Westina Corporation Pty Ltd v BGC Contracting Pty Ltd - [2008] WADC 183

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: WESTINA CORPORATION PTY LTD -v- BGC CONTRACTING PTY LTD & ANOR [2008] WADC 183

CORAM: GOETZE DCJ

HEARD: 30 SEPTEMBER-3 OCTOBER 2008

DELIVERED : 23 DECEMBER 2008

FILE NO/S: CIV 451 of 2007

BETWEEN: WESTINA CORPORATION PTY LTD (ACN 095 230 843)
Plaintiff
AND
BGC CONTRACTING PTY LTD (ACN 008 766 407)
First Defendant
BENJAMIN JOHN KEYS
Second Defendant

Catchwords:

Negligence - Collision between two road trains - Damages for written off value of a prime mover - Effect to be given to indemnity agreement on hire of prime mover and operator - Enforcement of indemnity by employee of hirer of prime mover

Legislation:

Property Law Act 1969 (WA)

Result:

Action dismissed

Representation:

Counsel:

Plaintiff:     Mr G R Hancy
First Defendant              :     Mr J R B Ley
Second Defendant         :     Mr J R B Ley

Solicitors:

Plaintiff:     DLA Phillips Fox
First Defendant              :     Greenland Legal Pty Ltd
Second Defendant         :     Greenland Legal Pty Ltd

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

Allied Westralian Finance Ltd v Wenpac Pty Ltd & Ors, unreported; FCt SCt of WA; Library No 950597; 8 November 1995
Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424
BGC Contracting Pty Ltd v Webber & Anor [2005] WASCA 112
Butler v St John of God Hospital [2008] WASCA 174
Chan v Cresdon Pty Ltd (1989) 168 CLR 242
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
Davis v Commissioner for Main Roads (1967‑1968) 117 CLR 529
Doonan v Beacham [1953] 87 CLR 346
Duckrell v Lee [1972] WAR 48
Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114
F & D Normoyle Pty Ltd v Transfield Pty Ltd [2005] NSWCA 193
Government Insurance Office v Fredrichberg (1968) 118 CLR 403
Holloway v McFeeters (1956) 94 CLR 470
Naxakis v Western General Hospital [1999] 197 CLR 269
New South Wales v Tempo Services Ltd [2004] NSWCA 4
Roads and Traffic Authority (NSW) v Palmer [2003] NSWCA 58
Snelgar v Westralia Airports Corporation Pty Ltd [2006] WASCA 83
Speno Rail Maintenance v Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) 23 WAR 291
The Bell Group Ltd (in Liq) v Westpac Banking Corporation [No 9] [2008] WASC 239
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] 165 CLR 107
Wall v Cooper [2008] WASCA 53
Westralian Farming Co-operative Ltd v Southern Meat Packers Ltd & Anor [1981] WAR 241

GOETZE DCJ:

Introduction

For some time prior to March 2005, the first defendant, BGC Contracting Pty Ltd, had a contract with Portman Iron Ore Pty Ltd to transport iron ore from Portman's Mount Jackson and Windarling mine sites to a railway siding at Koolyanobbing. Further, BGC contracted with Portman to maintain Portman's private haul road between the mine sites and Koolyanobbing.
BGC owned a number of prime movers and trailers which were used for the contract to transport iron ore from the Mount Jackson and Windarling mine sites to Koolyanobbing, including a Kenworth C50 prime mover with three trailers. However, it did not have enough prime movers and so, on 19 March 2005, the plaintiff, Westina Corporation Pty Ltd trading as Jamieson Transport, entered into a written agreement with BGC entitled "Plant Hire Agreement".
The hire agreement provided for Jamieson Transport to supply to BGC a prime mover together with a licensed operator for use by BGC in the course of its contract to transport Portman's iron ore from the mine sites to Koolyanobbing. To this end, Jamieson Transport provided a 2004 Mack Titan prime mover and a licensed operator, Hamish Ingold.
On 11 June 2005, at a point along the haul road being approximately 26 kilometres north of Koolyanobbing, the third of three trailers attached to the Kenworth C50 prime mover being driven in a southerly direction by the second defendant Benjamin John Keys, crashed into the 2004 Mack Titan prime mover, being the subject of the hire agreement to which I have just referred. Mr Keys was an employee of BGC.
The Mack Titan prime mover and associated equipment were extensively damaged or destroyed in the crash. Unfortunately, the driver of that prime mover, Mr Ingold, was killed.
Jamieson Transport brings this action to recover the loss of its prime mover and associated equipment alleging that the crash was caused by the negligent driving of the BGC road train by Mr Keys, for which BGC is vicariously liable, and, in the alternative, that BGC failed to properly maintain the haul road.
BGC and Mr Keys deny liability for the crash and BGC denies that it failed to properly maintain the haul road. BGC and Mr Keys further defend the claim by reason that Jamieson Transport provided an indemnity to them for any loss arising from the hiring of the prime mover and its operator.

The crash

The crash occurred at about 8.20 pm on 11 June 2005 during the night shift. On that particular day, the day shift had been cancelled due to excessive rain but, it was deemed safe for the night shift to proceed. It did so proceed.
Mr Ingold, and another driver Dale Teague, had both driven loaded road trains from the mine site to Koolyanobbing. They were each returning in a northerly direction along the haul road to the mine site to collect another load when, at the same time, Mr Keys was driving his prime mover, with three fully laden trailers attached thereto, from the mine site along the haul road, in a southerly direction to Koolyanobbing.
Mr Teague provided a written statement that he was driving in front of Mr Ingold at a distance of approximately 200 to 300 metres and that Mr Ingold, in his road train, was matching the speed of Mr Teague in his road train.
Mr Teague and Mr Keys both saw each other's approaching road train. Mr Keys also saw Mr Ingold's road train behind Mr Teague's road train. Mr Teague and Mr Keys successfully passed each other's prime mover and trailers, but, at some point, before Mr Keys and Mr Teague had fully passed each other's road train, Mr Teague observed that the third trailer of Mr Keys' road train had swayed to the left, off the haul road, and onto its shoulder. Mr Ingold's road train then disappeared out of Mr Teague's sight and into the darkness of the night.
The third trailer of Mr Keys' road train subsequently became out of control, rolled over spilling part of its load, and then, it slid across the haul road into the path of the prime mover driven by Mr Ingold, colliding with it, and killing Mr Ingold.

The claim against Mr Keys for his negligence

The plaintiff alleges that Mr Keys was negligent and that BGC is vicariously liable for that negligence in that Mr Keys:
"12.1.Drove the BGC Truck and/or trailers along, or across, the eastern road edge.
12.2Drove the BGC Truck and trailers in a manner that caused the third trailer to sway and leave the road.
12.3.Drove the third trailer into the path of the Jamieson Truck.
12.4.Failed to travel at a safe speed having regard to the condition of the Road.
12.5.Failed to brake, decelerate, steer or otherwise adequately control or position the BGC Truck or the third trailer on the roadway so as to prevent the third trailer leaving the road way, running out of control and causing the Collision.
12.6.Failed to stop or decelerate, and he continued to drive and he accelerated, when it was the fact that he knew or should have known that the trailer was swaying and travelling on and off the road but he did not know the condition of the third trailer, whether it was on the correct side of the road, or whether by accelerating he could safely keep it on the correct side of the road.
12.7.Continued to drive the BGC Truck and trailers when he was unable to see the edge of the Road or to determine where the truck or its trailers were positioned on the Road."

The plaintiff's claim

The evidence on behalf of the plaintiff was essentially documentary, including:
(a)a written report from Mr Doug Austin, District Inspector of Mines from the Resources Safety Division of the Department of Consumer and Employment Protection;
(b)statements made by Mr Keys to the police in the presence of Mr Austin; and
(c)statements made by Mr Dale Teague to the police in the presence of Mr Austin.

