Morgan v Fluor Daniel Constructors Pty Ltd
[2002] WADC 12
•25 JANUARY 2002
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MORGAN -v- FLUOR DANIEL CONSTRUCTORS PTY LTD [2002] WADC 12
CORAM: COMMISSIONER GREAVES
HEARD: 15 NOVEMBER 2001
DELIVERED : 25 JANUARY 2002
FILE NO/S: CIV 2144 of 1999
BETWEEN: CRAIG RICHARD MORGAN
Plaintiff
AND
FLUOR DANIEL CONSTRUCTORS PTY LTD
DefendantZURICH AUSTRALIAN INSURANCE LIMITED
Third Party
Catchwords:
Contract - Public liability policy - Exclusion clause - Insurance cover excluded for personal injury sustained "arising out of and in the course of employment" - No ambiguity in construction of exclusion clause - Agreed facts establish personal injury within the meaning of the policy - Liability of insurer excluded
Legislation:
Worker's Compensation and Rehabilitation Act 1981, s 19(2)(a)(i)
Result:
Third party claim dismissed
Representation:
Counsel:
Plaintiff: No appearance
Defendant: Mr R J L McCormack
Third Party : Mr R A McAuliffe
Solicitors:
Plaintiff: No appearance
Defendant: Blake Dawson Waldron
Third Party : McAuliffe Williams & Partners
Case(s) referred to in judgment(s):
Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473
McCann v Switzerland Insurance Ltd (2000) 176 ALR 711
Case(s) also cited:
Charles R Davidson & Co v M'Robb [1918] AC 304
Commonwealth v Oliver (1962) 107 CLR 353
Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529
Davidson v Mould (1944) 69 CLR 96
Dover Navigation Co Ltd v Craig [1940] AC 190
Education Department of Western Australia v Morgan [2000] WASCA 291
Fairweather v Fairweather & Ors (1944) 69 CLR 121
Humphrey Earl Ltd v Speechley (1951) 84 CLR 126
Jiminez v The Queen (1992) 173 CLR 572
Jones v Devonfield Enterprises (1995) 5 Tas R 345
Kavanagh v Commonwealth (1960) 103 CLR 547
Koorangang Cement Pty Ltd v Bates (1994) 35 NSWLR 452
Kroon v R (1990) 52 A Crim R 15
Park v Peach [1967] VR 558
Pearson v Fremantle Harbour Trust (1929) 42 CLR 320
St Helens Colliery Co Ltd v Hewitson [1924] AC 59
Tasmanian Government Insurance Office v Berkery (1994) 3 Tas R 267
Vandyke v Fender [1970] 2 QB 292
Whittingham v Commissioner of Railways (WA) (1931) 46 CLR 22
COMMISSIONER GREAVES: These are third party proceedings in which the defendant and third party rely upon the defendant and third party's statement of agreed facts and issues in respect of the trial of the third party proceedings dated 14 November 2001 in the following terms:
"AGREED FACTS
For the purposes of the trial in the third party proceedings, in respect of the defendant's claim for indemnity made therein as against the third party, the defendant and third party agree the following facts. This document is to be read in conjunction with the various documents included in the Agreed Bundle of Documents, as filed separately herewith.
Circumstances of plaintiff's accident
1.The plaintiff was born on 6 October 1970.
2.The plaintiff was employed by the defendant as a pipe fitter and/or as a leading hand on, relevantly, 23 August 1998 (the 'material date').
3.The Fluor Daniel Murrin Murrin Nickel-Cobalt Project Construction Agreement 1997 sets out the terms and conditions of the Plaintiff's employment with the Defendant (the 'Contract of Employment').
4.As at the material date, the plaintiff's place of employment, where he discharged his work‑related duties, was the Murrin Murrin mine site ('Murrin Murrin mine site'). The Murrin Murrin mine site was located approximately 60 kms from Laverton, in the State of Western Australia (the 'State').
