engineering breached that duty.

Duty and standard of care - Ridolfo

Mr Fitzpatrick also alleged, and in this appeal continued to allege, that Ridolfo was the manufacturer of the cabin and that Ridolfo owed to him a duty as manufacturer to install a fixed barrier and an emergency switch. Ridolfo denies that it was a manufacturer or that it owed this duty.

Duty and standard of care - the law

It is convenient at this stage to set out some general observations about duty and standard of care. The relationship of manufacturer and consumer is now an established category of relationship which, if it exists, will mean that the manufacturer will owe a duty of care to consumers of the product manufactured: Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317 at [29], Hayne and Callinan JJ at [156] ‑ [160], Heydon J agreeing at [177].
There is no common law regime of strict liability for products which are inherently dangerous, and a manufacturer is not an insurer against injury: Suosaari v Steinhardt [1989] 2 Qd R 477 at 487 or, expressed in another way, there is no absolute duty on a manufacturer to design or manufacture a defect free or accident proof product. See also Bull v Samson & Rover Mowers (Aust) Pty Ltd [1984] 2 Qd R 489 at 499; Suosaari v Steinhardt (supra) at 487. A manufacturer owes, to a consumer of the manufacturer's product, the duty to exercise reasonable care to prevent the product causing foreseeable risk of injury or loss to the consumer: Dovuro Pty Ltd v Wilkins (supra) [29] per McHugh J.
The circumstance that a product is inherently extremely dangerous, or, that the gravity of the risk of injury is serious, does not require more than a reasonable response. The circumstance will, however, require keener foresight or greater diligence or a high degree of care: Adelaide Chemical and Fertiliser Co Ltd v Carlyle (1940) 64 CLR 514 at 523 per Dixon J.
If there is a foreseeable risk of injury then, in determining the content of the duty of care, that is the standard of care, the tribunal of fact must determine what a reasonable man would do by way of response to the risk, and the perception of the reasonable man's response calls for a consideration of the magnitude of the risk, the degree of probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have: Wyong Shire Council v Shirt (1980) 146 CLR 40 at 47 ‑ 48; Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at [55]. It is only when those matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to a reasonable man placed in the defendant's position. The judgment in each case of what is a reasonable response to a foreseeable risk depends on the circumstances. Sometimes "inaction" is a course reasonably open to a defendant even though the taking of action may have prevented the accident: Dovuro v Wilkins (supra) per McHugh J [38].

Foreseeability

Reasonable foreseeability of injury is necessary before a duty of care can be established, but it is not sufficient to establish the existence of a duty: Hill v Van Erp (1997) 188 CLR 159, per Dawson J at 174; Sullivan v Moody (2001) 207 CLR 562 at [42]. The test of foreseeability has been described as "undemanding": see Dovuro Pty Ltd v Wilkins (supra) [104] per Kirby J. In almost every case in which a plaintiff suffers damage, it is foreseeable that if reasonable care is not taken, harm may follow; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2005) 205 CLR 254 per Hayne J. In considering foreseeability of risk it is not necessary that the manufacturer should foresee the precise risk of injury or how it occurred: Graham Barclay Oysters Pty Ltd v Ryan (supra) at [87] per McHugh J.

Obviousness of risk

The obviousness of a risk, and the remoteness of the likelihood that other people will fail to observe and avoid it, are often factors relevant to a judgment about what reasonableness requires as a response. In the case of some risks, reasonableness may require no response: Thompson v Woolworths (Q'land) Pty Ltd (2005) 221 CLR 234 at [36]; Dovuro v Wilkins (supra) at [38]. This does not mean that if whenever a risk is obvious there will be no duty of care or no breach. The High Court in Thompson v Woolworths (Q'land) (supra) said (at [37]):
"… The weight to be given to any [consideration] is likely to vary according to circumstances. If the obviousness of a risk, and the reasonableness of an expectation that other people will take care for their own safety, were conclusive against liability in every case, there would be little room for a doctrine of contributory negligence. On the other hand, if those considerations were irrelevant, community standards of reasonable behaviour would require radical alteration."
In looking at the reasonable response to a foreseeable risk, it is necessary to recall that there will be times when others do not act carefully or prudently. As a result, "the obviousness" factor is not to be elevated into some doctrine or general rule of law. See Vairy v Wyong Shire Council (2005) 223 CLR 422 at [162] ‑ [163]. Obviousness of risk is a descriptive phrase that signifies the degree to which risk of harm may be apparent. Obviousness is likely to be accorded greater weight when negligence consists only of a failure to warn of a relevant risk. That is because warnings only serve a purpose if they are likely to inform a person of something that the person does not already know or to draw attention to something that might be overlooked or forgotten. See Vairy v Wyong Shire Council (supra) at [7].
At present in New South Wales there is a debate about whether obviousness of risk is relevant in determining the duty of care owed by highway authorities or is relevant to the breach of duty of care. Thus in Burwood Council v Byrnes [2002] NSWCA 343 and Richmond Valley Council v Standing (2002) Aust Torts Reports 81‑679, it was held that obviousness of risk is relevant to the duty of care, this based on what was said by Gaudron, McHugh and Gummow JJ in Brodie v Singleton Shire Council (2001) 2006 CLR 512 at [163]. On the other hand, Temora Shire Council v Stein (2004) 134 LGERA 407 and Sutherland Shire Council v Henshaw [2004] NSWCA 386 hold that obviousness of the risk to a careful pedestrian goes to the breach of the duty of care. Ipp JA has visited this topic on several occasions. See Consolidated Broken Hill Ltd v Edwards (2005) Aust Torts Reports 81‑815 at [53]; Clarke v Coleambally Ski Club Inc [2004] NSWCA 376 at [26] ‑ [33] and most recently in Edson v Roads & Traffic Authority (NSW) (2006) Aust Torts Reports 81‑839.
In my opinion it is possible to make too much of the debate. If a foreseeable risk of injury exists in circumstances where there is a relationship between the plaintiff and defendant which will give rise to the generalised duty to take reasonable care to avoid risk of foreseeable injury then, in my opinion, the obviousness of the risk becomes important when considering the content of the duty. This is the standard of care or, in more basic terms, what it is that the defendant "must do" to discharge the generalised duty of care. Thus, if a risk is obvious and the plaintiff is injured, the conclusion might (not must) be that the defendant had no duty to do anything to prevent or reduce the risk of injury.
In Marsden v Ydalia Holdings (2006) Aust Torts Reports 81‑840, I said at [112] that obviousness is relevant when it comes to the question of whether there has been a breach of duty or not. So it is, but obviousness bears first on the issue of what a person must do in performance of the generalised duty of care. In other words, to consider obviousness first in relation to whether there is a duty to do or not to do something in the particular circumstances of the case. This is not only consistent with what was said by Gaudron, McHugh and Gummow JJ in Brodie v Singleton Shire Council (supra), but also with what was said in Vairy v Wyong Shire Council (supra) per Gleeson CJ and Kirby J at [8], where their Honours said:
"It is impossible to state comprehensively, or by a single formula, the circumstances in which reasonableness requires a warning … Often, the answer will be influenced by the obviousness of the danger, [and] the expectation that persons will take reasonable care for their own safety …"
It is also consistent with what was said by the High Court in the joint judgment in Thompson v Woolworths (Q'land) (supra) as quoted above. In Brodie v Singleton Shire Council (supra), Gaudron, McHugh and Gummow JJ said that the duty owed by a highway authority (as discussed in [150] ‑ [165]) was owed to users of a road "exercising reasonable care for their own safety" [163].

