Transfield Services (Australia) v Hall - [2008] NSWCA 294

No judgment structure available for this case.

Reported Decision: 75 NSWLR 12

New South Wales

Court of Appeal

CITATION: Transfield Services (Australia) v Hall; Hall v QBE Insurance (Australia) [2008] NSWCA 294
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 26 February 2008

JUDGMENT DATE:
10 November 2008

JUDGMENT OF: Beazley JA at 1; Campbell JA at 6; McClellan CJ at CL at 229

DECISION: (1) Appeal upheld.
(2) Set aside the orders in the Court below in favour of the Respondent. In lieu thereof, enter judgment for the Appellant.
(3) Respondent to pay costs of the Appellant of the appeal and in the Court below.
(4) Cross-appeal upheld and order 2 made by Harrison AsJ set aside.
(5) Judgment for the cross-appellant against the cross-respondent in the sum of $1,457,712 such judgment to date from 2 August 2007.
(6) The order for costs made by Harrison AsJ in favour of cross-respondent set aside.
(7) Order the cross-respondent to pay the costs of the cross-appellant both as to the appeal and as between those parties in the court below.

CATCHWORDS: TORTS – negligence – duty of care – non-delegable duties of care – respondent injured in fall from high ropes course when safety strop from which rope suspended broke – appellant contracted by Commonwealth to maintain plant and equipment at site – appellant engaged subcontractor to carry out inspection of ropes course and certify – whether subcontractor negligent – whether appellant owed non-delegable duty of care to respondent for negligence of subcontractor – whether general doctrine in Australian law that a person has a non-delegable duty to ensure reasonable care taken by an independent contractor employed to engage in an extra-hazardous or inherently dangerous activity – whether subcontractor employed to engage in extra-hazardous or inherently dangerous activity – whether scope for extending concept of non-delegable duties beyond existing categories – relevance of factors of control and vulnerability to finding of non-delegable duty – persuasiveness of authorities recognising proximity as the basis for a non-delegable duty – relevance of terms of contract between appellant and Commonwealth to finding of non-delegable duty – whether appellant vicariously liable for negligence of subcontractor – where alleged liability of appellant not put to trial judge on basis of vicarious liability – whether doing of the very act that the appellant directed the subcontractor to perform caused damage - INSURANCE – indemnity insurance – products liability – whether liability arose out of insured’s business – where activities giving rise to liability were incidental to insured’s business – whether ropes course a product within meaning of policy – whether exclusion clause applies – where exclusion clause admits of more than one interpretation – whether liability caused by or arose out of advice given for a fee – where liability in question has one cause that falls within an insuring clause and another cause that falls within the exclusion – where those causes are concurrent - WORDS AND PHRASES – "possession" – "control" – "advice"

LEGISLATION CITED: Safety, Rehabilitation & Compensation Act 1988 (Cth)

CATEGORY: Principal judgment

CASES CITED: ACQ Pty Ltd v Cook [2008] NSWCA 161
Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520
Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Donoghue v Stevenson [1932] AC 562
Fitzpatrick v Job [2007] WASCA 63; (2007) 14 ANZ Ins Cas 61-731
GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558
Hall v Adventure Training Systems Pty Ltd [2005] NSWSC 1079; (2006) 14 ANZ Ins Cas 61-673
Hall v Adventure Training Systems Pty Ltd [2007] NSWSC 817; (2007) Aust Torts Reports 81-904
Honeywill and Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191
Imbree v McNeilly [2008] HCA 40
Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166
Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672
Leask Timber and Hardware Pty Ltd v Thorne [1961] HCA 73; (1961) 106 CLR 33
Legal and General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390
Leichhardt Municipal Council v Montgomery [2007] HCA 6; (2007) 230 CLR 22
Matania v National Provincial Bank Ltd [1936] 2 All ER 633
McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28; (2007) 157 FCR 402
North v Marina [2003] NSWSC 64; (2003) 11 BPR 21,359
Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313
Padbury v Holliday & Greenwood Ltd (1912) 28 TLR 494
Read v J Lyons & Co Ltd [1947] AC 156
Rylands v Fletcher (1868) LR 3 HL 330
Scott v Davis [2000] HCA 52; (2000) 204 CLR 333
State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511
Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16
Stoneman v Lyons [1975] HCA 59; (1975) 133 CLR 550
Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562
Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418
Thomson v Cremin [1953] 2 All ER 1185
Torette House Proprietary Ltd v Berkman [1940] HCA 1; (1940) 62 CLR 637
Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156
Vero Insurance Ltd v Power Technologies Pty Ltd [2007] NSWCA 226; (2007) 5 DDCR 206
Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74
Watts v Perry and the National Insurance Co of New Zealand Ltd [1972] 1 NSWLR 73
Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corporation [1974] 1 QB 57
Wilson & Clyde Coal Co v English [1938] AC 57
Wilson v Hodgson’s Kingston Brewery Co (1915) 85 LJ KB 270

TEXTS CITED: G Williams, "Liability for Independent Contractors" (1956) Cambridge Law Journal 180

PARTIES: Transfield Services (Australia) Pty Limited (Appellant)
Norman Lindsay Hall (Respondent/Cross-Appellant)
QBE Insurance (Australia) Pty Limited (Cross-Respondent)

FILE NUMBER(S): CA 40563/07

COUNSEL: B Walker SC; R Gambi (Appellant)
SG Campbell SC; K Andrews (Respondent/Cross-Appellant)
J Stevenson SC; E Muston (Cross-Respondent)

SOLICITORS: DLA Phillips Fox, Sydney (Appellant)
Wyatt Attorneys, Sydney (Respondent/Cross-Appellant)
Hicksons, Sydney (Cross-Respondent)

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): 20150/04

LOWER COURT JUDICIAL OFFICER: Harrison AsJ

LOWER COURT DATE OF DECISION: 2 August 2007

LOWER COURT MEDIUM NEUTRAL CITATION: Hall v Adventure Training Systems Pty Limited & 2 Ors [2007] NSWSC 817

CA 40563/07
SC 20150/04

BEAZLEY JA
CAMPBELL JA
McCLELLAN CJ at CL
10 NOVEMBER 2008

TRANSFIELD SERVICES (AUSTRALIA) PTY LTD v NORMAN LINDSAY HALL; NORMAN LINDSAY HALL v QBE INSURANCE (AUSTRALIA) PTY LTD

Judgment

1 BEAZLEY JA: I have had the advantage of reading in draft the reasons of Campbell JA and McClellan CJ at CL.

2 I agree with Campbell JA that the appellant, Transfield Services (Australia) Pty Limited, did not owe a non-delegable duty of care to the respondent, Mr Hall: see Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672 at 679; Torette House Pty Ltd v Berkman (1939) SR (NSW) 156 at 164-165; Stoneman v Lyons [1975] HCA 59; (1975) 133 CLR 550 at 564-565 per Stephen J; Mason J (with whom Barwick CJ agreed) at 576.

3 It is not necessary, for my purposes, to otherwise comment on the remainder of Campbell JA’s reasons in respect of non-delegable duties and I do not do so, although I note that criticism of the concept dates back at least to 1956: see Glanville Williams, “Liability for Independent Contractors”, (1956) Cambridge Law Journal 180 at 190, referred to by Hayne J in Leichhardt Municipal Council v Montgomery [2007] HCA 6; (2007) 233 ALR 200 at [155], as follows:

“… the doctrinal roots of non-delegable duties are anything but deep or well established. Professor Glanville Williams went so far as to say that imposition of non-delegable duties represents the reaching of a desired result ‘by devious reasoning and the fictitious use of language’ Whether that particular form of criticism is merited, it is clear that the doctrine was introduced to cases concerning the liability of an employer in order to avoid the mischief of the doctrine of common employment. Though cast in terms of ‘duty’ the principle is one of strict liability for the conduct of another. It is, therefore, nothing but an exception to ordinary rules of vicarious liability.”

4 I agree with the reasons of Campbell JA that the appellant is not vicariously liable for the negligence of Adventure Training Systems Pty Limited. It follows that I agree that the appeal should be allowed and the judgment for the respondent be set aside. The respondent should also pay the appellant’s costs of the appeal at first instance.

5 I otherwise agree with the reasons of McClellan CJ at CL in relation to the cross-appeal and with his Honour’s proposed orders.

6 CAMPBELL JA:

Nature of the Case

7 In 2002 the Respondent was employed by the Royal Australian Navy as a member of the Navy Reserve. He worked four days a week as a facilitator and maintainer at a physical fitness facility at HMAS Stirling in Western Australia. At the facility was a course of low ropes, and a course of high ropes, on each of which a participant could carry out various physical activities. It was called the Endeavour Ropes Course. Sometimes the bureaucratic love of acronyms led to it being called “ERC”. The course was located in bush, about 100 metres from the ocean. It had been built or installed in 1993 by Rope Tech Australia Pty Ltd in conjunction with Merrybrook Pty Ltd. The trial judge found that Rope Tech Australia Pty Ltd was “a predecessor” of Adventure Training Systems Pty Limited (“ATS”).

8 Part of the duties of the Respondent involved periodical inspection and maintenance of the high ropes course.

9 On 29 January 2002, after carrying out an inspection of that course, he was preparing to abseil down from it. He attached the anchoring device for his abseiling rope to a loop of flexible steel rope. That loop was at one end of a length of wire rope called a safety strop. The other end of the safety strop was affixed to one of the rigid poles of the ropes course. The trial judge found that he adopted the correct abseiling procedure. However, when he placed his weight on his abseiling rope the safety strop from which it was suspended broke. He fell about 10 metres to the ground, suffering some significant injuries. The trial judge has assessed his damages at $1,457,711.91: Hall v Adventure Training Systems Pty Ltd [2007] NSWSC 817; (2007) Aust Torts Reports 81-904. No party appeals concerning that assessment of quantum.

10 It was common ground at the trial that the substantive law governing the Respondent’s entitlements is the common law of Western Australia, to which no civil liability statute applies. No defendant made a claim for contributory negligence.