5.As at the material date, the plaintiff's temporary place of residence was Laverton Caravan Park (the 'place of residence'), located in Laverton in the said State.
6.At the commencement of the Plaintiff's employment at the Murrin Murrin mine site on 22 May 1998, the Plaintiff availed himself of accommodation provided by the Defendant, but approximately 4 weeks prior to the material date, chose to travel to and from the mine site to reside with his family at the place of residence.
7.On the material date, the plaintiff completed his work‑related duties at the Murrin Murrin mine site at approximately 6.30am and, shortly thereafter, departed the said mine site in his motor vehicle and commence (sic) travelling from the said mine site to his place of residence (the 'plaintiff's journey').
8.At approximately 7.10am on the material date, the plaintiff was injured when, during the course of the plaintiff's journey, he lost control of his vehicle, which rolled over, at a point between the Murrin Murrin mine site and his place of residence (the 'accident').
9.The accident occurred at a location approximately 55 kms from the Murrin Murrin mine site, and being approximately 5 kms east of Laverton (the 'accident location').
9A.The accident was caused by the plaintiff's fatigued condition induced by a system of work provided by the defendant which required lengthy and frequent shifts thereby fatiguing the plaintiff.
Compromise of the plaintiff's claim
10.By writ of summons issued on 1 June 1999, the plaintiff made claim against the defendant for loss and damage he alleged he had sustained as a result of personal injuries he suffered in the accident on the material date.
11.Details of the plaintiff's claim for loss and damage are contained in the 'Plaintiff's Schedule of Claim' dated 16 August 2000 and filed in the within proceedings, and otherwise referred to in paragraph 7 of the plaintiff's statement of claim filed in the within proceedings on 1 September 1999.
12.On 9 November 1999, the plaintiff's claim against the defendant was compromised, as between the plaintiff and the defendant, by their respective legal advisers, on an 'in principle' basis, on the basis that there was a real risk that liability may be established, but without any admission, on terms which relevantly provided:
(a)consent dismissal of the plaintiff's claim against the defendant with no order as to costs;
(b)payment to the plaintiff of the sum of $400,000;
(c)plus the sum of $175,891.56 already paid by the defendant to the plaintiff, by way of wages, without any admissions, but in anticipation of a possible award of damages by this Honourable Court in favour of the plaintiff in respect of, relevantly, any loss of earnings and/or in anticipation of a possible award of damages in favour of the plaintiff in respect of a claim for breach of contract by failing to provide journey insurance to an equivalent sum, namely $175,891.56; and
(d)together with payment in respect of the plaintiff's party and party costs agreed at $40,000 and disbursements to be taxed if not agreed (collectively the 'settlement amount').
13.On 9 November 2001 the third party, by its solicitors, was informed in writing by the defendant's solicitors, by facsimile transmission, of the terms of the 'in principle' compromise.
14.Subsequently, also on 9 November 2001, the third party, by its solicitors, advised the defendant's solicitors that it (the third party) consented to the defendant compromising the plaintiff's claim on, relevantly, the terms referred to in paragraph 12 herein.
15.Subsequently, also on 9 November 2001, with the knowledge and concurrence of the third party, the defendant, by its solicitors, advised the plaintiff's solicitors of the fact of the third party's consent to the compromise.
16.As a result of the compromise, the defendant is legally obligated to pay the plaintiff the settlement amount as compensation for his bodily injuries allegedly suffered on the material date in the accident.
Insurance policies
17.As and from 30 June 1998 there was in force a contract of insurance No 32 4004668CON between the defendant and the third party (the 'public liability policy').
18.The public liability policy relevantly provided that:
(a)the defendant would be insured for the period 30 June 1998 to 1 November 1999 (the 'policy period');
(b)the third party would, subject to any relevant exclusion condition:
(i)indemnify the defendant against any relevant claim; and
(ii)would pay all costs and expenses incurred by the defendant in defending any such claim; and
(c)the third party would defend, on behalf of the defendant, any such claim.
