Zhang v Popovic
[2016] NSWSC 407
•12 April 2016
|
New South Wales |
Case Name: | Zhang v Popovic |
Medium Neutral Citation: | [2016] NSWSC 407 |
Hearing Date(s): | 21, 22, 23, 24, 31 March 2016 |
Decision Date: | 12 April 2016 |
Jurisdiction: | Common Law |
Before: | Adamson J |
Decision: | See paragraph 248 |
Catchwords: | TORTS – negligence – plaintiff injured while helping truck driver lift trailer ramp – driver aware that ramp was not functioning properly – foreseeable risk of harm that ramp would fall and injure plaintiff – vicarious liability of employer – employer also liable on its own account – failure to properly instruct employee as to safe conduct |
Legislation Cited: | Civil Liability Act 2002 (NSW), ss 5B, 5C, 5D |
Cases Cited: | Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 |
Texts Cited: | Second reading speech for the Motor Accidents (Compensation) Amendment Bill, Legislative Assembly of the Northern Territory, (Hansard) 21 February 2007 |
Category: | Principal judgment |
Parties: | Cheng Nian Zhang (Plaintiff) |
Representation: | Counsel: |
File Number(s): | 2009/296370; 2009/298017 |
JUDGMENT
Introduction
On 16 September 2007 Cheng Nian Zhang, the plaintiff, was injured when one of the metal ramps under which he was standing, which was attached to a trailer behind a truck at the Patrick Terminal at Port Botany, fell on top of him. The immediate cause of the left ramp dropping was that the weld that held the clevis mount (to which a hydraulic ram that supported it was attached) failed, causing the mount and the left ram to fall, taking the left ramp with it.
The parties and the pleadings
The statement of claim
By statement of claim filed on 20 January 2009 in the District Court the plaintiff commenced proceedings for damages against various people connected with the trailer: Vlado Popovic, the truck driver (the first defendant); Calabro Real Estate Pty Limited (Calabro), the registered owner of the trailer (the second defendant); Interfreight (Aust) Pty Ltd (Interfreight, the third defendant), which employed Mr Popovic and used the truck and trailer in the course of its freight business; and Popovic Haulage Pty Ltd (Popovic Haulage), a company associated with Mr Popovic (the fourth defendant).
Interfreight and Popovic Haulage have since been deregistered, on 28 April 2012 and 25 July 2010 respectively. Accordingly, they ceased to exist on the day of deregistration and could no longer sue or be sued: s 601AD of the Corporations Act 2001 (Cth).
The amended statement of claim
By amended statement of claim filed in the District Court on 17 March 2009, NRMA Insurance Ltd (NRMA), the compulsory third party insurer of the trailer, was joined as the fifth defendant. The proceedings were subsequently transferred to this Court.
The second amended statement of claim
The first four defendants were insured by the sixth defendant, National Transport Insurance (NTI). By application filed on 16 August 2010 the plaintiff applied for leave to join NTI to the proceedings as a defendant pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Leave was granted by Harrison AsJ on 14 September 2010. A second amended statement of claim was filed on 17 September 2010, joining NTI as the sixth defendant and alleging that the plaintiff’s claim was covered by the NTI Motor Fleet Policy. In its defence filed on 22 November 2010, NTI admitted that the policy covered the risk but denied indemnity on the basis of various exclusion clauses in the policy.
On 27 July 2011 consent orders were made in this Court for judgment, without admissions, in favour of the fifth defendant and an order that the plaintiff and the fifth defendant pay his or its (as the case may be) costs of the proceedings.
The third amended statement of claim
A third amended statement of claim was filed on 18 January 2012 in which further allegations of negligence were made.
The first cross-claim
On 2 May 2012 the first four defendants filed a cross-claim (the first cross-claim) against NTI, repeating the plaintiff’s allegations, and claimed indemnity under the NTI Motor Fleet Policy. They relied on s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).
The fourth amended statement of claim
On 18 January 2013 MacDougall J granted leave to the plaintiff to join ROC Services (NSW) Pty Ltd (ROC), the seventh defendant, to the proceedings on the basis of work ROC had performed on the trailer thirteen months before the accident. This led to the filing of a fourth amended statement of claim on 8 February 2013 in which the plaintiff alleged that ROC had negligently installed the left clevis mount and was accordingly responsible for the weld that failed and caused his injuries.
The second cross-claim
On 15 March 2013 leave was granted to NTI to file a cross-claim against ROC pursuant to ss 5 and 6 of the Law Reform (Miscellaneous Provisions) Act 1946. This cross-claim (the second cross-claim) was filed on 3 May 2013.
The fifth amended statement of claim
On 19 May 2015 Wilson J granted leave to the plaintiff to file a fifth further amended statement of claim, which was filed on 21 May 2015.
The sixth amended statement of claim
After ROC had served its evidence (denying that it had installed the clevis mount) the plaintiff sought to amend the fifth amended statement of claim to allege in the alternative that, in the event that ROC did not install or weld the left clevis mount, it was nonetheless in breach of its duty of care to the plaintiff by failing to ensure that the clevis mount that was already welded to the trailer was adequate to support the load. On 29 October 2015 Button J granted leave to the plaintiff to file a sixth amended statement of claim, which was filed on 4 November 2015. The sixth amended statement of claim is the current pleading.