Jobs Engineering - The appellant's case at trial and final form of the grounds of appeal

In her reasons for decision the trial Judge summarised the issues at trial at [40] where she said:
"The plaintiff claims that the first defendants owed him a duty of care to ensure that the machine was safe to use and operate. Paragraph 27 of the statement of claim alleges that this duty extended to the supply of a machine that was safe to use and operate, the provision of warning signs and a written manual of operating instructions, a reliable operating lever for the splitter box mechanism and design and manufacture of the machine that complied with Australian Standards. It is also claimed that the first defendants owed a duty to advise the plaintiff that the machine had been sold to the second defendant in a partly constructed condition and of the terms of the original supply agreement between the defendants. However, this issue was not actively pursued by the plaintiff and the evidence does not establish that the first defendants knew that the machine had been sold to the plaintiff by the second defendant until after the sale. There is no continuing obligation or duty on the part of the first defendants to advise the plaintiff that the original machine had been purchased without a cabin when Mr Job was contacted by the plaintiff in relation to a spare part some time after the sale and clearly some time after he had been operating the machine. In any event there is no evidence and nor was it seriously suggested that this could be in any way causative of the plaintiff's accident."

The allegations of breach of duty were all dismissed by the trial Judge. It may be observed that although her Honour referred to what the plaintiff claimed was the duty of care owed by Jobs Engineering, no finding was made about whether such a duty of care was owed. Jobs Engineering was the manufacturer of the machine without the cabin. A plaintiff in a negligence action must prove that the defendant owed the plaintiff a duty as a member of a class: Nagle v Rottnest Island Authority (1993) 177 CLR 423 at 435; Vairy v Wyong Shire Council (supra) at [6] and [122]; Mulligan v Coffs Harbour City Council (2005) 223 CLR 486 at [18]. Jobs Engineering was a manufacturer willing to sell to any person willing to buy the wood processing machine, and therefore owed a duty of care to such consumers and persons who might use the machine. Mr Fitzpatrick was a member of that class. On the low grade test, the risk of injury was foreseeable. Although the trial Judge did not expressly find that Jobs Engineering owed Mr Fitzpatrick a duty to exercise reasonable care to prevent the machine causing foreseeable risk of injury, it is implicit that she did so find. This is because she went on to examine the allegations of breach which is only necessary if there is a duty of care. The alleged breaches contain within them a statement of the alleged standard of care.
At the end of the hearing of the appeal, apart from ground 6, the only allegation against Jobs Engineering concerning breach of duty was in the third ground of appeal.
There was much controversy about the formulation and interpretation of ground 1 (which relates to duty) and ground 3 (which relates to breach) during the hearing, but senior counsel for the appellant made it clear that notwithstanding par (a) in ground 1, the only allegation which Jobs Engineering faced was the allegation that the content of the duty owed by Jobs Engineering was as set out in ground 1(b). That is, an alleged duty to take reasonable care to "ensure by providing advice and information" to "the person completing the manufacture" that such person was made aware of "safety features … [to] be installed", namely the need for the installation in or on the cabin of a fixed barrier and an emergency stop switch and of the written safety instructions "which needed to be provided" to "enable the machine to be operated safely". Mr Fitzpatrick alleged that this duty was breached.
The allegation that Jobs Engineering breached a duty it owed to Mr Fitzpatrick (to provide advice to Ridolfo) was not pleaded in the statement of claim. It may also be observed that the formulation of duty is unusual. It contends not that Jobs Engineering owed a duty to potential users, ie consumers, to warn them of the danger, but instead that Jobs Engineering owed a duty to consumers to take reasonable care to "ensure" that "the person completing the manufacture of the machine" was "made aware" of "safety features" and "instructions". Cast in this way, the alleged duty is in effect a duty to warn, ie a duty to warn Ridolfo (as the manufacturer) of the need for the "safety features" and "instructions".
This allegation sits uncomfortably with, and must be seen in the context of, evidence and unchallenged findings made by the trial Judge that Jobs Engineering had no responsibility for the design or construction of the cabin on which it is alleged by Mr Fitzpatrick that a barrier and switch should have been installed. It is to that evidence and those findings I now turn.

The evidence and findings concerning responsibility for the design and manufacture of the cabin

The evidence on the subject was given by Mr Job and Mr Ridolfo. Mr Job gave evidence that Ridolfo "wanted a cabin left off for freight reasons, and also they wanted to build their own. There was some talk about some airconditioning and fans, but we would never have done anything like that, so I kept right out of that part of it." Mr Job was asked if Mr Ridolfo said anything else about how they would build the cabin and he said "Yes. He said they had their own workshop in Western Australia and all the facilities to complete one satisfactorily and to bring it up to all Western Australian requirements. That's as far as he - like I didn't know what any requirements here were. I agreed to it."
He was also asked whether there was any discussion about guards and he said that it was never discussed. Mr Ridolfo gave evidence that while he was in Tasmania, he did not take any steps to place an order for the machine because he wanted to do a "bit more research into it" and that when he came back he:
"… called the Department of Transport and also, I think it was DOHSW at the time, or Worksafe, just to try and ascertain exactly what we needed to allow for in terms of the cabin. At the time we were looking at possibly moving the machine around, so if that was the case, we wanted to see if that was (a) legal, because it would have to be registered, and also, if we were going to go down the path of ordering it without the cabin, what sort of things we would need to allow for."
He was then asked what he did after these inquiries were made and what he decided to do, and he gave evidence that:
"… Then we would basically order the machine without a cabin.
How did you go about ordering the machine?---I called Mr Job, said that we were interested in ordering the machine. We had raised it with him on our visit in Tasmania, and we just confirm that we would like the machine to be made without the cabin, was there any problem with that. He said no, it was a very simple cabin, just angle iron and sheet metal for that could pretty much be made anywhere, and then, obviously, I sent a fax after that confirming the details and the order."
He also gave evidence that, after the machine came to Western Australia, he arranged to work in conjunction with G & G Welding to construct the cabin. Between them they settled upon the design and method of construction of the cabin.
Her Honour found at [43]:
"[Jobs Engineering] contracted with [Ridolfo] to provide a machine without the construction of a cabin. Although [Ridolfo] had photographs and had seen the basic construction of the cabin on similar machines in Tasmania the construction of the cabin was designed and implemented independently by [Ridolfo]."
Her Honour continued at [43]:
"The machine was specifically ordered to be constructed without a cabin and supplied in that form to [Ridolfo] to facilitate its transfer to Western Australia. … I am satisfied on the basis of the evidence of Mr Ridolfo and Mr Giancola that they brought independent views to bear on the design and requirements for the cabin to be constructed. This is confirmed by the distinct design employed in the cabin."
These findings are not challenged. They do not support the pleading in appeal ground 1(b) that Ridolfo was "completing the manufacture of the machine". That pleading suggests that Ridolfo was to complete in accordance with a plan conceived by Jobs Engineering. In fact, Ridolfo took over the responsibility for the planning, design and construction of the cabin. Ridolfo did not carry out work to complete what Jobs Engineering would have done. The design and construction was carried out "independently", as the trial Judge found.