19.The public liability policy includes within its terms exclusion clause 2(a) which relevantly provides that 'This Section shall not apply to liability:
(a)'for bodily injury and/or personal injury sustained by any person arising out of and in the course of his employment by the Insured under a contract of service or apprenticeship with the insured. […]' (the 'employment exclusion').
20.Save for the operation of the employment exclusion, the defendant's claim for indemnity falls within the terms of the public liability policy.
21.On the material date the defendant had in place a workers' compensation insurance policy WR 90312 with HIH Casualty and General Insurance Limited ('HIH Insurance') which relevantly insured the defendant for:
(a)payments it is legally liable to make in respect of a disability of any worker in the business of the insured under the Workers' Compensation & Rehabilitation Act 1981 (the 'Act') together with the defendant's reasonable costs and expenses incurred with the written consent of HIH Insurance; and
(b)legal liability to pay damages and all reasonable costs and expenses incurred with the written consent of HIH Insurance at common law for personal injury sustained by any person employed by the insured under a contract of service or apprenticeship if such injury is an injury in respect of which such a person is entitled to recover from the insured both compensation under the Act and (subject to section 92 of the Act) damages independently thereof.
22.The Plaintiff did not make a claim for compensation pursuant to the Act for his bodily injuries allegedly suffered on the material date in the accident.
23.The defendant, without any admission, made payments to the plaintiff during the period from on or about 30 August 1998 to on or about 27 August 2000, totalling $175,891.56, and which sum is also referred to in paragraph 12(c) herein.
24.Despite demand made by the plaintiff on 20 April 1999, the third party has refused to indemnify the defendant and to defend the claim in its name on the grounds that the:
(a)employment exclusion applies, further or alternatively
(b)HIH Insurance's workers' compensation insurance policy responds to the plaintiff's claim for indemnity in respect of the plaintiff's claim against the defendant in the within proceedings.
AGREED ISSUES
For the purposes of the trial in the third party proceedings, the defendant and third party agree the following issues are those for determination.
1.Whether the employment exclusion excludes the defendant's claim for indemnity for the settlement amount – ie whether the plaintiff's claim against the defendant can be said to be '… liability: (a) for bodily injury and/or personal injury sustained by any person arising out of and in the course of his employment by the Insured under a contract of service or apprenticeship with the Insured'.
2.Whether, if the employment exclusion does not exclude the defendant's claim for indemnity for the settlement amount, the defendant is entitled to recover from the third party:
(a)an amount constituting a full indemnity for the settlement amount plus its costs to be taxed; or
(b)an indemnity for the above, less the taxation component, being $65,113.78, comprised within the $175,891.56 already paid by the defendant to the plaintiff.
3.Whether the defendant is entitled to recover its costs of defending the plaintiff's claim and prosecuting the third party claim on an indemnity basis or on a party/party basis."
The public liability policy is to be found at p 1 et seq of the agreed bundle of documents. At p 17 of that bundle par (a) of Section C of the policy reads:
"The Insurer(s) hereby agree, subject to the limitations, terms and conditions hereinafter mentioned, that they will:
(a)pay on behalf of the Insured, all sums which the Insured shall become legally obligated to pay as compensation for:
(i)bodily injury or illness (including death at any time resulting therefrom) and/or personal injury suffered or alleged to have been suffered by any person or persons;
(ii)loss of or damage to or destruction of property and/or the loss of use thereof;"
Section C of the policy is extended at p 32 of the bundle under the heading "Off Site Liability Risks" which reads:
"Section C of this Policy shall extend to indemnify the Insured in respect of all sums which the Insured shall become legally liable to pay for compensation in respect of:
(a)bodily injury (including death); and
(b)damage to property
occurring during the Period of Insurance at and from all properties owned or leased by the Insured, whether on or off site and happening in connection with the Description of Business as detailed in the Schedule.
