Victorian WorkCover Authority v A.T.S. Towing Service Pty Ltd (ACN 054 744 204)
[2023] VCC 2010
•17 November 2023
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-20-03910
| VICTORIAN WORKCOVER AUTHORITY | Plaintiff |
| v | |
| A.T.S. TOWING SERVICE PTY LTD (ACN 054 744 204) | First Defendant |
| and | |
| LINKBACK (VIC) PTY LTD (ACN 053 416 596) | Second Defendant |
| and | |
| STEVEN MAVRO | Third Defendant |
| and | |
| CERTAIN UNDERWRITERS AT LLOYD’S OF LONDON | Third Party |
| AND | |
| A.T.S. TOWING SERVICE PTY LTD (ACN 054 744 204) | First Claimant |
| And | |
| LINKBACK (VIC) PTY LTD (ACN 053 416 596) | Second Claimant |
| and | |
| STEVEN MAVRO | Third Claimant |
| v | |
| CERTAIN UNDERWRITERS AT LLOYD’S OF LONDON | Respondent |
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JUDGE: | HER HONOUR JUDGE CLAYTON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17, 18, 19, 20 and 21 April and 1 May 2023 | |
DATE OF JUDGMENT: | 17 November 2023 | |
CASE MAY BE CITED AS: | Victorian WorkCover Authority v A.T.S. Towing Service Pty Ltd (ACN 054 744 204) & Ors | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 2010 | |
REASONS FOR JUDGMENT
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Subject:CONTRACTS – THIRD PARTY CLAIM
Catchwords: Dog attack on premises – construction of insurance contract – whether policy wording ambiguous – whether policy coverage limited by description of business – whether contra preferentum principle applicable
Legislation Cited: Wrongs Act 1958
Cases Cited:Allianz Australia Workers Compensation (NSW) Limited v PPG Industries Australia Pty Limited [2004] ACTCA 28;
Burns v MMI-CMI Insurance Ltd (formerly known as Chamber of Manufacturers Ltd) (1994) 8 ANZ Ins Cas 61-287;
Charter Reinsurance Co Ltd v Fagan [1997] AC 313;
Horsell International Pty Ltd v Divetwo Pty Ltd [2013] NSWCA 368;
McCann v Switzerland Insurance Australia Ltd & Ors (2000) 203 CLR 579;
McGrath v Sturesteps; Sturesteps v HIH Overseas Holdings Ltd (in liq) (2011) NSWLR 690.
Judgment: The claimant’s third party claim is dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Churilov | Hall & Wilcox |
| For the First Defendant | Mr D Ferrari | Thomson Geer |
| For the Second Defendant | Mr A Donald | SLF Lawyers |
| For the Third Defendant | Mr P Tiernan | Thomson Geer |
| For the Third Party | Mr C Blanden KC with Mr M Clarke | Terrill & Holmes Lawyers |
HER HONOUR:
Background to the third party claim
1Aaron Butler sued ATS Towing Services (“ATS”), Linkback (VIC) Pty Ltd (“Linkback”) and Steven Mavro for injuries arising from a dog attack on 4 April 2016 (“the primary proceeding”) on premises owned by Linkback. The dog was owned by Mr Mavro. It was kept on premises occupied by ATS and owned by Linkback.
2The dog attack occurred during the course of Mr Butler’s employment and the Victorian Workcover Authority (“VWA”), through its authorised insurer, paid Mr Butler compensation in the form of weekly benefits, and medical and other expenses.
3As commonly happens, the VWA sought to recover the amount it had paid Mr Butler from ATS, Linkback and Mr Mavro. It brought these proceedings (“the recovery proceeding”).
4The primary proceeding settled on the first day of trial. The recovery proceeding resolved a few days later.
5However, that was not the end of the matter. The defendants in the recovery proceeding brought a third party claim against Certain Underwriters of Lloyd’s of London (“Lloyds”).
The parties
6Following the resolution of the recovery proceeding, the first defendant (ATS) and the third defendant (Steven Mavro) were granted leave to discontinue their respective claims against the third party.
7For the purposes of the third party claim, the claimant is Linkback. The respondent is Lloyds. However the entity Linkback dealt with during the course of its insurance policy was Axis, an agent for Lloyds. To avoid confusion, I will refer to the respondent to the third party claim as Axis.
8Linkback is the registered proprietor of the land at 380 Hume Highway, Craigieburn (“380 Hume Highway”). Mr Mavro, and his daughter Linda Mavro, are both directors of Linkback. Part of the land at 380 Hume Highway was leased to Dahlsens Building Centres Pty Ltd (Dahlsens), which operated a hardware business. The rest of the land was occupied by two companies; ATS and Truck Wreck Pty Ltd (“Truck Wreck”). Mr Mavro and his daughter are both directors of ATS and Mr Mavro is the sole director of Truck Wreck.
9Mr Mavro and Ms Mavro, as directors of Linkback, permit Truck Wreck and ATS to occupy the land under a “licence at will”. There is no formal lease between Linkback as proprietor of the land and Truck Wreck or ATS.
10In 2010, Linkback entered into a lease with Dahlsens for part of the land at 380 Hume Highway. In that same year, Linkback also took out an insurance policy with Axis. The insurance policy was renewed on a yearly basis and there is no dispute that, at the time of the dog attack, there was a valid policy of insurance in place.
11Linkback says it has a contract of insurance, which Axis has breached by refusing to indemnify it, ATS and Mr Mavro, in respect to the claims made against them by Mr Butler and the VWA.
12The dispute in this case is whether the policy that Linkback took out with Axis provides insurance coverage for a dog attack that occurred on that part of the land that was leased to Dahlsens.
Circumstances around the dog attack
13The dog was purchased by Linkback for the purpose of providing guard-dog services to ATS and Truck Wreck. The dog was registered to Mr Mavro, and the costs associated with the upkeep of the dog were paid by Linkback.
