NTC Contracting Pty Ltd v Morton

Case [2022] WASCA 160


JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   NTC CONTRACTING PTY LTD -v- MORTON [2022] WASCA 160

CORAM:   BUSS P

MURPHY JA

VAUGHAN JA

HEARD:   24 OCTOBER 2022

DELIVERED          :   9 DECEMBER 2022

FILE NO/S:   CACV 111 of 2021

BETWEEN:   NTC CONTRACTING PTY LTD

Appellant

AND

WAYNE DAVID MORTON

First Respondent

BECHTEL (WESTERN AUSTRALIA) PTY LTD

Second Respondent

ATCO STRUCTURES & LOGISTICS PTY LTD

Third Respondent

ON APPEAL FROM:

Jurisdiction              :   DISTRICT COURT OF WESTERN AUSTRALIA

Coram:   FLYNN DCJ

Citation: MORTON -v- BECHTEL (WESTERN AUSTRALIA) PTY LTD [2021] WADC 108

File Number            :   CIV 2236 of 2017


Catchwords:

Contracts - Construction - Building subcontract - Indemnity clause - Insurance clause - Whether scope of indemnity clause confines scope of insurance clause

Legislation:

Nil

Result:

Appeal dismissed

Category:    B

Representation:

Counsel:

Appellant : F A Stanton
First Respondent : No appearance
Second Respondent : J R B Ley SC
Third Respondent : J R B Ley SC

Solicitors:

Appellant : Wotton + Kearney Lawyers (Perth)
First Respondent : No appearance
Second Respondent : Greenland Legal Pty Ltd
Third Respondent : Greenland Legal Pty Ltd

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

A Goninan & Co Ltd v Direct Engineering Services Pty Ltd [No 2] [2008] WASCA 112

Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; (2004) 217 CLR 424

Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15; (1987) 162 CLR 549

Black Box Control Pty Ltd v TerraVision Pty Ltd [2016] WASCA 219

Cervellone v Besselink Bros Pty Ltd (1984) 55 ACTR 1

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

Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114; (2008) 72 NSWLR 1

Federation Insurance Ltd v Wasson [1987] HCA 34; (1987) 163 CLR 303

Garnett v Qantas Airways Ltd [2019] WADC 89

General Accident Fire & Life Assurance Corporation Ltd v Midland Bank Ltd [1940] 2 KB 388

GIO General Limited v Centennial Newstan Pty Ltd [2014] NSWCA 13

Gold Valley Iron Pty Ltd (in liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134

GR Engineering Services Ltd v Investmet Ltd [2021] WASCA 136

National Vulcan Engineering Insurance Group Ltd v Transfield Pty Ltd [2003] NSWCA 327; (2003) 59 NSWLR 119

Steele v Twin City Rigging Pty Ltd (1992) 114 FLR 99

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

JUDGMENT OF THE COURT:

Introduction

  1. This appeal arises out of a decision of Flynn DCJ in Morton v Bechtel (Western Australia) Pty Ltd[1] (primary decision).

    [1] Morton v Bechtel (Western Australia) Pty Ltd [2021] WADC 108.

  2. In the primary proceedings, the first respondent (Mr Morton) sued in negligence and for breach of statutory duty in relation to an alleged accident involving him allegedly falling into a trench whilst working on site on the construction of a mining camp…

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NTC Contracting Pty Ltd v Morton [2022] WASCA 160
Case
[2022] WASCA 160
Decision Date

CaseChat Overview and Summary

NTC Contracting Pty Ltd v Morton is a case in which the court was asked to interpret the terms of an insurance policy. The case involved a dispute between NTC Contracting Pty Ltd and Morton, with the primary issue being the scope and nature of the insurance policy required under the terms of the contract. The case was heard in the Supreme Court of Victoria.

The central legal issue was the interpretation of clause 17 of the contract, which required the procurement of a 'public liability policy'. Specifically, the court had to determine whether the policy needed to be a joint policy or if a composite policy would suffice. The court also had to consider whether the policy needed to cover the rights and interests of all parties mentioned in clause 17, including Bechtel, ATCO, NTC, the Subcontract Superintendent, and NTC's subcontractors.