The Roles of the Defendants

11 The Respondent sued three defendants, namely, ATS, Transfield Services (Australia) Pty Limited (“Transfield”) and QBE Insurance (Australia) Limited (“QBE”). He did not sue his employer, possibly because sections 44 and 45 Safety, Rehabilitation & Compensation Act 1988 (Cth) significantly restrict the circumstances in which a Commonwealth employee can bring an action for damages in respect of an injury sustained by the employee in the course of his employment.

12 The trial judge explained the respective roles of the defendants:

“Adventure Training is a company based in Brookvale, New South Wales. Its involvement relates to fabrication, installation, maintenance and repair of certain aspects of the course and its component parts. Transfield is the contractor pursuant to a comprehensive maintenance contract with the Commonwealth of Australia in respect of Defence establishments situated in Western Australia, including HMAS Stirling.

Law Reform (Miscellaneous Provisions) Act

1946

Hall v Adventure Training Systems Pty Ltd

13 ATS took no active part in the trial. Neither did it take any active part in the appeal.

14 Transfield had contracted with the Commonwealth to maintain plant and equipment at HMAS Stirling. ATS had inspected the rope course in question in December 2001, pursuant to a contract it had entered with Transfield. At the time, the course was closed because of concerns about its safety. ATS issued Transfield with a report dated 17 December 2001 that said:

“An inspection was carried out on all elements and found to be in safe working order. On each element all cables, eyebolts (and nuts) strand-vices, wire rope grips, stays and belay pulleys were checked and found to be ok. Belay wire rope lines and belay pulleys are 20 months old at time of this report.”

Once the appropriate naval officer received that report, the course was re-opened. She had relied on the report in allowing the course to be re-opened.

Why the Respondent Fell

15 The steel rope that broke and caused the Respondent’s fall has been described in uncontested engineering evidence as being:

“… composed of a single wire rope coiled or looped back on itself. This is then brought in parallel to its parent and so the two adjacent strands were swaged. This was done using an aluminium alloy ferrule (elliptical) …. A thimble was inserted into the loop or eye to make it more rigid and permit a defined geometric shape.”

16 The ferrule in question looks like an elongated collar of metal, that surrounds both of the parallel strands of wire rope. This configuration meant that one end of the wire rope protruded from the ferrule. In late 1993 or early 1994, a few months after the course opened, the ferrule and the rope for a short distance on the other side of the ferrule to the loop were covered with a plastic shrink wrap material. The trial judge described it as “similar to electrical tape … but it is opaque”. The shrink wrap was applied to cover the ferrule and the wire rope so that people using the course did not spike their hands on a strand of wire when using the safety strop. The shrink wrap had never been removed from the safety strop from the time it was first applied.

17 After the Respondent’s injury, the shrink wrap was removed from the strop, and it was found that the wire rope underneath the shrink wrap was badly corroded. Uncontested engineering evidence stated that corrosion underneath the shrink wrap was foreseeable, in an open-air environment near the sea. The trial judge found that the shrink wrap should have been removed by ATS during the inspection, that removal of the shrink wrap was easy, replacement of it was inexpensive, and the corrosion such that it would have been readily visible if the shrink wrap had been removed. On this basis she found ATS negligent.

Findings and Issues Concerning Transfield’s Liability

18 The trial judge also found that Transfield was liable for the negligence of ATS, notwithstanding that ATS was an independent contractor engaged by Transfield, because Transfield owed a non-delegable duty of care to users of the ropes course. Transfield appeals against the finding that any such non-delegable duty existed. It submits that it owed no duty of care at all to the Respondent, and also that if it did owe a duty of care that duty of care was not a non-delegable one.

19 The Respondent, by Notice of Contention, seeks to uphold the result at which the trial judge arrived concerning Transfield’s liability. One argument to that conclusion relies upon the terms of the contract between Transfield and the Commonwealth as an aid to finding that Transfield owed a non-delegable duty of care to the Respondent. Another argument is that, regardless of whether a non-delegable duty of care exists, Transfield has a vicarious liability for the negligence of ATS.

Findings and Issues Concerning QBE’s Liability

20 The trial judge found that QBE was not liable to indemnify ATS for its liability. The primary reason for this conclusion was that QBE’s liability to indemnify arose under the policy only in relation to liability arising out of the Insured’s Business, and the liability of ATS in the present case did not arise out of the Insured’s Business.

21 Against the possibility that she was wrong in that conclusion, she also considered three other arguments that QBE put as to why the policy would not respond even if the loss had been one that arose out of the Insured’s Business. Those arguments were:

(1) the policy provided indemnity only concerning claims arising out of or in connection with any Product, and the ropes course was not a “Product” within the meaning of the policy;

(2) the liability fell within an exclusion of liability caused by or arising out of the rendering of professional advice or service by the Insured; and

22 The trial judge rejected arguments 1 and 2, but upheld argument 3.

23 In this appeal the Respondent, by a notice of cross-appeal, submits that QBE should have been found liable on the basis that ATS’s liability arose out of the Insured’s Business, and was not a liability caused by or arising out of advice given for a fee. QBE, by notice of contention, submits that the trial judge should have found for it on arguments 1 and 2, that there is a better reason than the reason the trial judge adopted why the liability of ATS in the present case did not arise out of the Insured’s Business, and that in any event ATS was not negligent.

FACTS RELEVANT TO BOTH TRANSFIELD’S AND QBE’S LIABILITY

Roles of Transfield and ATS Concerning Inspection

24 In the period from 1994 until 1999 maintenance of the course was carried out by an organisation other than ATS. By late 1999 naval personnel responsible for the course were concerned about the adequacy of the maintenance carried out, and decided to seek advice from other organisations. On 12 November 1999 ATS inspected the course, and produced an inspection report. Part of it said:

“It is our recommendation that the high ropes course and tower be taken out of service as it is deemed to be below the safety standard.

This report outlines the recommendations and actions required to bring the above courses and elements to a safe operational standard. Only after the following recommended actions have been addressed should the course be used.”

25 Concerning the high ropes course, the report stated:

“All eyebolts and fittings, including wire rope, have been checked some surface corrosion was seen on some fittings, all appear to be structurally sound other than what has been noted in this report.”

26 The report made specific recommendations about what needed to be done to each element in the course.

27 On 22 November 1999 ATS sent an invoice to Transfield for “Inspection of High Ropes Course at HMAS Stirling”. While Transfield must have had some sort of responsibility at that time concerning the carrying out of work at HMAS Stirling, the evidence does not elucidate what it was.

28 Lieutenant Commander Roslyn Astfalck was the manager of the adventure training activities at HMAS Stirling. On 19 October 2000 she emailed Mr Hope, of ATS, saying:

“At present I am rewriting our operating procedures to bring these in line with your company’s suggestions regarding ERC maintenance and inspection. The old procedure if you remember involved load testing both the belay cables and pulley blocks, this was substantiated by a number of standards. To add weight to the changes I have made to the maintenance schedule are there any Industry Standards that I can quote in support?”

29 On 29 August 2000 a contract was entered between the Commonwealth and Transfield relating to maintenance of plant and equipment at, inter alia, the Stirling base.

30 Clause 10.5(a)(i) of that agreement provided that Transfield must:

"employ, and ensure that its subcontractors employ, in connection with the Contractor’s Activities only persons who are careful, skilled and experienced in their respective trades and callings …"

31 Clause 10.7 of that agreement provided:

“The Contractor must:

(a) co-ordinate the work of all subcontractors engaged by it;

(b) provide and direct all necessary personnel to administer, supervise, inspect, co-ordinate and control the subcontractors engaged by it; and

(c) at all times co-ordinate the Contractor’s Activities and ensure execution and completion of the work which is to be carried out by the subcontractors engaged by it in a proper and workmanlike manner according to the obligations of the respective subcontractors.”

32 On 27 February 2001 naval officials promulgated a Standard Operating Procedure document known as “SOP 801” relating to adventure training equipment. Its introductory paragraph said, “the strict adherence to the Procedure contained herein is mandatory”. It explicitly stated:

“3. The ERC shall be maintained at the highest possible standard, due to the safety requirements of the ERC being used by personnel at heights.”

33 It required inspections of different degrees of stringency at different periods of time. The requirements for a yearly inspection were outlined in Annex D. It included the following provisions:

“3. The testing authority shall be a NATA endorsed company.

…

NOTE: HIGH ROPES COURSE IS STRUNG TO A MAXIMUM HEIGHT OF 16 METRES. VISUAL INSPECTION REQUIRES PERSONNEL TO WORK ALOFT TO INSPECT THE ENTIRE LENGTH OF EACH WIRE.

…

5. Each item of cordage, steel wire rope, pole structure and fitted appliance used for support of personnel or as a personnel securing device, shall be surveyed throughout its extremities, load tested then surveyed again on completion of the test.

6. All wires and structures used for support of personnel or as a personnel securing device shall be certified stating the:

…

c. test load applied to the wire or structure.

…

10. Any assembly of wire or structural support should not be disassembled for the purpose of the test unless directed by the Department of Defence representative nominated by the ATO.”

34 The “ATO” was defined to be the “Adventurous Training Officer” [sic]. The trial judge appears to have accepted that Lieutenant Commander Astfalck was the person intended to be referred to by that title, and that Lieutenant Commander Astfalck did not give either Transfield or ATS any specific instruction to disassemble the strop and look under the shrink wrap cover.

35 The particular requirements of SOP 801 for inspection of the particular safety strop that broke were stated in Schedule 2, and included:

“(a) The item shall be visually surveyed, throughout its extremities and examined for its serviceability.

(b) A test load of 300 kg is to be applied to the item. The test load is to travel along its entire length where possible.

(c) On completion of the test, the test weight is to be removed and the item shall be visually surveyed throughout its extremities and re-examined for serviceability.”

36 In the course of 2001 Lieutenant Astfalck had discussions with Mr Hope about the procedures that should be adopted for regular inspection of the course. Lieutenant Astfalck discussed SOP 801 in detail with Mr Hope. Her evidence was:

"They [ie ATS] disagreed with those requirements because these requirements actually talk about loading the cables and they were aware of what we were told to do with regard to operations and what they intended to do to actually certify that the course was actually safe to use."