Jobs Engineering - Conclusion on grounds 1 and 3

The generalised duty owed by Jobs Engineering to the users of the machine to avoid risk of foreseeable injury, did not oblige Jobs Engineering to supervise the work carried out by Ridolfo (and it is not alleged that it should), and it did not, in the particular circumstances of this case, oblige Jobs Engineering to give advice to Ridolfo about the need for a barrier or emergency switch. The circumstances are, the fact that Ridolfo told Jobs Engineering that it (Ridolfo) would design and manufacture the cabin in its own workshop, the fact that it had the facilities to complete the cabin satisfactorily, that it told Jobs Engineering that it had the facilities to bring the cabin up to Western Australian requirements, the fact that there was no high degree, or any degree of technical expertise necessary, which Jobs Engineering had, and Ridolfo did not have, to recognise the hazard which was presented by the splitter box and the fact that the danger presented by the splitter box was obvious to Ridolfo. Ridolfo did not request any advice and there was no contractual obligation requiring Jobs Engineering to provide advice.
In those circumstances, Jobs Engineering was not under a duty to consumers to exercise reasonable care to "ensure" that Ridolfo was made aware of the safety features which should be installed in the cabin and was not under a duty of care to provide any "written instructions which needed to be provided, to enable the machine to be operated safely". If there had been some aspect of the machine as supplied which contained some hazard of which Ridolfo was not aware then there may have been a duty owed by Jobs Engineering, to consumers, to advise Ridolfo to carry out work to diminish or guard against the hazard. In the circumstances though, the hazard was plain for all to see, it was an obvious risk, and Ridolfo undertook - to Jobs' knowledge - the construction of the cabin on which it is alleged the barrier and switch should have been mounted.
Even though the duty as formulated in the ground of appeal was not pleaded, the trial Judge in fact expressed a view on the duty now contended for. Her Honour said:
"[Jobs Engineering] did not have a duty of care to ensure that the cabin that was built by [Ridolfo] was constructed to include a barrier guard if one was required. I find [Jobs Engineering] were also not under a duty of care to advise [Ridolfo] that the cabin should be constructed to include such a barrier guard if it was required."
I agree with those conclusions. As a result, ground 1 and ground 3 (insofar as ground 3 relates to Jobs Engineering) should be dismissed. It is not therefore necessary for me to deal with the application by Mr Fitzpatrick to amend his statement of claim.
It is also not strictly necessary to deal with any of the other grounds that affect Jobs Engineering, but as they were argued I will deal with them.
Ground 4 alleged that the trial Judge erred in law in applying a subjective, rather than objective, test to the issue of breach of the duty of care on the part of the first and/or second respondents (including whether the respondents should have been aware of relevant design criteria, Australian Standards and regulations, and applied the same). Ground 6 alleged that the trial Judge erred in failing to find that the first respondent could and should have installed an emergency switch in the vicinity of the splitter box, and if that had been done, that the injuries to the appellant would have been avoided.
Ground 4 is irrelevant, even though it refers to Jobs Engineering, because it relates to the application of the Australian standards and regulations in relation to the manufacture of the machine. The contention is that the barrier guard and emergency switch were required by the Australian standard. The appeal complains that her Honour found only that Jobs Engineering did not know about the existence of the Australian standard and that her Honour should have gone on to consider whether Jobs Engineering ought to have known about it. This ground made sense when it was accompanied by grounds alleging that Jobs Engineering was under a duty to install a barrier or a switch, because Mr Fitzpatrick alleged the Australian standards required these to be installed. Those latter grounds were originally in the notice of appeal. They were abandoned for good reason, namely that Jobs Engineering did not design or construct the cabin. The duty of care, or rather standard of care, now alleged in ground 1 did not oblige Jobs Engineering to install the barrier or switch or comply with the Australian standards. This ground must therefore be dismissed.
Ground 6 cannot be sustained because, although it alleges that Jobs Engineering could, and should, have installed an emergency switch in the vicinity of the splitter box, it was contended in submissions that it should have been installed on the cabin. Jobs Engineering did not construct the cabin. Ground 6 is a remnant of the allegations made in the original notice of appeal and which were abandoned. Ground 6 contradicts the premise behind ground 1, which is that the cabin was constructed by Ridolfo. The Judge's finding that the cabin was constructed by Ridolfo is not challenged. As a result, ground 6 should be dismissed.
The grounds dealing with causation, namely 8, 9, 10 and 11, will be dealt with later in these reasons because the same grounds are presented against Ridolfo. I repeat that grounds 5 and 7 were abandoned and ground 12 may be ignored because it adds nothing to other grounds.

Ridolfo - The pleaded allegations and the issue on appeal concerning duty and standard of care and breach of duty - Grounds 2 and 3

