Rollings v Portrange Pty Ltd - [2014] WADC 56

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: ROLLINGS -v- PORTRANGE PTY LTD [2014] WADC 56

CORAM: SCOTT DCJ

HEARD: 15-17 JANUARY 2014

DELIVERED : 24 APRIL 2014

FILE NO/S: CIV 258 of 2010

BETWEEN: BRADLEY NOEL ROLLINGS
Plaintiff
AND
PORTRANGE PTY LTD
First Defendant
XSTRATA NICKEL AUSTRALASIA OPERATIONS PTY LTD
Second Defendant

Catchwords:

Contribution proceedings - Incorporation of terms in contract - Construction of indemnity and insurance clauses - Turns on own facts

Legislation:

Nil

Result:

Second defendant entitled to indemnity/damages

Representation:

Counsel:

Plaintiff:     No appearance
First Defendant             :     Ms B A Mangan
Second Defendant         :     Mr D R Clyne

Solicitors:

Plaintiff:     Not applicable
First Defendant             :     Jarman McKenna
Second Defendant         :     HBA Legal

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

Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424
China Ocean Shipping Co Ltd v PS Chellaram & Co Ltd (1990) 28 NSWLR 354
Commonwealth v Verwayen (1990) 170 CLR 394
Gillespie Bros and Co Ltd v Roy Bowles Transport Ltd [1973] 1 QB 400
Hewitt v Benale Pty Ltd (2002) 27 WAR 91
Jones v Dunkel (1959) 101 CLR 298
La Rosa v Nudrill Pty Ltd [2013] WASCA 18
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197
Qantas Airways Ltd v Aravco Ltd (1996) 185 CLR 43
Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) 23 WAR 291
TNT (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Westina Corporation Pty Ltd v BGC Contracting Pty Ltd [2009] WASCA 213

SCOTT DCJ:

Introduction

The first defendant carried on business as an electrical contractor under the name Elcore Electrical Contractors (Elcore) in the course of which it contracted to supply goods and labour. The plaintiff was employed by the first defendant.
The second defendant was formerly named Sir Samuel Mines NL and was the owner and operator of the Cosmos Mine (Mine) situated near Leinster.
Pursuant to purchase order S19582 issued by the second defendant, the first defendant agreed to provide labour (the plaintiff) to undertake electrical work at the Mine between 2 June 2005 and 1 September 2005.
During the course of undertaking work at the Mine the plaintiff sustained injury.
In this action the plaintiff sued the first and second defendants for negligence and breach of statutory duty. The plaintiff's claim was settled and the parties entered into consent orders (consent orders) in terms that:
(1)Judgment be entered for the plaintiff against the first and second defendants for the sum of $650,000 plus costs of $60,000 (settlement sum). The settlement sum to be paid:
(a)by the first defendant in the sum of $325,000 plus costs of $30,000; and
(b)by the second defendant in the sum of $325,000 plus costs of $30,000.
(2)The question of the liability to pay the settlement sum as between the first and second defendants in negligence and breach of statutory duty be apportioned:
(a)twenty per cent to the first defendant; and
(b)eighty per cent to the second defendant.
(3)The question of the liability to pay the settlement sum, as between the first and second defendants in contract, be determined at a trial of the contribution proceedings.
The trial related to the contribution proceedings between the first and second defendants.

Issues to be determined in the contribution proceedings

The second defendant claims that:
(1)the contract between it and the first defendant (Contract) comprised:
(a)purchase order S19582;
(b)terms and conditions (Terms) pursuant to which the first defendant:
(i)was obliged to indemnify the second defendant against the plaintiff's claim; and
(ii)was obliged at its own cost and expense to maintain in full force and effect insurances which indemnified the second defendant against its liability for injury to persons including the plaintiff.
(2)the first defendant:
(a)was obliged to indemnify it against its liability to pay any sum to the plaintiff under the consent orders; and/or
(b)by failing to maintain such insurances effective at the date the plaintiff was injured, was in breach of the Contract by reason of which the second defendant suffered loss and damage.
The first defendant:
(1)denies that the Contract included the Terms;
(2)says that if the Terms did form part of the Contract:
(a)on their proper construction it was not obliged to indemnify the second defendant thereunder;
(b)it was not obliged to maintain the insurances alleged by the second defendant. Alternatively, the second defendant had waived any requirement that the first defendant maintain such insurances.
(3)counterclaims against the second defendant sums owed to it pursuant to the consent orders.