37 She had drafted a revised edition of SOP 801 in 2001, but it had not been accepted.

38 Some of the work required to be done under the maintenance contract was classified as “general buildings and facilities maintenance”, and some as “fixed plant and equipment”. There were different procedures and payment regimes for carrying out those two types of work. On 24 May 2001 the Commonwealth issued a variation order to Transfield. It included, inter alia, the high ropes course in the fixed plant and equipment that the maintenance contract dated 29 August 2000 applied to. While Transfield used its own labour to carry out some types of work on fixed plant and equipment (predominantly electrical and mechanical maintenance) Mr Eden, a Transfield officer, explained “if there was enough volume of that particular task to justify employing that capability full time we would opt to use a subcontractor as the most cost effective method to do that task.” Inspection of the high ropes course was one of the types of task concerning which Transfield opted to use a subcontractor.

39 A Noble & Son Ltd (“Noble”) specialises in testing lifting gear and mining equipment. It operates a NATA accredited laboratory. It had supplied some steel ropes and accessories for repairs to the ropes course in 2001, and had issued testing certificates in October 2001 relating to various ropes in the course. Those certificates show that the manner of testing adopted was to apply weights that were twice the workload limit of the rope. In contrast, there is no evidence to suggest that ATS was endorsed by NATA in any way.

40 On 8 November 2001 Transfield submitted to a navy official a quotation from Noble for annual inspection and testing of various items, one of which was the high ropes course. A navy official notified Transfield that it approved that request on 13 November 2001. However there is no indication that Noble actually did anything to test the course before the Respondent was injured. A separate part of Transfield's letter of 8 November 2001 stated that "Transfield & Nobles have undertaken a comprehensive inspection of all facilities and have identified a significant number of non-conforming ropes and fitting". It proposed spending $5,000 "to undertake immediate repairs". There is no written acceptance of that proposal, and it is not clear whether the work ATS later agreed to do, of “replacement of all strand vices to the high ropes course with new and hard eyes” was the repair work that Transfield was referring to.

41 Towards the end of 2001 the Respondent had noticed that some of the ropes of the course had started to elongate. He brought it to the attention of Lieutenant Astfalck. She decided to close the course, and seek advice about what to do. The procedure adopted under the maintenance contract with Transfield was for any problems concerning maintenance of an item to which the contract applied to be brought to the attention of a help desk that Transfield operated. Lieutenant Astfalck discussed the situation with someone at the Transfield help desk. Her evidence was:

"They decided at that point that they would incorporate some of the maintenance work with some of the maintenance work due in April because we needed to fly Adventure Training Systems out from the Eastern States".

42 She had no direct contact with ATS that resulted in ATS carrying out its inspection of the course in December 2001.

43 On 28 November 2001 Transfield faxed ATS requesting that it provide a quote for:

“1. Carry out assessment of course and certify.

2. Replacement of all strand vices to the high ropes course with new and hard eyes.”

44 On 10 December 2001 ATS replied to Transfield, saying:

“This quotation is based on the information / request as outlined in your fax of 28th Nov 01.

1. Carry out assessment of course and certify.

2. Replacement of all strand vices to the high ropes course with new and hard eyes.

Adventure Training Systems recommends the following;

Cost $ 1,148.00 (total of 13 strandvices with hard-eye thimbles).

Total Contract Price $ 7,198.00

45 It was pursuant to acceptance of that quotation that ATS carried out its inspection, and issued its report dated 17 December 2001 (para [14] above).

46 The Multi-vine (sometimes also referred to in the evidence as the milking machine) was the part of the ropes course at which was located the particular safety strop that failed. As well as the general conclusion that all elements were found to be in safe working order, the report of 17 December 2001 gave a more specific statement of items of work that had been performed. It included:

“All equipment, (wire rope grips, Quick-links) showing surface rust were cleaned with a wire brush and treated with Cold Gal Paint, or Oil product.

…

The wire rope on hand and foot lines is currently showing significant rusting due to the location and age of the course. It is recommended that in the next 6 months a sample of wire rope be removed from the course and tested by a NATA Certified rigging/lifting supply company to determine the condition of such wire rope.”

47 It identified specific work that had been done on various parts of the course, including the Multi-vine, but said nothing about the safety strop located there. It gave specific recommendations for other work that should be performed, including to the Multi-vine. No recommendation was made relating to the safety strop at the Multi-vine.

48 On 20 December 2001 ATS sent an invoice to Transfield relating to “inspection, maintenance and upgrade work for Endeavour Ropes Course”. An amount of $6,543.64 was charged for that item, without any allocation into component parts. When 10% GST was added the invoice total became $7,198, ie, equal to the quoted amount.

TOPIC 1 – LIABILITY OF TRANSFIELD?

Trial Judge’s Reasoning on Non-Delegable Duty

49 The trial judge recognised that there were some categories of relationship in which one person has been held to owe the other a non-delegable duty. However she held that the facts of the instant case did not fall within any of those recognised categories.

50 The trial judge also recognised that a non-delegable duty of care had been held to arise in some circumstances where the relationship between the plaintiff and the defendant evidenced elements of “control” by the defendant and “special dependence or vulnerability” on the part of the plaintiff. However, she held that those characteristics were not manifested in the present case.

51 She held that a third category of case where a non-delegable duty arose was “where the activity being carried out by the defendant’s independent contractor is sufficiently dangerous, or alternatively a substance associated with the activity being carried out by the defendant’s independent contractor is sufficiently dangerous”. The trial judge held that Transfield was under a non-delegable duty of this type. She found that the duty arose from the following factors:

(i) Transfield’s contractual obligation under clause 10.5 of its contract to engage only careful, skilled and experienced subcontractors.

(ii) The activities to be carried out by the subcontractors of Transfield were dangerous, because of the dangerousness of the activities on the high ropes course, and the vulnerability of people using the course to deficiencies in its physical integrity.

52 Counsel for both Appellant and Respondent in the present case accepted, in broad terms, the trial judge’s categorisation of circumstances where a non-delegable duty of care could arise. The qualifications to this are that Mr Walker SC, counsel for the Appellant, noted the imprecision of “sufficiently dangerous”, in the formulation of the third category, and Mr Campbell SC, counsel for the Respondent, submitted that the factors which gave rise to the second category could also be relevant to the third category.

Nature of a Non-Delegable Duty

53 In Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672 Mason J (with whom Deane and Dawson JJ agreed), at 679, referred to a non-delegable duty as being a duty

“… of such a nature that its performance cannot be delegated to a contractor on the footing that delegation to a competent contractor is a sufficient compliance with the duty.”

54 Such a duty differs from ordinary duties of care in negligence, in that for ordinary duties of care in negligence the duty is, in its totality, a duty for the defendant to take reasonable care to avoid causing harm of a particular type to the plaintiff. Concerning such a duty it is well established that if the defendant delegates to an independent contractor the performance of those activities that might possibly cause harm to the plaintiff, and the defendant has exercised reasonable care to choose an appropriately skilled contractor, and the task that is delegated is not one the performance of which must necessarily involve the performance of activities from which damage to the plaintiff will result, then the defendant has exercised reasonable care.

55 What the non-delegable duty contemplates is a duty that is more stringent than this. It is not a duty of strict liability, in the sense that the defendant is liable for any damage suffered regardless of whether the defendant, or anyone else, has been negligent. Before a plaintiff can succeed in a case based on breach of such a non-delegable duty, the plaintiff must establish that someone has been negligent. However, the situation differs from an ordinary duty of care in negligence in that a person subjected to such a duty cannot perform it by taking reasonable care to select an appropriate independent contractor to carry out the acts that eventually injure the plaintiff.

56 In one aspect of its operation it may not be appropriate to call a non-delegable duty a “duty of care” at all. This is because a defendant bears liability for any injury that the plaintiff sustains by reason of a failure on the part of an independent contractor to take care not to cause the type of harm in question to the plaintiff, when there has been no personal want of care on the part of the defendant in selecting the contractor or in any other respect whatever. But the non-delegable duty of care retains the ordinary aspects of a duty of care if the defendant seeks to perform it completely through his own actions, rather than by having an independent contractor act on his behalf.

57 This feature of non-delegable duties has been recognised for decades. In Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 Windeyer J said, at 95:

"… apart from true instances of strict liability, the distinction between delegable and non-delegable duties does not, it seems, really amount to more than the adoption of convenient headings for those cases in which defendants have been held not liable for the negligence of independent contractors and cases in which they have."

Liability for “Inherently Dangerous” Activities

58 I shall start to examine whether Transfield had a non-delegable duty to the Respondent by considering how the law has dealt with arguments that there are special rules governing liability for “inherently dangerous” activities.

59 Read v J Lyons & Co Ltd [1947] AC 156 involved a plaintiff who was an invitee to the defendant’s explosives factory, who was injured when a high-explosive shell being manufactured exploded without any negligence on the part of the defendant. The House of Lords held that the dangerousness of the activities make it appropriate for the defendant to be subject to a high standard of care, but rejected the notion that there was a type of activities or things the inherent danger of which resulted in the imposition of absolute liability, in the sense of liability regardless of whether anyone (whether the defendant its servants and agents, or anyone else) had been negligent. Lord Macmillan said at 172-173:

"In my opinion it would be impracticable to frame a legal classification of things as things dangerous and things not dangerous, attaching absolute liability in the case of the former but not in the case of the latter. In a progressive world things which at one time were reckoned highly dangerous come to be regarded as reasonably safe. The first experimental flights of aviators were certainly dangerous but we are now assured that travel by air is little if at all more dangerous than a railway journey. Accordingly I am unable to accept the proposition that in law the manufacture of high-explosive shells is a dangerous operation which imposes on the manufacturer an absolute liability for any personal injuries which may be sustained in consequence of his operations. Strict liability, if you will, is imposed upon him in the sense that he must exercise a high degree of care, but that is all. The sound view, in my opinion, is that the law in all cases exacts a degree of care commensurate with the risk created. It was suggested that some operations are so intrinsically dangerous that no degree of care however scrupulous can prevent the occurrence of accidents and that those who choose for their own ends to carry on such operations ought to be held to do so at their peril. If this were so, many industries would have a serious liability imposed on them. Should it be thought that this is a reasonable liability to impose in the public interest it is for Parliament so to enact. In my opinion it is not the present law of England.”