Mr Austin's report and evidence

Mr Austin was contacted almost immediately after the crash and attended at the site thereof on the following day, being 12 June 2005. On 13 June 2005, Mr Austin took statements from a number of witnesses, and was present when the police took statements from Mr Keys and Mr Teague. Mr Austin later travelled to the crash scene, and, as he stated in his report, he "walked through events as recalled by Mr Keys in his statement".
On 14 June 2005, Mr Austin spent a considerable time at the scene of the crash studying it, taking photographs, measuring and recording such ever information as was able to be garnered from that scene. Likewise, Mr Austin attended at the crash scene on 15 and 16 June 2005. He requested that a survey of the crash scene be carried out and drawings compiled. A copy of the plan and an enlargement thereof were tendered in evidence. Various photographs are included in Mr Austin's report.
The plan depicts what can be seen in the photographs and relevant primary facts can be observed in the photographs.
Photograph 15 in Mr Austin's report shows a guide or marker post on the edge of the haul road delineating that road from the shoulder, which can be seen to slope away from the haul road to form a drainage channel before rising again into the bush. Photograph 15 shows the left wheel trace from the third trailer drawn by Mr Keys' prime mover at 450 metres from the point of collision. The wheel trace in photograph 15 is adjacent to the marker post.
Photograph 16 shows the third trailer wheel trace at 300 metres from the collision scene. That left wheel trace is at the left edge of the road.
Photograph 17, being a photograph taken approximately 230 metres from the crash site, shows a road edge marker and the left wheel trace from the third trailer. Although Mr Keys drove his prime mover on the road past the marker post, the third trailer left a wheel trace which appears to be on the shoulder side of the road, but which then swayed back onto the haul road to successfully negotiate the marker post.
Photograph 18 shows a continuation of the third trailer wheel trace on the haul road shoulder at approximately 180 metres from the crash scene with the trailer then having gouged a prominent wheel rut into the soft shoulder of the haul road approximately 140 metres from the crash site. The soil is quite disturbed and photograph 19 shows the wheel trace leading directly into this prominent wheel rut to which I have referred. Mr Austin thought it "reasonable to conclude that the rut was formed by the left side rear wheels of the trailer".
Photograph 20 is a closer photograph of the prominent wheel rut measured to be 27 metres long at a depth of 0.05 of a metre with two lumps of hard, protruding rock, about 7.5 metres apart. Those rocky outcrops are shown in photographs 20 and 21.
Photograph 22 indicates that the third trailer from Mr Keys' unit continued to move further off the road until all of the trailer's wheels were in the drainage channel as evidenced by the wheel traces of both the left side and right side wheels depicted in that photograph.
Photograph 23 reveals part of the third trailer's load to the north of the crash site and largely in the drainage channel. It can be inferred from the load seen on the haul road and on the shoulder that the trailer had overturned. Photograph 24 then shows the third trailer in its resting position after the crash. Photograph 6 shows Mr Ingold's road train after the crash.
It can be further inferred from these photographs that the third trailer of Mr Keys' road train "boomeranged" from its overturned position in photograph 23, out of the drainage channel and across the haul road. The underside of it then moved into the path of the prime mover driven by Mr Ingold and collided with it, as can be seen from photograph 13 revealing fragments of the cabin from Mr Ingold's prime mover on the underside of Mr Keys' overturned third trailer. The remainder of the iron ore from that trailer was then largely spread out on the haul road, as can be seen from photograph 24.
Photograph 27 shows that the haul road is wide enough to accommodate three trucks side by side, although clearly from that photograph, it would not be advisable for three trucks to attempt to pass each other simultaneously. Photograph 28 shows two trucks side by side on the haul road, indicating that there is ample room for two trucks to pass each other, with safety, when travelling in opposite directions, without the need to be too close to marker posts delineating the edge of the haul road from the shoulder.

Evidence from Mr Keys

The haul road and "dog wagging"

Mr Keys gave oral evidence that the haul road was constructed of compacted gravel. He said that the shoulder was made of excess gravel and mud and sloped away from the road as can be seen from the photographs to which I have referred, such that there was a drainage channel on either side of the haul road.
Mr Keys also said that there was a significant difference between the appearance of the haul road and the shoulder in both texture and colouration during daylight, however at night, "it looks as one". He was aware that the shoulder was "too soft" to drive on and that because of the recent rain, the shoulder may have been "more softer" than usual. He therefore would neither attempt to drive, nor park, on the shoulder. His concern was "getting bogged".
Mr Keys did not have any problem in seeing the marker posts at night. On high beam, they could be seen from a distance of between 100 and 150 metres and on low beam they could be seen from approximately 50 metres. He also indicated, that, when passing an oncoming road train, he would aim to pass as close to the marker posts as he possibly could "without running them down". The reason for this was to leave the oncoming vehicle with as much room to pass as possible.
Mr Keys indicated that the BGC trucks were able to drive at a speed limit of up to 90 kilometres per hour, whilst the Jamieson Transport trucks were able to travel up to a speed of 70 kilometres per hour.
Importantly, Mr Keys was aware, that, the third trailer on haulage units may sway from side to side, especially on dirt roads. If that sway were to eventuate, then, in normal conditions, he would accelerate so as to cause the third trailer to come back into line with the rest of the unit. Braking might cause the trailer to slide and/or roll over. He knew that the third trailer is commonly referred to as the "dog" trailer, because, like a dog's tail, it would "wag". Indeed, it is common ground that this sway, or the potential for this sway, is well known to the drivers of road trains.
In cross‑examination however, Mr Keys indicated that he knew he should not drive off the edge of the road. He did not however, necessarily believe that he should not drive along the edge of the road. To the best of his knowledge, the edge of the road was delineated by guide posts. He also said that he should leave room between his truck and those delineators.
Driving on the shoulder was something Mr Keys said he would never do and he would not drive in such a manner that the third trailer might go onto the shoulder.
Further, in cross‑examination, Mr Keys gave evidence that if the third or dog trailer were to go into the shoulder, then, it could become bogged and then it would be at risk of overturning. That could possibly also cause the second trailer to overturn. It could also be the case, that, the driver could lose control of the third trailer and then, as Mr Keys put it, "I don't know what could happen". He also conceded that if the trailer were to venture into the shoulder, and "start to sink" then, it is possible that that could also cause sway.
Mr Keys then went on to say that there a number of ways in which a trailer can sway into the shoulder, including:
(a)the driver positioning the prime mover, and hence the trailers, too close to the edge of the road;
(b)the driver performing a moving manoeuvre;
(c)a combination of speed and direction of movement; and
(d)other reasons, such as mechanical failure, movement of the product being transported in the trailers and road conditions.

Details of the crash

Mr Keys gave oral evidence that he was travelling in a southerly direction approaching the crest of a hill when he saw the oncoming headlights of a truck driven by Mr Teague. Accordingly, he manoeuvred his truck to the left using a marker post as a guide. He said that he "lined myself up to the edge of the road". The manoeuvre to his left was a slight movement to gradually bring his prime mover and trailers to the left. The haul road was straight.
As Mr Keys passed Mr Teague in their respective road trains, Mr Keys felt a "slight jerking" motion. By this time, he had slowed his road train to about 50 kilometres per hour whereas, going up the crest of the hill, he had been travelling at about 75 kilometres per hour.
Mr Keys had not previously experienced this "slight jerking motion". He "felt it was like a flat tyre". He began to accelerate because the engine "may have just started to labour". This occurred just as he passed Mr Teague in his unit. The jerking movement then ceased.
The jerking motion then started again after two seconds and after he had passed Mr Teague's road train when Mr Keys was approximately half way between the road trains of Mr Teague and Mr Ingold, which, Mr Keys said, were about 150 metres apart.
As he approached Mr Ingold's prime mover, Mr Keys looked to the left of the road, rather than into the head lights of Mr Ingold's prime mover. Nonetheless, Mr Keys was aware of Mr Ingold's headlights. He could not see the edge of the road. He thought that he was adjacent to or beside the marker post on the haul road and that that included the whole road train. He looked in the rear view mirror. This should have enabled him see a flash of the side lights on his rig. He believed that he may have seen his third trailer on the shoulder of the road, but only for a brief second, when he felt a slight nudging motion. He thought that a tyre may have become loose and have become tangled in the wheels. He heard a slight thud. He brought his prime mover and trailers to a halt, over a distance of approximately 50 metres. He then exited the prime mover, saw the resulting devastation and radioed for help.

Evidence from statements of Mr Dale Teague

Mr Teague did not give oral evidence, but, written statements by him were tendered into evidence.
In his employee statement dated 12 June 2005, Mr Teague indicated that he went past a BGC truck and noticed Mr Keys' "dog trailer doing a bit of wagging".
In his statement dated 13 June 2005, Mr Teague said that "at first (he) thought (Mr Keys') truck was too far over to the left and wondered if he was on the road. Just before they passed each other, (Mr Teague) saw the other truck pass a guide post and realised he was not as far over as (he had) thought. As he got towards the dog trailer of the other truck, (he) noticed the dog trailer appeared to be slipping off the road. (He) then saw the dog trailer slide looking in my mirror again".
In his statement dated 23 September 2008, Mr Teague said that Mr Ingold was travelling approximately two to three hundred metres behind him and that Mr Ingold was matching Mr Teague's speed in their respective prime movers and trailers.
His statement goes on to record that he saw two oncoming road trains, the second of which was that operated by Mr Keys. Mr Teague says that his truck was positioned on the west side of the haul road travelling north "and approximately two feet from the marker pegs on the west side of the road". As he approached the road train driven by Mr Keys, he "thought it was too far over to the east side of the road and wondered if it was on the road". He saw it "pass a guide post on the east side of the road". It seemed to Mr Teague that Mr Keys' prime mover was "very close to the guide post on the side of the road". As he passed Mr Keys' road train, that road train "looked to me as if it had moved towards the centre of the road". He could not see its side lights, but the third trailer of Mr Keys' road train "appeared to be off the road". Indeed, this appeared to be the case after the two road trains had passed each other. Further, Mr Teague "saw the dog trailer (of Mr Keys' road train) swinging out towards the marker pegs on the east side of the road" and he "saw the dog trailer off the road and in the slushy section on the east side of the road".