14The dog was kept on the part of the land at 380 Hume Highway where ATS and Truck Wreck operated. A fence divided that part of the property from the property leased to Dahlsens. The dog escaped from the fenced part of the land and got onto the highway. Mr Butler was working on the highway when he encountered the dog. He entered that part of the premises leased to Dahlsens, the dog followed him, and it was there that the dog attacked and injured him.
15There was no allegation that Dahlsens has any liability for the attack and it was not a party to either Mr Butler’s proceeding or the VWA proceeding.
Lease to Dahlsens
16In 2010, Linkback entered into a seven-year lease with Dahlsens, with an option to extend.
17The premises leased were described as “Unit 1, 380 Hume Highway, Craigieburn Vic 3062”.[1]
[1]Second Defendant’s Court Book (“2DCB”) 128
18The parties agree that the property at 380 Hume Highway had not been formally or legally subdivided, and there is no separate land title for the property described as “Unit 1, 380 Hume Highway”. This description was a way of delineating the part of the land that was leased to Dahlsens, from that part of the land that was used by ATS and Truck Wreck.
19The premises were leased for the permitted use of “Timber, Hardware, Manufacture and Distribution”.[2]
[2]2DCB 128
20The terms of the lease provided that the landlord (Linkback) pay all council rates, land tax and insurance, except for insurance costs in excess of $15,000 which were to be borne by the tenant (Dahlsens).
21Clause 7.1 of the lease provided that the tenant must keep current insurance in the names of the landlord and the tenant:
(i)for the replacement of plate glass;
(ii)against public risk for such sum as the landlord may reasonably specify from time to time, not being less than $10,000,000; and
(iii)for the tenant’s property for its replacement value.[3]
[3]2DCB 130
22Clause 8.2 of the lease provided that the landlord must keep the premises and the landlord’s fittings insured for their replacement value against loss or damage by fire, storm and tempest, and such other risks (if any) as the landlord chooses.[4]
[4]2DCB 130
The Insurance Policy
23Linkback took out an insurance policy with Axis in 2010, which was renewed each year. At the time of Mr Butler’s accident, the Policy in place ran from 18 May 2015 to 18 May 2016.
24Linkback submits that there was, in fact, two distinct policies of insurance. One was a policy of liability insurance for general liability up to the limit of $10,000,000 for any one occurrence. The other was a business insurance policy providing insurance for loss of income from rent.
25Both policies were entered into at the same time. The relevant policy for this action is the Liability Policy (“the Policy”).
26The Policy provided that “certain Underwriters at Lloyd’s have agreed to Indemnify the Insured, in accordance with the wording attached to the Certificate”.[5]
[5]Third Party Amend Court Book (“TPCB”) 29
27The Certificate notes that, in accepting this insurance, the underwriters have relied on the information and statements that Linkback provided on the Proposal Form. The Certificate says “[you] should read this Certificate, Schedule and Policy wording carefully and if it is not correct contact your Broker or Axis Underwriting Services”.[6]
[6]TPCB 29
28The coverage of the Policy provided that the insured would be indemnified for:
“… all sums which the Insured shall be legally liable to pay as Compensation in respect of Personal Injury or Property Damage occurring during the Policy Period as a result of an Occurrence happening in connection with the Business of the Insured described in the Schedule.”[7]
[7]TPCB 30
29The “Schedule” is defined at clause 17 of the “General and Products Liability Policy” as “[t]he Schedule attaching to and forming party (sic) of the Policy Wording including any Schedule substituted for the original Schedule”.[8]
[8]TPCB 31
30The Policy Schedule described the business as “Property Owner tenanted as Timber & Hardware Sales”.[9]
[9]TPCB 24
31The Policy Schedule identified the insured as “Linkback (Vic) Pty Ltd” and the location as “1: 380 Hume Highway Craigieburn”.[10]
[10]TPCB 24
32The terms of the Policy provided:
(a) General Liability insurance up to $10,000,000 in any one occurrence.
33The Business Insurance Policy consisted of the “policy wording, a Certificate of Insurance and a Schedule”.[11]
[11]TPCB 45
34The Policy Schedule to this policy also described the business as “Property Owner tenanted as Timber & Hardware Sales”.[12]
[12]TPCB 24
35The Business Insurance policy insured Linkback for:
(a) fire insurance for “buildings” up to $3,300,000;
(b) loss of income from loss of rent up to $325,000. The indemnity period for loss of income/loss of rent was twelve months.[13]
[13] TPCB 24-25
36The cost of the Policy for the twelve-month period to May 2016 was $1,210 for the Policy,[14] and $10,950.50 for the Business Policy.[15]
[14]TPCB 23
[15]TPCB 27
37Linkback says the Policy covered all the land at 380 Hume Highway and, as a result, the Policy covers any negligent act on the land used by ATS or Truck Wreck which gave rise to the injury to Mr Butler sustained on the land used by Dahlsens.
38Axis says the Policy covers only that part of 380 Hume Highway that is tenanted as “Timber & Hardware Sales”. In other words, it covers only the land leased to Dahlsens. Although the attack occurred on the Dahlsens’ part of the land, this was not because of any breach or negligence on that land. No liability attaches to Dahlsens or Linkback in its role as property owner of that part of the land that was leased for “Timber & Hardware Sales”. Therefore, Axis says there is no claim that can be made on the Policy.
Evidence of Linda Mavro
39Ms Mavro gave evidence that she became a director of Linkback in 1987 when she turned eighteen.
40Linkback purchased the land at 380 Hume Highway in 1991.
41In 1997, she became a director of ATS. ATS provides towing services. Truck Wreck, as the name suggests, wrecks vehicles for parts, but it uses 380 Hume Highway primarily for storing vehicles. Part of Truck Wreck operations are also carried out on an adjacent property at 6 Rushwood Drive. She said the Rushwood Drive property was owned by another family company, Banchi Green Pty Ltd (“Banchi Green”). Both she and her father are directors of Banchi Green.