60 In the Full Court of the New South Wales Supreme Court in Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 Jordan CJ, at 164-165, recognised that there were some categories of relationship in which one party owed the other a non-delegable duty. At 165 his Honour said of a person who engaged an independent contractor to carry out work:

“… although he is liable for all the consequences of the results contracted for, he is not as a general rule responsible for damage occasioned by negligence on the part of the contractor in applying the methods selected by the contractor for achieving those results, these methods and their application being matters over which the employer has no control, and not being methods which must necessarily be used and from which damage must necessarily result.”

61 Jordan CJ declined to recognise any exception concerning work that was “extra hazardous”. After an extensive review of the authorities he concluded, at 170:

“… there is no general rule that if a person employs an independent contractor to do an inherently lawful act, he incurs liability for injury to others occasioned by the methods incidentally employed by the contractor in the course of its performance (these not being methods necessarily involved in the doing of the act and necessarily injurious), by reason only of the fact that the act is “dangerous,” “hazardous,” or “extra hazardous.” “

62 On appeal to the High Court (Torette House Proprietary Ltd v Berkman [1940] HCA 1; (1940) 62 CLR 637) the decision of the New South Wales Full Court was affirmed, but not on the basis that involved acceptance, or rejection, of this latter aspect of the judgment of Jordan CJ.

63 Latham CJ at 647-648 noted that the English Court of Appeal in Honeywill and Stein Ltd v Larkin Brothers Ltd [1934] 1 KB 191 and Matania v National Provincial Bank Ltd [1936] 2 All ER 633 had held that someone who engages an independent contractor to do “an act which in its very nature involves in the eyes of the law special danger to others” can be liable for negligence in the conduct of that operation. It was those cases that Jordan CJ had declined to follow. Latham CJ, at 648, said it was not necessary to consider whether those cases were correct, because the act of the independent contractor in the case before him was not one that in its very nature involved special danger to others. Starke J at 651-652 said that the work the contractor was engaged to do:

"… was lawful in itself and of such a character that if executed with due care involved no injurious consequences to others; there was no special or peculiar hazard in the work which the plumber was employed to execute. Under these circumstances the rule of law is that an employer is not responsible for the act of a person who is not his agent or servant but an independent contractor".

64 Amongst the authority quoted by Starke J for that proposition was Honeywill and Stein. Dixon J did not advert to the question.

65 The test put forward by Jordan CJ in Torette House was adopted and applied by Stephen J in Stoneman v Lyons [1975] HCA 59; (1975) 133 CLR 550 at 564-565. The defendant in that case was a landowner, who had engaged a builder to carry out work that involved construction of a trench immediately adjacent to a building on the boundary of the neighbouring land. The terms of the contract with the builder required the builder to obtain instructions from the architect before proceeding with any work that required underpinning of the adjoining property. The builder dug underneath the neighbouring property, without previously obtaining the architect’s instructions, thereby causing damage to the neighbouring building. The defendant was held not liable, Stephen J at 565 doing so on the basis that:

“… the negligent acts of the contractor’s workmen were not authorised by the employer, the appellant, nor necessary to be employed in achieving the contractual aim; they were merely methods, and grossly unskilled and hazardous ones, selected by them for achieving the results contracted for. For these acts, as Jordan CJ points out, the employer will not be liable.”

66 Stephen J also said that the matter was not one involving extra-hazardous activity, because (at 565):

“… the erection upon a block of level, vacant land of a single-storeyed structure, the building contract itself calling for no special and dangerous methods of construction but on the contrary containing suitable safeguards, is not such an activity … the suggested doctrine should not … extend beyond the … case of work authorised by the employer which, however performed, inherently involves peculiar danger to others.”

67 Mason J (with whom Barwick CJ agreed) said at 575 that the case was no occasion to decide whether the doctrine of absolute duty or strict liability for extra-hazardous activities was part of the common law in Australia, but said

“If it has application here, it would be wrong to classify the demolition and erection of a building (necessarily involving an excavation) in immediate proximity to the wall of an adjoining building as an extra-hazardous act. The operation is one which certainly involves a risk of injury to the neighbour if it is not executed with due care. But this is not in itself enough to justify its description as extra-hazardous. To my mind this expression signifies that, notwithstanding the taking of proper precautions, there is some element of danger arising from the operation.”

68 Mason J at 576 said:

“The principle that in the case of dangerous operations there is a special responsibility to take care does not exclude the liability of a person who engages an independent contractor to undertake an operation which is inherently dangerous and which injures a third party. But to make the principal liable it must appear that he himself was guilty of some negligent act or omission or that he authorised some negligent act or omission by the contractor in executing the operations which the latter was employed to carry out. Thus it may appear that the principal is liable because he failed to take care to engage a competent contractor or because, having knowledge that the contractor proposed to execute the work in an unsafe manner, he did nothing to eliminate the danger.”

69 If this passage stood by itself, one might conclude that Mason J was rejecting the notion that a principal had a non-delegable duty for the negligence of an independent contractor engaged to perform an inherently dangerous task, if the principal had selected the contractor with care and had no knowledge that the contractor was proposing to use unsafe methods. However when at 575 he had said there was no occasion to decide whether there was an absolute duty for extra-hazardous activities, one cannot be sure whether it is appropriate to draw that conclusion.

70 Though Kondis does not deal with liability for extra-hazardous activities, it is convenient to mention here, in its correct place in the chronology of cases, a different topic dealt with by Kondis, namely the rationale for non-delegable duties. In Kondis at 680-681 Mason J noted that the decision in Wilson & Clyde Coal Co v English [1938] AC 57, had held that an employer’s duty to its workers was a non-delegable duty, but that Lord Wright in Wilson

“… advances no reason or policy consideration for fixing the employer with the higher duty to see that care is taken instead of the duty that he himself take reasonable care.”

71 After tracing the types of cases in which such a non-delegable duty had been held to exist Mason J at 687 sought to identify the sort of circumstances in the relationship between plaintiff and defendant in such a case which led to the imposition of that higher standard:

Meyers v Easton

Dalton v Angus

The foreseeability of injury is not in itself enough to generate the special duty. Before the special duty arises there must exist in the relationship between the parties an element of the kind already discussed.”

72 In Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 the High Court considered a situation in which Stevens, who was an independent contractor to Brodribb, was injured by the negligent manipulation of logs by Gray, another independent contractor to Brodribb. One basis upon which it was argued that Brodribb had liability was that the operations involved in manipulating the logs, that caused Stevens’ injury, were inherently dangerous, or extra-hazardous.

73 The argument of counsel for Stevens is reported, at page 19, as being:

Kondis v State Transport Authority

Honeywill & Stein Ltd v Larkin Bros Ltd

Matania v National Provincial Bank

74 Thus, the argument that the High Court was being asked to adopt was that a person who engaged an independent contractor to perform extra-hazardous operations owes a non-delegable duty of care to someone who it was foreseeable could be injured in the course of those operations. The argument was the one that Jordan CJ had rejected in Torette House, but concerning which no ratio emerged from the decision of the High Court in Torette House. It was the argument that had been put under a serious cloud, though not decisively rejected, by the High Court decision in Stoneman v Lyons.

75 In Stevens v Brodribb Mason J (with whom Brennan J was “in general agreement”) said, at 29-30:

Salsbury v Woodland

Staveley Iron & Chemical Co Ltd v Jones

Stoneman v Lyons

Honeywill & Stein Ltd v Larkin Bros Ltd

Matania v National Provincial Bank Ltd

Salsbury v Woodland

Hughes v Percival

Rainham Chemical Works Ltd v Belvedere Fish Guano Co Ltd

Read v Lyons & Co Ltd

Torette House Pty Ltd v Berkman

Stoneman v Lyons

Adelaide Chemical & Fertilizer Co Ltd v Carlyle

Swinton v China Mutual Steam Navigation Co Ltd

Thompson v Bankstown Corporation

Imperial Furniture Pty Ltd v Automatic Fire Sprinklers Pty Ltd

Todman v Victa Ltd

76 Wilson and Dawson JJ considered the argument at somewhat more length. They had, at 40, some difficulty in working out what should count as extra-hazardous activities and in particular doubted “whether logging operations can be so categorised”, but assumed for the purpose of the argument that the logging operations were extra-hazardous.

77 The argument as their Honours saw it was that Brodribb was liable because Stevens’ injuries (at 39-40):

“… were sustained as a result of the extra-hazardous operations in which Stevens and Gray were engaged at the time of the accident. In these circumstances, it was said, Brodribb was under a duty to take special precautions to safeguard Stevens against injury and it was a duty which could not be delegated by the employment of independent contractors.”

78 It is not clear, from the argument as so formulated, whether the “duty to take special precautions” is more extensive than a duty to take reasonable care. However, a reading of their Honours judgment as a whole suggests that they understood the argument as being that Brodribb was under a duty to ensure that reasonable care was taken. I say that not only because of the way the argument had been put by counsel, but also because, at 40, their Honours quoted from Honeywill and Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191, at 199-200 the principle that they were considering as being:

“… if a man does work on or near another's property which involves danger to that property unless proper care is taken, he is liable to the owners of the property for damage resulting to it from the failure to take proper care, and is equally liable if, instead of doing the work himself, he procures another, whether agent, servant or otherwise, to do it for him.”