Evidence relating to whether the Terms were incorporated in the Contract

Tania Saunders

Ms Saunders gave evidence that she was, between 2000 – 2005, the group accountant for the second defendant, stationed in West Perth.
She said that before the second defendant allowed any new contractor on the Mine site, the contractor was required to produce certificates that it had relevant insurance cover in place.
She said that when there was a new contractor coming to site, she would be advised by a person in the purchasing department by email or telephone. She would seek a certificate of currency for the insurance cover from the contractor and if it was not in order, she would then follow it up with the second defendant's insurer.
She said that at the relevant time, Peter Jones was the senior person in the second defendant's purchasing department and Daniel Palmateer was the junior.
She identified exhibit 2 as the second defendant's standard terms and conditions in which the contractor was referred to as the Vendor. These were the Terms.
On the front sheet of exhibit 2, which appeared to have been faxed on 21 January 2004, were the following handwritten words:
Attn: Ian Galloway
Forwarded to you as requested by T. Saunders, Perth office
She said that the handwriting was not hers. She recognised the handwriting to be Mr Jones's.
She could not remember how the notation, referring to her, came to be made. She said that in accordance with her standard practice she would have rung Mr Jones and told him to make sure that the first defendant got a copy of the second defendant's Terms prior to coming to site.
It was for the purchasing department on site to send the Terms to a new contractor. She relied on Mr Jones, particularly, to inform her by telephone or email that the Terms had been sent to a new contractor. Given the passage of time she did not have any specific recollection of Elcore as a contractor.
She said that she was the person who gave a clearance for a new contractor to come on site. Although she relied upon Mr Jones or Mr Palmateer, she was in charge of and worked very closely with the purchasing department.
She identified purchase order S19582 as the form of purchase order which was issued by the second defendant to contractors.
In cross‑examination she was shown exhibit 1A which was a handwritten purchase order dated 13 December 2004 numbered 2877 (order 2877) relating to 'equipment electrical test and tagging' at 2 Hopkins Street. She that she had no idea whether any terms and conditions were endorsed on that form of purchase order. She said that it was not an official purchase order with which she was familiar and she did not know the signature on it. She said that as far as she was aware, the only terms and conditions that the second defendant operated with were the Terms.
She agreed with the proposition that if she checked a new contractor's insurance cover in 2000, she would not know whether that contractor had insurance in, say, 2013. She said however that if the contractor had complied initially with the requirement to have the insurance cover in place it would then know what the terms were in order to be on site, and she would assume that the contractor would continue with its insurance obligations.
She was shown other terms and conditions (exhibit 49) (Other Terms) which she said she did not know whether she had seen them before.

Daniel Palmateer

Between September 2003 and the end of 2005 Mr Palmateer said that he worked in the supply (purchasing) department of the second defendant as a storeman and purchasing officer. He was stationed at the Mine site. Mr Jones and Steven Blackie worked in that department as well.
He said that when a new contractor was to come on site the second defendant had a form which would be sent from the supply department to that contractor together with the second defendant's terms and conditions. He identified exhibit 2 as the Terms which were sent to new contractors.
The new contractor would be requested to advise its details and provide the insurance paperwork before a contract was set up with that contractor.
He said that a new contractor would not come on site until it was set up as a vendor on the second defendant's computer system. In those days the second defendant was a very small company so probably there would only be one or two new contractors per month.
The Terms would be sent to the new contractor and once they were agreed the new contractor, as the vendor, would be set up on the computer system prior to any purchase order being sent to it.
He said that as far as he was aware the only time that the Terms were sent to a contractor by the supply department was when it was a new contractor.
He said that they had a facsimile printout at the end of every day to ensure the contractors received copies that were being sent.
He said that purchase order S19582 was a copy of a purchase order from the supply department. He was shown the Other Terms and said that that document was not familiar to him.
He was shown exhibit 1A and said that he had not seen it before. He said that form of purchase order was not from the supply department at the Mine site.

Emails exhibited by consent

A number of emails were tendered by consent (exhibits 3 – 12, 15, 19, 20 and 51). In the main they were emails between Mr Galloway, who was the first defendant's insurance broker, and Messrs Evans and Lucas the insurance brokers for the second defendant with respect to the terms of the public liability and workers' compensation insurance cover required to be taken out by the first defendant before its personnel could attend on the Mine site.
Those emails culminated in the brokers, on behalf of their respective clients, agreeing to the terms of insurance cover in accordance with cl 13.2 (workers' compensation/common law liability) and cl 13.3 (public liability) of the Terms in respect to which the second defendant was noted as an additional insured party/principal.
The final certificates of insurance reflecting the agreed insurance cover were dated 28 January 2004 and comprised exhibit 17 (public liability) and exhibit 18 (workers' compensation/common law).
Excerpts from some of those emails are as follows:
(a)from Mr Lambert (of the second defendant) to the plaintiff dated 10 January 2004:
Brad
Can you advise me if you are available to fill in whilst personnel are on leave we are proposing the following dates
17/01/04 to 25/01/04 = 9 days
5/02/04 to 15/02/04 = 11 days (exhibit 51)
(b)from Mr Evans to Ms Saunders dated 12 January 2004:
Further to your fax on Friday attaching the certificates for Elcore, we have now reviewed these and it appears that they do not meet the conditions of your contract.
To resolve this situation, please obtain confirmation from Elcore (or their broker) the following:
Public liability
1.Have Jubilee Mines NL and Sir Samuel Mines NL interested [sic] noted on the policy.
2.Does policy contain a waiver of subrogation?
3.Does policy contain a cross‑liability clause?
Workers' Compensation
1.Have Jubilee Mines NL and Sir Samuel Mines NL noted as principals on the policy.
2.Does policy provide cover for pinciples [sic] indemnity at common law.
Please request that Elcore has revised Certificates of Currency issued noting the above in order to comply with your insurance contract. (exhibit 3)
(c)from Ms Saunders to Gerald Clarke (of the first defendant) dated 14 January 2004:
Gerard,
As per our phone conversation can you refer the following to your Broker for clarification.
Public Liability
1.Have Jubilee Mines NL and Sir Samuel Mines NL interested noted on the policy.
2.Does policy contain a Waiver of Subrogation?
3.Does policy contain a Cross Liability Claim?
Workers' Compensation
1.Have Jubilee Mines NL and Sir Samuel Mines NL noted as Principal on the policy.
2.Does policy provide for Pincipals [sic] Indemnity at Common Law?
Can you please have revised Certificates of Currency issued noting the above in order to comply with our insurance contracts. (exhibit 5)
(d)from Mr Galloway to Allianz (the first defendant's insurer) dated 21 January 2004:
Bill, please find attached a copy of Sir Samuel Mines NL contract conditions that our above mutual client will be working under when performing work for this Principal.
Can you please review clauses 11, 12, 13 and 14 and advise whether the above insurance can be extended to accommodate these contract conditions in terms of their liability insurance protection under Policy No 61‑1121252‑LCP. (exhibit 7)
(e)from Mr Galloway to Mr Lucas dated 22 January 2004:
Mark,
I have spoken to Sir Samuel Mines in respect to the attached Purchase Order – Terms and Conditions and she has asked me to refer this matter to you.
Our client Portrange Pty Ltd Trading as Elcore Electrical Contracting will be performing electrical work to this client under the attached Purchase Order, terms and conditions, and we have a number of problems associated with these conditions. (exhibit 6)
(f)from Mr Galloway to Mr Lucas dated 28 January 2004:
Mark, have spoken to Allianz and confirm the following:-
Public and products liability insurance
Allianz has extended policy to note and include the interests of Sir Samuel Mines NL and the policy extends to include cross liability.
Workers' Compensation Insurance
Policy has been indorsed to note Sir Samuel Mies [sic] NL as Principal including at common law.
Common law limited to $50 million. The contract requires $100 million. Please confirm $50 million is in order.
Mark, my client is requiring site access late this week, therefore can you please confirm the $50 million cover is in order and I will issue COC to your client. (exhibit 9)
(g)from Mr Galloway to Mr Lucas dated 28 January 2004:
Mark, client has currently six employees including two working directors who have been declared under their workers' compensation insurance policy.
In regard to the Jubilee Mine, I understand that 2 – 3 employees will be attending site. (exhibit 10)
(h)from Mr Lucas to Mr Galloway dated 29 January 2004:
Thanks for the revised C of C's. I will recommend that Sir Samuel Mines grants your client access to the mine site. (exhibit 19)
The final certificates of insurance sent by Mr Galloway to Mr Lucas included the following:

Certificate of insurance (exhibit 17)

INSURED:Portrange Pty Ltd trading as Elcore Electrical Contractors

OTHER
INTERESTED
PARTIES:Sir Samuel Mines NL noted as an additional Insured Party
TYPE OF
INSURANCE:                  Public and products liability insurance
PERIOD OF
INSURANCE:                   28 January 2004 to 25 September 2004
COVERING:  All sums which the insured shall become legally liable to pay by way of compensation (excluding punitive, exemplary or aggravated damages) by reason of third party personal injury or property damage arising out of the insured's business activities or products.
LIMIT OF
LIABILITY:  Public liability - $20,000,000 any one occurrence and unlimited in the aggregate during any one period of insurance. (exhibit 17)

Workers' Compensation

INSURED:Portrange Pty Ltd trading as Elcore Electrical Contractors

OTHER
INTERESTED
PARTIES:Sir Samuel Mines NL noted as Principal both at Statute and Common Law

TYPE OF
INSURANCE: Workers' Compensation Insurance

PERIOD OF
INSURANCE:                   28 January 2004 to 25 September 2004
COVERING:  Legal liability under Western Australia Workers' Compensation and Rehabilitation Act and at Common Law for personal injury sustained to employees in the course of their employment.
INDEMNITY:                   Acts Benefits including Common Law liability - $50,000,000. (exhibit 18)

Thereafter, in early 2004 the following purchase orders were issued by the second defendant to the first defendant for the hire of labour personnel to work at the Mine site:
(a)Purchase order S15274 dated 6 February 2004 pursuant to which the plaintiff worked on the Mine site for six days.
(b)Purchase order S15330 dated 10 February 2004 pursuant to which the plaintiff worked on the Mine site for two days.
It is common ground between the parties that when the insurance taken out by the first defendant fell due for renewal on 25 September 2004 the first defendant did not renew public liability and workers' compensation insurance for the ensuing 12 month period in which the second defendant was included as an additional insured party/principal.
It is also common ground that the first defendant did not receive any further purchase orders from the second defendant to provide labour to work at the Mine site during the remainder of 2004.
The parties were in agreement that in 2005 the second defendant issued the following purchase orders to the first defendant to provide labour to work at the Mine site. Each of the purchase orders was in the same format.
(a)Purchase order S18428 dated 26/01/05 for the periods 9/02/05 ‑ 17/02/05 and 23/02/05 – 3/03/05.
(b)Purchase order S18700 dated 25/02/05 for the periods 09/03/05 ‑ 17/03/05 and 23/03/05 – 31/03/05.
(c)Purchase order S19084 dated 06/04/05 for the periods 06/04/05 ‑ 14/04/2005, 20/04/05 ‑ 28/04/05, 04/05/05 and 18/05/05 ‑ 26/05/05.
(d)Purchase order S19582 dated 26/05/05 for the periods 02/06/05 ‑ 09/06/05, 15/06/05 – 23/06/05, 29/06/05 – 07/07/05, 13/07/05 – 21/07/05, 27/09/05 – 04/08/05, 10/08/05 – 18/08/05 and 24/08/05 – 01/09/05.
The plaintiff was in each case, the person who worked at the Mine site.
The first defendant rendered tax invoices with respect to the labour hire the subject of each purchase order and received payment from the second defendant.
Each of the purchase orders in this format which were issued in 2004 and 2005 contained the following indorsement at the bottom left hand corner of the order:
Please furnish materials or services specified herein in accordance with above prices and the Company's Standard Terms and Conditions which form part of this Purchase Order.
All prices are firm unless stated otherwise.
Terms and Conditions are available upon request.
Please mark 'Sir Samuel Mines NL – Cosmos nickel project' including Purchase Order number on all packing slips and parcels.
It was common ground that the second defendant did not after January 2004 inquire of the first defendant whether the insurance cover the subject of the certificates comprising exhibits 17 and 18 had been renewed by the first defendant and nor did the second defendant require the first defendant to do so.
The first defendant tendered two handwritten purchase orders which were in a different format to the abovementioned purchase orders. These were:
(a)Order 2877 (exhibit 1A).
(b)Purchase order 3180 dated 9 August 2005 in which the goods and/or services to be supplied were described as 'work carried out on transportable office at 2 Hopkins Street, Boulder' (exhibit 56).
Each of these purchase orders contained the following indorsement at the foot of the order:
Please furnish materials or services specified herein in accordance with above prices and the company's standard terms and conditions which form part of this purchase order.
All prices shown herein are firm prices unless stated otherwise.