The pleaded case against Ridolfo included a claim under the Trade Practices Act as well as a claim in negligence which had various aspects. All of the claims were dismissed. The surviving allegations in this appeal are that Ridolfo owed a duty of care to Mr Fitzpatrick and breached its duty of care in two respects as appear from grounds 2 and 3. Ground 3 alleged that the trial Judge erred "in failing to find" that Ridolfo "breached [its] duty of care … by failing to incorporate relevant safety features in the machine as referred to in ground 2." Ground 2 alleged an error by the trial Judge in failing to find that Ridolfo, "which had undertaken the responsibility of completing the machine, and which had imported and supplied the machine" to Mr Fitzpatrick, "owed a duty of care to potential users of the machine to install appropriate safety barriers and emergency stop switch in accordance with the standards of a competent and experienced designer/engineer and relevant Australian standard and WA regulations and in accordance with appropriate safety criteria."
Some observations should be made about this ground of appeal. First, nothing was said in the appeal about non-compliance with "WA regulations", so that part of ground 2 may be ignored. As an aside, I should mention that senior counsel for Mr Fitzpatrick handed up a number of pieces of legislation concerning occupational safety. They showed that governments from time to time have legislated to provide for occupational safety. Senior counsel made it clear however, that he did not rely on this to prove that any relevant statutory obligation was imposed on the respondents. Counsel for Jobs Engineering objected to this material. It is hardly necessary to rule on this objection because counsel for Mr Fitzpatrick made no reference to the material after it was objected to. Nevertheless, the objection should be upheld because the material is irrelevant and does not bear upon the resolution of this appeal.
Secondly, the reference to safety "barriers" (plural) in ground 2 can be ignored. Counsel for Mr Fitzpatrick made it clear that the only complaint was about the absence of "a" barrier (singular) constructed across the opening to the cabin like one that was constructed by Mr Fitzpatrick after the accident. Ground 2 must therefore be read as alleging that Ridolfo failed to "incorporate" a barrier guard in or on the cabin which would have prevented Mr Fitzpatrick gaining access to the splitter box, and failed to install a safety switch on the cabin. It is alleged that these omissions caused the injuries. Another type of barrier - an interlocking barrier - was the subject of consideration at trial but not on this appeal.
Ground 2 alleges that the trial Judge erred in "failing to find" what duty of care was owed by Ridolfo. I agree with the appellant in this regard. At [48] her Honour said:
"In par 25 of the statement of claim the plaintiff alleges that the second defendant owed the plaintiff a duty of care, inter alia, to ensure that the machine was safe to operate. The duty of care is said to arise because of the sale of the machine and because the second defendant was aware that the plaintiff would operate the machine to process firewood and that the second defendant represented that the machine would be safe to use for that purpose and also failed to advise that it had purchased it from the first defendants without a cabin. Paragraph 26 sets out the particulars of the second defendant's negligence."
Having said what Mr Fitzpatrick alleged, her Honour did not make any finding about whether a duty of care was owed and therefore made no finding about the content of any duty. Her Honour merely decided that none of the pleaded omissions, such as the failure to provide instructions or the failure to provide an "adequate" splitter box control lever, could be sustained.
It is therefore necessary to decide whether a duty of care was owed by Ridolfo to Mr Fitzpatrick, and if so what its content was. In the statement of claim, Mr Fitzpatrick described Jobs Engineering as the manufacturer but did not describe Ridolfo as a manufacturer. However, in par 25 of the statement of claim it was alleged that Ridolfo "as suppliers of the machine" owed a duty of care to Mr Fitzpatrick to ensure that it was designed and manufactured in accordance with Australian standards. In par 26 it was alleged that the accident was caused by Ridolfo's negligence in that the machine was "supplied" by Ridolfo "and delivered" "without safeguards … including barrier guards".
In Mr Fitzpatrick's written submissions to this Court it is submitted that (par 20, AB 22):
"[Ridolfo], in completing and importing and supplying the machine, was under a duty to potential users to apply the knowledge and expertise of a reasonable engineer/designer in order to ensure that the machine was properly completed, and supplied in a form that was reasonably safe to use. It assumed a responsibility to properly complete the machine."
The written submissions filed by Ridolfo submitted that (AB 64):
"…[Ridolfo] was not the designer or manufacturer of the machine.
…and that
(10)The relationship between [Mr Fitzpatrick] and [Ridolfo] was that of a vendor and purchaser of second‑hand equipment …"
If a manufacturer is a person who makes something, then clearly Ridolfo was a manufacturer because it made the cabin, or caused it to be made. However, when Ridolfo purchased the machine it was a consumer. When it designed and constructed the cabin it did not do so intending to sell it. It was for Ridolfo's own use. There was a foreseeable risk of injury if a person was caught up in the splitter box, but this was not a risk which Ridolfo had created. After using the machine for two years Ridolfo decided to sell it when approached by Mr Fitzpatrick offering to buy it. Ridolfo was not a manufacturer in the business of selling machines to a class of consumers the individuals of which were unknown to it. A manufacturer in business to sell its products is under a duty to design and manufacture to take account of the fact that the sale may be to persons some of whom might be experienced in the use of such a product, but some of whom may be inexperienced. The manufacturer must also allow for the possibility that the class of consumers includes the intelligent and the unintelligent, the careful and the not so careful.
In this case, Ridolfo was dealing with a person who had approached it with a proposal that Ridolfo sell the machine. Any duty owed by Ridolfo was not owed to a class of persons. If there was a duty of care it was a duty owed to Mr Fitzpatrick. Ridolfo was the vendor of the machine which carried with it a foreseeable, but obvious, risk of injury. The risk was obvious to Ridolfo and from what appears below, Mr Fitzpatrick was told all about the risk, or rather how to avoid the risk of injury, and from this, and from the fact that the risk was obvious, Mr Fitzpatrick knew about the risk of injury. In my opinion Ridolfo was not a manufacturer. Ridolfo was the vendor of second‑hand goods. The distinction is significant. Every weekend the Sunday newspapers are full of offers to sell second-hand goods. The persons selling those goods are not required to modify goods which carry with them a risk of injury to diminish that risk. There is however still a relationship which may impose a duty to exercise reasonable care to avoid foreseeable risk of injury by warning of some danger in the goods which the vendor may know about but which the purchaser may not. There was a foreseeable risk of injury in this case. The required response to that risk depends on a further consideration of the circumstances, which are considered under the next heading.

I should say immediately however that, in my opinion, the response required from Ridolfo; the standard of care he had to observe as the vendor of second‑hand goods, was to warn of any danger of which Ridolfo was aware and which was not obvious. In my opinion, Ridolfo, having been approached by Mr Fitzpatrick to sell the machine, was under no duty to carry out work before the sale was completed. Ridolfo was not under any duty to install a barrier guard to prevent negligent use by the purchaser of the machine. There was some discussion during the appeal about whether a guard was necessary to prevent a person accidentally falling into the splitter box, but it is clear that an assessment was made by Ridolfo about the risk of this happening and it responded to it, as explained below, by installing the 240 mm plate. In any event, this case is not concerned with guards or devices necessary to prevent injury from accidental entry into the splitter box. It is concerned with a contention that guards or devices were necessary to prevent an operator deliberately introducing a limb into the splitter box. The contention was that Ridolfo was under a duty to install the barrier and switch in order to avoid the risk of injury from deliberate but negligent use of the machine, a contention which should be rejected for reasons appearing under the next two headings.

Obvious risk

Ridolfo purchased the machine knowing of the risk of injury from the splitter box. It then constructed the cabin for its own use, making its own assessment of the likelihood of the risks of injury from the machine. Mr Ridolfo saw that it was possible that an operator might slip from the cabin, so Ridolfo constructed a 240 mm high plate on the floor of the cabin adjacent to the opening near the splitter box to prevent the chair from slipping off the edge. Ridolfo also placed some mesh to protect against another source of potential injury, namely the chainsaw; but it did not construct a barrier to prevent workers deliberately putting their foot in the splitter box and nor did Ridolfo erect any warning signs. It did neither because it regarded the risk of injury to be obvious. Mr Ridolfo said:
"Well, basically you had a one metre wide knife with thousand of PSI pressure behind it. If anything got stuck in there it was going to come off second best …
Did you reinforce that with the operators at any stage?‑‑‑It was always discussed whenever we were, you know - we didn't show many people how to use it, but obviously when we were first sort of showing our operator, you know, if you got to get - if you have to unblock anything you may sure you lock the mechanism and that. It wasn't actually put out in black and white, 'Don't walk in there, don't step in there,' because - yes, I took that just as an obvious deterrent.
Did you put an obvious sign up?‑‑‑No."
At AB 383 Mr Ridolfo was asked:
"In the splitter box - [it] was pretty obvious to you. What hazard are you referring to?‑‑‑Well, just putting any sort of limb in there, anything, knowing, you know, the pressure behind it and the very nature of it, yes, I just - well, in my opinion it was obvious that you were at much greater risk by putting anything in there."
At AB 377 Mr Ridolfo said:
"… I wasn't … thinking that we had to stop someone putting their limb or whatever in there."
He also said that he was not told by Mr Job that the splitter box area was dangerous and a safety hazard but he said, "No, but that was - no, that was obvious, but, no, he didn't." The cabin Ridolfo had constructed allowed the machine to be operated for two years. There was no evidence of any mishap or injury to any operator in that time. Further, Mr Fitzpatrick had the use of the machine demonstrated to him and he was shown how to safely use the machine.
The hazard or the risk of injury from the machine was plain for all to see. The machine could be operated without the operator having to introduce a limb into the splitter box while it was operating. The risk of injury was so obvious that no reasonable person would consider the need to prevent access to the splitter box while it was operating.