After he passed Mr Keys' road train, Mr Teague looked in his rear vision mirror and saw the head lights of Mr Ingold's prime mover. When he next looked, he could not see those head lights. He then received a radio call for help. He returned to the scene and found that the crash had occurred.
On 1 October 2008, Mr Teague provided a further statement indicating his belief that "the guide posts were approximately one to two feet to the left of what (he) thought was the edge of the road".

Findings

Mr Ley, counsel for the first and second defendants, submitted that nothing in the evidence of Mr Keys, or in his statement to the police, suggested that his driving was at fault. Mr Ley submitted that Mr Keys believed he had suffered a blown tyre and that there were only a few seconds between the realisation that something was amiss and the crash occurring. Accelerating, which is a usual procedure, momentarily resolved the problem but, as is now known to be the fact, the third trailer went off the road into the shoulder, rolled over and collided with the prime mover driven by Mr Ingold.
The oral evidence given by Mr Keys as to the circumstances of the crash is quite different from the detail of his written statements. The written statement provided by Mr Keys to the police in the presence of Mr Austin is curious in that whilst Mr Keys gave evidence that he believed he made that statement after having attended at the crash scene, Mr Austin's report at pp 8 and 11 indicates that it was made before that attendance.
This issue of when the statement of Mr Keys was made only arose after Mr Austin had given his evidence and whilst Mr Keys was being cross examined. This written statement is in effect consistent with a reconstruction of events after investigation by Mr Keys, which necessarily involved an inspection of the crash scene, or at least, a detailed briefing thereon. Alternatively, it could be the truth, but whatever the position, there are differences between that statement and Mr Keys' oral evidence. However, it does not seem to be necessary to resolve those differences because, in his oral evidence, Mr Keys indicated that:
(a)he knew where the edge of the road separated into the shoulder;
(b)he lined his prime mover up to the edge of the road;
(c)he knew that the shoulder of the road was much softer than the haul road itself;
(d)he should not drive on the shoulder;
(e)the third trailer can naturally sway, especially on dirt roads;
(f)he should not drive so that the third trailer might go onto the shoulder;
(g)if the third trailer went onto the shoulder, it could be bogged and then it was at risk of overturning;
(h)the second trailer could then possibly be "brought down"; and
(i)he could lose control and then he did not "know what could happen".
Mr Ley submitted that contrary to the reasons of Martin CJ in Wall v Cooper [2008] WASCA 53 at [5], nothing was put to Mr Keys that there was anything negligent with his driving. It was not put to Mr Keys that he should have braked in order to stop and thereby avoid the crash.
However, the cross‑examination of Mr Keys by Mr Hancy, counsel for the plaintiff, commenced with Mr Keys indicating that he knew he should not drive his road train into the shoulder and that he knew that it was natural for the dog trailer to sway. He also knew the edge of the road was delineated by the marker posts and that it was therefore necessary to leave a gap between those marker posts and his road train when passing them.
Further cross‑examination revealed, as I have outlined above, what can happen when the dog trailer travels into the shoulder of the road, including that the trailer could be bogged, possibly the second trailer could be "brought down", control could be lost and "I don't know what could happen". Mr Keys would never drive on the shoulder, or allow the trailer onto the shoulder. Mr Keys conceded that the dog trailer can leave the road and pass into the shoulder if the prime mover, and hence the trailer, are driven too close to the edge of the road and sway occurs. There can be any number of natural reasons why such sway might occur.
Mr Ley further submitted that, the photographs to which I have referred might well indicate that the dog trailer "wagged", but the reason for that "wagging" is not known, and nor is the reason why there was more sway than Mr Keys expected. Mr Ley then submitted that none of this suggests negligence on the part of Mr Keys, whose concern was to keep his prime mover in the correct position, so that he could successfully pass Mr Teague and Mr Ingold.
However, the correct position of the prime mover surely could not have been on the edge of the haul road or so close to it, that, if sway or wagging occurred to the left, then, the dog trailer would necessarily move into the shoulder where Mr Keys conceded it should not be.
Mr Ley submitted that this crash was the "confluence of unfortunate circumstances", including unfortunate timing of Mr Ingold's presence and the fact, that, the section of the road where the crash occurred was unusually soft and moist.
However, softness and moisture of the haul road and shoulder was a factor known to Mr Keys and that seems to be a compelling reason to ensure that the prime mover was driven in a safe position on the haul road at all places to allow oncoming road trains to pass and further, to ensure that if sway occurred, then, it did not progress onto the shoulder.
In his statement to the police dated 13 June 2005, Mr Keys said that he noticed "some water in the drainage". Mr Ley submitted that at 230 metres from the crash site, the road did not support the road train because of moisture and that is the reason for the drift of the dog trailer into the shoulder. Mr Ley referred me to p 47 of Mr Austin's report which reads, inter alia, as follows:
"It was clear from the deep wheel rut formed by the left wheels of the trailer as it left the haul road pavement that the embankment formation was of softer material when compared with the pavement. The embankment (drain batter) forms a part of the side drain that is typically about 6 m wide and 300 mm deep. The drain batter is not designed for heavy vehicle passage and has not been compacted to support any load."
It is clear, that, the wheel rut occurred off the haul road pavement and on the shoulder of the road, being in the drain batter. It is also apparent from the photographs that at least the left rear wheels of the third trailer had "swayed" into the shoulder before the wheel rut occurred.
The point however seems to be that Mr Keys positioned his prime mover at "the edge of the road", such that if any sway to the left occurred, as it did, then, the third trailer would necessarily sway into the "too soft" or "more softer" than usual shoulder. In referring to this softness, Mr Keys was not alluding to that section of the haul road where the crash occurred. Rather, he was talking of the haul road in general. But it was the presence of the trailer on this soft shoulder that could lead to the unknown. As Mr Keys put it, he did not "know what could happen".
Mr Ley also submitted that there was no expert evidence with respect to lateral movement and therefore I should not infer negligence by reason of there being what he described as "clear lateral movement to the left" but, he said such occurred absent any negligence. That can be accepted, but the problem was, as I have noted, that the sway to the left was, of necessity, into the shoulder once Mr Keys positioned his prime moved on the edge of the road.
Mr Ley also submitted, that, there must be evidence to allow me to draw any inference of negligence and this is a case in which he submitted that the there are other inferences which are open to be drawn and indeed, the inference that Mr Keys was negligent is not the most compelling inference to be drawn.
Mr Ley relied upon the decision of Duckrell v Lee [1972] WAR 48 for the proposition that the photographs may allow an inference to be drawn as to the movements of the road train driven by Mr Keys, but such photographs do not allow an inference to be drawn about the conduct of Mr Keys. Burt J, as he then was, said in that case at p 50:
"All that one knows is what one can infer from the marks left by the vehicle on the road, but if one reaches that point, you may then by legitimate inference be able to say how the vehicle as a physical object behaved – if I can use that word with reference to an inanimate object – but that does not, I think, in the particular circumstances of this case, enable one to draw any legitimate inference as to the quality of the behaviour of the driver as a driver, and it would not enable one to sustain the conclusion that he had been guilty of careless driving within the meaning of the section".
However, that was a prosecution for a traffic matter in which the criminal burden of proof applied. In the instant case, involving a civil claim, there is the evidence of the photographs showing that left and right rear wheels of the third trailer of the road train driven by Mr Keys were off the haul road and on the shoulder. There is also evidence from the statements of Mr Teague to that effect. He "saw the dog trailer swinging outwards towards the marker pegs" and "in the slushy section on the east side of the road". I take this to be a reference not just to the shoulder, but into the drainage channel of the shoulder. His use of the word "slushy" is consistent with the recent rainfall and Mr Keys' evidence of the shoulder being soft. The shoulder was, after all, a drainage channel.
There is also here the evidence of Mr Keys himself that he lined his prime mover up to the edge of the road and that he knew that the dog trailer can sway naturally. Further, that it is appropriate to leave a gap between the road train and the marker posts. Further still, he said that the dog trailer can go into the shoulder by driving too close to the edge of the road and that if the dog trailer does go onto the shoulder, control can be lost and "then I don't know what could happen".
Mr Hancy submitted that it was not necessary to show the precise negligence or the way in which the crash occurred. First, he relied on Doonan v Beacham [1953] 87 CLR 346 at 351 for the following passage approving the reasons for decision of Smith J in the Full Court of the Supreme Court of Victoria from which the appeal was brought, in that case:
"A plaintiff in an action for damages for negligence must, it is true, make out his allegation for negligence within the limits of the particulars he has furnished, and any amendments thereto which he may be given leave to make. But if he adduces evidence upon which the jury can properly find, on the balance of probabilities and as a matter of reasonable inference, that the damage was caused by negligence on the part of the defendant which must have taken some form falling within the scope of the particulars, I do not think that it is an answer in law to his claim that the evidence does not enable the jury to find more specifically the nature of the defendant's negligence."
Secondly, Mr Hancy relied upon Holloway v McFeeters (1956) 94 CLR 470, being a case involving circumstantial evidence. At p 480, in the reasons of Williams, Webb and Taylor JJ it was stated that:
"Inferences from actual facts that are proved are just as much part of the evidence as those facts themselves. In a civil cause 'you need only circumstances raising a more probable inference in favour of what is alleged … where direct proof is not available it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference; they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is a mere matter of conjecture: see per Lord Robson, Richard Evans & Co Ltd v Astley (1911) AC 674 at p 687.
Mr Hancy further relied on Government Insurance Office v Fredrichberg (1968) 118 CLR 403 at 407 and 413 to support his submission that negligence can be inferred from the movement of the third trailer off the road from its position of being in the centre of the road when Mr Keys travelled over the crest of the highway.
In my view, I simply do not have any or any sufficient evidence to show that Mr Keys was negligent when he moved his road train from the centre of the road as he passed over the crest of the hill to the left of the haul road. There is no expert evidence. However, it seems logical that absent oncoming vehicles, drivers of road trains may well drive in the centre of the road and then to move their vehicle to the left to enable passing vehicles to pass safely as and when required, without negligence.
It is indisputable that the third or dog trailer of Mr Keys' road train did sway to the left. Initially its two left wheels and then subsequently, its two right wheels, entered onto the shoulder of the haul road prior to the crash.
It is further the fact that Mr Keys said in his evidence in chief, "I lined myself up to the edge of the road". In cross examination, he said that he knew he should not drive off the edge of the road, although he did not, however, necessarily believe that he should not drive along the edge of the road. This seems to be contradicted by his evidence that he should leave a gap between his road train and the delineators.
It is also conceded by Mr Keys that he knew that there can be natural sway of the third trailer and that he knew that the shoulder of the haul road was soft and should not be driven on.
It seems to me, that, by reason that there can be natural sway of a dog trailer or a third trailer on a road train then, a reasonably competent operator should make allowance for that natural sway when driving, especially when on a dirt road. The reasonably competent operator should not drive on the edge, or so close to the edge, of the road by reason that if such natural sway were to occur, and if it were to occur to the left, then that would necessarily result in the trailer entering the shoulder, as in this case, which shoulder was known to Mr Keys to contain some water and be "too soft" for safe driving purposes. That is because a reasonably competent operator might not, in those circumstances, be able to take evasive action, such as accelerating, in order to overcome the sway, before the third trailer swayed so far as to be off the road pavement and on the shoulder in what would be a potentially dangerous situation, as ultimately happened here. The reason is obvious. As Mr Keys put it, "possibly I could lose control and then I don't know what could happen".
Thus, Mr Keys' act of having lined his road train "up to the edge of the road" amounts to a negligent act which was the primary cause contributing to the crash, even if the sway into the drain was a natural event without negligence. But it was the positioning of the prime mover on the edge of the road which is the relevant starting point.
This then seems to fit within particular 5 of the particulars of negligence in that Mr Keys "failed to … position the BGC truck or the third trailer on the roadway so as to prevent the third trailer leaving the roadway, running out of control and causing the collision". This does not require me to draw any inference at all.
However, if necessary, the inference of negligence in this case can be based on the pleaded particulars of negligence as a whole and drawn from the facts as I have found them to be. Such inference is not merely speculation or conjecture, following Kirby J in Naxakis v Western General Hospital [1999] 197 CLR 269 at 289 from p 21, in which he said that:
"A distinction was drawn between inferences (which may be properly drawn from the facts) and mere conjecture or speculation (which is not permissible)."
Referring back to Doonan v Beacham, (supra) at p 351, I:
"find, on the balance of probabilities and as a matter of reasonable inference, that the damage was caused by negligence on the part of (Mr Keys) which must have taken some form falling within the scope of the particulars".
I do not know whether the sway was caused by the manoeuvre to the left from the centre of the road or by natural causes. As mentioned, there has been no expert evidence as to the movement from the centre of the road causing sway, if it did sway, and nobody gave any evidence as to the cause of the third trailer being in the shoulder. Mr Teague only saw the third trailer off the road in the shoulder area. The photographs reveal that the trailer had been in the shoulder area. However, it has not been proved what caused the sway, but it does not appear to matter. What is important is where Mr Keys positioned his prime mover in the circumstances of the haul road, its edge and, as he knew it to be the fact, the "slushy" or "too soft" shoulder into which he should not allow the trailer to pass, such that if and when sway occurred, and if it was to left and into the shoulder, that could foreseeably lead to the crash.
I therefore find Mr Keys to have been negligent and that BGC is vicariously liable for the negligence of Mr Keys at its employee.