The first defendant did not call any witnesses in this trial. It adduced into evidence, however, the affidavit of Christian John Foyle sworn 17 October 2012 (exhibit 50) in which Mr Foyle deposed to the following:
(a)he was the solicitor having the carriage of the matter on behalf of the second defendant;
(b)he was instructed by the second defendant on 9 June 2011 that the Other Terms were printed on the reverse side of purchase order S19582. In accordance with those instructions the second defendant filed a notice of contribution and indemnity against the first defendant on 21 September 2011 in which the second defendant relied on those Other Terms.
(c)when he inspected documents at the second defendant's office on 15 March 2012 in order to provide further discovery he was then instructed that the Other Terms were not printed on the reverse side of purchase order S19582 and that the applicable terms and conditions were the Terms. As a consequence he said that the notice of contribution and indemnity was amended so as to allege that the Contract was subject to the Terms.
In that affidavit Mr Foyle did not depose as to the name and/or position of the person or persons from whom he obtained instructions on 9 June 2011 or 15 March 2012. Mr Foyle was not called by either party.

Law as to the incorporation of Terms

There is no real controversy between the parties as to the relevant legal principles which apply. This is not a case where the first defendant has acknowledged by signature the incorporation of the Terms at any time.
For the Terms to be incorporated in any contract between the first defendant and the second defendant it is necessary for the second defendant to prove that reasonable notice was given to the first defendant of those Terms prior to the formation of the Contract viz the contract incorporating purchase order S19582: Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197.
If reasonable effort has been made to give notice of the existence of the Terms it is not necessary that the second defendant prove that the first defendant read or understood the Terms: TNT (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353, 373 – 374; China Ocean Shipping Co Ltd v PS Chellaram & Co Ltd (1990) 28 NSWLR 354, 394 – 395.
The parties to a contract may, by their conduct, incorporate terms into the contract by a previous course of dealing. A course of dealing refers in general to the existence of a prior consistent history of comparable transactions between the parties when the relevant transaction is undertaken.
It is not an essential pre‑condition to the incorporation of terms by a previous course of dealing that:
(a)any document containing the relevant terms has been sent or given to the party sought to be bound at or prior to the formation of each of the contracts (or one or more of them) constituting the previous course of dealing; or
(b)the relevant terms have been incorporated in at least one of the contracts constituting the previous course of dealing.
However the time when any document containing the alleged terms was in fact given or sent to the party sought to be bound, that party's degree of knowledge (if any) of the document or the alleged terms, will be relevant in determining whether it was given reasonable notice and if so what the party seeking to rely on the alleged terms was reasonably entitled to conclude from the actions or conduct of the other party. La Rosa v Nudrill Pty Ltd [2013] WASCA 18 [70] – [72] and the cases there cited.
The rights and liabilities of the parties to a contract are to be ascertained, not on the basis of the subjective beliefs or understandings of the parties, but on the basis of what each party, by words or conduct would have led a reasonable person in the position of the other party to believe. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. See Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 [40].