The third cross-claim
On 19 November 2015 ROC filed a cross-claim against Mr Popovic and Calabro (the third cross-claim) for contribution and indemnity pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946.
The fourth cross-claim
By orders made on 5 November 2015, Mr Popovic and Calabro were granted leave to file a cross-claim against ROC for contribution and indemnity pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. They filed the fourth cross-claim on 19 November 2015.
The fifth cross-claim
On 19 November 2015 ROC filed a notice of motion seeking leave to proceed against NTI pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 and repeated the relevant allegations from the sixth amended statement of claim. The motion was heard by Harrison AsJ on 4 February 2016. NTI opposed the grant of leave on the basis that ROC had not established that Mr Popovic and Calabro would be unable to meet any judgment in favour of the plaintiff.
Associate Justice Harrison dealt with the issue in the following way, as appears from the following extract from her Honour’s reasons:
“[12] I propose to grant leave to the seventh defendant to file the cross-claim against the sixth defendant once the seventh defendant provides evidence that indicates that the first and second defendants are unlikely to be able to satisfy any judgments made against them. The evidence is to be served by the seventh defendant on the sixth defendant within seven days.
[13] Once the evidence is provided to the sixth defendant, if the parties agree, I will make the order I have proposed granting leave to the seventh defendant to file and serve a cross claim against the sixth defendant.”
By 22 March 2016, NTI had accepted that ROC had established that the first, third and fourth defendants could not meet a judgment in favour of the plaintiff. On this basis NTI accepted that ROC was entitled to leave to file the fifth cross-claim (against NTI) in respect of any liability of those defendants. ROC tendered a statutory declaration made by Mirjana Tabuso, a director of Calabro, in which she deposed that Calabro would not be able to meet any judgment against it in the proceedings. Mr McCulloch SC, who appeared with Mr Stockley on behalf of NTI, objected to the form of the evidence on the basis that Ms Tabuso expressed a conclusion rather than annexing relevant business records in the form of Calabro’s financial statements. This evidence was not augmented. Accordingly, the leave to file the fifth cross-claim does not extend to the joinder of Calabro as cross-defendant. On 24 March 2016 I granted leave to ROC to file the fifth cross-claim against NTI in respect of the liability of the first, third and fourth defendants.
The Court ordered that issues relating to liability and indemnity be determined as a separate question.
The facts
Interfreight
Interfreight conducted a transport business from premises at 12 Ash Road, Prestons. It was registered on 17 June 2003 and deregistered on 28 April 2012. From 5 September 2005, its registered office and the location from which it carried on business was 12 Ash Road, Prestons. John Tabuso was its sole director, apart from a three-day period from 17 to 19 June 2003 when Jose Sanchez (Jose) was also a director and secretary of Interfreight. Jose had conducted the business on those premises before he had sold it to Mr Tabuso. When Jose had been conducting the business, his brother, Peter (Mr Sanchez) conducted his own welding business from the same premises.
Interfreight used several trucks and trailers in its freight business. It employed drivers, including, from about 2001, Mr Popovic. Calabro was the registered proprietor of the trailer. There was scant evidence about the arrangement between Calabro and Interfreight, which does not appear to have been at arm’s length. Mr Tabuso was formerly a director of Calabro. Mr Tabuso’s wife became a director of Calabro. At all events, although Calabro owned the trailer, it was used by Interfreight, which had continuous physical possession of it from at least May 2006.
When Mr Popovic started working for Interfreight, Mr Tabuso gave him limited training: he instructed him how to fasten the ramps at the rear of the trailer to a dog and chain before driving the truck to which the trailer was attached and warned him not to walk behind the ramps when they were elevated.
Hoxton Truck and Trailer Repairs Pty Ltd
During at least part of 2006 Hoxton Truck and Trailer Repairs Pty Ltd (Hoxton) carried out some (but not all) repairs and maintenance on vehicles used by Interfreight. Its sole director was Mr Sanchez, Jose’s brother. Mr Sanchez was the only person who did any work on behalf of Hoxton. He held qualifications in Auto Electrical and Welding.
Mr Tabuso described Mr Sanchez as “my mechanic”. He clarified this description by saying that Hoxton was subcontracted to Interfreight to perform mechanical work. Mr Tabuso gave evidence that he, or one of his employees, recorded in an exercise book (one book for each truck or trailer) the work that had been performed on each of his vehicles.
It appears from the limited number of invoices in evidence that Hoxton issued weekly invoices to Interfreight. According to Mr Tabuso (whose evidence I accept on this point) Interfreight paid Hoxton on presentation of each invoice. I note that all invoices issued by Hoxton that are in evidence (dated 29 May, 5 June, 12 June, 19 June, 26 June and 3 July 2006) were issued after Hoxton’s deregistration on 7 May 2006. Mr Sanchez was unable to provide a satisfactory explanation for this circumstance, which may be explained by his ignorance of the fact of deregistration of Hoxton and its legal consequences.