The claim against BGC for its negligence.

In case I am wrong on the claim against Mr Keys, I will deal with the alternative claim against BGC, that, if Mr Keys was not negligent, then BGC was negligent. The particulars of that claim are as follows:
"14.1Failed to ensure that the Road edge was sufficiently delineated by markers or otherwise;
14.2Failed to ensure that the lighting from headlights of prime movers and spacing between markers were sufficient to ensure that a prime mover driver could identify the edge of the Road and keep all of his road train on the Road at all times;
14.3Failed to ensure that road edges and shoulders were sufficiently compacted to ensure that a road train or trailer that crossed the Road edge did not sink into soft ground and run of control;
14.4Failed to provide Keys with a prime mover that shone its headlights a sufficient distance ahead and failed to position road markers so as to enable him to keep in view at all times the markers that delineated the edge of the Road;
14.5Re‑opened the Road and caused haulage to resume when:
14.5.1the Road edge was not sufficiently delineated by markers or otherwise;
14.5.2the lighting from headlights of Key's prime mover and spacing between markers were sufficient to ensure Keys could identify the edge of the Road and keep all of his road train on the Road at all times;
14.5.3at the location of the Collision a driver was not able sufficiently to determine where the edge of the Road was;
14.5.4the road shoulders were sufficiently compacted to ensure that a road train or trailer that crossed the road the Road edge did not sink into soft ground and run out of control."
The plaintiff did not provide any expert evidence to assist in the resolution of this claim.
As to particulars, 14.1, 14.2, 14.4 and 14.5.1 – 14.5.3 inclusive, there was evidence in Mr Austin's report of complaints by BGC drivers that the road trains flicked up dirt which covered the marker posts from time to time and which prevented them from being seen by drivers from a distance. However, BGC had a squad of workers whose task it was to clean the marker posts as and when required.
Mr Keys did not have any difficulty in seeing the marker posts. There is no evidence as to what distance, or where, the marker posts should have been spaced at or positioned. There is no evidence as to what the proper headlight requirements were for prime movers. There is no expert evidence to assist.
As to particulars 14.3 and 14.5.4, it is common ground that drivers should not drive on the shoulder. Mr Austin's report at pp 47 and 48 supports this as I have noted above. Further testing of the road edges and shoulders set out in Mr Austin's report does not demonstrate any negligence with respect to construction of the haul road.

None of the particulars are made out. The result is that this claim is dismissed.

Damages

The plaintiff's claim is the sum of $313,697.03 from 30 September 2008 plus interest accruing at $51.57 per day as set out in the plaintiff's amended schedule dated 30 September 2008.

Indemnity

The defence pleads that the terms of the written hire agreement dated 19 March 2005 require Jamieson Transport to indemnify BGC against loss arising out of the hiring of the 2004 Mack Titan prime mover and licensed operator.
Apart from a copy of the hire agreement being tendered into evidence, no other evidence was led in respect of this issue.
I have already outlined the general nature of the contract between Jamieson Transport and BGC and the purpose for which the 2004 Mack Titan prime mover and licensed operator were hired. A more detailed review is now required. Relevant terms are as follows:

"SCHEDULE

Provided by:

Costed to:

4.     Equipment Responsibilities

BGC

SUP

BGC

SUP

Mobilisation $

X

X

          Location:

Demobilisation  $

X

X

            Location:

Fuel LF/LP

X

X

Minor Repairs      $         Per

X

X

Major Repairs

Tyre/Track Maintenance (Fair wear & tear)

Estimated Tyre Hours

GET

Parent Bucket (Fair wear and tear)

Daily Servicing & Top Up Oils

X

X

Major Servicing

X

X

Insurance Plant/Equipment

X

X

Provided by:

Costed to:

5. Personnel Responsibilities

(Labour/Wet Hire)

BGC

SUP

BGC

SUP

Accommodation and Messing

X

X

Travel to/from site

X

X

Public Liability insurance

X

X

Workers Compensation Insurance

X

X

Income Protection and/or Journey Insurance (if req'd under the head contract)

X

X

Have BGC HSE requirements been issued?