42Two other companies owned by Mr and Ms Mavro operate from Rushwood Drive – AAA Truck Smash Repairs and Mavyle Pty Ltd (“Mavyle”). Mavyle buys and sells vehicle wrecks.
43Ms Mavro was uncertain about the registered address of some of the businesses and thought some were registered to Rushwood Drive. Company searches show that the registered address of Mavyle and ATS is 380 Hume Highway and the registered address of Linkback,[16] and Truck Wreck is 6 Rushwood Drive.[17]
[16]2DCB 37; Exhibit D2-2: Bundle of company extracts
[17]2DCB 4; Exhibit D2-2: Bundle of company extracts
44Ms Mavro said she became involved in managing the companies in around 1999. Initially, her role was office administration, doing the accounts and banking, and dealing with computer issues. Her responsibilities have increased over the years. She does not have a hands-on role in towing or dismantling the trucks, but has a management role, along with her father. The companies do not employ anyone else in a management role. Bookkeeping is subcontracted out from time to time.
45Despite being the only person involved in management aside from Mr Mavro, Ms Mavro was unable to say whether the premises where ATS and Truck Wreck operated was insured in 2010, when Linkback entered into a lease with Dahlsens. She was unable to say whether either company had public liability insurance related to 380 Hume Highway. She said her father may have organised it.
46Ms Mavro was unable to say whether Truck Wreck had public liability insurance in 2015. She was aware that ATS had public liability insurance related to its towing services in 2015, but did not have insurance related to its business at 380 Hume Highway.
47The insurance they did have was brokered by Cursio Financial Services Pty Ltd (“Cursio”), but Ms Mavro did not know when Cursio came on board. She believed it had been engaged as a broker by a previous bookkeeper prior to 2010.
48She said, prior to Dahlsens taking up the lease, she believed the property had been insured by a couple of different companies over the period from purchase, but she could not be specific about which companies or when.
49She was aware that Banchi Green had insurance related to the Rushwood Drive property, but was not aware of the specifics, as her father had arranged that insurance.
50A business risk analysis was completed by Cursio as follows:
(a) the Description of the “Business & Processes” was property owner – Timber and Hardware;
(b) the business interruption identified $325,000 as the amount insured for to cover “rentals”;
(c) under “Details of Tenants” was written “Timber & Hardware – Dahlsens”;
(d) those sections of the document to do with machinery and equipment are crossed out;
(e) the document notes the type of goods as “timber”, quantity as “not much” and that the timber is stored “above ground on shelves”.[18]
[18]TPCB 81-84
51Ms Mavro agreed that the rent received from Dahlsens was $325,000 per annum. She otherwise said she had not been the person to give Cursio instructions in relation to that document.
52Ms Mavro was shown a document “Business Insurance (Property Owners) Proposal”,[19] which is an Axis form appearing to have been completed by Cursio. The form notes the following:
[19]TPCB 76
(a) The property is 380 Hume Highway;
(b) Only one building is identified, being a single-storey building with tin walls and roof, and a concrete floor. The age of the building was given as thirty years.
(c) The occupation of “each tenant” was noted as “Hardware store”;
(d) Ten car parking spaces were identified;
(e) Under “Protection”, there are noted to be no fire sprinklers or bars/grills on all external windows. There are noted to be fire detectors that cover the whole property. The question, “[d]o any tenants store or use any dangerous substances, or use heat processes” is answered “[n]o”;
(f) The buildings are assigned a value of $3,300,000;
(g) The loss of income covered is $325,000 for twelve months;
(h) Glass is covered;
(i) Money, engineering electronics, employee theft, portable items, and transit items, are all either crossed through or marked as “[n]ot applicable under this property owners cover”.
(j) Property Owners Liability Insurance cover is sought for public liability in the amount of $10,000,000 for any one occurrence.[20]
[20]TPCB 76-78
53That document was sent from Cursio to Axis on 5 April 2011 with a request for a quote and a note “[t]he tenant is very similar to Bunnings”.[21]
[21]TPCB 80
54Ms Mavro said she was not involved in preparing this document.
55In April 2012, Cursio responded to an email from Axis, noting that the Policy was due to shortly expire and asking for an updated listing of tenant occupations and activities, details of any changes to building values or sums insured, estimated rental income for the next twelve months, and details of any claims not reported.
56Cursio responded, advising that nothing had changed.[22] There was a similar set of correspondence between Cursio and Axis for 2013. Ms Mavro could not say whether Cursio had contacted anyone from Linkback about renewing the insurance policy, although she did not believe she had been contacted, notwithstanding that her name is the reference on the document.
[22]TPCB 85
57The Policy for 2014-2015 amended the form of the Schedule of Insurance.[23] In that document, the building (singular) was insured for “fire and perils” for $3,300,000. Ms Mavro said that she “presumably would have given the whole property”,[24] but agreed that $3,300,000 was the value assigned to the building leased to Dahlsens. However, she subsequently said that the valuation of $3,300,000 was for the whole property at 380 Hume Highway, because it “is one property to us”.[25]
[23]TPCB 100
[24]Transcript (“T”) 323, Line (“L”) 18
[25]T340, L6
58The Policy for 2015-2016, which covered the period in which Mr Butler was injured, noted, in the Schedule of Insurance, that it was a “Business Combined Insurance” policy for business insurance and liability insurance.[26]
[26]TPCB 106
59The location insured was 380 Hume Highway, the property owner was Linkback and the property was tenanted as “Timber & Hardware Sales”.[27] The valuations, items covered and not covered, and sums insured, were unchanged from earlier policies.
[27]TPCB 107
60Ms Mavro agreed that there was no difference between the insurance policy originally taken out and the one in place at the time of Mr Butler’s injury.[28]
[28]T325
61Ms Mavro was taken to an ASIC Business Names search,[29] which showed a number of business names associated with Truck Wreck, including AAA Truck Rentals, AAA Truck Parts, A A A Truck Parts, aaa truck wreckers and aaa truck parts. She said that those business had operated from 380 Hume Highway at some stage.