79 Wilson and Dawson JJ went on to say that the cases relied upon in Honeywill and Stein did not support a proposition of such width, and it is “inconsistent with the ordinary principles regarding vicarious liability and liability for the acts of independent contractors”. They approved the statement of “those principles” by Jordan CJ in Torette House v Berkman, at 170 where his Honour said:

“A person who procures the doing of an act is liable for its actual consequences and for anything necessarily involved in its being done whomsoever he may have procured to do it. He is liable for the acts of any agent of his acting within the scope of his employment. For the actual breach of any duty owed by himself he is responsible whatever steps he may have taken or agency he may have employed to endeavour to prevent a breach. In certain special circumstances, if he causes an act to be done he incurs a liability to see that care is used to prevent injury from being caused by methods incidentally used to produce the result, whomsoever he may employ to produce it. But there is no general rule that if a person employs an independent contractor to do an inherently lawful act, he incurs liability for injury to others occasioned by the methods incidentally employed by the contractor in the course of its performance (these not being methods necessarily involved in the doing of the act and necessarily injurious), by reason only of the fact that the act is ‘dangerous’, ‘hazardous’, or ‘extra-hazardous’.”

80 After considering further authority, Wilson and Dawson JJ said, at 42-43:

Adelaide Chemical & Fertilizer Co Ltd v Carlyle

Swinton v China Mutual Steam Navigation Co Ltd

Thompson v Bankstown Corporation

Wyong Shire Council v Shirt

Honeywill and Stein Ltd v Larkin Bros Ltd

Torette House Pty Ltd v Berkman

81 Deane J, the other judge who sat in Stevens v Brodribb, said nothing about the significance of extra-hazardous activities.

82 Mason J and Wilson and Dawson JJ all referred to the doctrine they were rejecting as one involving “strict liability”. However, in the context in which the argument was put, that involves rejecting a proposition that a principal who engages an independent contractor to engage in an extra-hazardous activity is liable, even in the absence of personal fault in the principal, for failure of the independent contractor to take reasonable care in carrying out that activity.

83 In other words, four of the five judges in Stevens v Brodribb expressly reject the proposition that a person has a non-delegable duty to ensure that reasonable care is taken by an independent contractor who is employed to engage in an extra-hazardous activity. That rejection is part of the ratio of the case. Thus, even if it were the fact that the activity to be carried out by ATS was extra-hazardous, that by itself would not suffice to impose liability on Transfield.

84 Mr Campbell SC, counsel for the Respondent, reminded us of Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520. It is a case that has significance concerning both liability for extra-hazardous activities, and the basis on which non-delegable duties exist. Burnie was a joint judgment of Mason CJ, Deane, Dawson, Toohey and Gaudron JJ, in which the defendant was a building owner who retained an independent contractor to carry out work on the defendant’s premises. Those premises contained some highly inflammable material, that was ignited when welding activities carried out by the contractor caused sparks or molten metal to ignite the material. The plaintiff was an occupier of adjacent premises whose goods were ruined when the fire spread. The court held that the defendant was in breach of a non-delegable duty of care.

85 At 550 the majority judgment referred with approval to the judgment of Mason J in Kondis, and said, at 550-551:

“element in the relationship between the parties which generates [the] special responsibility or duty to see that care is taken”

“the person on whom [the duty] is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised”

Kondis v State Transport Authority

Stevens v Brodribb Sawmilling Co Pty Ltd

“the central element of control”

The Commonwealth v Introvigne

86 Their Honours said that the ordinary situation where liability of the type recognised in Rylands v Fletcher (1868) LR 3 HL 330 would arise was such a situation:

“so placed in relation to [the other] person or his property as to assume a particular responsibility for his or its safety'

87 Their Honours also held, at 558-559, that:

“dangerous”

“inherently dangerous”

“dangerous in themselves”

88 The expression “collateral negligence” is used to refer to negligence of a contractor in the way in which the contractor chooses to perform the work, and that is not inherent in the task he or she has been asked to perform. In accordance with the principles governing when a person who engages an independent contractor is liable for negligence of that independent contractor that were stated by Jordan CJ in Torette House, the employer is liable for anything that is necessarily involved in performance of the task that has been given to the contractor, but not for collateral negligence of the contractor. For example, a defendant is not liable if an employee of an independent contractor, engaged to install windows in a building, accidentally leaves a tool in a position from which it falls on a passer-by: Padbury v Holliday & Greenwood Ltd (1912) 28 TLR 494. And it has been held that if a defendant engages an independent contractor to deliver beer to a hotel, and an employee of the contractor chooses to do so by delivering it through a cellar flap in the footpath that he negligently leaves open, causing a passer-by to fall in, the defendant is not liable if it was an available alternative for the employee to deliver the beer by means that did not create that risk: Wilson v Hodgson’s Kingston Brewery Co (1915) 85 LJ KB 270. In Burnie their Honours pointed out that in some circumstances a defendant could be liable for collateral negligence of an independent contractor:

“collateral'’

89 I would not regard that statement as providing any justification for holding an employer liable for the collateral negligence of an independent contractor in any circumstances other than those where a dangerous activity carried out within certain premises by or at the instruction of a person who is in control of those premises causes reasonably foreseeable damage to a person or property outside the premises. The concern of the court in Burnie was to restate on a coherent basis the ancient law concerning damage caused by the spread of fire from premises, and the case law that stemmed from Rylands v Fletcher. The previous law in those two areas had both involved strict liability. Burnie replaced that strict liability with a liability based on a non-delegable duty of care of the person in control of the premises. If the liability of the person in control of the premises did not extend to liability for collateral negligence of that person's independent contractors the law, on that new basis, would provide for liability in a substantially narrower field of circumstances than the previous law had provided. As I understand it, it was to preserve the commonality of coverage of the newly restated law and the old law concerning spread of fire, and Rylands v Fletcher, that the remarks in the paragraph I have just quoted were made. The ratio in Burnie does not apply in the present case, because the present is not a case where Transfield occupied any relevant premises, nor did any dangerous activity carried out on its premises cause damage to someone outside the premises.

90 I have quoted a passage at para [87] above from page 558-559 of Burnie, that contemplated that there could be a non-delegable duty in relation to things or activities that were “dangerous”, in a wider sense than “inherently dangerous” or “dangerous in themselves”. For similar reasons to those I have mentioned in the last paragraph, I do not regard that passage as intending to suggest that there could be a non-delegable duty concerning such dangerous things or activities outside the context with which Burnie was concerned, of activities formerly covered by the ancient law concerning spread of fire, and Rylands v Fletcher. Burnie has recognised a new category of non-delegable duty, that can be owed by the occupier of premises to a person outside the premises, concerning the activities carried on within the premises. It is not necessary for the purpose of this judgment to set out in detail the precise circumstances in which that new category of non-delegable duty arises. What matters for present purposes is that in the circumstances where that duty exists, it can apply in relation to the conduct of dangerous activities (not merely extra-hazardous activities) within the premises. But, outside its proper sphere of operation, broadly coextensive with that occupied by the former law concerning spread of fire and Rylands v Fletcher, Burnie has not detracted from the principle decided in Stevens v Brodribb, that there is no general doctrine in Australian law that a person has a non-delegable duty to ensure that reasonable care is taken by an independent contractor who is employed to engage in an extra-hazardous activity.

91 My reasons for taking this view of the two passages involve not only a reading of Burnie itself. As well, subsequent remarks in the High Court concerning non-delegable duties provide no support for extending the scope of the operation of the concept of non-delegable duties beyond existing categories. I turn now to consider those subsequent cases.

92 Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313 was a claim brought by a child who had been electrocuted as a result of the combined effect of two defects in the electrical system of a house that the defendant had rented to her parents. One of the defects was an inadequate repair of the stove. That repair had been carried out by an electrician, Mr Briggs, who was an independent contractor engaged by the landlord, after the tenants had entered into possession of the premises. The other was a defect in the earthing system, arising from an earth wire in the neutral link of the fuse box being inadequately connected.

93 A majority in the High Court (Brennan CJ, Toohey, Gaudron and McHugh JJ) held that the landlord was liable, but differed in the reasons why that liability arose. What is relevant for present purposes is that five of the seven judges held that the landlord was not under a non-delegable duty such as made it liable for the negligence of the electrician who had repaired the stove, Mr Briggs. Brennan CJ said, at 333:

“non-delegable”

94 Gaudron J at 361-363 said:

Hackshaw v Shaw

Australian Safeway Stores Pty Ltd v Zaluzna

Burnie Port Authority

95 Kirby J at 399-404 rejected the existence of a non-delegable duty, in the course of which he explained, at 401, why the case he was considering did not fit within the general criteria of control and vulnerability for the existence of a non-delegable duty that the High Court had laid down.

“vulnerability”

Burnie Port Authority v General Jones Pty Ltd

Kondis v State Transport Authority

Voli v Inglewood Shire Council

Bryan v Maloney

“central element of control”

Burnie Port Authority

“special”

96 Toohey J at 350, and McHugh J at 366-369 held there was a non-delegable duty of care owed in relation to Mr Briggs’ work, but an important element of the reasoning of both these judges was (as McHugh J put it at 369) that the landlord “undertook to have an electrical stove repaired in circumstances where the plaintiff and her parents might reasonably expect that due care would be exercised in repairing the stove.”

97 Since Northern Sandblasting, no decision in the High Court has suggested any more expansive view of the circumstances in which a non-delegable duty can arise.

98 In Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166 it was argued that a landlord of residential premises owes a non-delegable duty to members of the tenant’s household to take reasonable care for their safety by putting the premises in a safe state of repair (at 169), but the significance of it being a non-delegable duty rather than an ordinary duty of care was, on the facts, “merely rhetorical” (per Gleeson CJ at [55]). However some remarks of more general application were made. Gummow and Hayne JJ, at [191] said:

Kondis v State Transport Authority

99 Gummow J returned to that theme in Scott v Davis [2000] HCA 52; (2000) 204 CLR 333 at [248], where his Honour said:

“non-delegability”

Kondis

Burnie Port Authority v General Jones Pty Ltd

Kondis

“has undertaken the care, supervision or control of the person or property of another”

“to assume a particular responsibility”

Kondis

“non-delegability”;

100 In State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511 the High Court held that the non-delegable duty owed by school authorities to pupils did not extend to make the authority liable for deliberate criminal conduct engaged in by a teacher against a pupil. McHugh J at [153], (though in the course of a dissenting judgment) referred with apparent approval to the remarks of Gummow J in Scott v Davis to which I have earlier referred. Gummow and Hayne JJ at [246] also referred to those remarks, saying:

“…

Introvigne

Kondis

, and

Burnie

Rylands v Fletcher

“It is difficult to suggest any criterion by which the non-delegable character of such duties may be determined, other than the conclusion of the courts that the responsibility is so important to the community that the employer should not be permitted to transfer it to another.”