YES/NO

Evidence of insurance sighted

YES/NO

Note: A copy of the insurance certificate is to be provided to BGC

1.DEFINITIONS
…
Wet Hire:Means the hire of Plant with operator
…
3.WARRANTY
The Supplier warrants that the Plant is in sound mechanical condition capable of safe operation and complies with all relevant legislation, regulations, safe operating requirements affecting the use of such Plant and the Supplier agrees to defend, indemnify and hold BGC harmless against any injury, death, claim or other such loss arising out of the use of the Plant by BGC except to the extent caused by BGC's willful (sic) conduct.
9.WET HIRE
Where the Plant is hired on a Wet Hire basis, the Supplier shall:
(a)Provide a properly trained and appropriately licensed operator fully experienced in the sale operation of the Plant for the purpose it is hired; and
…
(e)Bear the risk of loss in the hiring of the Plant and must defend, indemnify and hold BGC harmless against any injury, death, claim or other loss arising from the hiring other Plant; and
…"

In reality, this wet hire agreement is a haulage contract in which Jamieson Transport supplied the prime mover and a licensed operator who thereby retained at least some independence as a subcontractor and therefore a degree of control over that prime mover.
This situation is to be contrasted with a dry hire arrangement, in which only the relevant equipment is hired. That would be a true hire agreement. In the case of the dry hire of a prime mover, a BGC driver would drive the prime mover and only be subject to instructions from BGC, without any independence or resort to Jamieson Transport.
The provision of the licensed operator therefore involved more than the provision of a mere driver and cl 9(e) of the wet hire agreement should be understood in that context.

Interpretation of the indemnity clause

First, I note that the wet hire of this prime mover and licensed operator was for work in a mine and on a private haul road where accidents can and do happen. In any given situation, such an accident could, arguably, have been caused by the negligence of employees of Portman, BGC or Jamieson Transport or any other on‑site subcontractors resulting in loss to Jamieson Transport.
Examination of the BGC hire agreement, which is in the style of a standard form, reveals that Jamieson Transport was required to insure for public liability, workers' compensation and income and/or journey protection, in addition to undertaking other expenses outlined in the Schedule above. Importantly, Jamieson Transport was required to insure its own prime mover.
The wet hire agreement by cl 9(e) required Jamieson Transport to first, "Bear the risk of loss in the hiring of the Plant", and then, secondly, to "indemnify and hold harmless BGC against any injury, death, claim or other loss arising from the hiring of the Plant".
Mr Ley submitted that any consequential loss from the crash is a "loss arising from the hiring of the Plant" within cl 9(e) of the hire agreement, such that Jamieson Transport should indemnify BGC for the loss for which I have now found BGC to be vicariously liable to Jamieson Transport in respect of the negligence of Mr Keys.
Mr Hancy however, submitted that sole cause of the loss is Mr Keys' negligence and that cl 9(e) does not specify that Jamieson Transport is to indemnify BGC for its operator's negligence. Therefore, the indemnity does not apply.
Mr Hancy further submitted that the term "hiring of the Plant" necessarily incorporates into it the operation thereof by the licensed operator provided pursuant to the wet hire agreement. He further submitted that cl 9(e) is only able to be invoked if the Jamieson Transport licensed operator was negligent.
Mr Hancy also submitted that cl 9(e) is ambiguous and that that ambiguity should be interpreted in favour of Jamieson Transport, such that Jamieson Transport should not be held liable to indemnify BGC for the negligence of its driver, Mr Keys.
It is therefore necessary to determine the proper construction of cl 9(e) of the hire agreement. To that end, counsel referred to various authorities.
Both counsel referred to Canada Steamship Lines Ltd v The King [1952] AC 192 at 207 – 208 in which the House of Lords said that:
"Their Lordships think that the duty of a court approaching the consideration of such clauses may be summarized as follows:
(1)If the clause contains language which expressly exempts the person in whose favour it is made (hereafter called 'the proferens') from the consequence of the negligence of his own servants, effect must be give to that provision. Any doubts which existed as to whether this was the law in the Province of Quebec were removed by the decision of the Supreme Court of Canada in The Glengoil Steamship Company v Pilkington.
(2)If there is no express reference to negligence, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence on the part of the servants of the proferens. If a doubt arises at this point, it must be resolved against the proferens in accordance with article 1019 of the Civil Code of Lower Canada: 'In cases of doubt, the contract is interpreted against him who has stipulated and in favour of him who has contracted the obligation.'
(3)If the words used are wide enough for the above purpose, the court must then consider whether 'the head of damage may be based on some ground other than that of negligence' to quote again Lord Greene MR in the Alderslade case. The 'other ground' must not be so fanciful or remote that the proferens cannot be supposed to have desired protection against it, but, subject to this qualification, which is, no doubt, to be implied from Lord Greene's words, the existence of a possible head of damage other than that of negligence is fatal to the proferens even if the words used are, prima facie, wide enough to cover negligence on the part of his servants."
Both Mr Hancy and Mr Ley referred to Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 510 in which it was said that:
"… the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity."
Mr Hancy submitted that I was bound to follow the third guideline in the Canada Steamship case pursuant to Allied Westralian Finance Ltd v Wenpac Pty Ltd & Ors, unreported; FCt SCt of WA; Library No 950597; 8 November 1995 in which Rowland J (with whom Franklyn and Walsh JJ agreed) said that:
"In the result, it seems to me that the principles set out in the Canada Steamship case are not in tension with the general rule set out in the Darlington Futures case."
Mr Ley disagreed and submitted that it is difficult to now accept the decision of Rowland J as being correct given the High Court's decision in Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424 in which the joint judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ said at [17]:
"The proper construction of [the indemnity clause] cannot be undertaken without reference to the principles of construction applicable to contractual indemnities. The starting-point is the decision of this Court in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 561 as follows:
'At law, as in equity, the traditional view is that the liability of the surety is strictissimi juris and that ambiguous contractual provisions should be construed in favour of the surety. The doctrine of strictissimi juris provides a counterpoise to the law's preference for a construction that reads a provision otherwise than as a condition. A doubt as to the status of a provision in a guarantee should therefore be resolved in favour of the surety.' "
Their Honours then referred to Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 256 and they
"described the statement in Ankar set out above as evidencing a 'settled principle governing the interpretation of contracts of guarantee' ".
In Andar, at [29] their Honours also said that in respect of ambiguity arising from indemnity clauses:
"the principles of construction outlined earlier in these reasons require the provisions to be construed in favour of"
the party providing the indemnity.
Andar was essentially resolved by reference to the contract itself in that case. Brambles sought indemnity for its negligent act, but Andar was not to indemnify Brambles for cases attributable to Brambles' own negligence. The majority reasons concluded that the "liability for which Brambles now seeks an indemnity clearly falls within that limitation" ie, of negligence as set out in the indemnity clause ‑ see [15] and [28]. After dealing with the contract itself, the majority reasons went on to say at [29]:
"Finally, to the extent that cll 8.2.2 and 8.2.3 remain ambiguous, the principles of construction outlined earlier in these reasons require the provisions to be construed in favour of Andar."
Kirby J came to the same result as the majority basing his decision on facts relevant to that case. Callinan J dissented, rejecting the submission that the "contra proferentum rule [had] any role to play" – see [122]. He quoted the above passage from the Darlington Futures case and went on to say at [123] that "Andar was not a case of ambiguity of language in a contract".
Andar's case has been referred to in Snelgar v Westralia Airports Corporation Pty Ltd [2006] WASCA 83 at [84] per Steytler P, and followed in F & D Normoyle Pty Ltd v Transfield Pty Ltd [2005] NSWCA 193, BI (Contracting) Pty Ltd v A W Baulderstone Holdings Pty Ltd [2007] NSWCA 173 and Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114.
In F & D Normoyle, Ipp JA said at [60] that the decision in the Darlington Futures case referred to above "must now, in relation to indemnity clauses, yield to what was said in Andar". McColl JA agreed. Bryson JA followed the decision in the Darlington Futures case – see [141] – [142].
In BI (Contracting), Beazley JA, with whom Tobias and Bell JJA agreed, said at [29] that the majority approach in Andar as:
"to the construction of the indemnity clause was first to construe the clause strictly in the context of the contract as a whole and, to the extent that there remained any ambiguity, to construe the indemnity in favour of the proferens."
In Erect Safe, Giles JA at [11] followed Andar. Basten JA said at [30] that:
"Although, as will be noted below, there have been suggestions that Ankar and Chan as followed in Andar Transport, turned away from the principles stated in Darlington Futures, that seems unlikely to be correct. Not only was no such suggestion to be found in any of the later cases, but the hearings in Darlington and in Ankar were within a month of each other and the Court was constituted by the same members, three of whom were also in the majority judgment in Chan and four of whom were in Dickinson v The Motor Vehicle Insurance Trust (1987) 163 CLR 500, to which reference will be made below.
[87]The authorities stating the principles to be applied in construing an indemnity require that ambiguity be resolved in favour of the surety, but do not require that ambiguity be detected where the natural and ordinary meaning of the language, taken in its contractual context, requires no such conclusion."
At [149], McClellan CJ at CL referred to the reasons of Giles JA in Roads and Traffic Authority (NSW) v Palmer [2003] NSWCA 58 noting his comments that parties can agree as to risk allocation and that allocation of risk can be affected by insurance. Further, that an indemnity can extend to a liability caused by the negligence of an indemnified party. There can also be a difference in approach to an indemnity clause between a party's liability caused by its own act or neglect and liability incurred by reason of an indemnity upon the performance of the subject contract.
Ultimately however, McClellan CJ said:
"[154]The resolution of any disagreement about a particular clause in a contract must be approached by considering the terms of the relevant document. Although the resolution of disputes in other cases may provide guidance, each dispute must be resolved by the application of the accepted principles of construction to the particular contract."
It is necessary then to apply these principles to the wet hire agreement so as to construe the words of cl 9(e) by their natural and ordinary meaning strictly, in the context of the whole wet hire agreement. And here, that context is to be viewed in the factual scenario of a mine site and haul road which give purpose to, and reason for, the terms of that agreement.
The contractual context is that BGC required Jamieson Transport to provide insurance, not just for public liability, but also to insure its own prime mover and thereby, to recover "any loss" so caused by reason of the indemnity to BGC. Presumably, the cost of that insurance was a factor considered by Jamieson Transport in agreeing the tonnage rates for the transport of iron ore by it for BGC.
In this way, the parties expressly required Jamieson Transport to "Bear the risk of loss in the hiring of the Plant" and they allocated the cost of that risk of liability to Jamieson Transport.
It should also be observed, that, the requirement of Jamieson Transport to "Bear the risk of loss in the (wet) hiring of the Plant" necessarily dictates that Jamieson Transport was to bear:
"plainly enough, the whole risk of [its] carrying out the contract. That risk extends to the causing of damage to the property or person of a third person, to the property of (BGC) as well as to the receipt of damage by (Jamieson Transport itself) and (cl 9(e)) specifically include(s) various categories of such damage."
See Menzies J in Davis v Commissioner for Main Roads (1967‑1968) 117 CLR 529 at 533.
Further, it is not necessary in a case such as the present to determine why a party enters into a contract. In F & D Normoyle, Bryson JA commented at [144] that:
"Courts have when applying indemnity clauses sometimes found it difficult to suppose and difficult to conclude that one party to a contract should intend to indemnify the other party from the consequences of the indemnified party's own negligence."
He then referred to Davis v The Commissioner for Main Roads (supra) at 536 – 537 in which Menzies J, with whom Barwick CJ and McTiernan J agreed, rejected an argument that indemnity should not be provided to a negligent party. It was "plain from its language" that the relevant clause in that case so provided an indemnity for the negligence of the Commissioner and its servants and agents. Bastow JA at [91] also referred to this reasoning of Menzies J in Erect Safe, as did McClellan JA at [149] when referring to Giles JA in Palmer.
In this case, it is plain from the natural and ordinary meaning of the language of cl 9(e), when construed strictly in the context of the wet hire agreement as a whole, that, Jamieson Transport agreed to bear the risk of loss and to indemnify BGC against "any … claim or other loss". This wide term necessarily includes its own negligence and in order to cover that eventuality, Jamieson Transport was required to insure the prime mover and its licensed operator.
It is here pertinent to note that cl 3 of the hire agreement warrants that the prime mover "is in sound mechanical condition capable of safe operation and complies with all relevant legislation, regulations, safe operating requirements affecting the use of such Plant" and an indemnity is given "arising out of the use of the Plant except to the extent caused by BGC's willful (sic) misconduct".
This indemnity in cl 3 is necessarily tied to the warranty to which it is joined however, had the draftsman considered it appropriate to exclude BGC's wilful misconduct or negligence from the indemnity in cl 9(e), then, he could have done so, in the same way he excluded BGC's wilful misconduct from cl 3. Further, the draftsman did not exclude BGC's negligence from either cl 3 or cl 9(e).
Mr Hancy submitted that there is ambiguity in cl 9(e) as to indemnity for BGC's negligence. However, to arrive at a construction of that clause which results in an ambiguous interpretation requires a straining of the natural and ordinary meaning of the words contained in cl 9(e). That clause is better understood when regard is had to the insurance arrangements of items 4 and 5 to the Schedule. It is not appropriate to try and establish ambiguity where none exists and the natural and ordinary meaning of cl 9(e) in the context of the agreement as a whole, including the Schedule, is clear. There is nothing ambiguous about cl 9(e), such that an ambiguity should not be sought out and detected.