Ridolfo under no duty to warn of the risk of injury from the splitter box

Mr Fitzpatrick alleged at trial that Ridolfo had a duty to warn about the risk of injury. As pleaded, it was alleged that this duty should have been discharged by warning signs. There were no warning signs, but her Honour found that Mr Fitzpatrick had in fact been warned of the risk of injury and that Mr Fitzpatrick was then well aware of the risk. At the moment the question under consideration is about whether there was a duty to warn. In my opinion, Ridolfo was not under a duty to warn of such an obvious risk.

In fact Ridolfo did warn Mr Fitzpatrick

However, assuming I am wrong in that regard and there was a duty to warn about the risk of injury from the splitter box, Ridolfo discharged that duty. Ridolfo took considerable care to demonstrate the safe use of the machine and, by doing so, warned Mr Fitzpatrick of the danger posed by the splitter box. Her Honour found that Mr Fitzpatrick was aware of the danger. There is no challenge to this finding. Any duty Ridolfo had to warn of the danger was discharged.

Did Ridolfo, as part of its duty, have to install a barrier and emergency switch before supplying the machine to Mr Fitzpatrick?

The conclusion reached above is that Ridolfo was the vendor of second‑hand goods and not a manufacturer, and did not, in the circumstances, have a duty to warn about the risk of injury, but in any event had warned of that risk.
However, in case that conclusion is wrong, and Ridolfo should be held to be a manufacturer, then the question arises as to whether Ridolfo was obliged to install these items in discharge of its duty to exercise reasonable care to avoid foreseeable risk of injury to users of the machine as modified by Ridolfo.
Mr Fitzpatrick submits that Ridolfo owed a duty of care to "install" "appropriate safety barriers and emergency stop switch", that is a fixed barrier and an emergency switch. That means that Mr Fitzpatrick is contending that before the machine was supplied to Mr Fitzpatrick, Ridolfo was obliged to then construct and add to the machine a barrier and an emergency switch, even though it had been under no obligation to do so when it built the cabin on to the machine. The submission is therefore that Ridolfo had a duty to do more than warn of the risk of injury. In this regard it is important to keep in mind the objective nature of the inquiry about what a defendant should do in discharge of his duty. Hayne J in Vairy v Wyong Shire Council (supra) at [124] put the point in this way:
"Again, because the inquiry is prospective, it would be wrong to focus exclusively upon the particular way in which the accident that has happened came about. In an action in which a plaintiff claims damages for personal injury it is inevitable that much attention will be directed to investigating how the plaintiff came to be injured. The results of those investigations may be of particular importance in considering questions of contributory negligence. But the apparent precision of investigations into what happened to the particular plaintiff must not be permitted to obscure the nature of the questions that are presented in connection with the inquiry into breach of duty. In particular, the examination of the causes of an accident that has happened cannot be equated with the examination that is to be undertaken when asking whether there was a breach of duty of care which was a cause of the plaintiff's injuries. The inquiry into the causes of an accident is wholly retrospective. It seeks to identify what happened and why. The inquiry into breach, although made after the accident, must attempt to answer what response a reasonable person, confronted with a foreseeable risk of injury, would have made to that risk. And one of the possible answers to that inquiry must be 'nothing'."
The hazard created by the splitter box was not one created by Ridolfo. A court is much less ready to find a defendant who has not created a danger liable for it: Commissioner of Main Roads v Jones (2005) 79 ALJR 1104 [76]. Ridolfo was a consumer when it bought the machine containing the splitter box. It is true that Ridolfo designed and constructed the cabin, but it was doing so for its own use, and in any event and more importantly it assessed the risks and concluded that the only risk to be guarded against was that of accidentally slipping into the splitter box. Ridolfo guarded against this by installing the 240 mm plate. It has not been contended that this was not an effective safeguard from injury resulting from an accidental fall into the splitter box. It also installed a bar across the opening but it was removable and appears not to have been used.
A barrier of the kind Mr Fitzpatrick refers to was only necessary to prevent a person doing what no reasonable person would do. An emergency switch was only necessary to save such a person. The likelihood that Mr Fitzpatrick would ignore the advice to use the metal hook, ignore the advice to shut the splitter box into neutral before adjusting wood and deliberately use his foot to move wood while the splitter box was operating, in short to adopt an unnecessarily unsafe system of work, was not something which a reasonable person would regard as a necessity to guard against. Ridolfo was not Mr Fitzpatrick's employer. An employer may be liable if an employee adopts an unsafe system of work and is then injured because there is an ongoing relationship and the employer is obliged to exhort the employee to use a safe system of work. Ridolfo had no ongoing relationship with Mr Fitzpatrick. As Heydon JA said in Van der Sluice v Display Craft Pty Ltd [2002] NSWCA 204:
"All citizens can safely and reasonably assume that each normal adult human being acting autonomously and voluntarily will not incur unnecessary and blatantly obvious risks."
An example of this was given in Thompson v Woolworths (Q'land) (supra), where the court at [35] referred to a motorist approaching a pedestrian crossing. The motorist will reasonably assume that the assembled pedestrians will observe the lights which control the crossing.
Ridolfo did not consider it necessary to install these features for his own use. There was no evidence that in the two years Ridolfo owned the machine there was any circumstance which alerted it to the need for these devices. The question then is whether there is anything in Ridolfo's conduct which should lead this Court to conclude that it was not the conduct of a reasonable person. In my opinion Ridolfo's conduct was the conduct of a reasonable person. The obviousness of the risk, the expectation that any reasonable operator of even limited intelligence would take care for his own safety, and the fact that there was no need, in normal operation, for an operator to put a limb near the splitter box while it was in motion meant, in my opinion, that Ridolfo was not required to do more than warn new operators of danger of which they might not be aware. In my view, Ridolfo was not required to install the barrier or an emergency switch.
It is important to bear in mind that a defendant is not negligent merely because it fails to take a course of conduct which would have eliminated the risk of damage. A plaintiff must show that the defendant was not acting reasonably in failing to take that course. If inaction is a course reasonably open to a defendant, the plaintiff fails to prove negligence even if there were alternatives open to the defendant that would have eliminated the risk: Dovuro v Wilkins (supra) [38] per McHugh J.