Whether the Terms incorporated in the Contract

The second defendant contends that the Terms were incorporated in the Contract by reason of the following:
(a)the first defendant was a new contractor proposing to provide labour personnel to work on the Mine site and knew it to be a prerequisite for its personnel to be allowed on the Mine site that it had insurance cover in place pursuant to the Terms;
(b)reasonable notice was given to the first defendant of those Terms by a copy being forwarded to it directly alternatively to its insurance broker as its agent;
(c)by a course of dealing.
The second defendant contends that I can be satisfied that in January 2004 a copy of the Terms was received by the first defendant from the second defendant having regard to the evidence of Ms Saunders and Mr Palmateer that the second defendant's standard practice was for a copy to be forwarded to a new contractor.
Further, counsel for the second defendant submits that I can infer that the first defendant had a copy of the Terms before a copy was facsimiled to Mr Galloway on 21 January 2004 because:
•it is evident from the email from Mr Evans to Ms Saunders dated 12 January 2004 (exhibit 3) that Ms Saunders had by then received from the first defendant copies of its insurance certificates in order that she could ascertain whether they complied with the requirements of the Terms;
•the logical inference is that the first defendant was, when it forwarded the certificates to Ms Saunders, aware of the insurance requirements which were recited in the Terms;
•that inference is supported by the email from Ms Saunders to Mr Clarke dated 14 January 2004 (exhibit 5) in which she asked him to have the first defendant's broker clarify certain insurance issues and have revised certificates issued;
•Ms Saunders must then have been referred by the first defendant to Mr Galloway to whom a copy of the Terms was facsimiled by Mr Jones on 21 January 2004 in order that Mr Galloway could deal with insurance issues;
•absent any evidence to the contrary the logical inference to be drawn is that the first defendant had beforehand received a copy of the Terms direct from the second defendant.
Counsel for the second defendant submits that because the first defendant did not call evidence from any person in its employ at the relevant time who could have given evidence that the first defendant did not receive a copy of the Terms in January 2004, the compelling inference to be drawn is that any evidence which may have been called would not have assisted the first defendant's case on that issue: Jones v Dunkel (1959) 101 CLR 298, 308, 312, 320 – 321.
Alternatively, counsel contends, if I was not satisfied that a copy of the Terms was forwarded to and received by the first defendant direct, then receipt of those Terms by Mr Galloway on 21 January 2004 as the agent for the first defendant constituted reasonable notice to the first defendant of those Terms.
As to the contention by the first defendant that there was uncertainty as to what were the second defendant's standard terms and conditions, the second defendant submits that there is no evidence as to the extent to which the Other Terms were (if at all) used by the second defendant or any evidence that the first defendant ever received or sighted them.
On the other hand the first defendant contends that the second defendant has failed to prove that the Terms were incorporated in the Contract and says that:
(a)The evidence of Ms Saunders was that with respect to the provision to the first defendant of the Terms she relied upon those in the supply department on the Mine site providing those Terms to a new contractor such as the first defendant.
(b)Although Mr Palmateer said that the usual practice of the personnel in the supply department was to send the Terms to a new contractor by facsimile there was no 'paper trail' which one would expect to exist to confirm that the Terms were sent to the first defendant.
(c)The evidence established that the Terms were first forwarded to Mr Galloway on 21 January 2004. He was not actually or ostensibly authorised by the first defendant to agree to the incorporation of the Terms in any contract between the first and second defendants. From the emailed correspondence I should infer that his authority was limited to negotiating with the second defendant's brokers with respect to the insurance cover to be taken out by the first defendant to enable it to attend at the Mine site in February 2004.
(d)There was no course of dealing between the first and second defendants which would result in the Terms being incorporated in the Contract because:
•purchase orders S15274 and S15330 resulted in the first defendant's personnel (the plaintiff) working on the Mine site for no more than eight days in early 2004;
•the next dealing between the first and second defendants was the handwritten purchase order of 13 December 2004 (exhibit 1A) in respect to which there was no evidence that the Terms were those referred in the notation on that purchase order;
•the next purchase order resulting in the first defendant providing labour (the plaintiff) to the Mine site was S18428 dated 26 January 2005 (exhibit 30);
•the affidavit from Mr Foyle makes clear that the Other Terms were considered by the second defendant to have been the terms and conditions applicable to the Contract when the second defendant's solicitors were initially instructed to pursue contribution and indemnity proceedings. Counsel submits that by reason of the failure by the second defendant to call any evidence as to the existence of and use by the second defendant of the Other Terms or as to the basis upon which Mr Foyle was initially instructed that the Other Terms were applicable to the Contract I should draw an inference in accordance with Jones v Dunkel that such evidence would not have assisted the second defendant's case, on those issues.

Findings

I am satisfied that the Terms were incorporated in the contracts constituted by the issue of purchase orders after January 2004 including the Contract. My reasons are as follows.
(1)I am satisfied that reasonable notice of the Terms was given to the first defendant by the second defendant in January 2004.
(a)I consider it reasonable to infer that the first defendant received a copy of the Terms from the second defendant before 21 January 2004. In that regard:
•I accept the evidence of Ms Saunders and Mr Palmateer that before a new contractor could come on the Mine site the second defendant's practice was for the supply department to forward to it a copy of the Terms. The Terms under which the parties were to contract were obviously important.
•It is true that there is no evidence of any facsimile confirmation of a copy of the Terms being forwarded by the second defendant's supply department to the first defendant. Nonetheless, Mr Palmateer said that the procedure would have been followed with respect to the engagement of the first defendant as a new contractor. I accept his evidence.
•In the email to the first defendant's insurer, Allianz, dated 21 January 2004 (exhibit 5) Mr Galloway referred to the 'contract conditions that our abovementioned client will be working under … .' In the email from Mr Galloway to Mr Lucas of 22 January 2004 (exhibit 6) Mr Galloway says '… I have spoken to Tanya Saunders at Sir Samuel Mines in respect to the attached Purchase Order – Terms and Conditions … Our client Portrange Pty Ltd trading as Elcore Electrical Contracting will be performing electrical work to this client under the attached Purchase Order, terms and conditions …'
There being no evidence to the contrary, I consider it reasonable to infer that Mr Galloway would not have made these statements, important as their subject matter obviously is, without having received instructions from the first defendant to that effect. Given the commercial significance of the Terms, in my view it is inherently unlikely that the first defendant would have given such instructions to Mr Galloway without having had a copy of the Terms.
•Whether the first defendant had received a copy of the Terms was a central issue in this case. On 10 January 2014, the first defendant filed notice of the witnesses it intended to call at the trial. Those witnesses included Mr Clarke and Mr Galloway – each of whom were referred to in the emails as persons from whom evidence might be expected to have been called. Neither of those witnesses were called and no explanation was forthcoming as to why they were not called. So I assume they were available. In the premises I consider it reasonable to infer, as I do, that the evidence which may have been given by them would not have been of assistance to the first defendant's case with respect to this issue.
(b)If I am wrong in my finding that the first defendant received a copy of the Terms from the second defendant, I am satisfied that receipt by Mr Galloway of a copy of the Terms by facsimile from Mr Jones on 21 January 2004 constituted reasonable notice to the first defendant of the Terms. To that end:
•On 14 January 2004, Ms Saunders sent an email to Mr Clarke of the first defendant referring to a telephone conversation between them and asked him to refer certain insurance issues to the first defendant's broker for clarification. (exhibit 4)
•On 21 January 2004 a copy of the Terms was facsimiled by Mr Jones to Mr Galloway.
•From those communications, I draw the inference that Ms Saunders was told by an employee of the first defendant, likely Mr Clarke, that Mr Galloway was the first defendant's insurance broker and requested her to arrange for a copy of the Terms to be forwarded to him in order that he could deal with matters of insurance cover required of the first defendant in accordance with those Terms.
•Notwithstanding that the first defendant may not have then sighted a copy of the Terms, that conduct is consistent only with it having accepted the incorporation of the Terms in its dealings with the second defendant – leaving it to Mr Galloway to negotiate the insurance cover required by the second defendant pursuant to cl 11 – cl 14 of the Terms.
•As a consequence, receipt of the Terms by Mr Galloway constituted reasonable notice of those Terms to the first defendant.
•Further, in these circumstances, Mr Galloway was actually or at least, ostensibly authorised by the first defendant to confirm to the second defendant's agents, the first defendant's agreement to the Terms. By exhibit 6, Mr Galloway did so.
(2)Reasonable notice of the Terms having been given to the first defendant, they were thereby incorporated in future contracts between the parties, including the Contract, by reason that:
(a)The conduct of the parties in negotiating the terms of insurance cover pursuant to the Terms as a pre‑requisite to the first defendant's personnel being allowed on site was in my view consistent only with their common intention that the Terms were to be incorporated in any future contract.
(b)Further, the preamble in the Terms provided:
IT IS AGREED between the Company and the Vendor that unless otherwise agreed between them in writing, the following terms and conditions shall apply to all Purchase Orders issued by the company and accepted by the Vendor after receipt of these terms and conditions by the Vendor …
(c)In any event by the course of dealing between the first and second defendants the Terms were incorporated in the Contract. To that end:
•Each of the purchase orders prior to purchase order S19582 related to the provision of labour by the first defendant to the second defendant to work at the Mine site. They were each comparable transactions with purchase order S19582.
•On each purchase order (including purchase order S19582), in plain terms, there was a notation that the Terms applied.
I do not consider that the absence of evidence from the second defendant as to the use to which the Other Terms were put and/or the basis upon which the second defendant first instructed Mr Foyle that the Other Terms were on the reverse side of purchase order S19582, results in there being any adverse inference reasonably drawn against the second defendant with respect to the identification of the terms and conditions at the foot of the purchase orders. In that regard the uncontradicted evidence which I accept is:
•Ms Saunders' evidence that the Terms were the second defendant's standard terms and conditions. She said she had never seen the Other Terms before.
•Mr Palmateer's evidence that the Terms were the terms and conditions which were sent to new contractors and that the Other Terms were not generated by the supply department at the Mine site.
•There was no evidence that the Other Terms had been sighted at any time by the first defendant prior to these proceedings being on foot.