Causation

Mr Hancy submitted that there is no causal relationship between the hiring of the prime mover and its licensed operator and the loss suffered by BGC. The loss has not, he said, resulted from the hiring of the prime mover and its operator, but from the negligence of Mr Keys for which BGC is vicariously liable. The loss to BGC is merely coincidental with the prime mover and the operator being on the haul road. Accordingly, Mr Hancy said that the indemnity does not operate.
In support of this, Mr Hancy submitted that wet hire is to be contrasted with dry hire, such that if, on dry hire, a Jamieson Transport truck was driven by a BGC operator, then there is no doubt, he said, that there would not be any indemnity for negligence by BGC. Mr Hancy therefore submitted that the clear point of demarcation was the licensed operator, such that Jamieson Transport's licensed operator had to have been negligent before any indemnity will operate. Otherwise, the indemnity applied for the mere coincidence that the operator was an employee of Jamieson Transport, rather than BGC.

For reasons outlined above, this submission seeks to place too narrow a focus on the differences between dry and wet hire arrangements. It overlooks the requirement that, on wet hire, Jamieson Transport was required to bear the risk of the hire to BGC. That is an important provision, which is not applicable in a dry hire arrangement, and nor is there an indemnity provision on dry hire, save for cl 3. The submission also overlooks the practical differences between the two arrangements, to which I have referred above.
In F & D Normoyle, Ipp JA, with whom McColl JA agreed, said at [90] that the words "arising from" are not "open ended" with an unlimited concept of causation … some causal or consequential relationship is required.
The relevant indemnity clause in F & D Normoyle provided that:
"[43]The term of the sub-contract on which the Joint Venture relies forms part of a set of standard conditions. Chadwick does not contend that the sub‑contract is not governed by those conditions. Clause 12 of the conditions provides:
'The sub-contractor shall indemnify and keep indemnified [the Joint Venture] and their respective officers, employees and agents against all claims, demands, proceedings, liabilities, costs, charges and expenses arising as a result of any act, neglect or default of the sub-contractor, its employees or agents relating to its execution of the Works.'
[44]'Works' are defined by cl 1.1(f) as the work and services to be provided by the sub-contractor. Clause 8 provides that the sub-contractor shall supervise the Works."
On the facts, the subcontractor Normoyle was not negligent, although the Joint Venture was found to be guilty of breach of statutory duty and to have caused the worker's injuries. Normoyle had stored the relevant pipes in the proper location on the ground level of the construction site. That is why it was not negligent. Another party had removed the pipes and left them in a path on an upper level where the worker tripped over them and was injured. Only the Joint Venture was liable for that. The liability of the Joint Venture was said to be too remote for the indemnity clause to respond. Normoyle was not obliged to indemnify the Joint Venture, because it had not committed any relevant act of negligence, breach of contract or breach of statutory duty. It was therefore not obliged to indemnify the Joint Venture.
In this case, the indemnity from the wet hire agreement is not so qualified, as it was in F & D Normoyle, to only become operative upon "the act, neglect or default of the subcontractor, its employees or agents".
In BI (Contracting), the relevant indemnity clause provided as follows:
"[10]…
'The Subcontractor shall take out and maintain workmen's compensation insurance and public risk insurance policies in respect of the subcontract works and shall pay all premiums thereon and all fees required by any public or local government authority in respect of the subcontract works and shall indemnify the builder against all liability relating to the subcontract works. (Emphasis added)' "
Baulderstone undertook contract works at the Royal Adelaide Hospital, part of which, requiring the installation of asbestos insulation, was subcontracted to BI (Contracting). The plaintiff was a Baulderstone employee, who, many years later developed mesothelioma. He sued Baulderstone, which brought a cross claim against BI (Contracting). At trial, liability was apportioned as to 80 per cent to BI (Contracting) and 20 per cent to Baulderstone. This was not challenged on appeal. Beazley JA, with whom Tobias JJA and Bell J agreed, found that the indemnity clause was operative, notwithstanding Baulderstone's negligence. She said:
"[105]Returning then to the construction of the subject indemnity clause and applying the principles of construction to which I have referred, it seems to me that the following matters are relevant. The language of cl 6 is in the widest terms and as a matter of ordinary construction would encompass the injury, loss and damage for which Baulderstone was liable to Mr Stutley. However, it was BIC that was undertaking the works that caused Mr Stutley's injury. It is probable that the parties had it in their contemplation, therefore, that BIC should be responsible for whatever loss or damage was caused by the carrying out of those works. In other words, it is apparent from its terms that cl 6 is a risk allocation clause and it was intended to allocate the risk for all liability that arose relating to that part of the building works undertaken by a particular sub-contractor, in this case, BIC for the asbestos insulation work carried out by it.
[106]The negligent performance of building work is not unusual. Indeed, the negligent carrying out of such work is a common cause of accidents and consequent injury. That is the point of having insurance to cover such liability, as this clause also required: see Davis v The Commissioner of Main Roads per Menzies J at 537. Accordingly, it is likely, in my opinion, that the parties would have had it in contemplation that BIC should be liable for its negligence, notwithstanding that Baulderstone was also negligent. In this regard I am of the opinion that there is no ambiguity in the provision so as to cause the clause to be construed in favour of BIC so as to make cl 6 inapplicable to the present circumstances."
The relevant indemnity clause in Erect Safe provided that:
"[6]…
Clause 11:
INDEMNITY
The Subcontractor must indemnify Australand Constructions against all damage, expense (including lawyers' fees and expenses on a solicitor/client basis), loss (including financial loss) or liability of any nature suffered or incurred by Australand Constructions arising out of the performance of the Subcontract Works and its other obligations under the Subcontract."
In short, the facts were that Erect Safe Scaffolding erected the scaffolding on a building site incorrectly. The head contractor, Australand, was aware of the problem, but failed to rectify it before the relevant injury occurred. Australand was therefore liable to the injured worker. It sought indemnity from the subcontractor.
After referring to the reasoning of Ipp JA in F & D Normoyle at [91], Giles JA referred to the causal or consequential relationship looking to the reason why liability was incurred so as to attract the claimed indemnity, saying that:
"[11]There is no easy test for the nature or extent of the causal or consequential relationship involved in the words 'arising out of', and a substituted form of words should not be devised to replace the words chosen by the parties to the subcontract. The words are wide, but the relationship with Australand's damage etcetera which they require is informed by their presence in an indemnity clause. So far as ambiguous, the clause should be construed in favour of Erect Safe (Andar Transport Ltd v BramblesLtd [2004] HCA 28; (2004) 217 CLR 424 at [17] – [23] per Gleeson CJ and McHugh, Gummow, Hayne and Heydon JJ; F & D Normoyle Pty Ltd v Transfield Pty Ltd [2005] NSWCA 193; (2005) NSWLR (502 at [47] per Ipp JA, McColl JA agreeing). The relationship should not be remote, but one of substance albeit less than that required by words such as 'caused by' or 'as a result of'; beyond that, it is a question of judgment on the particular facts.
[12]The incurring of liability by Australand directs attention to why the liability was incurred, and particularly to whether an act or omission of Australand itself brought the liability upon it. Here it did. Although Erect Safe created the problem and failed to rectify it, the basis for Australand's liability was breach of its own duty of care owed to Mr Sutton. The breach was by its own default and not because it was fixed with liability by reason of the default of Erect Safe. Australand’s own breach of its own duty of care brought the liability upon it, although Erect Safe's performance of the Subcontract Works provided the occasion for it to incur liability. In my opinion, that is insufficient for the liability to have arisen out of the performance by Erect Safe of the Subcontract Works and of its other obligations, within cl 11."
Although Giles JA gave a wide meaning to the words "arising out of", the causal relationship with Australand's damage "was to be informed by their presence in an indemnity clause". It should not be remote and was a matter of judgment. He looked to the fact that Australand's liability was incurred by reason of its own default, noting that, in performing the Subcontract Works, Erect Safe provided the occasion for Australand to incur liability. His primary emphasis of "why the liability was incurred" seems, with respect, to have taken preference over the terms agreed between the parties by the actual wording of their indemnity clause itself and in particular, the requirement for liability "to have arisen out of the performance by Erect Safe of the Subcontract Works".