The exclusion clause referred to in par 19 of the statement of agreed facts and issues appears at p 18 of the agreed bundle.
Clause 3.2 of the contract of employment provides at p 96 of the bundle:
"A local status employee who travels to site each day shall be paid an amount of $33.00 per day where their employer does not provide their employees with suitable transport."
I was not told whether the plaintiff was such an employee or whether he received such an allowance or suitable transport. Clause 7.1 of the contract takes the matter no further.
It is agreed between the defendant and third party that as a result of the compromise, the defendant is legally obligated to pay the plaintiff the settlement amount as compensation for his bodily injuries allegedly suffered on the material date in the accident. The defendant and third party also agree in terms of Section C of the policy that the defendant is legally obligated to pay the plaintiff the settlement amount as compensation for his bodily injuries allegedly suffered on the material date in the accident.
It follows that as between the defendant and third party, the defendant is liable to the plaintiff for personal injury alleged to have been suffered by the plaintiff within the meaning of Section C par (a)(i) of the policy.
The first agreed issue
The first agreed issue requires a consideration of the proper construction of the exclusion clause. The defendant and third party are agreed that the word "or" in the exclusion clause is to be construed conjunctively. The first agreed issue is stated to be whether the liability of the defendant to the plaintiff is a liability within the meaning of the exclusion clause and therefore not a liability covered by Section C of the policy.
Before me, there was no issue that the liability of the defendant to the plaintiff is a liability for personal injury sustained by the plaintiff arising out of his employment by the defendant under a contract of service with the defendant. The first agreed issue requires the Court to determine whether on a proper construction of the exclusion clause that liability is for personal injury sustained in the course of the plaintiff's employment by the defendant.
The first agreed issue is to be determined on a proper construction of the exclusion clause whether the clause excludes the defendant's liability to the plaintiff for personal injury sustained in the course of his employment. The liability of the defendant to the plaintiff as agreed between the defendant and third party is that the defendant is legally obligated to pay the plaintiff the settlement amount as compensation for his bodily injuries as allegedly suffered on the material date in the accident.
By par 9A of the statement of agreed facts and issues, the defendant and third party are agreed the accident was caused by the plaintiff's fatigued condition induced by a system of work provided by the defendant which required lengthy and frequent shifts thereby fatiguing the plaintiff. It is upon those agreed facts that the action between the plaintiff and defendant was compromised and upon which the defendant and third party are agreed that subject to the exclusion clause, the defendant's claim for indemnity falls within the terms of the public liability policy.
The case for the third party on the first agreed issue
For the third party, it was submitted there is an agreed and obvious connection between the injuries sustained by the plaintiff and his employment which should lead the Court to conclude the liability of the defendant to the plaintiff is, upon a proper construction of the policy, a liability for personal injuries sustained by the plaintiff in the course of his employment, so that the defendant's claim for indemnity against the third party is excluded.
Counsel for the third party submitted there is no uncertainty about the meaning of the phrase "in the course of his employment" in the exclusion clause. He said:
"… The clause has been crafted in such a manner that enables a wide range of circumstances to be brought under it, because that is something that is not normally encompassed within a public liability policy. They are liabilities of an employer for instance that arise in the employment.
This fatigue arose in the employment. It doesn't do any violence to those workers (sic) [this should obviously read 'words'] to suggest that this kind of circumstance should be excluded. In fact if one stands back and says, 'Look at the scheme of the insurances that were available to this employer. They had their workers' compensation insurance. They had public liability insurance,' and the public liability insurance policy said, 'We're not covering things that arise out of and in the course of employment'. Why? Because you can go elsewhere and insure elsewhere and obtain coverage for that. It mightn't mesh perfectly because the wording might be slightly different between policies and there may be gaps, but we are not covering that.
… We say that if there is no ambiguity, there is no need to construe it against the insurer because the words are quite, wide enough and clear enough to exclude a risk of this nature."