Construction - whether the second defendant is indemnified under clause 11

Indemnity clause (cl 11)

The second defendant claims that it is entitled to be indemnified by the first defendant pursuant to cl 11.2(c) and/or cl 11.2(d)(i) of the Terms.
In his written submissions counsel for the second defendant referred to cl 11.2(d)(i) only. In oral argument in closing he acknowledged that due to a misreading he had understood that cl 11.2(c) did not apply because he understood it to be restricted to the supply of goods. He conceded that on closer inspection the definition of 'Goods' in the Terms included 'Services'.
I note that in the second defendant's statement of claim against the first defendant the second defendant pleaded reliance on cl 11.2(c) (par 5.1).
Counsel for the first defendant in her written closing submissions also dealt with that subclause (pars 53 – 55).
As a consequence it is appropriate to make a determination with respect to the construction of both clauses 11.2(c) and (d)(i).
Where a contract is one of indemnity, a doubt as to the construction of a provision must be resolved in favour of the indemnifier: Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 [17] – [23].
A contractual indemnity is the obverse of an exemption clause. A 'reflexive indemnity' is distinguishable from a 'bare indemnity' in that a reflexive indemnity is intended by the parties to apply to a liability which arises, as between them, from the indemnified party's own default (for example, a breach of duty or breach of contract). In these circumstances a reflexive indemnity operates in relation to a liability stemming from the indemnified party's own default as both an indemnity and a release: Westina Corporation Pty Ltd v BGC Contracting Pty Ltd [2009] WASCA 213[51].
In Gillespie Bros and Co Ltd v Roy Bowles Transport Ltd [1973] 1 QB 400 Buckley LJ observed that:
It is … a fundamental consideration in the construction of contracts of this kind that it is inherently improbable that one party to the contract should intend to absolve the other party from the consequences of the latter's own negligence (419).
On the other hand in Qantas Airways Ltd v Aravco Ltd (1996) 185 CLR 43, the contractual provision the subject of the dispute between the parties, made plain, by express and specific language, that it was to operate as a reflexive indemnity; that is, the provision undoubtedly conveyed the intention of the parties that the indemnity applied to liabilities arising from the default or breach of duty of the indemnified party.
A contractual provision will be enforced as a reflexive indemnity if the court is satisfied the parties intended that the provision should apply to liabilities as between the parties which arise from the indemnified party's own default. In each case whether a contractual provision should be characterised as a reflexive indemnity will depend on the proper construction of the particular provision. Westina Corp [67].