[29]2DCB 33
62Ms Mavro was shown a business name search for ATS which showed a considerable number of business names associated with ATS.
63She agreed that none of the business names associated with either Truck Wreck or ATS were identified in the insurance policy with Axis for 380 Hume Highway. She said:
“… we insured the property as Linkback (Vic) because that’s the property owner. The fact that we had our other businesses on Linkback’s property informally, that’s what we- we thought we’d insured the property, Linkback Vic. Whether AAA Truck Parts was in a bit of it, whether ATS Towing was in a bit of it, it is owned and controlled by Linkback (Vic) and that’s who we insured with Cursio”.[30]
[30]T336, L12-19
64She could not say why the details of the businesses being undertaken on the property, other than Dahlsens, had not been provided to the insurer.
65She could not say why, in relation to insurance taken out by Banchi Green on the Rushwood Drive property, the Policy noted the land was tenanted by AAA Truck Parts, truck mechanic/wrecker and spray booth, even though AAA Truck Parts was another one of the group of companies owned by Mr and Ms Mavro, and had no formal lease with Banchi Green.
66Emails in relation to the insurance policy for Banchi Green were sent to Ms Mavro, but she said she did not deal with that property and would have just printed the emails off for her father because he “can’t work emails”.[31]
[31]T332, L29
67She said, when the Policy documents for renewal were sent through each year, she would have passed them on to her father to read.
68She said, in the early 2000’s, they first got guard dogs for the property at 380 Hume Highway. The dog that was responsible for Mr Butler’s injuries was purchased in around 2010 or 2011. He lived at the property and had a pen just north of the office where she worked. When everyone left the site in the evening, he would be let out of his pen and was free to roam that part of the premises where ATS and Truck Wreck operated.
69She arranged for expenses associated with the dog, including vet bills, registration fees and food, to be paid by Linkback.[32] She said her father was responsible for the daily care of the dog.
[32]Exhibit D1-2: Bundle of documents in relation to dog and security services
Evidence of Steven Mavro
70Mr Mavro said the guard dog was looked after by him, in the sense that he let him out at night and put him away in the morning. However, dog-related expenses were paid by Linkback because “he would protect both properties”.[33] When asked what he meant by “both properties”, he said “[t]he Dahlsens property and the ATS property”.[34] He agreed that those properties were part of one holding.
[33]T356, L11-12
[34]T356, L15
71He said that the dog would bark if someone came onto the Dahlsens property, but the dog could not access the Dahlsens property, and was fenced into that part of the property occupied by ATS.
72He agreed that the reason insurance was sought via Cursio for the 380 Hume Highway property, was because it was a requirement in the lease with Dahlsens.[35]
[35]T357
73He had the discussions with Cursio at the time the Policy was first taken out. He agreed he had given the instructions to Cursio to complete the initial business risk analysis. However, he said that, after the initial consultation with Cursio, he never spoke to anyone from Cursio or Axis. He said that, subsequent contact about the renewal of each policy “would be contact with Linda, I’d say”.[36] He said Linda was really the “go-to” person in relation to the renewal of these insurances.[37]
[36]T367, L21
[37]T367, L28-30
74He said he never told Cursio or Axis about the informal tenancy arrangements on 380 Hume Highway between Linkback and ATS, or Truck Wreck, because “[i]t would have gone to the office or Linda”.[38]
[38]T375, L26-27
75He agreed that nothing had changed in the insurance policy between the initial policy and the Policy in place at the time of Mr Butler’s injury.
Construction of the Policy
76A policy of insurance is a commercial contract. The interpretation of such a contract requires examination of:
(a) the language used by the parties;
(b) the commercial circumstances which the document addresses;
(c) and the objects which it is intended to secure.[39]
[39]McCann v Switzerland Insurance Australia Ltd & Ors (2000) 203 CLR 579 at paragraph [22] (per Gleeson CJ)
77If the language in the Contract is ambiguous or could have more than one meaning, evidence of surrounding circumstances may be admissible. However, evidence of surrounding circumstances is not admissible to contradict the plain meaning of the language of the Contract.[40]
[40]Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 388
78However, a court is entitled to depart from the ordinary meaning where:
“… something has clearly gone wrong with the language so as to interpret it in accordance with the ordinary rules of syntax makes no commercial sense … .”[41]
[41]McGrath v Sturesteps; Sturesteps v HIH Overseas Holdings Ltd (in liq) (2011) NSWLR 690 at paragraph [18]
79When the effect of a document, or part of a document, is unclear, a reasonable construction should generally be preferred as representing the presumed intention of the parties.[42] If the words of a policy are ambiguous, or could have more than one meaning, they should be construed strongly against the party who puts them forward.[43]
[42]Allianz Australia Workers Compensation (NSW) Limited v PPG Industries Australia Pty Limited [2004] ACTCA 28 at paragraph [29] (per Higgins CJ, Crispin P & Weinberg J)
[43](Ibid)
Is the wording of the Contract ambiguous?
Linkback’s submissions
80In this case, Linkback says the words are not ambiguous, in that the Policy covers 380 Hume Highway, which includes the ATS and Truck Wreck parts of that land.
81Linkback submits that the Policy identifies the property insured as 380 Hume Highway, and therefore it is the entirety of that property that is insured. It would have been a simple thing to delineate that part of the land leased to Dahlsens as “Unit 1, 380 Hume Highway” if the intention was just to insure that portion of the land. No such delineation was made and the law requires that the plain meaning of the words be given effect.
82Linkback says the location or “situation of risk” in the Policy Schedule must have work to do. That work is to link the occurrence of an event to the situation of risk. Linkback says that the Schedule records the location as 380 Hume Highway, and does not limit that property by referring to the “leased” part of 380 Hume Highway.
83Under “Endorsements”, the Policy refers to fire-fighting equipment at the premises, without further defining the premises, which must mean the entire premises at 380 Hume Highway, and not just some portion of the premises at 380 Hume Highway.