Australian Standard 4024.1 - 1996

Mr Fitzpatrick points to Australian Standard 4024.1 ‑ 1996 and suggests that its provisions required Ridolfo to install a barrier. The trial Judge found that Jobs Engineering did not know about the existence of the Australian standard but, as I have said, so far as Jobs Engineering is concerned, the Australian standard is irrelevant because Jobs Engineering did not manufacture the cabin. The remaining allegation involving the Australian standards is that Ridolfo did not comply with them. An Australian standard comes to represent a consensus of professional opinion and practical experience as to sensible safe precautions and a standard of reasonable conduct; Onetech Pty Ltd v Shaw [1999] WASCA 289 at [17]. The Australian standard in this instance reflects the case law on negligence. Thus, cl 5.5.1 states that after a hazard is identified "risk estimation" should be carried out in relation to the hazard. Clause 5.5.2 reads:
"The risk associated with a particular situation or technical process is derived from a combination of the following elements:
(a)The severity of harm.
(b)The probability of occurrence of that harm, including the following:
(i)The frequency and duration of the exposure of persons to the hazard.
(ii)The probability of occurrence of a hazardous event.
(iii)The technical and human possibilities to avoid or limit the harm (eg awareness of risks, reduced speed, emergency stopping device, enabling device)."
In cl 7 of the standard, which deals with selection of safeguards, there is a reference to circumstances where a hazard or risk cannot be eliminated or avoided by design. In the case of Ridolfo, the hazard from the splitter box could not be eliminated or avoided by design because Ridolfo did not build the splitter box. Clause 7.1 of the standard reads:
"When a hazard or risk cannot be eliminated or avoided by design, the provision of safeguards shall be considered. Four critical factors to be considered in the selection process are -
(a)the severity of potential injury;
(b)the frequency of access or entry to the danger zone and/or the time of exposure to the hazard;
(c)the possibility of avoiding the hazard; and
(d)the type, process and operating requirements."
The standard then sets out suggested safeguards in cl 7.3 where "operational access" is required. Operational access is defined as access which is required during normal operation. In this case there was no need for operational access. During the normal operation of the splitter box, access was not only not required, but the system and method of work recommended by Ridolfo involved keeping away from the splitter box and using the metal hook to adjust misaligned logs after putting the splitter box into neutral. Clause 7.4 specifies the type of guards to be used when maintenance access was required, that is, where access was not required during normal operation. This assumes that the device would continue in operation during maintenance, because it refers to trip devices as one means of shutting down the equipment. This machine had the splitter box lever which allowed for the shutting down of the equipment where maintenance was to be carried out.
In my opinion, although Mr Ridolfo did not advert to the Australian standards, he did consider the factors mentioned in cl 7.1. He took into account the severity of potential injury. He was well aware that severe injuries would follow if part of a person's body was introduced into the splitter box when it was in operation. On the other hand, he considered that there should be no access or entry to the danger zone while the splitter box was operating. He considered the possibility of avoiding the hazard. He considered that the use of the steel hook and the splitter box control lever to shut down the splitter box would mean that the hazard could and should be avoided by operators at all times, and there was no evidence that his experience produced any evidence of the existence of a risk that operators were inclined to use a foot to deal with misaligned logs. He placed a steel plate on the floor to prevent operators slipping into the splitter box.
The "type, process and operating requirements" of the machine did not require an operator to place any part of his person into the splitter box while it was in operation. "Casual access" was defined in the standard as including access for maintenance operations and the ability of other persons to inquisitively or unwittingly enter a danger zone. There was no need for an operator to gain access for maintenance operations and the obviousness of the risk made it extremely unlikely that any person would "inquisitively or unwittingly" enter into the splitter box while it was in operation. That a person would use his foot to adjust the wood was clearly not regarded as likely by Ridolfo.
There is nothing in the Australian standard which should lead this Court to conclude that Ridolfo was obliged to install the barrier or the emergency switch.

The emergency switch

This was given little attention in the appeal. The pleaded case was that a dead man switch should be installed. This was abandoned when Mr Chew gave evidence that it was not appropriate for this kind of equipment. A dead man switch is a type which is held during operation and which upon release stops the operation of the equipment.
The allegation then changed on appeal to an allegation that Ridolfo should have mounted a switch on the cabin which could have been used to stop the machine by Mr Fitzpatrick after his foot was caught. However, it was never explained precisely where on the cabin the switch could be mounted. It was said that it could have been mounted in a position where Mr Fitzpatrick could have hit it once his foot became caught, but this assumes that a reasonable person in Ridolfo's position was to assume that Mr Fitzpatrick was likely to ignore the very simple and safe procedure of placing the splitter box in neutral via the splitter control lever and using the hook.
Two years' experience and the existence of a simple and effective means of putting the splitter box into neutral meant that any reasonable person in Ridolfo's position would conclude that there was no likelihood that this sort of accident would occur.
Grounds 2 and 3 should be dismissed insofar as they relate to Ridolfo.

Causation - Grounds 8 to 12

If (contrary to my conclusion) Jobs Engineering did owe a duty of care to advise Ridolfo of the need for a barrier and switch or to provide written instructions, or if (contrary to my conclusion) Ridolfo owed a duty of care to install a barrier guard and a switch before selling to Mr Fitzpatrick, then the issue of causation arises.
The allegations of negligence against both respondents are allegations of negligent omissions. The question whether each negligent omission caused the loss is a question of fact: Bennett v Minister of Community Welfare (1992) 176 CLR 408 (at 428). The causal connection is to be determined in accordance with commonsense notions of causation, and not in accordance with philosophical or scientific theory of causation: March v E & M H Stramare Pty Ltd (1991) 171 CLR 506.
If, but for the negligent act or omission, the actual damage suffered by a plaintiff would not have occurred, it will often be possible, as a practical matter, to conclude the issue of causation in the plaintiff's favour. However, the "but for" test is not the exclusive test: March v E & M H Stramare (supra), 412 ‑ 413 per Mason CJ, Deane and Toohey JJ; Chappel v Hart (1998) 195 CLR 232, [25] per McHugh J, [62] per Gummow J, [93] per Kirby J and [110] Hayne J.
The chain of causation may be broken for purposes of attributing legal responsibility for the injury if there is an intrusion of a new cause which disturbs the sequence of events, something which can be described as "unreasonable" or extraneous or extrinsic: Bennett v Minister for Community Welfare (supra) at 428; Chappel v Hart (supra), at [93] per Kirby J (at [93.5(d)]).
In the case of negligent omissions, the question of causation is answered by reference to what would, or would not, have happened had the omission not occurred: Bennett v Minister for Community Welfare (supra) at 420. This involves a comparison between two sets of facts, one actual and one hypothetical: Chappel v Hart (supra) at [113] per Hayne J.

At the hearing on 26 September 2006, GIO applied for leave to amend its grounds of appeal against Jobs Engineering. Proposed ground 6 was entirely new. GIO had not previously sought to invoke exclusion clause 10(a) of the insurance policy.

GIO's appeal against Jobs Engineering: the provisions of the insurance policy

GIO insured Jobs Engineering under a policy described as a "combined business insurance policy". Section 7 of the policy is concerned with public liability insurance. By s 7, GIO agreed to indemnify Jobs Engineering, as follows:
"We will indemnify you in respect of all sums which you shall become legally liable to pay for compensation in respect of:
(a)bodily injury (including death and illness)
(b)damage to property (including loss of property)
(subject to the excess as stated on the certificate of Insurance)
caused by an occurrence in connection with the Business and which occurs during the Period of Insurance.
In addition, we will also pay legal costs, charges and expenses incurred as a result of your entitlement to indemnity under this Section and incurred with our written consent.
…"
The exclusions to the agreed indemnity for public liability include exclusion 10, which provides that GIO shall not be liable for claims:
"Arising
(a)out of a breach of duty owed in a professional capacity by you or persons for whose breaches of such duty you may be legally liable;
(b)… "
Exclusion 17 provides that GIO shall not be liable for claims:
"In respect of bodily injury or damage to property caused by the nature, condition or quality of goods (which expression includes containers) sold or supplied by you other than:
(i)goods under your control or in your actual physical custody or of any person in your direct service;
(ii)goods sold or supplied at or from a canteen provided by you for your employees."
Section 7 of the policy provides for certain "optional benefits" to apply if those benefits are shown in the certificate of insurance. GIO and Jobs Engineering agreed that an optional benefit concerning "products liability" should apply. The relevant provisions of the policy in respect of public liability insurance for "products liability" are these:
"'Products' means any goods, product or property sold, supplied or distributed by you (including their containers) in the course of the Business after they have ceased to be in your custody or under your control.
We will indemnify you in respect of all sums which you shall become legally liable to pay for compensation in respect of bodily injury or damage to property as a result of an occurrence and caused by the nature, condition or quality of Products sold or supplied by you within the Commonwealth of Australia.
In addition we will also pay legal costs, charges and expenses incurred as a result of your entitlement to indemnity under this Optional Benefit and incurred with our written consent.
…
We shall not be liable for:
(a)any defective design or error in formula or in specification of any of the Products processed or manufactured by you;
(b)…
(c)…
(d)bodily injury or damage to property arising out of Products sold or supplied where in respect of such injury or damage you would have been entitled to claim indemnity or contribution from any party but for an agreement between you and such party;
(e)bodily injury or damage to property caused by or arising out of Products manufactured specifically for and installed in an aircraft or other aerial device or caused by or arising out of Products which you knew would be so installed."
The policy contains an agreement between GIO and Jobs Engineering (on page 3 of the policy) that:
"Where insurance under any section of this policy is changed by any clause granting additional or optional benefits or by any endorsement, the insurance thereby provided shall be subject to the terms, exclusions and conditions both general and specific contained in or endorsed on this policy so far as they may apply."