The foregoing suggests the need for considerable caution in developing any new species of this genus of liability.”

101 Kirby J, at [289] refers to his reluctance to expand the already identified categories of non-delegable duties, and says:

“At the heart of my reluctance lies a concern that I feel about the doctrinal foundations of this exceptional principle of tortious liability.”

102 It is convenient to mention here that Gaudron J in Lepore at [104] noted a common feature of the situations where a non-delegable duty has been imposed, namely that the duty is not merely to refrain from doing something that involves a foreseeable risk of injury, but is a duty of positive action – to take reasonable care to provide support to adjoining land, to take reasonable care to provide a safe system of work, to take reasonable care to provide proper nursing and medical care, or to take reasonable care to provide a safe school environment.

103 In Leichhardt Municipal Council v Montgomery [2007] HCA 6; (2007) 230 CLR 22 the High Court held that a local council did not owe pedestrians a non-delegable duty of care, to ensure that reasonable care was taken by independent contractors engaged by the council to carry out work on public footpaths. In the course of so deciding, Gleeson CJ said, at [18]:

Burnie Port Authority v General Jones Pty Ltd

Rylands v Fletcher

Burnie Port Authority

179 In my view, if a person has taken over the business of selling some particular type of product, and seeks to carry on the business and preserve its goodwill, it can in some circumstances be incidental to the carrying on that business to provide after-sales service to customers who have purchased goods from the previous owner of the business. Providing that service has a fairly obvious connection with preserving the goodwill of the business that the new owner is operating.

180 In the present case, the proposal form made clear that ATS had taken over the business of RTA, and that RTA had been a business operated by the same people as operated ATS. It expressly disclosed "we offer a maintenance inspection of the ropes courses we have installed". In my view, the liability that ATS incurred to the Respondent was one arising out of its Business.

Was the Rope that Failed a “Product”?

181 The trial judge held that the special indemnity wording of the public liability section of the policy prima facie applied, because the rope system was a Product, as it had been serviced, repaired or handled by Adventure Training. Though she did not elaborate on it, it is evident that the trial judge took the view that the act of inspection of the ropes course that resulted in the issue of the letter dated 17 December 2001 was itself servicing, repairing or handling the ropes course, and therefore the ropes course was a “Product” within the meaning of the policy. By a Notice of Contention, QBE disputes this finding.

182 Mr Stevenson submits that:

(a) the only candidate for being a “Product” is the safety strop that failed;

(b) the safety strop has not been shown to have been serviced, repaired or handled by the insured; and

“Product”

183 I do not accept submission (a). I see no reason for defining the Product in question as narrowly as QBE’s submission seeks to define it. The trial judge, in my view, correctly, regarded the relevant Product as being the ropes training course. It was to the ropes training course as a whole that the engagement of ATS related, and the report of ATS related.

184 In response to submission (b), in my view it can fairly be said that the course as a whole was serviced by ATS. The report of 17 December 2001 showed that that included not only inspection but cleaning of surface rust from all equipment, and treating of “all equipment” with a paint or oil. Some new parts (thimbles and strand-vices) were also installed. Carrying out those activities would necessarily have involved some incidental repair, and handling.

185 In respect to submission (c), I see no reason why the “possession” or “control” that is referred to need be an exclusive possession or control. In my view, it can suffice for there to be “possession” or “control” within the meaning of this definition that the Insured has the practical opportunity of dealing with the item in question to the extent that is involved in the Insured manufacturing, constructing, growing, extracting, producing, processing, assembling, erecting, installing, treating, altering, servicing, repairing, selling, handling, supplying or distributing that item. ATS had that degree of possession or control.

186 It follows that in my view the trial judge was right to regard the definition of “Product” as satisfied.

Exclusion Clause Re Professional Advice or Service

187 The trial judge found that the liability of Adventure Training was not one caused by or arising out of the rendering of professional advice or service. In her view, the nature of the “advice” or “service” provided is adequately described by the terms of the request for quotation dated 28 November 2001 (para [43] above), namely:

“(1) Carry out assessment of course and certify.

(2) Replacement of all strand vices to the high ropes course with new and hard eyes.”

188 She accepted the account given by the British Columbia Court of Appeal in Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754 at 757, whereby professional services, in the context of an exclusion clause in an insurance policy, were:

“… services, such as design of the plant, which could normally be expected to be provided only by a professional engineer.”

189 She noted that in GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 Kirby P had referred (at 568-569) to “professional” as meaning no more than advice and services of a skilful character. However, she did not apply Kirby P’s broader characterisation of “professional” for two reasons. One was that Kirby P had been concerned with construing an insuring clause, not an exclusion. Second, she noted that Kirby P’s statement was made in the context of a policy written for a local government authority. She concluded that work in the nature of routine maintenance, such as ATS provided in the present case, did not amount to providing professional advice or service.

190 By a Notice of Contention, QBE disputes this finding.

191 No features of the particular insurance policy in question are pointed to as aids to construction of this phrase. In construing any exclusion, the language of which admits of more than one interpretation, the court takes into account both the contra proferentem principle (which is well established in insurance law, whatever its status might be in other areas of contractual interpretation: North v Marina [2003] NSWSC 64; (2003) 11 BPR 21,359), and the principle that it would not give effective business operation of a contract if an exclusion clause inappropriately circumscribed the cover provided by the insuring clauses: Fitzpatrick v Job [2007] WASCA 63; (2007) 14 ANZ Ins Cas 61-731 at [270]. This court has recently applied Chemetics and Fitzpatrick v Job, in Vero Insurance Ltd v Power Technologies Pty Ltd [2007] NSWCA 226; (2007) 5 DDCR 206 at [147]-[149]. The High Court refused special leave to appeal from the decision in Vero on 7 March 2008.

192 Upholding the trial judge's decision concerning construction of this exclusion is comfortably within the language of the clause, and would be in accordance with the contra proferentem principle. There is no relevant point of distinction between the present case and Vero, so far as the construction of the exclusion is concerned. In these circumstances there is no need to rely on the principle whereby exclusion clauses should not be construed so as to circumscribe inappropriately the insuring clauses. In my view the trial judge’s decision on this question of construction was right.

Exclusion Clause Re Liability Caused By or Arising Out Of Advice … Given for a Fee

193 The reason the trial judge held the exclusion clause operative was because she found that the report of Adventure Training in December 2001 counted as “advice … given for a fee”, and that the liability of ATS arose out of that advice. She noted that Hoeben J, when granting leave to join QBE in the present proceedings, had considered it open to argue that a literal construction of the exclusion:

“advice”

194 The trial judge took the view that when ATS’s report of 17 December 2001 expressly stated “an inspection was carried out on all elements and found to be in safe working order” that was a positive act of giving advice, that the giving of advice was for a fee, that the giving of the advice resulted in the re-opening of the course, and also that the giving of the advice resulted in the Respondent sustaining the injury that has led to ATS’s liability. For that reason, she held the policy did not respond.

195 The Respondent, by cross-appeal, disputes that finding.

196 Mr Campbell submitted that:

(1) the inspection report did not provide advice, rather it set out findings on inspection. It was negligent inspection that was the cause of the damage.

197 I do not accept the first of those submissions. The task that Transfield requested ATS to embark on included two tasks, “carry out assessment of course”, and “certify”. In its quotation, ATS referred specifically to those two separate tasks. The expression “certify” carries with it not just the provision of an opinion or statement of fact, that might be off-the-cuff, but the giving of an opinion or statement of fact in writing, in circumstances where the subject of the certification is of sufficient seriousness to warrant being certified. The quotation stated ATS's recommendation as being to provide both “inspection and report”.

198 The trial judge gave specific consideration to whether the report amounted to “advice”. She observed:

“The Macquarie Dictionary gives three meanings to the word “advice”. The first is “an opinion recommended, or offered, as worthy to be followed”, the second is “a communication, especially from a distance, containing information”, and the third is “a formal or professional opinion given, especially by a barrister”. The second is too broad to be capable of meaning in the present context. The third is an indication of how advice is often used in an every day context to convey a need for professionalism, and expertise. The first bears a similar meaning to the third, in that an opinion “worthy to be followed” indicates a belief in the expertise of the person imparting the information.”

199 The report in the present case did not merely provide information. Significantly, it conveyed an opinion or evaluation concerning what had been observed on inspection. That opinion or evaluation was not merely a summary of the factual information concerning what had been observed. It measured the factual information that had been obtained on inspection by reference to a normative standard, namely whether the course was “in safe working order”. That opinion was of a type that ordinarily could be reliably formed only by a person who had appropriate training and experience. It was given in a context where it would have been understood on both sides that it was likely to be acted on. The trial judge was right to regard it as being “advice” within the meaning of the policy.

200 Another submission is that ATS’s invoice (para [48] above) does not even mention the giving of advice, let alone charge a fee for it. While that is clearly correct, whether something is “advice given for a fee” depends upon whether the advice is given in return for, or in exchange for, a fee. That requires the whole circumstances concerning the terms on which the advice is given to be examined, not merely an invoice that is issued after the advice has been given. In the present case, even though no separate price was allocated for the certification, as opposed to the inspection, the advice is given “for a fee” when it is a significant part of a package of services for the whole of which a fee is charged.

201 While negligent inspection was one of the causes of the Respondent’s injuries, the giving of the report was another cause of those injuries. ATS’s certification was requested in circumstances where the course was closed because it was feared to be dangerous. The report was not for the purposes of some private individual, but for the purpose of a large bureaucratic organisation, concerning which it is reasonable to infer that proper procedures and documentation are a matter of importance. The trial judge found that:

“… Lieutenant Commander Astfalck was relying upon Adventure Training for its advice and its expertise to determine what maintenance and inspection procedures were required to be carried out to ensure the safety of the course.”