Counsel for the third party further submitted that where an employee is injured after usual working hours and beyond his place of employment by some cause which has originated in the system of work imposed by the employer and which by its very nature is likely to cause injury while travelling home from work, it really does no violence to the concept of the phrase "in the course of the employment" to apply it to that situation. He said there is always a question of degree, but in this case time, place and circumstance are all connected to the employment where the fatigue arose.
Counsel for the third party accepted there is no element of causal relation with the employment and its incidence within the expression "in the course of the employment" as ascribing the causal element is attained by the words "arising out of".
Counsel for the third party relied upon the reasons of Mason CJ, Deane, Dawson and McHugh JJ in Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 at 478 where their Honours reviewed the authorities about the interpretation of the phrase "in the course of employment" as it appeared in s 9 of the Workers' Compensation Act 1987 (NSW). Section 4 of that Act defined injury to mean "personal injury arising out of or in the course of employment". Their Honours observed that for the purposes of s 4, the course of employment is not identical with the period of employment of a worker or with the work which that person performs. Their Honours went on to review the authorities and expressed the opinion at p 482 that the rational development of this area of the law requires a reformulation of the principles which determine whether an injury occurring between periods of actual work is within the course of employment so that their application will accord with the current conception of the course of employment as demonstrated by the recent cases. They went on to observe the course of employment is ordinarily perceived as commencing when the employee starts work in accordance with his or her ordinary or overtime hours of work and as ending when the employee completes his or her ordinary or overtime hours of work. They continued at p 483:
"For the purposes of workers' compensation law, an injury is more readily seen as occurring in the course of employment when it has been sustained in an interval or interlude occurring within an overall period or episode of work than when it has been sustained in the interval between two discrete periods of work. Where an employee performs his or her work at a permanent location or in a permanent locality, there is usually little difficulty in identifying the period between the daily starting and finishing points as a discrete working period. A tea break or lunch break within such a period occurs as an interlude or interval within an overall work period. Something done during such a break is more readily seen as done in the course of employment than something that is done after a daily period of work has been completed and the employee has returned to his or home."
Their Honours confirmed that regard must always be had to the general nature, terms and circumstances of the employment and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen.
Counsel for the third party submitted the reformulation of the principles which determine whether an injury occurring between periods of actual work is within the course of employment as expressed by their Honours should lead the Court in this case to conclude the plaintiff sustained personal injury in the course of his employment and the liability of the defendant to the plaintiff for such personal injury is excluded.
The case for the defendant on the first agreed issue
Counsel for the defendant drew attention to par 7 of the defendant and third party's statement of agreed facts and issues and the fact that the plaintiff had completed his work‑related duties at the Murrin Murrin mine site at approximately 6.30 am and, shortly thereafter, had departed the mine site in his motor vehicle and commenced travelling home. Counsel submitted there is no impediment or no direction by the defendant which has anything to do with a continuation of the plaintiff's work duties. He referred to par 6 of the same statement and the fact that the plaintiff had availed himself of accommodation provided by the defendant, but approximately four weeks prior to the material date, chose to travel to and from the mine site to reside with his family. Counsel submitted the plaintiff elected to travel home which he said emphasises the freedom of choice of the plaintiff in deciding where to live unconnected with work‑related duties. He said the plaintiff of his own volition drove 60 odd kilometres after work to be with his family. Counsel submitted the plaintiff decided where he wanted to live and that accordingly he was not driving home in the course of his employment at the time of the accident, although he was going home from his employment.
Counsel for the defendant also relied upon the reasons of their Honours in Hatzimanolis v ANI Corporation Ltd and in particular the passage at p 483 where their Honours observed the course of employment is ordinarily perceived as commencing when the employee starts work in accordance with his or her ordinary or overtime hours of work and as ending when the employee completes his or her ordinary or overtime hours of work.