The indemnity clauses in the Terms provide:
11.1In this clause 11 … :
'Claim' means any claim, action, proceeding, demand, cost, damage, loss, expense, liability or other outgoing howsoever incurred or suffered by, or brought or made or recovered howsoever arising (whether or not presently ascertained, immediate, future or contingent).
…
'Vendor Personnel' means the Vendor, its sub‑contractors, and the directors, officers, employees and agents of each of them.
11.2Unless due solely to the negligence of the Company, the Vendor shall be liable for and must indemnify the Company, its directors, officers, servants, principals, employees and agents against any and all Claims arising, whether at common law or under statute, and caused or contributed to, whether wholly or in part and whether directly or indirectly, by:
(c)reason of any acts, neglect or default by the Vendor, its servants, agents or contractors in or in connection with or in relation to the supply of Goods; or
(d)the presence of any Vendor Personnel on or about the Company's premises in respect of:
(i)injury to or death of any person; or
…
Counsel for the first defendant submitted that the definition of 'Claim' in cl 11.1must refer to claims against the second defendant and as the thing that must be solely due to the negligence of the second defendant as a pre‑condition to cl 11.2 is not there specified, to give meaning to that clause the words 'the Claim is' must be inserted after the word 'Unless'.
Counsel then contended that on its proper construction cl 11.2(c) means that unless (the Claim is) due solely to the negligence of the second defendant the first defendant shall be liable for and must indemnify the second defendant against any and all Claims by reason of any act, neglect or default by the first defendant.
Counsel contends that the plaintiff's claim against the second defendant is due solely to the negligence of the second defendant and is not, therefore, by reason of any act, neglect or default of the first defendant. As a consequence, counsel submits, the first defendant is not liable pursuant to cl 11.2(c) for the plaintiff's claim against the second defendant.
I do not agree. A 'Claim' is not defined in cl 11.1 in the limited way counsel contends. The word 'Claim' by its definition is broad and relates to the nature of any right accruing to a party 'incurred or suffered by, or brought or made or recovered howsoever arising'. On its proper construction it includes a claim against more than one party. There is no warrant for the inclusion of the additional words proposed by counsel.
In its natural and ordinary meaning, in light of the Terms as a whole, by the first paragraph of cl 11.2 in the event that a 'Claim' is made by a person which is not due solely to the negligence of the second defendant (but, necessarily, partly due to the negligence of another) the pre‑condition within which cl 11.2(a) – cl 11.2(d) fall for consideration is satisfied.

Clause 11.2(c)

There is no ambiguity in the meaning of cl 11.2(c). The reflexive indemnity responds, in this case, with respect to the plaintiff's claim (including his claim against the second defendant) which 'arises … at common law … caused or contributed to … in part … directly or indirectly by … reason of any [negligent] act, neglect or default by the first defendant … in or in connection with or in relation to the supply of Goods' (ie, by definition in clause 18, the services which it contracted to provide to the second defendant).
That 'act neglect or default' by the first defendant is established because the plaintiff's claim in negligence is pleaded against both defendants, the first defendant admits it was negligent in its defence in the contribution proceedings (par 2.2) and by the consent orders it agreed that it was liable to the plaintiff in negligence to the extent of 20%.
This is the effect of a reflexive indemnity because by its very terms it is intended by the parties to apply to a liability which arises, as between them, from the indemnified party's own default.
The second defendant is entitled to the indemnity sought against the first defendant pursuant to cl 11.2(c).

Clause 11.2(d)

Counsel for the first defendant contends that the words 'arising from' require the existence of a causal or consequential relationship between the plaintiff's injury on the one hand and the hiring of his labour on the other and that the mere presence of the plaintiff on the Mine site is not sufficient.
I do not agree. On its proper construction the plaintiff's claim arose at common law and was caused or contributed, whether directly or indirectly, by his presence on the Mine site in respect of injury to him.
In Speno Rail Maintenance Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) 23 WAR 291 the court there dealt with an indemnity clause in the following terms:
A contractor (Speno) shall be solely liable for, and shall be deemed to indemnify and hold harmless the company (Hamersley) against any and all liabilities losses damages … of every name or nature whatsoever arising whether:
(a)under any statute or at common law in respect of personal injury … or death of
(i)any and all persons employed by it in the execution of the Work/Services …
resulting either directly or as a consequence of the performance of the Work/Services under the Contract.
In that case a worker employed by Speno was injured whilst travelling on the railway in the course of his work, as a result of the negligence of employees of Hamersley.
The court approved the trial judge's conclusion that the accident (injury) would not have happened if Speno had not been performing rail grinding works or services under the contract, with the consequence that the liability of Hamersley to the worker arose out of the performance of a contract by Speno.
Whilst cl 11.2(d) is in somewhat different terms the construction is not dissimilar.
That is, in this case, the plaintiff would have not have been injured had he not been on the Mine site in performance of the Contract.
To that end his presence on or about the Mine site when he sustained injury is sufficient for the purposes of this sub‑clause.
In my view, on the proper construction of this sub‑clause, the second defendant is entitled to the benefit of the indemnity.

Whether insurance requirements were waived

The first defendant submits that even if the Terms were incorporated in the Contract, the second defendant by not insisting upon the provision of certificates of currency of insurance from the first defendant before the Contract was entered into, waived its entitlement to insist on compliance with any requirement to put in place or maintain such insurance cover.
Alternatively, the first defendant submits that it was not obliged to maintain that cover given the provisions of cl 14.1 of the Terms.
Each contention must be rejected. Clause 13.1 of the Terms required the first defendant at its own cost and expense to maintain in full force and affect the insurances required in subclauses 13.2 and 13.3. Those were the insurances which were taken out by the first defendant in early 2004 in which the second defendant was noted as an additional insured party/principal.
The first defendant then knew that it was a pre‑requisite for its personnel to be allowed on site, that insurance cover in accordance with the Terms was required to be in place.
There is no evidence from which I could make any finding that the second defendant, by not requiring to sight certificates of currency of those insurances at any time after they were in place in late January 2004, did an intentional act with knowledge such that it abandoned its right to insist upon the first defendant's compliance with its obligations under cl 13, by acting in a manner inconsistent with that right: Commonwealth v Verwayen (1990) 170 CLR 394, 407. The second defendant did not waive compliance by the first defendant of its obligations pursuant to those subclauses.
Clause 14.1 of the Terms does not assist the second defendant. That clause provided:
General Conditions
(a)Insurances shall be purchased by the Vendor before the commencement of the risks to which insurance relates with insurers and on terms approved by the Company … and shall be kept in force as required by the Company.
As I say, from the nature of the emailed correspondence between the parties' representatives culminating in the insurance cover being taken out by the first defendant as and from late January 2004 it was clearly evident to the first defendant that in order for it to be on the Mine site those insurances needed to be in place.