202 She also found:

“… the liability of Adventure Training must have arisen from the advice that they provided. The report must be considered to be advice when taken as a whole. The report states, "An inspection was carried out on all elements and found to be in safe working order". This is a specific reference to the safety of the course, and it is reasonable to assume that the course was reopened as a result of this statement in the report. It may not have been "professional advice" but it was "worthy to be followed", and therefore it was advice. The advice was followed, and as a result the plaintiff was injured.”

203 It would have been open to the trial judge to make a stronger finding than “reasonable to assume” about the relationship between the report and the re-opening of the course. Lieutenant Astfalck, whose credit was in no way impeached, gave evidence:

204 One can safely infer that, if the negligent inspection had been carried out, and the man who carried out the inspection promptly died or fled the jurisdiction without providing any report, the course would not have been reopened. The present is a case where the liability in question has one cause that falls within an insuring clause, another cause that falls within the exclusion, and those causes are concurrent in the sense that the co-existence of them is necessary to produce the loss. In that circumstance, the exclusion prevails: Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corporation [1974] 1 QB 57; McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28; (2007) 157 FCR 402.

205 It was common ground that an exclusion clause should not be interpreted so as to excessively circumscribe the insuring clauses. However, in my view treating the exclusion as applying the present case does not excessively circumscribe the insuring clause.

206 The trial judge correctly applied this principle when she rejected the second of the shades of meaning of “advice” identified by the Macquarie Dictionary, namely mere information, as the appropriate construction of “advice” in this exclusion.

207 I respectfully agree with Hoeben J's observation that “it is difficult to envisage selling, installation and training in respect of outdoor education activities without the provision of some advice.” I would accept that in the ordinary course, a comparatively specialised type of item, like an adventure training course, would be purchased only after discussion between the vendor and the intending purchaser about matters such as the circumstances in which the purchaser was intending to use the course, the types of people who would be likely to use the course (which would influence its configuration and how physically challenging it would be), and the likely costs, both initial costs and for ongoing maintenance. Further, at least some of these topics would involve expert evaluation on the part of the vendor, and so could properly be described as “advice”. If the exclusion related to “liability caused by or arising out of advice”, there would be a very real question about whether, in the context of this particular business, the exclusion clause eviscerated the insuring clause. However, it is only “liability caused by or arising out of advice given for a fee” that is excluded. I would not assume, without evidence, that in this line of business it was only if they were paid for doing so that salesmen would be prepared to discuss with an intending customer how a product that the salesman was trying to sell would meet the intending customer's needs. In most lines of business, sales talk comes free.

208 Mr Campbell also submitted that application of the principle of construction should lead to the exclusion only applying to liability to the person to whom the advice was given, or the person who commissioned the advice.

209 In Vero a firm of engineers had a public liability policy, that excluded liability for “claims arising out of a breach of the duty owed in a professional capacity by The Insured …”. The engineers designed and installed some boilers at a power station. The design and installation was in no way defective. However, the boilers incorporated some asbestos lagging. Asbestos dust and fibre were released in the course of carrying out maintenance work on the boilers, and came to be inhaled by a worker, Mr Barlow, giving him mesothelioma. Mr Barlow sued the operators of the power station, who claimed contribution from the engineers. The question at issue was whether the engineers’ insurance policy responded. The trial judge held that the engineers were liable in tort to the worker, because they had failed to warn the Electricity Commission about the dangers of asbestos, and the necessity to adopt stringent precautions against workers inhaling the asbestos fibres when the fibres were disturbed. The trial judge found this to be a common law duty owed to Mr Barlow against the foreseeable possibility that the power station operator would be negligent, not a professional duty owed to the power station operator. Beazley JA, (with whom Harrison J and I agreed) held that the exclusion did not operate because (at [149]):

“The respondent did not owe a professional duty to Mr Barlow. Rather, it owed him a duty of care as a third party in respect of whom it was reasonably foreseeable might suffer damage as a result of its negligence ….”

210 In my view that decision does not result in the exclusion in the present case being narrowed in a way Mr Campbell contends. In Vero, the engineers had not breached any duty owed in a professional capacity at all – there was nothing wrong with the boilers that they designed and installed. Rather, the claim arose out of a duty of a different character, namely an ordinary common law duty of care.

211 The exclusion that is in question in the present case depends upon the manner in which the liability against which indemnity is sought arose (viz, from the giving of advice for a fee). It would involve narrowing the exclusion, in a way for which there is no textual support, if it were restricted to liability owed only to the narrow class for which Mr Campbell contends.

212 Mr Campbell also placed some reliance upon Leask Timber and Hardware Pty Ltd v Thorne [1961] HCA 73; (1961) 106 CLR 33. That case was an action for damages by the widow of a man killed as a result of the driving, by a person who did not hold the requisite certificate, of a power crane. The widow sued the employer of the driver, alleging the tort of breach of statutory duty. The statutory provision in question forbad an employer from allowing a person who was not the holder of a certificate of competency to drive a crane. Dixon CJ, Kitto, Taylor and Windeyer JJ held that the statutory provision in question did not create a private right of action. The use Mr Campbell seeks to make of it in the present case arises from some obiter observations of Dixon CJ, to the effect that if the essence of the offence was not the unlawful driving of the crane but the failure to hold a certificate of competency, he could not see how failure to hold the certificate of competency was a cause of the personal injuries (at 38-39). The same point was made by Kitto J at 45:

“If a person is injured by the incompetent driving of a power crane, the cause of the injury is the incompetent conduct of the driver – that which he does or omits and would not have done or omitted if he had acted competently. The absence of a certificate, if he is uncertificated, is not the cause. And e converso the cause is still incompetent driving, even if he has a certificate.”

213 In my view those observations do not bear upon the present case. Here, it was only because ATS gave its advice that the course was put back in service, with the consequent sustained injuries by the Respondent.

214 The trial judge was right in holding that the exclusion applies.

Negligence of Adventure Training

215 QBE, by Notice of Contention, disputes the factual finding of the trial judge that ATS had breached its duty of care.

216 Mr Stevenson’s argument is put in two separate ways, both dependent upon the task that ATS was required to perform being defined by SOP 801 (though subject to a modification in that ATS was not to apply loads to the wires). Each argument is to the effect that SOP 801 defined ATS's task in a way that excluded having to remove the shrink wrap and inspect underneath it, and ATS could hardly have been negligent by failing to perform a task it was not required to perform at all.

217 Though the trial judge makes some reference at paras [39]-[41] and [45] of her judgment to SOP 801, she makes no clear finding that the task that ATS embarked on (whether at the request of Transfield or otherwise) was to inspect in accordance with SOP 801. The findings of the trial judge are (at [41]):

"... What Adventure Training intended to do was to actually certify that the course was safe to use ... That is, Adventure Training was to use its expertise in evaluating whether the course was safe or not."

218 And, at [45]:

"It is my view that Lieutenant Commander Astfalck was relying upon Adventure Training for its advice and its expertise to determine what maintenance and inspection procedures were required to be carried out to ensure the safety of the course. It was never the intention of Adventure Training or the Department of Defence that Adventure Training in conducting inspection, maintenance and certification of the course was limited to matters outlined in SOP 801."

219 That latter finding is an explicit denial that ATS’s task was limited by the terms of SOP 801. There is no basis for reversing the finding. That is sufficient to dispose of QBE’s argument that ATS was not negligent.

220 But QBE’s argument fails for additional reasons. Even if ATS's task had been limited to carrying out an inspection in accordance with SOP 801, modified to leave out load testing of the wires, QBE's argument would still not succeed. The first way in which QBE puts the argument relies on the part of SOP 801 (set out para [33] above) requiring any assembly of wire or structural support not to be disassembled unless directed, and the trial judge's finding that Lieutenant Commander Astfalck gave no specific instructions to disassemble the strop and look under the shrink wrap cover. In those circumstances, QBE argues, ATS was positively forbidden to remove the shrink wrap cover.

221 I do not agree.

222 Removing the shrink wrap from the part of the loop of the safety strop that it covered would not, in my view, involve disassembling “any assembly of wire or structural support”. The safety strop was an assembly of wire, but removing the shrink wrap would be exposing an assembly of wire, not disassembling one.

223 Further, the requirement was that the assembly of wire not be disassembled "for the purpose of the test" unless directed otherwise. That requirement appears in SOP 801 following a requirement that each item of (inter alia) steel wire rope:

“shall be surveyed throughout its extremities, load tested, then surveyed again on completion of the test.”

224 The "test" referred to in the requirement not to disassemble is the load test. The load test was not done, nor intended to be done, and hence the requirement not to disassemble "for the purpose of the test" unless directed otherwise did not speak to the circumstances in which ATS was carrying out its inspection.

225 The second way in which QBE puts the argument is that the requirement to visually survey the item throughout its extremities did not involve cutting off the shrink wrap. I disagree. Visually surveying the extremities involves examining the extremities with the naked eye. Thus, it involves doing whatever is necessary to be able to examine the extremities with the naked eye, whether it be getting oneself sufficiently close to the extremities to be able to examine them properly, or removing physical obstructions to a clear line of sight, like the shrink wrap.

226 QBE’s challenge to the finding of negligence on the part of ATS fails.

227 In the result, the policy does not respond.

Orders

228 I propose the following orders:

(1) Appeal upheld.

(2) Set aside the orders in the Court below in favour of the Respondent. In lieu thereof, enter judgment for the Appellant.

(3) Respondent to pay costs of the Appellant of the appeal and in the Court below.

229 McCLELLAN CJ at CL: I have had the benefit of reading the reasons of Campbell JA in draft. I agree with his Honour’s conclusions with respect to the resolution of the appeal. However, my view of the cross-appeal differs in one significant respect from that of his Honour.

230 I agree with Campbell JA that the liability of ATS to the respondent was a liability arising out of its business. QBE was aware that although Rope Tech Australia Pty Ltd had installed the ropes course ATS had taken over the business of Rope Tech. For the purposes of the policy the ropes course was one that ATS had installed. I agree that the “business” of ATS for the purposes of the policy extended to maintenance inspection of the ropes course. I also agree with his Honour that the strop is a failed “product” and that the exclusion clause in relation to “professional advice or service” has no application with respect to the liability of ATS.