84The Business Policy Schedule refers to “Buildings”, without defining what buildings, so it must mean all the buildings on 380 Hume Highway, which includes buildings on the land tenanted by ATS and Truck Wreck.
85Linkback says the phrase “Business of the Insured” is a “term of art” that is not defined in the Policy wording or in the Policy Schedule. “Business” means “commercial activity” and the commercial activity of Linkback was as a property owner, leasing part of that property to a tenant.
86The Policy Schedule refers to “business description”, and this accurately describes Linkback as “Property Owner tenanted as Timber & Hardware Sales”. However, Linkbacks submits the “business description” in the Policy Schedule does not define the “Business of the Insured”. Linkback says the “Business of the Insured” that was insured with Axis, is Linkback’s business as property owner. Linkback says that means Linkback is insured as property owner of all of 380 Hume Highway, not just that part of it tenanted as timber and hardware sales. It says the important aspect of the business description for the interpretation of the contract, is that Linkback was insured as a property owner.
87Linkback says the words “tenanted as Timber & Hardware Sales” do no work other than to describe one of the tenancies at the situation of risk. Those words do not appear in the Policy wording, only the Policy Schedule and do not regulate the rights and obligations of the parties.
88As a property owner, Linkback was carrying on the commercial activity of leasing premises. A dog under its control as a property owner caused personal injury while on the premises leased. Linkback may have liability as an occupier of the land, or as the owner of the dog, or both. The dog was kept on the land owned by Linkback and leased, informally, to Truck Wreck and ATS. The “occurrence”, that is, the action of the dog which caused injury to Mr Butler, is linked to the business activity of the insured, Linkback, because it occurred in connection with the leased premises.
89However, if the Court decides that the wording is ambiguous, then Axis put the documents forward and the construction ought to be in Linkback’s favour.
Axis’ submissions
90Axis also says the wording is not ambiguous. The Policy covers Linkback in its capacity as “Property Owner tenanted as Timber & Hardware Sales”. That is, it covers Linkback when Linkback is operating a business as a property owner, whose tenant is timber and hardware sales.
91Crucially, Axis submits, the Policy was a combined business insurance policy. That means it is an insurance policy that covers the business of the insured as well as having a liability component.
92Axis says the words “tenanted as Timber & Hardware Sales” must have some work to do, otherwise the description could have simply read “property owner”. The property at 380 Hume Highway is a single holding. There is no delineation of the property into subdivisions. The appropriate means to identify what was insured was by identifying the business that was insured, that is, Linkback as Landlord for Dahlsens.
93Axis says the most important aspects of the Policy documents in identifying what is covered and what is not, is the identity of the insured and the description of the business.
94The location merely identifies where the insurance operates, but coverage is not necessarily confined to 380 Hume Highway. For example, if a bit of the roof flew off the building Dahlsens leased and injured someone out on the street, Linkback may be liable if it had failed to maintain the roof adequately and the Policy would respond, notwithstanding that the injury did not occur on 380 Hume Highway. The occurrence would have happened in connection with the business of the insured, that is, as owner of the property tenanted as timber and hardware sales.
95Axis says the Policy responds only to that part of the property where Linkback is conducting business as a property owner of property tenanted as timber and hardware sales, as identified in the lease. It does not respond to Linkback’s business as property owner of businesses otherwise tenanted for towing or wrecking (or anything else).
96Axis says the “occurrence” was the injury caused by the dog owned by Mr Mavro, maintained by Linkback, and kept on land owned by Linkback and tenanted to ATS.
97Axis says the Policy does not respond to the Claim because nothing about the “occurrence” was in connection with the stated business activities for which Linkback was insured.
98The fact that the injury occurred on the land leased by Dahlsens is irrelevant. The dog attack had nothing to do with the land being tenanted for timber and hardware sales. The dog attack had nothing to do with Linkback owning the property which was tenanted for that purpose. This was not a situation in which Linkback is liable because of its role as occupier or landlord of the land tenanted to Dahlsens. If Linkback is liable, it is because of its obligations in respect of the land tenanted to ATS or Truck Wreck, or because of its obligations as owner of the dog. In neither of these capacities has Axis provided insurance coverage.
Analysis
99The “Insuring Agreements” identify what is covered, the limits of liability, the Policy period, the supplementary payments and provide definitions. The definitions shall, “unless the context specifically provides to the contrary, be interpreted in the manner described” in the insuring agreement.[44]
[44]TPCB 30
100Under “Coverage” the Policy says:
“Subject to the terms, definitions, conditions, limitations and exclusions of this Policy the Insurers will indemnify the Insured for all sums which the Insured shall be legally liable to pay as Compensation in respect of Personal Injury or Property Damage occurring during the Policy Period as a result of an Occurrence happening in connection with the Business of the Insured described in the Schedule.”[45]
[45]TPCB 30
101The following terms are defined:
(a) personal injury;
(b) property damage;
(c) occurrence;
(d) compensation;
(e) insured;
(f) insured’s products;
(g) vehicle;
(h) watercraft;
(i) hovercraft;
(j) aircraft;
(k) Australia;
(l) indemnitee;
(m) pollution;
(n) tools of trade;
(o) policy period;
(p) limits of liability;
(q) schedule.
102An “occurrence” is defined as:
“An event including continuous or repeated exposure to substantially the same general conditions, which results in Personal injury or Property Damage, neither expected nor intended from the standpoint of a reasonable person in the position of the Insured. All events of a series consequent on or attributed to one source or original cause will be deemed an Occurrence”.[46]
[46]TPCB 31
103The “insured” is defined as the insured named in the Schedule and any subsidiary company, as well as any director officer, employee and so on.
104Both the Policy period and the limits of liability are described as “stipulated in the Schedule and further defined in the Insuring Agreements”[47] and the Schedule is defined as attaching to, and forming part of, the Policy wording, including any schedule substituted for the original Schedule.