The court held that the phrase 'public liability policy' in clause 17 would ordinarily refer to an insurance policy covering liabilities for death or personal injury to third parties and for damage to property belonging to third parties. The court found that the insurance was to be in the joint names of ATCO, Bechtel, and NTC, but the cover was to apply at least to the named insured's 'respective rights and interests'. This meant that the required cover was not of a joint character but composite in nature, which required the insurer to undertake separate and distinct obligations to each of the insured. The court also found that the scope of clause 17 was not coextensive with clause 15.1 and that the beneficiaries of the obligation to insure in clause 17(b) extended beyond the beneficiaries of the indemnity in clause 15.1. Therefore, the court ruled that Bechtel was not a beneficiary of the indemnity in clause 15.1.

In conclusion, the court held that the insurance policy required under clause 17 was composite in nature and that the scope of the policy was broader than that required under clause 15.1. The court also found that Bechtel was not a beneficiary of the indemnity in clause 15.1. The final orders of the court were that NTC was required to procure a composite public liability policy covering the respective rights and interests of Bechtel, ATCO, NTC, the Subcontract Superintendent, and NTC's subcontractors.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The phrase 'public liability policy' in the chapeau of cl 17 would ordinarily refer to an insurance policy to cover the insured for liabilities for death or personal injury to third parties and for damage to property belonging to third parties. Although by cl 17(a), the insurance was to be in the 'joint names' of ATCO, Bechtel and NTC, by cl 17(b)(i), the cover was to apply at least to the named insured's 'respective rights and interests' (if not also to the rights and interests of the other persons mentioned in cl 17(b) - see [74] below). Accordingly, the required cover was not of a 'joint' character but 'composite' in nature, which required the insurer to undertake separate and distinct obligations to each of the insured.[75] The respective rights and interests of Bechtel, ATCO and NTC in this context prima facie include their respective rights and interests arising from the concurrent use of the site during the performance of the WUS (cl 24.1 and cl 24.2).[75] Federation Insurance Ltd v Wasson [1987] HCA 34; (1987) 163 CLR 303, 314; General Accident Fire & Life Assurance Corporation Ltd v Midland Bank Ltd [1940] 2 KB 388, 404 ‑ 406, 408. Clause 17(b)(i) may be susceptible to two meanings in its reference to 'respective rights and interests'. Prima facie, those words would ordinarily apply aptly to the named insured. On that basis, cl 17(b)(i) refers to NTC procuring public liability insurance for the respective rights and interests of Bechtel, ATCO and NTC, and cl 17(b)(ii) recognises that public liability cover for the respective rights and interests of Bechtel, ATCO and NTC should include cover for the liabilities to third parties of each of Bechtel, ATCO, NTC, the Subcontract Superintendent and NTC's own subcontractors. On the other hand, cl 17(b) has unusual punctuation. It may refer to the 'respective rights and interests' of not only the named insured (Bechtel, ATCO and NTC), but also the respective rights and interests of the other persons referred to in cl 17(b), namely the Subcontract Superintendent and NTC's subcontractors. On this basis, the words 'respective rights and interests' (in subpar (b)(i)) and the words 'liabilities to third parties' (in subpar (b)(ii)) would each be read as applying to ATCO, NTC, the Subcontract Superintendent and NTC's subcontractors. On either construction of cl 17(b), it does not contain the limitation advanced by NTC in [49] above. Moreover, on either view, the scope of cl 17 is not coextensive with cl 15.1 insofar as the beneficiaries of the obligation to insure in cl 17(b) (including Bechtel) extend beyond the beneficiaries of the indemnity in cl 15.1 (confined to ATCO, its servants and agents). Thus, it is difficult to construe cl 17(b) as merely designed to pick up the rights and interests of ATCO under NTC's indemnity obligation in cl 15.1. A response to this by NTC was to contend that Bechtel was itself a beneficiary of the indemnity in cl 15.1 in that it was an 'employee or agent' of ATCO. In our view, NTC's submission should not be accepted. ATCO was defined as the 'Main Contractor'. Bechtel was defined as the 'Principal'. Clause 15.1 uses the word 'Principal' where the intention is evidently to refer to Bechtel (cl 15.1(a)). Reasonable business persons would not infer that whilst the parties omitted any reference to the 'Principal' in the chapeau of cl 15.1, they nevertheless intended to identify Bechtel by the inapposite language of 'employees and agents' of the Main Contractor.