GIO's appeal against Jobs Engineering: proposed ground 6 and exclusion clause 10(a)

I agree with Pullin JA that GIO should not be granted leave to amend its grounds of appeal to add proposed ground 6 for the purpose of invoking exclusion 10(a). First, for the reasons his Honour gives, GIO should be bound by the conduct of its case at trial. See University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483; Water Board v Moustakas (1988) 180 CLR 491 at 497 ‑ 498. Secondly, GIO's submissions in relation to proposed ground 6 are without merit. My reasons for that conclusion are set out below.
An insurance policy is a commercial contract and should be given a businesslike interpretation. See McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 per Gleeson CJ at 589 [22]. His Honour added:
"Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure (Lake v Simmons [1927] AC 487 at 509, per Viscount Sumner)."
The critical issue, in determining whether exclusion 10(a) applies or not, is whether Mr Fitzpatrick's claim against Jobs Engineering, as formulated in grounds 1(a) and 3 of his appeal, arises "out of a breach of duty owed [by Jobs Engineering] in a professional capacity".
In GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558, the appellant agreed to indemnify the respondent under an insurance policy against legal liability in respect of public liability, products liability and professional liability. By an endorsement, the policy was amended so that all claims relating to "the rendering or failure to render professional advice or service by the Insured or any error or omission connected therewith" could only be brought under a clause of the policy which related to "Professional Liability" as distinct from other clauses concerned with "Public Liability" and "Products Liability". The appellant refused to indemnify the respondent in respect of several claims which alleged that the claimants had suffered loss and damage in consequence of the respondent's negligent issue of a "Certificate of Structural Soundness" in respect of premises which were subsequently damaged in an earthquake. The appellant contended that the activities of the respondent, which gave rise to the claims, could not properly be characterised as "the rendering or failure to render professional advice". In the Court of Appeal of New South Wales, Kirby P (with whom Sheller and Powell JJA agreed) held that the relevant activities of the respondent must be examined to determine whether, in their nature, they are properly characterised as "professional". The source of the respondent's duties to perform the activities in question was a relevant, but not definitive, circumstance. Kirby P noted, at 568, that the term "professional", in a professional indemnity insurance policy, is very broad. His Honour concluded that, in the context of such a policy written for a local government authority, "professional" involves no more than advice and services of a skilful character according to an established discipline. The claims made against the respondent arose out of such activities and were therefore within the endorsement to the policy, and the clause which related to "Professional Liability". The judgment of the Court of Appeal was reversed in the High Court (Newcastle City Council v GIO General Ltd (1997) 191 CLR 85) on the basis of the proper construction of s 40 of the Insurance Contracts Act 1984 (Cth), but not on the point I have been discussing.
In Suncorp Metway Insurance Ltd v Landridge Pty Ltd (2005) 12 VR 290, the Court of Appeal of Victoria considered whether a claim brought by a tenant against the respondent real estate agent (who was acting for the landlord) was "for breach of a professional duty by reason of any act, error or omission committed or alleged to have been committed by the Insured in the conduct of the Business", within a professional indemnity policy. The tenant was injured when she tripped and fell in the garage of residential premises which she leased through the respondent acting for the landlord. She alleged, relevantly, that the respondent had negligently failed to repair the floor of the garage or to inform the landlord of the danger. Buchanan JA (with whom Nettle JA and Hollingworth AJA agreed) observed, at 294 [16]:
"The question whether a breach of duty answers the description of a breach of a professional duty depends upon characterisation of the overall activity in the context of which the breach occurs, and is not answered by concentrating on the specific task which has not been performed or badly performed so as to give rise to liability. … The breaches by the [respondent] agent's employees in the present case … occurred in the course of carrying out the activity of property management, which in my opinion is to be regarded as a professional activity for the purposes of the policy of insurance."
His Honour rejected, at 295 [20], the appellant/insurer's argument that the liability for breach of a professional duty covered by the indemnity clause in the policy was limited to the duty which the respondent/agent owed to its client, the landlord:
"The insurer's argument would limit the policy to one providing indemnity against claims by those whose contractual relationship with the agent create and define the agent's professional duty. In my view, such a limitation is neither expressly nor implicitly present in the insuring clause of the policy. I think it sufficient that the claim for compensation against which the insurer promised indemnity was for acts or omissions which constituted breaches of a professional duty."
Compare FAI General Insurance Co Ltd v Gold Coast City Council [1995] 2 Qd R 341, and the observations of the Court of Appeal of Queensland, at 344, as to the meaning of the term "professional", and the views expressed by Nettle JA in Suncorp Metway Insurance, at 297 [28], in relation to those observations.
The term "professional" in the indemnity clause of a professional indemnity policy does not necessarily bear an identical meaning in an exclusion clause of a public liability or products liability policy. See Toomey v Scolaro's Concrete Constructions Pty Ltd (in liq) (No 5) (2002) 12 ANZ Ins Cas 61‑519 per Eames J at 76,075 ‑ 76,076 [66] ‑ [69]. The context in which the term "professional" is used in an insurance policy may be significant in determining its meaning.
In Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754, an exclusion clause in a liability insurance policy excluded indemnity for "liability … caused … by … errors or omissions in the rendering of professional services". The respondent/insured was found liable to a customer for damage suffered as a result of the respondent/insured's failure to give proper instructions to the customer in relation to equipment which the respondent/insured had supplied. The Court of Appeal of British Columbia held that the failure to give proper instructions was not an error or omission in the rendering of professional services within the meaning of the policy, and the fact that the employee who prepared the manual happened to have professional qualifications was irrelevant. Also see Government Insurance Office of New South Wales v Council of the City of Penrith (1999) 102 LGERA 102 per Powell JA (with whom Mason P agreed) at 107 ‑ 108 [19] ‑ [24].
In the present case, s 7 of the policy provides cover against public liability and products liability. It does not, however, provide professional indemnity cover.
At all material times, the core activities of Jobs Engineering's business comprised the design, manufacture and supply of machinery and equipment, including the machine in question with and without a cabin.
By the indemnity clause in the products liability cover, GIO agreed to indemnify Jobs Engineering, relevantly, in respect of sums which Jobs Engineering "shall become legally liable to pay for compensation in respect of bodily injury or damage to property as a result of an occurrence" and caused by "the nature, condition or quality" of any goods or products sold or supplied by it. If the nature, condition or quality of any machinery or equipment designed, manufactured and supplied by Jobs Engineering were to cause personal injury or property damage to any person, and the relevant nature, condition or quality was attributable to the negligent act or omission of Jobs Engineering, there is a significant likelihood that the person suffering the injury or damage would have a cause of action against Jobs Engineering. If any and all negligent acts and omissions of Jobs Engineering, of the kind I have just mentioned, were to be characterised as breaches of duty owed by it in a professional capacity, within exclusion 10(a), the cover under the indemnity clause of the products liability insurance would be severely circumscribed. The indemnity clause would not respond unless Jobs Engineering's legal liability to pay was not attributable to its negligence or other breach of duty owed by it in a professional capacity, but arose on some other legal basis. The parties cannot have intended such an uncommercial and unreasonable result, and it is not a construction which the language of the policy unequivocally requires.
The products liability insurance clause contains several specific exclusions. I have set out the relevant provisions at [257] above. For example, GIO is not liable for "any defective design or error in formula or in specification" of any goods or products manufactured or supplied by Jobs Engineering in the course of its business. Exclusion 10(a) applies to the products liability cover by virtue of the agreement (on page 3 of the policy) which I have set out at [258] above.
I consider that exclusion 10(a) is limited, in the context of the products liability cover, to claims arising out of breaches of duty owed by Jobs Engineering to persons who have retained it to perform work or services in the course of its business. The exclusion does not extend to breaches of duty owed to third parties who may suffer foreseeable loss or damage as a result of negligent acts or omissions by Jobs Engineering in designing, manufacturing or supplying machinery and equipment, including the negligent failure to give advice of the kind which it should have given to V & D Ridolfo. My construction of exclusion 10(a) is consistent with the evident object of the products liability cover, namely, to provide indemnity, of real and not negligible value, in respect of claims for personal injury and property damage caused by defective goods and property designed and manufactured by Jobs Engineering, and put into circulation within Australia.
I should mention, for completeness, that before the accident there was some communication between Mr Fitzpatrick and Mr Job. The communication comprised three telephone conversations initiated by Mr Fitzpatrick. In the first conversation, Mr Fitzpatrick made an inquiry as to the cost of purchasing a new machine. In the second conversation, Mr Fitzpatrick informed Mr Job that he had purchased V & D Ridolfo's machine. Mr Fitzpatrick said that a hydraulic motor fitted to the machine needed to be repaired or replaced, and he asked Mr Job to recommend someone who could repair or replace it. Mr Job gave Mr Fitzpatrick the name of a company in Welshpool. In the third conversation, Mr Fitzpatrick made an inquiry as to where he could obtain a spare part which he needed to repair the machine's control lever. In my opinion, the communication to which I have referred did not constitute an express or implied retainer which obliged Jobs Engineering to give advice to Mr Fitzpatrick in relation to the safety features which should be installed to enable the machine to be operated safely. No relevant "breach of duty owed [by Jobs Engineering] in a professional capacity", within exclusion 10(a), arose in the course of or in connection with that communication.
Ground 6 of GIO's appeal is without merit.