[47]TPCB 31
105I do not accept the submission of Linkback that the “Business of the Insured” is not defined. The “Coverage” clause identifies that the “Business of the Insured” is described in the Schedule. This is the only “term of art” that is identified in the coverage clause as being defined in the Schedule. The other terms that are capitalised in the Coverage Clause are all identified in the “Definitions” clause.
106The wording of the Insuring Clause makes it clear that the Business of the Insured is as described in the Schedule. The Schedule contains the following information:
· The Insured: Linkback (Vic) Pty Ltd
· Business Description: Property Owner tenanted as Timber & Hardware Sales
· Location: 1: 380 Hume Highway Craigieburn VIC 3064
· Interested Parties: Not applicable
107By identifying the “Insured” and “Business Description” in the Policy Schedule, the Policy Schedule identifies that Linkback is insured in its capacity as property owner, tenanted as Timber & Hardware Sales, at 380 Hume Highway.
108It is not clear to me in what, if any way, it assists Linkback that there are two separate policies; one business and one liability. Both contain the same description of the business as “[p]roperty Owner tenanted as timber & hardware sales”. To the extent it might be said that the Business Policy was intended only to cover Linkback in its business as landlord to Dahlsens, while the Liability Policy was intended to cover the entirety of 380 Hume Highway, that is not the way the case was put, nor was there any evidence that the parties intended to obtain insurance coverage for different purposes – one as a landlord for Dahlsens and the other as a property owner for 380 Hume Highway. There is no basis upon which I could make a finding that the two policies differed in what “Business of the Insured” was covered.
109Further, Linkback relied on aspects of the Business Policy to make out its case that it was the entirety of the premises at 380 Hume Highway that was insured, by pointing to the use of the words “Buildings” in the Schedule, which it said referred to all the buildings on the land, and not just the single building on the land leased to Dahlsens. It is not open to rely on aspects that assist, but not aspects that do not assist, its case.
110The aspect of the Policy in contention, is whether what was insured was Linkback as “property owner of 380 Hume Highway”, or Linkback as “property owner of 380 Hume Highway, where that land is tenanted as timber and hardware sales”.
111The fact that there is both a liability and a business policy does not have any bearing on the construction of the Contract in that regard.
112In Horsell International Pty Ltd v Divetwo Pty Ltd,[48] the Court held that, in order to construe the insuring clause, the words of the definition of “Insured’s Business” had to be read into the operative text of the Policy. However, this did not render the label “Insured’s Business” irrelevant. Rather, the label was part of the context in which the insuring clause was to be constructed.[49] In this case, there is no definition of “Business of Insured”, but, rather, an identification of the Business of the Insured being as described in the Schedule.
[48][2013] NSWCA 368
[49](Ibid) at paragraph [159]
113I do not accept Linkback’s submission that the description in the Schedule merely identifies one of the aspects of Linkback’s business as a property owner tenanting out part of the land, and that this identification has no bearing on what was actually insured. There is no reason why the Contract would provide a partial description of the business of the insured if the intention was, in fact, to insure Linkback in its role as property owner of the whole of 380 Hume Highway.
114The Policy Schedule identifies the insured, Linkback; the capacity in which it is insured – as property owner tenanted as Timber and Hardware Sales; and the location where it is insured – 380 Hume Highway.
115These parameters of the Policy mean that Axis did not insure Linkback for occurrences in its capacity as property owner for premises other than 380 Hume Highway. Nor did it insure Linkback for occurrences in its capacity as property owner tenanted as “Timber & Hardware Sales” at locations other than 380 Hume Highway, unless those occurrences happened in connection with its business as property owner tenanted as timber and hardware sales at 380 Hume Highway, such as in the example where a part of the roof fell off and injured someone outside the premises.
116It follows that it also does not insure Linkback for occurrences in its capacity as property owner where property is tenanted other than for “Timber & Hardware Sales”.
117Each part of the Policy Schedule has a role to play in identifying and defining the boundaries of the Insurance Contract between Axis and Linkback.
118Although the part of the land leased to Dahlsens is defined in the Lease as “Unit 1/380 Hume Highway”, there is no land title for such an address. This was merely a convenience for the sake of identifying, in the lease, what part of the land was tenanted to Dahlsens. However, in the Insurance Contract, the means of identifying the business that was covered by the Insurance Contract was by reference to both the address and the business description, that is, to identify the location and the activity for which coverage was being provided.
119There was no submission by either party that the use of the number “1” and the colon in the description of the location in the Schedule, identified a subsection of the land at 380 Hume Highway. A colon is not a common means of identifying a unit, apartment or subdivision. Such subsections of property would usually be identified by use of a dash or slash (eg 1-380 Hume Highway or 1/380 Hume Highway) or words or letters (eg Unit 1 380 Hume Highway of 380A Hume Highway) and therefore I have not taken into account the “1” and “:” in the description of the location in these reasons.
120It follows that I am satisfied that the language of the Policy is not ambiguous, and that Linkback was insured for occurrences for which it was liable as property owner of 380 Hume Highway where that property was tenanted to Dahlsens.
Was the occurrence in connection with the business of the insured?
121There is no dispute that the dog attack on Mr Butler falls within the definition of an “occurrence”.
122There is a dispute as to whether the occurrence happened “in connection” with the business of the insured.
123Linkback submits that the dog attack happened on land owned and occupied in the relevant sense. By operation of s14A of Part IIA of the Wrongs Act 1958, Linkback meets the definition of “occupier”. The lease between Linkback and Dahlsens created a right by Linkback to enter the premises to carry out maintenance and repairs.
124Linkback owed a duty, as a deemed occupier of the premises, to take reasonable care to see that Mr Butler would not be injured or damaged by reason of the state of the premises, or things done, or omitted to be done, by it in relation to its business as property owner tenanted as timber and hardware sales.
125Linkback says the dog attack occurred as a result of the “state of the premises”, being the state of the fence that allowed the dog to escape. The dog was kept for the purpose of guarding the premises, and although it was meant to be contained on that part of the land occupied by ATS and Truck Wreck, it also barked if anyone entered the Dahlsens’ part of the land and thereby provided guard-dog services to Dahlsens.