231 However, I have a different view to Campbell JA in relation to the application of the exclusion clause with respect to “advice … given for a fee”.

232 Clause 1, the General Operative clause of the policy, provides an indemnity to ATS in respect of liability “arising out of” its business. Accordingly as Campbell JA has found indemnity extends to the maintenance inspection of the ropes course. Clause 10.4 excludes liability:

“Caused by or arising out of,

10.4.1 the rendering of or failure to render professional advice or service by the Insured or any error or omission connected therewith.

10.4.2 advice, design, formula or specification given for a fee.”

233 In my opinion the task which ATS was requested to carry out is not properly described as “advice … given for a fee”. It was asked to assess the “course and certify” and replace “all strand vices to the high ropes course with new and hard eyes.” ATS responded to the request by quoting for a task which included the following elements:

Adventure Training Systems recommends the following;

234 Amongst the terms and conditions offered by ATS was the following:

“One of our Project Managers will be assigned to carry out the upgrade of the Team Challenge Activities. He will be able to ensure the integrity of the constructions, and completion within the time period specified. You can be sure of the safety of your activities when you have fully insured experienced professionals from Adventure Training Systems install your Adventure Activities.”

235 By its tender in response to the request from Transfield ATS was offering to do no more than a general maintenance check in the course of its ordinary business.

236 The nature of the task which ATS carried out is confirmed by the report which ATS made when the work had been completed. ATS reported on 17 December 2001 in the following terms:

“An inspection was carried out on all elements and found to be in safe working order. On each element all cables, eyebolts (and nuts) strand-vices, wire rope grips, stays and belay pulleys were checked and found to be ok. Belay wire rope lines and belay pulleys are 20 months old at time of this report.”

237 On the final page of the report, there are a number of recommendations about personnel belay span line equipment, which come after the signature of the report’s author. Thereafter there is a “note” which states that “[t]he ropes course is safe to use, but the new standard [presumably in relation to the belay span lines] should be implemented as soon as resources are made available.” Significantly, in the body of the report the author provides an extensive list of the works completed at the time of inspection. It reads as follows:

General works.

All equipment, (wire rope grips, Quick-links) showing surface rust were cleaned with a wire brush and treated with Cold Gal Paint, or Oil product.

All Maillon Rapide Quicklinks brushed and sprayed with Cold Gal paint.

The wire rope on hand and foot lines is currently showing significant rusting due to the location and age of the course. It is recommended that in the next 6 months a sample of wire rope be removed from the course and tested by a NATA Certified rigging/lifting supply company to determine the condition of such wire rope.”

238 In these circumstances, certification by ATS that the course was “safe to use” was no more than confirmation that it had carried out the inspection and maintenance tasks as requested albeit that some further maintenance work was required. To the extent that the communication by ATS that the course was safe can be characterised as “advice” at all, it was advice so interwoven with and incidental to the insured business of ATS that to exclude it would strike fundamentally at the commercial purpose of the policy: Legal and General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 at 394 per Kirby P and at 405-7 per McHugh JA.

239 The word “advice” in the exclusion clause should be interpreted bearing in mind what was said by the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510:

contra proferentem

240 The conclusion that ATS relevantly provided advice “for a fee” is also at odds with the tax invoice ultimately issued to Transfield by ATS. It particularised a single fee in respect of the work performed which was described as: “Inspection, Maintenance and up grade work for Endeavour Ropes Course”. This description, which is appropriate to describe the work requested by Transfield and performed by ATS, is within the normal business of ATS insured by QBE and not excluded by the terms of the policy.

241 In lieu of Order 4 proposed by Campbell JA, I propose the following orders:

**********

11/03/2010 - Correction of minor typographical errors - Paragraph(s) [128] and [191]

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Citations

Transfield Services (Australia) v Hall [2008] NSWCA 294

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Statutory Material Cited

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CITATION:	Transfield Services (Australia) v Hall; Hall v QBE Insurance (Australia) [2008] NSWCA 294 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	26 February 2008
JUDGMENT DATE:	10 November 2008
JUDGMENT OF:	Beazley JA at 1; Campbell JA at 6; McClellan CJ at CL at 229
DECISION:	(1) Appeal upheld. (2) Set aside the orders in the Court below in favour of the Respondent. In lieu thereof, enter judgment for the Appellant. (3) Respondent to pay costs of the Appellant of the appeal and in the Court below. (4) Cross-appeal upheld and order 2 made by Harrison AsJ set aside. (5) Judgment for the cross-appellant against the cross-respondent in the sum of $1,457,712 such judgment to date from 2 August 2007. (6) The order for costs made by Harrison AsJ in favour of cross-respondent set aside. (7) Order the cross-respondent to pay the costs of the cross-appellant both as to the appeal and as between those parties in the court below.
CATCHWORDS:	TORTS – negligence – duty of care – non-delegable duties of care – respondent injured in fall from high ropes course when safety strop from which rope suspended broke – appellant contracted by Commonwealth to maintain plant and equipment at site – appellant engaged subcontractor to carry out inspection of ropes course and certify – whether subcontractor negligent – whether appellant owed non-delegable duty of care to respondent for negligence of subcontractor – whether general doctrine in Australian law that a person has a non-delegable duty to ensure reasonable care taken by an independent contractor employed to engage in an extra-hazardous or inherently dangerous activity – whether subcontractor employed to engage in extra-hazardous or inherently dangerous activity – whether scope for extending concept of non-delegable duties beyond existing categories – relevance of factors of control and vulnerability to finding of non-delegable duty – persuasiveness of authorities recognising proximity as the basis for a non-delegable duty – relevance of terms of contract between appellant and Commonwealth to finding of non-delegable duty – whether appellant vicariously liable for negligence of subcontractor – where alleged liability of appellant not put to trial judge on basis of vicarious liability – whether doing of the very act that the appellant directed the subcontractor to perform caused damage - INSURANCE – indemnity insurance – products liability – whether liability arose out of insured’s business – where activities giving rise to liability were incidental to insured’s business – whether ropes course a product within meaning of policy – whether exclusion clause applies – where exclusion clause admits of more than one interpretation – whether liability caused by or arose out of advice given for a fee – where liability in question has one cause that falls within an insuring clause and another cause that falls within the exclusion – where those causes are concurrent - WORDS AND PHRASES – "possession" – "control" – "advice"
LEGISLATION CITED:	Safety, Rehabilitation & Compensation Act 1988 (Cth)
CATEGORY:	Principal judgment
CASES CITED:	ACQ Pty Ltd v Cook [2008] NSWCA 161 Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13; (1994) 179 CLR 520 Chemetics International Ltd v Commercial Union Assurance Co of Canada (1984) 11 DLR (4th) 754 Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Donoghue v Stevenson [1932] AC 562 Fitzpatrick v Job [2007] WASCA 63; (2007) 14 ANZ Ins Cas 61-731 GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 Hall v Adventure Training Systems Pty Ltd [2005] NSWSC 1079; (2006) 14 ANZ Ins Cas 61-673 Hall v Adventure Training Systems Pty Ltd [2007] NSWSC 817; (2007) Aust Torts Reports 81-904 Honeywill and Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191 Imbree v McNeilly [2008] HCA 40 Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166 Kondis v State Transport Authority [1984] HCA 61; (1984) 154 CLR 672 Leask Timber and Hardware Pty Ltd v Thorne [1961] HCA 73; (1961) 106 CLR 33 Legal and General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 Leichhardt Municipal Council v Montgomery [2007] HCA 6; (2007) 230 CLR 22 Matania v National Provincial Bank Ltd [1936] 2 All ER 633 McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28; (2007) 157 FCR 402 North v Marina [2003] NSWSC 64; (2003) 11 BPR 21,359 Northern Sandblasting Pty Ltd v Harris [1997] HCA 39; (1997) 188 CLR 313 Padbury v Holliday & Greenwood Ltd (1912) 28 TLR 494 Read v J Lyons & Co Ltd [1947] AC 156 Rylands v Fletcher (1868) LR 3 HL 330 Scott v Davis [2000] HCA 52; (2000) 204 CLR 333 State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511 Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 Stoneman v Lyons [1975] HCA 59; (1975) 133 CLR 550 Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562 Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 Thomson v Cremin [1953] 2 All ER 1185 Torette House Proprietary Ltd v Berkman [1940] HCA 1; (1940) 62 CLR 637 Torette House Pty Ltd v Berkman (1939) 39 SR (NSW) 156 Vero Insurance Ltd v Power Technologies Pty Ltd [2007] NSWCA 226; (2007) 5 DDCR 206 Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74 Watts v Perry and the National Insurance Co of New Zealand Ltd [1972] 1 NSWLR 73 Wayne Tank & Pump Co Ltd v Employers Liability Assurance Corporation [1974] 1 QB 57 Wilson & Clyde Coal Co v English [1938] AC 57 Wilson v Hodgson’s Kingston Brewery Co (1915) 85 LJ KB 270
TEXTS CITED:	G Williams, "Liability for Independent Contractors" (1956) Cambridge Law Journal 180
PARTIES:	Transfield Services (Australia) Pty Limited (Appellant) Norman Lindsay Hall (Respondent/Cross-Appellant) QBE Insurance (Australia) Pty Limited (Cross-Respondent)
FILE NUMBER(S):	CA 40563/07
COUNSEL:	B Walker SC; R Gambi (Appellant) SG Campbell SC; K Andrews (Respondent/Cross-Appellant) J Stevenson SC; E Muston (Cross-Respondent)
SOLICITORS:	DLA Phillips Fox, Sydney (Appellant) Wyatt Attorneys, Sydney (Respondent/Cross-Appellant) Hicksons, Sydney (Cross-Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	20150/04
LOWER COURT JUDICIAL OFFICER:	Harrison AsJ
LOWER COURT DATE OF DECISION:	2 August 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	Hall v Adventure Training Systems Pty Limited & 2 Ors [2007] NSWSC 817