Redwood v Taylor

[2003] NSWSC 229

CITATION:	Redwood v Taylor [2003] NSWSC 229
HEARING DATE(S):	27 March 2003
JUDGMENT DATE:	31 March 2003
JURISDICTION:	Common Law Division
JUDGMENT OF:	Master Malpass
DECISION:	The application brought against National Transport Insurance Limited is dismissed. The plaintiff is to pay the costs of that application. The Exhibits may be returned.
CATCHWORDS:	Charge on insurance moneys - enforceable by way of action against insurer - granting of leave - discretionary power and prescription - does policy indemnify against alleged liability - exclusion clauses - discretionary considerations (including viability of defendant).
LEGISLATION CITED:	Law Reform (Miscellaneous Provisions) Act 1946, s 6 (1) and (4). Workplace Injury Management and Workers Compensation Act 1998.
CASES CITED:	Bailey v New South Wales Medical Defence Union Limited (1995) 184 CLR 399. Connelly v Wells (1994) 10 NSWCCR 396. Kinzett v McCourt & Ors (1999) 46 NSWLR 32. Fishwives Pty Ltd v FAI General Insurance Co Ltd & Ors (2002) 12 ANZ Insurance Cases 60 - 515.
PARTIES :	Michael Redwood (Plaintiff/Applicant) v Brian Taylor (Defendant/First Respondent) National Transport Insurance Limited (Second Respondent) Commercial Union Workers Compensation NSW Limited (Third Respondent)
FILE NUMBER(S):	SC 20594 of 2001
COUNSEL:	Mr C S Leahy SC (Plaintiff/Applicant) N/A (Defendant/First Respondent) Mr G Parker (Second Respondent) N/A (Third Respondent)
SOLICITORS:	Slater & Gordon (Plaintiff/Applicant) N/A (Defendant/First Respondent) Fraser Clancy (Second Respondent) Nevill & Edwards (Third Respondent)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Master Malpass

Monday 31 March 2003

20594 of 2001 Michael Redwood v Brian Taylor

JUDGMENT

1 MASTER: The plaintiff was a panel beater. He performed work for the defendant in respect of a business which may have been known as “Banana Coast Towing” or “Banana Coast Repairs & Towing”. The business was located at Grafton.

2 On or about 1 February 2000, whilst he was performing work at the Grafton premises he suffered personal injury as the result of being struck by a fragment of a hydraulic cylinder. The cylinder exploded in an area adjacent to where he was working.

3 The plaintiff has brought a claim for damages against the defendant. The claim is as presently formulated in an Amended Statement of Claim filed on 5 December 2001. It is put on alternate bases. The stance taken on behalf of the plaintiff is that he was either an employee or an independent contractor.

4 The proceedings came before Newman AJ on 11 October 2002. An application was made pursuant to s 6 (4) of the Law Reform (Miscellaneous Provisions) Act 1946. The relief that is sought is set forth in a Notice of Motion filed on 1 May 2002.

5 The application sought to join two insurers. Both had declined indemnity. One of the insurers is National Transport Insurance Limited (National). It issued a public liability insurance policy. The other insurer is CGU Workers’ Compensation (NSW) Limited (CGU). It was formerly known as Commercial Union Workers’ Compensation (NSW) Limited. It issued a policy of insurance in the name of “Banana Coast Repairs & Towing”.

6 It was sought to have both insurers added as defendants in the proceedings together with leave to file an Amended Statement of Claim.

7 On the application of the plaintiff, Newman AJ adjourned the proceedings and reserved the costs thrown away by reason of the adjournment. At that time, there was no evidence from the plaintiff.

8 The application came on for hearing again on 27 March 2003. There was then an affidavit sworn by the plaintiff on 13 March 2003. It was read together with material from a number of other affidavits. The plaintiff was cross-examined.

9 For some time, the defendant has been a litigant in person. He did not appear at the hearing. He had previously appeared before Newman AJ.

10 At the commencement of the hearing, the court was informed that agreement had been reached between the plaintiff and CGU. Consent orders were made (which inter alia gave leave to the plaintiff to bring an action against CGU). The consent was given on the basis set forth in Exhibit A (no concession as to liability to indemnify). The application then proceeded as a defended matter between the plaintiff and National.

11 The relevant provisions of s 6 are as follows:-

“(1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.
……………………………………………………………………
(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured:
Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken”.

12 During the course of submissions, counsel referred the court to a number of decided cases (including Bailey v New South Wales Medical Defence Union Limited (1995) 184 CLR 399; Kinzett v McCourt & Ors (1999) 46 NSWLR 32 and Fishwives Pty Ltd v FAI General Insurance Co Ltd & Ors (2002) 12 ANZ Insurance Cases 60 – 515).