126Linkback says owning the dog was part of its business and therefore is covered by the business insurance policy.
127Axis disputes that owning a guard dog was any part of Linkback’s business, and disputes whether, as a matter of fact, the dog was owned, in the relevant sense, by Linkback, given that it was registered to, and looked after by, Mr Mavro.
128However, Axis says, even if owning a guard dog did form part of Linkback’s business, it was no part of the business for which it was insured. As a landlord, it had no obligation to provide guard-dog services to Dahlsens. Nowhere in the Policy is the provision of guard-dog services defined, described, or referred to, as the subject of the Policy.
129Axis says, on no construction of the facts, can the ownership of the dog, or the provision of guard-dog services, be made to fit within the description of the business under the Policy.
130In Horsell International Pty Ltd v Divetwo Pty Ltd,[50] the insured party operated a scuba-diving business and had a professional liability policy of insurance that provided coverage for injury or damage “in connection with the Insured’s Business”. The Policy Schedule provided that the Insured’s Business was “as defined in the Policy wording under ‘Scuba Diving’”. Scuba diving was then defined to include activities relating to a number of aspects of scuba diving, snorkelling, swimming, tours, and other related activities, including transportation of people from one island to another, guided tours of the island when not diving, bush walking, bird watching, whale watching and beach games.
[50](Supra)
131The Policy also provided indemnity to directors of the Insured but “only while acting within the scope of their duties in such capacity”. Divetwo director, Mr Todd, took his boat out, and was involved in a collision that resulted in him being charged with dangerous navigation occasioning grievous bodily harm. The trial judge made a finding of fact that the purpose of the boat trip was recreational and was not in connection with the business.
132The Policy included coverage of watercraft up to 12 metres and Mr Todd’s craft fell within that length. However, at first instance, the trial judge found that:
“… ‘the somewhat sparse wording of the endorsement [was] wholly inadequate to support the contention that it was designed to provide public liability cover for boats up to 12 metres without any qualifications in the insuring clause 1’.”[51]
[51](Ibid) at paragraph [69]
133The trial judge found that the Policy did not respond to the Claim, as the accident did not occur “in connection with the business”, notwithstanding that the boat was insured and engaging in activities that were the same as those activities undertaken for the business. The use of the boat in a location proximate to Mr Todd’s usual business operations was not sufficient to establish a connection for the purposes of the insuring clause.
134On appeal, the court agreed that the activity for which Divetwo was insured had to be “in connection with the Insured’s Business”. A remote connection would usually not suffice. The words “in connection with” widen the ambit of the cover beyond activities expressly referred to in the insuring clause while, at the same time requiring that the activity must have a connection with the insured’s business before it comes within the terms of the Policy.[52] A recreational trip in the boat was not sufficiently “in connection” with Divetwo’s business to satisfy the requirement and, accordingly, the Court agreed that the Policy did not respond.
[52](Ibid) at paragraph [144]
135In this case, I have found that the business for which Linkback is insured is its business as property owner tenanted as timber and hardware sales. On the evidence before me, the dog entered the land tenanted by Dahlsens from the Hume Highway, having escaped from the land tenanted by ATS or Truck Wreck. The dog did not enter onto the Dahlsens’ land because of any action or inaction by Linkback in its role as property owner tenanted as timber and hardware sales. That is, there is no evidence that there was any failure to meet an obligation owed by Linkback to, for example, maintain the boundary fence between Dahlsens and ATS, and that this failure enabled the dog to get onto the land and to injure Mr Butler.
136It follows from my findings about the Policy wording that I do not accept that the occurrence was in connection with the business of the insured, as defined. I do not accept that the incidental provision of guard-dog services, by reason of the shared boundary fence between ATS and Dahlsens, means that the dog attack happened in connection with Linkback’s business as property owner tenanted as timber and hardware sales.
What was the intention of the parties?
137However, if my finding that the Policy wording is not ambiguous is incorrect, it is appropriate to look at the circumstances and the conduct of the parties and draw inferences on the basis of probability as to the intention of the parties.
138The intention of the parties is of limited relevance once the Insurance Contract is formed, and parties will be bound by the terms of the Contract regardless of their prior state of mind.[53]However, the intention of the parties may assist the Court to draw inferences on the basis of probability where there is dispute.
[53]Burns v MMI-CMI Insurance Ltd (formerly known as Chamber of Manufacturers Ltd) (1994) 8 ANZ Ins Cas 61-287
139Ms Mavro gave evidence that, as far as she was concerned, she “would have” taken the Policy to cover the whole property because it is “one property”. She said her insurance agent, Cursio, had been to the property on “numerous occasions so they had seen the property and knew what buildings were there. We take it as one property”.[54]
[54]T336, L2-4
140Linkback submitted that Ms Mavro’s belief as to the insurance coverage is reinforced by the fact that ATS claimed indemnity under the Policy when it was sued by Mr Butler.
141However, according to Ms Mavro’s evidence, she did not engage Cursio and was not involved in the Insurance Contract, other than being generally aware of its existence. She said that, despite being named as a contact point, she was merely a conduit to Mr Mavro and printed emails for his attention, as he was unfamiliar with email technology.
142Mr Mavro said that, after the initial consultation with Cursio, he had no involvement with the insurance policy and that would have been handled by Ms Mavro. He said he did not tell Cursio about ATS or Truck Wreck leasing land at 380 Hume Highway from Linkback, because that was something that would have gone to the “office” or to Ms Mavro.
143The evidence of Ms Mavro and Mr Mavro about their intention to cover the whole of the property at 380 Hume Highway is not persuasive. Each of them appeared to consider the other was the person with responsibility for the Policy.
144Other than vague statements from Ms Mavro, there was no evidence that Linkback, ATS or Truck Wreck had any insurance for 380 Hume Highway prior to the Dahlsens’ lease, and, I infer, from the lack of evidence about any prior insurance policy, that no such policy existed.