McClellan CJ at CL essentially agreed with Giles JA [155] and [160], however, he said at [155] that the appropriate meaning may have been more obvious if the word "its" had been included before the words "performance of the Subcontract Works". He adopted the reasoning that the liability of Australand was caused by its own negligence, and that the indemnity only applied for liabilities arising from "its", ie Erect Safe's, performance of the subcontract works, rather than "the" performance thereof, which is the word actually used in the relevant indemnity clause. However, if "Erect Safe's performance of the Subcontract Works provided the occasion for (Australand) to incur liability", then it seems that the liability is one "arising out of the performance of the Subcontract Works".
Further, the insurance requirements in Erect Safe were different from the present case. Erect Safe does not appear, from the reasons for decision, to have been obliged to bear the risk of the performance of the Subcontract Works, as did Jamieson Transport, although Erect Safe was required to obtain public liability insurance in the joint names of Australand and the subcontractor. However, that insurance was for liability to third parties, whereas the loss in the present case is a direct loss to the parties to the wet hire agreement.
Basten JA, dissenting in Erect Safe, preferred the view of Menzies J in Davis v Commissioner for Main Roads for reasons I have already outlined.
It is then necessary to refer to Speno Rail Maintenance v Australia Pty Ltd v Hamersley Iron Pty Ltd (2000) 23 WAR 291, in which, Malcolm CJ at [23] agreed with Ipp and Wheeler JJ. Ipp J at [48] generally agreed with Wheeler J. Speno is, of course, a decision prior to Andar.
Malcolm CJ said:
"[3]… The claim for an indemnity against Speno was based upon cl 37 of the contract between Hamersley and Speno which provided that:
'The contractor [Speno] shall be solely liable for, and shall be deemed to indemnify and hold harmless the company [Hamersley] against any and all liabilities, losses, damages … of every name or nature whatsoever arising whether:
(a)under any statute or at common law in respect of personal injury … or death of
(i)any and all persons employed by it in the execution of the Work/Services …
resulting either directly or as a consequence of the performance of the Work/Services under the Contract.'
…
[11]In the language of the policy, the question to be determined was not whether the liability to Mr Nolan was caused by the performance by Speno of the contract, but whether the liability of Hamersley to Nolan arose out of the performance by Speno of the contract with Hamersley.
[12]In my opinion, Mr Nolan's journey on the HIRail was something being done in the course of the performance of the contract by Speno. It follows that the negligent incident giving rise to liability occurred in the course of Speno's performance of the contract. The injury to Mr Nolan occurred in the course of such performance. In my view, this was enough to establish that Hamersley's liability was one "arising out of" the performance by Speno of the contract."
Ipp J said at [66]:
"[66]It is true that the negligent act that gave rise to liability was the operation of the switches while the HIRail was travelling on the rail track, and not some aspect of Speno's performance of Contract-HS1243. But the incident giving rise to liability occurred in the course of Speno's performance of the contract. That is to say, the HIRail was on the track and Nolan was in the HIRail only because Speno required them to be in those places so as to enable it to perform the contract. There is undoubtedly a causal link between Hamersley's liability and the performance by Speno of the contract, namely, the presence of the HIRail (with Nolan in it) on the tracks at the very moment the switches were negligently operated.
Wheeler J said at [131]:
"[131]In the present case, I have no difficulty with Zurich's proposition that the relevant negligent act or omission was the switching of the switches or points by the Hamersley employee. However, in doing so, Hamersley breached its duty of care which was owed to those travelling on the railway that it operated. It was by reason of Speno's performance of the contract that Mr Nolan, Speno's employee, was travelling on the railway. His presence was directly related to and formed part of the performance of the contract, and in that sense the duty, which was one ingredient of Hamersley's liability, 'arose' out of the performance of the contract by Speno."
As Basten JA put it in Erect Safe at [66] when referring to the reasoning of Wheeler JA in Speno:
"Her Honour's reasoning was, in substance, that because Hamersley's duty of care arose from the performance by Speno of its contract, so it followed that Hamersley's liability arose from that performance. The same reasoning applied in the present case would engage the operation of the indemnity clause, even if Speno were not followed in other respects."
Accordingly, in Speno, Hamersley obtained the indemnity even though it was the negligent party.
Another pre‑Andar decision is New South Wales v Tempo Services Ltd [2004] NSWCA 4 in which Meagher J said at [8]:
"The words 'in connection with' are words of the widest import, do not require any direct or proximate relationship with the contract in question, but must have some causal or consequential relationship with it. The question then becomes: does Mrs Coleiro's injury have any causal or consequential relationship to the performance of the services contracted for? It must. She was at the accident site because the contract required her to be there; she was there during the school term, during specified hours of duty, her presence there had no other reason than performance of the contractual services; she had signed on at the commencement of her shift as required by a clause in specification forming part of the cleaning contract, and she was going about the performance of the contracted services. These factors must compel a finding that the injury arose 'in connection with' the performance of the services. It does not matter that her mop was not actually on the floor."
Indemnity was therefore obtained notwithstanding that Tempo Services had not been guilty of any negligence and that the State of New South Wales was the tortfeasor, being the occupier liable for Mrs Coleiro's fall and consequential injury.
The words "arising from" in cl 9(e) are to be given a wide interpretation. In Butler v St John of God Hospital [2008] WASCA 174 Newnes AJA said that:
"While there is no easy test for the nature or extent of the causal or consequential relationship involved in the words 'arising out of', the relationship is less than that required by words such as 'caused by' or 'as a result of': beyond that it is a question of judgment on the particular facts: Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500, 505; Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114 [11]."
In this case, Jamieson Transport bore the risk of loss, insured for that loss and indemnified BGC against "any injury death claim or other loss arising from the hiring of the Plant". It was a risk allocation clause intending to allocate liability for risk for all liability arising from the hiring by Jamieson Transport to BGC of the prime mover and licensed operator. Accidents caused by negligence are common on mine sites.
It is the performance of the "hiring of the Plant" to which the indemnity relates and that indemnity applies to "any" loss. There is therefore a causal link between BGC's vicarious liability for Mr Keys' negligence and the performance by Jamieson Transport in the "hiring of the Plant".
To follow Wheeler JA from Speno at [131], BGC, through Mr Keys:
"breached its duty of care which was owed to those travelling on the [haul road]. It was by reason of [Jamieson Transport's] performance of the hire agreement that [Jamieson Transport's prime mover] was travelling on the [haul road]. [Its] presence was directly related to and formed part of the performance of the [hire agreement] and in that sense the duty, which was one ingredient of [BGC's] liability arose out of the performance of the contract by [Jamieson Transport]".
The question posed by Meagher JA in Tempo can also be utilized in the same way in this case, as follows:
"does [the crash] have any causal or consequential relationship to the [use of the 2004 Mack Titan prime mover and licensed operator provided by Jamieson Transport pursuant to the hiring of the Plant]"?
The same answer, as in Tempo, applies. "It must", by reason that the prime mover was being driven on the haul road because the hire agreement required it to be so used in the performance of that agreement, being "the hiring of the Plant". Therefore, the loss which BGC suffered is a "loss arising from the hiring of the Plant".
Speno was required to indemnify Hamersley Iron notwithstanding that Hamersley Iron was the sole tortfeasor. So too, Tempo was required to indemnify New South Wales when that State was the liable occupier. This is consistent with Menzies J in Davis, BI (Contracting) and Basten JA in Erect Safe. And so, the facts and reasoning in those cases, reveal that there may be a causal relationship in any given case between the loss and the performance of the services contracted for. Each case will depend upon its own facts. The loss arising out of the crash in this case occurred by reason that the contract services were actually being performed by Mr Ingold as the licensed operator for Jamieson Transport. Snelgar (supra) is another such case, as is BGC Contracting Pty Ltd v Webber & Anor [2005] WASCA 112 in which BGC was liable to indemnify another party even if that other party was concurrently liable in tort – see McLure J at [83] and with whom Malcolm CJ and Murray J agreed.
Although each indemnity clause is different, I am bound to follow the principles of construction as laid down by Andar.
In following the Speno approach, I note that whilst Basten JA in Erect Safe referred to Speno and Tempo, neither Giles JA nor McClellan CJ did so. I have previously commented on their reasons. The reasoning in F & D Normoyle is based on a different indemnity clause leading to a determination of remoteness, and the majority decision applying any ambiguity in favour of the surety.
I am accordingly of the view, that, BGC is entitled to the indemnity it seeks. The natural and ordinary meaning of cl 9(e) can be plainly interpreted when read strictly in the context of the whole wet hire agreement. It is not ambiguous and nor is the loss too remote, given the true meaning of the clause.