13 Where there is a charge within the meaning of the section, the statutory provisions confer a discretionary power upon the court, which is exercisable subject to what has been described as the prescription (see inter alia Fishwives at 61 – 515) appearing in the proviso to subsection (4). The power is exercised having regard to the particular circumstances of the case before the court and so that justice is best served between the parties. The plaintiff bears the onus of satisfying the court that leave should be granted.

14 The prescription is that leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability and that necessary steps have been taken to establish entitlement to do so. It seemed to be common ground that the onus, to establish that leave shall not be granted in such a case, rested with the insurer.

15 At this stage, it is convenient to mention certain of the submissions made on behalf of the insurer in resisting the application. One submission was that the cover provided by the public liability insurance policy did not extend to the business that was being conducted by the defendant. Another, was that this case fell within one of the exclusions contained in the policy. In substance, it was being said that the defendant was not entitled to be indemnified against the alleged liability under the policy. A further submission was that for discretionary reasons the application should also fail.

16 A copy of the policy is an annexure to an affidavit sworn by Mr Clancy. There are a number of identifiable parts to this document.

17 It commences with what is called “POLICY SCHEDULE”. The client is identified as:-

“B & HF TAYLOR
T/AS BANANA COAST REPAIRS & TOWING
WESTLAWN FINANCIAL SERVICES PTY LTD
69 VICTORIA STREET
GRAFTON
NSW 2460”

It also contains the following:-

“LEGAL LIABILITY as a Cartage Contractor (Non haz)
THE PRODUCT: GOODS TRANSPORT”

There is then reference to limits for General Liability and Products Liability. The situation is identified “at and from GRAFTON”.

18 Another part of the document has the heading “LIABILITY INQUIRY”. It contains the following:-

“The Business: Legal Liability as Cartage Contractor (Non Haz)
The Product: GOODS TRANSPORT”.

There is also mention of limits for Public Liability, Product Liability, and Pollution.

19 A further part has the heading “LIABILITY POLICY”. It contains general definitions (including definitions of “The Business”, “Employee” and “Worker” ).

20 The definition of business contains the following:-

“ 2. The Business shall mean:
that Business described in the Schedule and shall also include:
……………………………………
.3 the ownership or occupation of, the carrying out of repairs maintenance alterations or additions to, or the demolition of, the Person Insured’s premises to which this Policy applies.”

21 The definition of employee is as follows:-

“ 3. Employee shall mean:
any person engaged in the Business under a contract of service or apprenticeship with any Person Insured (other than with a Person Insured by the Principal’s Liabilities Clause), or so deemed by any law.”

22 The definition of worker is as follows:-

“ 18. Worker means:
any person employed by the Person Insured, or deemed to be employed by the Person Insured pursuant to any Workers’ Compensation Law.”

23 Yet a further part has the heading “Exclusions applicable to section 4 – Public Liability”. It contains the following exclusions:-

“……………………………………..
9. Employees/Sub-Contractors
Personal injury to any Employees/Sub-Contractors arising out of or in the course of their employment/sub-contracting.
10. Workers’ Compensation & Industrial Awards.
Liability imposed by the provisions of any Workers’ or Workmens’ Compensation Law or any Accident Compensation legislation or any industrial award or agreement or determination.”

24 The policy contains no definition of sub-contractor or of independent contractor. Indeed, the court was told that, “independent contractor” may not appear anywhere in the policy.

25 The evidence inter alia as to the nature of the business of the defendant and of the work being performed by the plaintiff has its shortcomings and obscurities.

26 In a statement made by the defendant, the following material appears:-

“…………………………….
We do towing and salvage of all types of vehicles. We only service and repair our our (sic) own vehicles. I own a Mack R600 prime mover. During the 99/00 summer period I decided to refurbish the vehicle. The cab had been partially affected by rust. The cab was removed from the chassis and placed on a pallet.
……………………………..
I mentioned I had a cab that needed work. Shortly after this Glen brought Michael up to our workshop. Michael looked at the cab. The cab needed some panelbeating work and then had to be sprayed. Michael gave us a price. I discussed the price with my son. We considered the price reasonable and accepted Michael’s quote. Michael came up to our workshop about a week later and started the work. Michael brought all his own gear and materials and worked on the cab in the workshop. Michael did the work piecemeal – working about a week and then taking a couple of days off – and followed this pattern until his accident.
………………………………..”