145The fact that the first insurance policy in evidence for 380 Hume Highway coincided with Dahlsens’ lease, is persuasive evidence that the policies were taken out to meet Linkback’s obligations pursuant to the lease, and to cover the risk to Linkback of business losses arising from that lease in the form of loss of rental.
146Linkback submits that the Policy proposal documents are wholly inadmissible and no regard can be had to them.
147However, if the terms of the Contract are ambiguous, the Policy proposal documents may provide context from which the intention of the parties may be discerned.
148The “Business Insurance Risk Analysis”[55] completed by Cursio in April 2011, identified the “tenants” as “Timber & Hardware ꟷ Dahlsens”.[56]
[55]TPCB 70
[56]TPCB 74
149The Business Insurance (Property Owners) Proposal form required the occupation of each tenant to be listed. The occupation of each tenant is identified as “Hardware Store”. An email attached to the proposal from Maria Mangiafico of Cursio to Kerrianne Dalton at Axis, dated 5 April 2011, said:
“Hi Kerrianne, can you please quote.
The tenant is very similar to Bunnings.”[57]
[57]TPCB 80
150The policies were then provided and entered into.
151The following year, Emily Walker from Axis, emailed Maria Mangiafico, noting that the Policy was about to expire and asking for the following information:
(a) an updated listing of tenant occupations and activities;
(b) details of any changes to the buildings value or sums insured;
(c) estimated rental income for the next twelve months;
(d) details of any claims and/or incidents incurred, but not yet reported to them.[58]
[58]TPCB 85
152Ms Mangiafico responded, “[h]i Emily, nothing has changed. Everything the same”.[59]
[59]TPCB 85
153In 2013, Axis sent, to Cursio, a renewal notice, which included a Victorian Fire Services Levy Notice. By email dated 22 April 2013, Ana Kreso, of Axis, requested Cursio advise of any changes to tenancy or sums insured.[60] No changes were notified and the “closing advice” was provided for Linkback for “Business Combined Insurance” for “Business & Liability”.[61]
[60]TPCB 92
[61]TPCB 92
154There is similar correspondence for 2014 and 2015. In each renewal period, Cursio was asked to provide any updated information in relation to tenancy and sums insured. No changes were notified and the tenant was never altered from “Timber & Hardware Sales”.
155The Policy never reflected the tenancy of ATS or Truck Wreck.
156Not identifying ATS or Truck Wreck as tenants in the insurance policy with Axis, contrasts with the insurance coverage in relation to the property at Rushwood Drive.
157Ms Mavro and Mr Mavro both gave evidence that Banchi Green is the registered owner of the property at Rushwood Drive. AAA Truck Parts, a wrecking and mechanic business owned by Mr and Ms Mavro, operated from that property, pursuant to an informal leasing arrangement, or under a licence at will, with Banchi Green.[62]
[62]T299 and T353
158Banchi Green had a policy of insurance with Axis which was cancelled in 2015. That policy identified Banchi Green as the property owner, the situation as 6 Rushwood Drive, and noted the property was tenanted by “AAA Truck Parts (Truck mechanic/wrecker & spray booth)”.[63]
[63]TPCB 120
159Axis submits that, despite AAA Truck Parts not having a formal lease with Banchi Green, AAA Truck Parts was noted on the insurance Policy Schedule as the tenant, as the Policy was intended to cover the business operations of AAA Truck Parts.
160Neither Mr Mavro, nor Ms Mavro, gave evidence that demonstrated familiarity with the insurance policy taken out by Banchi Green, both suggesting that the other person would have been the primary contact.
161The Banchi Green policy is of relevance, only to the extent that it shows that companies owned and operated by the Mavro’s identified AAA Truck Parts as a tenant, even though AAA Truck Parts was a tenant under the same informal arrangement at Rushwood Drive as ATS and Truck Wreck were at Hume Highway. I infer that, had Linkback intended the 380 Hume Highway insurance policy to cover ATS and Truck Wreck, it would have noted that in the description of the business insured, as it did in relation to AAA Truck Parts.
162Drawing this inference is consistent with the conduct of Linkbacks in the following ways:
(a) there was no evidence of any policy of insurance in relation to 380 Hume Highway prior to the lease with Dahlsens and I conclude that there was no such policy in existence;
(b) the insurance policy with Axis coincided with the commencement of Dahlsens’ lease with Linkback;
(c) Cursio describes the business insured as “similar to Bunnings”, which description can only apply to Dahlsens, and has no applicability to any of the other businesses operating at 380 Hume Highway.
163Linkback submits that, according to the principle of contra proferentem, where the document is ambiguous in identifying exactly what the business of the insured is, the Court ought to construct the Contract strongly in favour of them, as the Policy was provided by Axis.
164Axis submits that the description of “Business Insured” was proposed by Cursio, agents for Linkback. In Divetwo, the court held that the contra proferentem principle was not available where the definition was proffered by the insured’s agent.
165I am satisfied that the description of the business included in the Policy was proffered by Cursio. It accorded with the description in the Business Insurance Risk Analysis submitted by Cursio and the Business Insurance (Property Owners) Proposal form completed by Cursio. It also accorded with the description Ms Mangiafico provided when first seeking the Policy as “very similar to Bunnings”.
166I am not persuaded that the term “Business of the Insured” ought to be construed in favour of Linkback to mean property owners of 380 Hume Highway, where Linkback’s agent identified the tenants as timber and hardware sales for the purposes of the Policy.
167I therefore conclude that, despite the evidence of Ms Mavro and Mr Mavro that they understood the Policy to cover all of the land at 380 Hume Highway, it was, in fact, the intention of the parties to insure only the business of Linkback as a landlord to Dahlsens at 380 Hume Highway.
168The Contract gives effect to this intention.
Rectification
169It follows from my finding that there is no need to rectify the Contract as the plain words of the Contract accurately reflect the intention of the parties.
Orders
170Linkback’s third party claim is dismissed. I will hear from the parties on the question of costs.
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