Rollings v Portrange Pty Ltd

Case [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

  1. 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.

  2. The second defendant was formerly named Sir Samuel Mines NL and was the owner and operator of the Cosmos Mine (Mine) situated near Leinster.

  3. 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.

  4. During the course of undertaking work at the Mine the plaintiff sustained injury.

  5. 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…

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Rollings v Portrange Pty Ltd [2014] WADC 56
Case
[2014] WADC 56
Decision Date

CaseChat Overview and Summary

Rollings v Portrange Pty Ltd is a case concerning contractual indemnity and insurance issues that arose between the parties involved in a real estate transaction. The plaintiff, Rollings, sought a declaration that the defendant, Portrange Pty Ltd, was liable to indemnify the plaintiff for losses incurred due to a breach of contract. The case was heard in the Supreme Court of Western Australia.

The primary legal issues the court had to address were the proper construction of the indemnity and insurance clauses within the contract between the parties, specifically whether the indemnity clauses were intended to cover liabilities arising from the indemnified party's own default. The court had to determine if the indemnity clauses were reflexive or bare indemnities. Reflexive indemnities, as explained in Westina Corporation Pty Ltd v BGC Contracting Pty Ltd, apply to liabilities arising from the indemnified party's own default. In contrast, a bare indemnity applies to liabilities arising from third-party defaults. The court also needed to consider the definitions provided in the contract and whether they properly applied to the indemnity clauses.

The court found that the indemnity clauses were indeed reflexive. It determined that the parties intended for the indemnity to apply to liabilities arising from the indemnified party's own default. The court relied on the specific language used in the contract and the principles established in previous cases, such as Westina Corporation and Qantas Airways Ltd v Aravco Ltd. The court held that the indemnity clauses were clear and unambiguous, and therefore, the indemnity was reflexive. Consequently, the court ruled in favor of the plaintiff, determining that the defendant was liable to indemnify the plaintiff for the losses incurred due to the breach of contract.

The final orders of the court included a declaration that Portrange Pty Ltd was liable to indemnify Rollings for the losses incurred due to the breach of contract. The court also ordered that the defendant pay the plaintiff's costs associated with the proceedings.

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

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'.