GIO's appeal against Jobs Engineering: proposed ground 2 and the exclusion clause relating to "defective design"

I agree with Pullin JA, for the reasons he gives, that the amendment relating to ground 2(c) should be allowed. I am satisfied that Jobs Engineering would not suffer any relevant prejudice as a result of the other proposed amendments to ground 2, and I would therefore allow them.
In my opinion:
(a)As to particular (a) of ground 2, although, as I have held, Jobs Engineering breached its duty to Mr Fitzpatrick by failing to advise V & D Ridolfo that a fixed barrier guard should be installed between the cabin and the splitter box, Jobs Engineering was not obliged to design the barrier guard itself or to install it (on the machine) before delivering the machine to V & D Ridolfo. Also, Jobs Engineering was not obliged to advise V & D Ridolfo that the barrier guard should be constructed in accordance with Jobs Engineering's design. In any event, any "defective design or error in formula or specification", within the exclusion clause, related to the cabin (which was not "processed or manufactured" by Jobs Engineering) and not to the machine.
(b)As to particular (b) of ground 2, none of the matters asserted in the particular establishes that Jobs Engineering's failure itself to design and install a barrier guard entitles GIO to invoke the exclusion clause.
(c)As to particular (c) of ground 2, I agree with Pullin JA, for the reasons he gives, that the matters asserted in the particular are without merit.
The balance of ground 2 does not add anything of substance to the other parts of the ground that I have already addressed.

GIO's appeal against Jobs Engineering: grounds 3 ‑ 9 (as re‑numbered by Pullin JA)

I agree with Pullin JA, for the reasons he gives, that grounds 3 ‑ 9 (as re‑numbered by his Honour) fail.

GIO's appeal against Jobs Engineering: ground 10 (as re‑numbered by Pullin JA

If Mr Fitzpatrick's appeal against Jobs Engineering is allowed, it is unnecessary to decide ground 10 (as re‑numbered by Pullin JA). I should note, however, that, in my opinion, ground 10 should fail. My reasons are set out below.
By the costs extension clause, GIO agreed to:
"pay legal costs, charges and expenses incurred as a result of your entitlement to indemnity under [s 7] and incurred with our written consent."
By the indemnity clause, GIO agreed to indemnify Jobs Engineering in respect of "all sums which [it] shall become legally liable to pay for compensation" in respect of bodily injury or damage to property. Jobs Engineering's entitlement to indemnity, and GIO's obligation to indemnify, arose upon Jobs Engineering incurring an obligation, enforceable at law, to pay compensation in respect of the injury or damage in question. Such an obligation would ordinarily (but not exclusively) arise upon a judgment being entered in a court of competent jurisdiction or a settlement agreement being made with the claimant who suffered injury or damage.
In my opinion, the expression "entitlement to indemnity" in the costs extension clause refers to Jobs Engineering's contractual right to an indemnity in respect of a claim which, if established or admitted, would be within the indemnity clause in s 7. The costs extension clause would not have a reasonable or businesslike operation if it applied only to legal costs, etcetera, incurred as a result of Jobs Engineering's having incurred a legally enforceable obligation to pay compensation to a claimant. Virtually all of Jobs Engineering's legal costs, etcetera, would, ordinarily, be incurred before any judgment was entered against it or any settlement agreement was made.
The costs extension clause should be given a construction which promotes its evident commercial purpose, namely, to provide cover in respect of legal costs, etcetera, incurred by Jobs Engineering, with the written consent of GIO, as a result of claims made against Jobs Engineering which, if established or admitted, would require GIO to indemnify it.

GIO's appeal against Jobs Engineering: conclusion

I would dismiss GIO's appeal against Jobs Engineering.

The outcome of the appeals: summary

I would allow Mr Fitzpatrick's appeal against Jobs Engineering, but I would reduce his damages by 70 per cent on account of his contributory negligence.
The appeal by Mr Fitzpatrick against V & D Ridolfo, and GIO's appeal against Jobs Engineering, should, however, be dismissed.