27 In a Workcover Final Interview Statement from the defendant, the following appears:-

“Q11: What work do you perform?
A: Heavy towing and salvage.
…………………………………….
Q14: What was the employment relationship and or agreement between you and Michael Redwood?
A: His father bought (sic) him up here. I have known his father for 30 years. His father bought (sic) him up here to look at a job. He came up here to see if he could do some work. He was to prepare and paint a truck dog box, repair and paint the cab, repair and paint the bonnet of an R600 Mack truck.”

28 The material shows that the plaintiff commenced the work on 10 January 2000. He was to be paid an hourly rate. He was to be paid at the completion of the job. He paid his own tax. He brought his own tools and the material he needed for the job. He did not have any set working hours and chose when and if he worked. He did the work in a main shed at the Grafton premises. He filled in a time sheet. He prepared a document headed “Invoice/Statement”. He was paid the sum claimed in that document. In one of his statements, he was described by the defendant as a “sub contractor”.

29 I am satisfied that the defendant’s business was not a business that fell within the cover provided by the policy. The evidence establishes that he carried on a business of heavy towing and salvage. For completeness, I should add that the plaintiff submitted that such a finding should be made. The business was not that of a cartage contractor engaged in the transport of goods. I should add that the extension of the definition of business contained in clause 2 (3) (concerning the carrying out of inter alia repairs and maintenance) related to the person insured’s premises and not to work carried out in respect of vehicles thereon. In my view, the policy does not indemnify against the alleged liability and there can be no charge on insurance moneys payable in respect of it.

30 Although this decision is determinative of the plaintiff’s application, for the assistance of the parties, I shall make observations concerning other aspects of the matters argued.

31 It is the submission of the plaintiff that his evidence leans toward a finding that he was an employee and that the evidence from the defendant suggests that he may be an independent contractor. In my view, there seemed to be a lack of significant difference between their respective evidence. The insurer made a contrary submission that the plaintiff was an employee.

32 A determination of this question requires the court to consider the whole of the circumstances of the relationship (Connelly v Wells (1994) 10 NSWCCR 396). On the material before the court, a finding that he was an employee would be open. If he is not an employee as such, he may be taken to be a worker employed by the defendant by legislation deeming it to be so (Workplace Injury Management and Workers Compensation Act 1998). If he is an employee as defined, then liability is excluded under the policy and there can be no charge.

33 The plaintiff also said that he was not a sub-contractor. He relied on the dictionary meaning given to the word “sub-contractor”. The dictionary meaning defines that term as one who contracts to render some performance for another which the latter requires for the performance of his own contract. In answer to this submission, it was said by the insurer that “sub-contractor” as it appears in the policy has a special meaning which caught someone in the position of the plaintiff.

34 Such evidence as there is on the question, suggests that the defendant was the owner of the subject matter of the plaintiff’s work and that there was a contract between them concerning that work. In the circumstances, it is unnecessary to dwell on this question.

35 I should also mention that it seems to be common ground that this policy and the workers’ compensation policy are to be regarded as mutually exclusive. Liability under any Workers’ Compensation Law is excluded under the policy.

36 The defendant was said to be not a viable defendant (in the sense that he lacked the means to satisfy any judgment recorded against him). This was a principal submission made on behalf of the plaintiff.

37 The authorities (see inter alia Kinzett at p 47) refer to a practice to refuse leave to proceed against an insurer, wherever the insured is a viable defendant.

38 The problem for the plaintiff on this question was one of evidentiary deficiency. There was a lack of sworn evidence. Largely, the relevant material was untested assertion.

39 The plaintiff looked to various matters. I shall expressly mention certain of them. The defendant had ceased to have legal representation. At the previous hearing, he was a litigant in person. He did not appear at this hearing. The plaintiff placed stress on the material that appears in the transcript of the hearing that took place before Newman AJ. This is material which is no more than untested assertion made by the defendant in court inter alia to the effect that he is an elderly man with various problems (including disabilities and health problems as well as a possible entitlement to an invalid pension).

40 The material leaves open the possibility that the defendant may still carry on the business and have assets of the business as well as other assets.

41 In the light of the evidence that is before this Court, I am not satisfied that the court can regard him as not a viable defendant.

42 The defendant remains a party to the proceedings. There is now an additional defendant CGU. It is not said that such insurer could not satisfy any judgment if liability was established against it.

43 In the particular circumstances of this case, if the discretionary power had been available to exercise, I would not have been satisfied that the plaintiff was entitled to the relief sought.

44 The application brought against National Transport Insurance Limited is dismissed. The plaintiff is to pay the costs of that application. The Exhibits may be returned.

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Last Modified: 04/01/2003