The indemnity and Mr Keys

Only BGC is specifically referred to in the indemnity in cl 9(e) of the hire agreement. However, Mr Ley submitted that it also applies to Mr Keys by virtue of s 11(2) of the Property Law Act 1969 which provides as follows:
"(2) Except in the case of a conveyance or other instrument to which subsection (1) applies, where a contract expressly in its terms purports to confer a benefit directly on a person who is not named as a party to the contract, the contract is, subject to subsection (3), enforceable by that person in his own name but —
(a)all defences that would have been available to the defendant in an action or proceeding in a court of competent jurisdiction to enforce the contract had the plaintiff in the action or proceeding been named as a party to the contract, shall be so available;
(b)each person named as a party to the contract shall be joined as a party to the action or proceeding; and
(c)such defendant in the action or proceeding shall be entitled to enforce as against such plaintiff, all the obligations that in the terms of the contract are imposed on the plaintiff for the benefit of the defendant."

It is here relevant to repeat that Jamieson Transport was, by cl 9(e), required to bear the risk of loss in hiring the plant and licensed operator to BGC. Further, that that clause required Jamieson Transport indemnify BGC against "any … loss "arising from that hiring. I have now found that BGC has suffered loss from that hiring by reason of Mr Keys' negligence, which must be indemnified.
As I have said, the parties allocated risk by their agreement. Clearly, Jamieson Transport was to insure its prime mover against any loss suffered by BGC in respect of which Jamieson Transport was required to indemnify BGC.
However, BGC is a body corporate which necessarily requires its employees to carry out its functions and daily business activities, including the driving of its road trains, even if, as happened here, that is done in a negligent manner. Such negligent driving must have been within the contemplation of Jamieson Transport, through its employees, when it entered into the hire agreement.
Hence I can draw the inference, if that be necessary, that the real commercial intent of Jamieson Transport was to indemnify BGC against the negligent actions and defaults of its employees and in so doing, to include those employees of BGC in the protection of the cl 9(e) indemnity, particularly when regard is had to the fact that BGC is vicariously liable for the negligence of its employees, including Mr Keys. Further, the loss in this case is the same loss for each of Mr Keys and for BGC. Jamieson Transport could not twice recover its loss from each of Mr Keys and BGC. Further, Jamieson Transport was required by the hire agreement to insure its prime mover and that should cover any loss incurred by it.
It is therefore appropriate to find that cl 9(e) by its terms, confers a benefit directly on Mr Keys, who is not named therein. That benefit is the indemnity – see Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] 165 CLR 107 at 122 – 123.
The subject matter of cl 9(e) is not excluded from the scope of s 11(2), as it is not "a conveyance or other instrument to which subsection (1) applies". Further, the requirements of s 11(2)(a), (b) and (c) have been met and s 11(3) does not apply.
Accordingly, it follows, that, by s 11(2), Mr Keys is able to claim the benefit of the indemnity – see Westralian Farming Co-operative Ltd v Southern Meat Packers Ltd & Anor [1981] WAR 241 per Burt CJ (with whom Wallace J agreed) at 243 – 246 and Kennedy J at 250 – 251 and The Bell Group Ltd (in Liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 at [3361] – [3372].

4. Equipment Responsibilities	BGC	SUP	BGC	SUP
Mobilisation $	X	X
Location:
Demobilisation $	X	X
Location:
Fuel LF/LP	X	X
Minor Repairs $ Per	X	X
Major Repairs
Tyre/Track Maintenance (Fair wear & tear)
Estimated Tyre Hours
GET
Parent Bucket (Fair wear and tear)
Daily Servicing & Top Up Oils	X	X
Major Servicing	X	X
Insurance Plant/Equipment	X	X

5. Personnel Responsibilities (Labour/Wet Hire)	BGC	SUP	BGC	SUP
Accommodation and Messing	X	X
Travel to/from site	X	X
Public Liability insurance	X	X
Workers Compensation Insurance	X	X
Income Protection and/or Journey Insurance (if req'd under the head contract)	X	X
Have BGC HSE requirements been issued?	YES/NO
Evidence of insurance sighted	YES/NO
Note: A copy of the insurance certificate is to be provided to BGC