Counsel for the defendant also referred to the judgment of Gleeson CJ in McCann v Switzerland Insurance Ltd (2000) 176 ALR 711 at 722 in relation to the approach to be taken to the construction of exclusion clauses, where his Honour said:
"A policy of insurance, even one required by statute, is a commercial contract and should be given a business‑like interpretation. Interpreting a commercial document requires attention to the language used by the parties, commercial circumstances which the document addresses, and the objects which it is intended to secure."
The case for the defendant is, therefore, that the plaintiff of his own volition and entirely unconnected with his work‑related duties chose to drive home from the mine site and sustained injuries in the accident which did not occur in the course of his employment. He submitted if the words "in the course of his employment" are ambiguous in the contract as a whole, they are to be construed contra proferentem, against the third party.
Conclusions in relation to the first agreed issue
Approaching this exclusion clause in the manner explained by Gleeson CJ in McCann's case, it is necessary to consider whether it was a purpose of the public liability policy to insure the defendant against legal liability at common law not within its insurance cover under the HIH Insurance policy. It is obvious the public liability policy was a contract entered into at a time when the parties knew of the provisions of s 19(2)(a)(i) of the Act as amended in 1993, which excluded journey insurance. The parties knew the HIH policy provided no cover against liability at common law in such circumstances. The question is whether it was the purpose of the parties in negotiating the public liability policy to cover any such contingent liability.
Notwithstanding the knowledge of the parties at the time the public liability policy was entered into, it is equally obvious from a reading of the policy as a whole, including the exclusion clause, that it was not a purpose of the policy to provide indemnity to the defendant against its liability to the plaintiff for personal injuries sustained in the course of the plaintiff's employment by the defendant. As the recent authorities in Australia referred to by counsel demonstrate, the words "in the course of employment" have come to have a received and unambiguous meaning in this branch of the law. It is their application to the facts of any one case which may raise uncertainty. There is nothing to suggest that the parties to this public liability policy intended the words should be given a different meaning because of the effect of s 19(2)(a)(i) of the Act. I conclude it was not the purpose of the policy to cover the gap in the defendant's insurance cover, which gap it was at all times open to the defendant to arrange additional cover for.
It is then necessary to determine whether the agreed facts establish the liability of the defendant to the plaintiff is for personal injuries sustained in the course of his employment, in accordance with the reformulation of the principles expressed by their Honours in the High Court in Hatzimanolis. In my opinion, upon the facts agreed in this case, the Court should conclude the plaintiff was employed at the Murrin Murrin mine site approximately 60 kilometres from Laverton and resided with his family at the Laverton Caravan Park. The plaintiff sustained injury while driving home on 23 August 1998. The plaintiff had been driving to and from the mine site for some four weeks. It may reasonably be inferred the defendant knew of this fact. The plaintiff drove to and from the mine site to reside with his family. It is obvious that to reside at the mine site required the plaintiff to reside away from his family. I conclude that the circumstances and nature of the plaintiff's employment was such that it was reasonable for him to travel to and from the mine site to reside with his family. I also conclude the plaintiff may have been entitled to a travel allowance or suitable transport for this purpose in these circumstances, pursuant to clause 3.2 of the employment contract.
In considering the circumstances and nature of the plaintiff's employment, it is also necessary to have regard to the agreed fact that the accident was caused by the plaintiff's fatigued condition induced by a system of work provided by the defendant which required lengthy and frequent shifts, thereby fatiguing the plaintiff. In all these circumstances, I conclude the injuries in this case did not occur after ordinary working hours to an employee who performed his work at a permanent location.
Upon a proper construction of the exclusion clause in the public liability policy as a whole, therefore, I conclude that the agreed liability of the defendant to the plaintiff is for personal injuries sustained in the course of the plaintiff's employment by the defendant.
It follows that in relation to the first agreed issue the court should conclude the employment exclusion excludes the defendant's claim for indemnity for the settlement amount. In these circumstances, it is not necessary for the court to determine the second and third agreed issues. The defendant's claim against the third party should be dismissed.
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