Clause 13 - Insurance

The relevant provisions are as follows:
13.1Vendor to Insure
The Vendor shall at its own cost and expense maintain in full force and effect with, reputable and substantial insurers, the insurances described in this clause 13.
13.2Insurance of Vendor's Employees
Workers' compensation and any other insurance required by any applicable law and employer's liability/common law insurance for an amount of $100,000,000 for any one accident in respect of any person employed or engaged by the Vendor or deemed to be so employed.
Such insurance shall extend to indemnify the Company for the Company's liability whether under statute or at common law.
13.3Third Party/Public Liability Insurance
General third party liability covering liability for physical loss or damage to property and injury or death to persons (not being a person who is defined as a worker of the applicable insured under any statute relating to workers' compensation) arising from or in connection with the provision of Services on the Premises.
The insurance policies which were taken out by the first defendant in January 2004 were not in evidence.
However, the final certificates of insurance issued to the first defendant and accepted by the second defendant as reflecting the insurance cover pursuant to the Terms were in evidence.
There is no contention by the first defendant that the insurance cover taken out by it did not reflect the insurances described in cl 13.2 and cl 13.3 of the Terms subject to the specific variations which were agreed in the emails and reflected in the certificates.
In those circumstances I am satisfied that in late January 2004 the provisions of cl 13.1 of the Terms were satisfied by the first defendant and that the insurance cover in accordance with cl 13.2 and cl 13.3 was in place in which the second defendant was noted as an additional insured party/principal. That insurance cover was in place current to 25 September 2004.
The first defendant submits that the insurance contemplated in cl 13.2 was insurance against employer's common law liabilities, limited to liabilities in respect of an injury or a disease that arose 'out of or in the course of' a worker's (as defined in the workers' compensation legislation) employment' and as such the relevant insurance cover was third party/public liability insurance the subject of cl 13.3 ie, referable to the liability by the indemnity.
I do not agree. The construction of cl 13.2 is plain. The insurance cover in which the second defendant was noted as an interested party as principal was described as 'common law insurance … or any one accident in respect of any person employed or engaged by the Vendor or deemed to be so employed. Such insurance shall extend to indemnify the Company for the company's liability whether under statute or at common law'.
That can only refer to workers employed by the first defendant or deemed to be employed by the second defendant. The insurance responds in favour of the second defendant in the event that it is liable to such a worker at common law.
The plaintiff's claim against the second defendant falls within the scope of that cover.
In any event, given my finding as to the indemnity, insurance pursuant to clause 13.3 would in any event respond in favour of the second defendant.
Counsel for the first defendant contended that there was no certainty that the first defendant would have had the ability to renew or put in place insurance cover in the same terms as that in place in late January 2004 because of the Court of Appeal decision in Hewitt v Benale Pty Ltd (2002) 27 WAR 91.
In Hewitt v Benale the Court of Appeal held that the provisions of pt IV of div 2 of the Workers' Compensation and Rehabilitation Act 1981 (WA) applied to limit common law damages against a deemed employer (the second defendant) pursuant to s 175(1) of the Act to the same extent as the employer (the first defendant). That was the position counsel submitted at the date upon which insurance cover was finalised in late January 2004.
Subsequently, effective from 4 January 2005 the provisions of s 93B of the Act by which the liability for common law damages was limited, was amended resulting in that limitation no longer applying to a deemed employer.
Counsel for the first defendant contended that this created an uncertainty in the insurance market because of the unlimited liability, at common law, of a deemed employer. Counsel said that that would result in there being no certainty that the insurances taken out in January 2004 were capable of being put in place by the first defendant for a period after the effective date of the amendment and specifically so that it would be current at the date upon which the plaintiff sustained injury.
To that end counsel relied upon the evidence of Mr Lucas who said that at the time insurance cover was negotiated in January 2004 the liability of the deemed employer was no greater at common law than the liability of the employer but when the law was changed the meaning of a principal's indemnity extension on a workers' compensation policy was something different.
In reliance upon that evidence the first defendant maintained that I could not be satisfied that the same insurance cover was capable of being renewed or taken out in the same terms as the policies in January 2004. I do not accept that contention.
Mr Lucas' evidence was very general in its tenor. He advanced no opinion as to the likelihood of the insurance cover taken out by the first defendant in late January 2004 not being able to be renewed or taken out so that the second defendant would have been covered against the plaintiff's claim.
There was an obligation on the first defendant (cl 13.1) to keep in full force and effect the insurances the subject of cl 13.2 and cl 13.3.
The first defendant had done so in late January 2004 and its failure to maintain or take out that or other effective cover constituted a breach.
The damage suffered by the second defendant by the first defendant's breach is the loss of the benefit of the insurance cover, ie, the sum for which the second defendant is liable to the plaintiff.
In the premises the second defendant is entitled to be indemnified against its liability to the plaintiff, alternatively to damages in that sum.
The first defendant's counterclaim will be dismissed.
I will hear counsel as to the appropriate orders.

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: ROLLINGS -v- PORTRANGE PTY LTD [2014] WADC 56 (S)