In about May 2006 Mr Tabuso asked Mr Sanchez to remove the old set of ramps from the trailer and make and install a new set. Interfreight provided the material for the ramps to Hoxton. In May and June 2006 Mr Sanchez made the ramps and attached them to the trailer. Work referable to that task appears on the weekly invoices for that period which were submitted to Interfreight for payment.
There is a substantial issue as to the identity of the person who, or corporation which, installed the clevis mounts attached to the rear of the trailer. There are three possibilities open on the evidence:
(1)Mr Sanchez or Hoxton installed the clevis mounts at the same time as he manufactured and fitted the new ramps onto the trailer;
(2)Interfreight attached the clevis mounts itself; or
(3)ROC installed the clevis mounts when the trailer was delivered to it in August 2006 for manufacture and installation of the hydraulic system to raise and lower the ramps.
I am satisfied for reasons given below that (3) has been excluded by the evidence of the ROC witnesses whom I accept. The choice between (1) and (2) is more difficult.
Mr Sanchez, who was not a reliable witness, denied installing them. I do not accept his denial, but this is not a situation where non-acceptance of a denial can prove the opposite: Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694 per Gibbs J. There is no entry in the weekly invoices he submitted to Interfreight that indicates that he installed the clevis mounts. Although not every task performed was scrupulously documented in the invoices, I consider that if Mr Sanchez had installed the clevis mounts, there would probably have been some reference to the job in the invoices.
Mr Tabuso told Doug Rolland, a WorkCover inspector, in the course of an interview in May 2008 that Hoxton installed them (although there is some ambiguity about his statement) and also represented to Steven Hall, a welding expert retained by NTI, at a site visit in November 2010, that Hoxton installed them (although there is also some ambiguity about his representation). However, Mr Tabuso was not a reliable witness. His statements that Hoxton did the welding might simply have been an attempt to deflect the blame for the weld away from Interfreight, which might otherwise have been regarded as responsible for the condition of the trailer and the failure of the weld. Interfreight employed at least one welder, who would have been capable of installing the clevis mount. After all, when the right clevis mount was damaged in August 2007 (see further below) it was repaired in-house by a welder employed by Interfreight.
I am satisfied the clevis mounts were installed on the trailer, probably in about May or June 2006 when the ramps were installed, but in any event at some time before late August 2006 when the trailer was delivered to ROC for the installation of the hydraulic system. I consider it more probable than not that it was Interfreight which welded the left clevis mount to the trailer, at least when it was installed before late August 2006.
Whether the mount was removed or re-welded between that time and the time of the accident will be addressed further below. The evidence leaves open the possibility that the left clevis mount was removed and replaced between about mid- 2006 (when it was installed) and the date of the accident. This possibility has not been excluded by the evidence. This matter is relevant to the question (which bears on ROC’s potential liability) whether the plaintiff has established the condition and appearance of the left clevis mount at the time it was delivered to ROC in August 2006.
The events of August 2006 prior to delivery of the trailer to ROC
On 8 August 2006 the trailer was inspected at the Heavy Vehicle Inspection Scheme (HVIS) location at Penrith for the purpose of renewing its registration. A defect notice was issued. The “comments” section of the Inspection report said as follows:
“Loading ramps not fitted at time of inspection rear marker plates missing. Trailer step deck area stress cracks appearing in chassis rails.”
The absence of the loading ramps, although noted in the “comments” section, was not a “defect”. The trailer was inspected at the HVIS at Minto on 11 August 2006. The inspector was satisfied that the defects (which had been classified as minor) had been rectified. There is no reference in the exercise book kept by Mr Tabuso to these repairs having been made.
I note that the exercise book produced by Calabro in answer to a subpoena contained an entry dated 10 August 2006 which read:
“SENT TRAILER TO ROCK [SIC] HYDRAULIC TO FIT HYDRAULIC SYSTEM”
I am satisfied that this entry was inserted into the book by someone at Interfreight after it was returned some time later by WorkCover to Calabro as the original book, which was taken for copying by WorkCover after the accident before it was returned to Calabro, had no such entry. That the entry for 10 August 2006 was not in the book when it was taken by WorkCover at some time after 16 September 2007, casts substantial doubt not only on that entry but also on the proposition that other entries in the book were contemporaneous with the work done. There is no corresponding item on an invoice issued by Hoxton. Moreover, it is inconsistent with the trailer’s having been inspected at Minto on 11 August 2006 as referred to above.
The work done by ROC
In August 2006 (some time after the HVIS inspection at Minto on 11 August 2006) Interfreight engaged ROC to install hydraulic cylinders to raise and lower the ramps. These hydraulic cylinders (otherwise known as rams) are welded at one end to the clevis mounts (also known as lugs) which form part of the structure of the rear of the trailer and at the other to the ramp. The rams work as pistons to raise and lower the ramp using hydraulic force.
ROC was established in 1999 by Nabil Fahmy (a motor mechanic by trade) and Adrian Hall (a qualified fitter machinist by trade) who purchased a business with a similar name which had been conducted previously at Silverwater. In its first years of operation up to and including 2006, ROC’s business was focussed on hydraulic cylinders. It did not install clevis mounts.
On 15 August 2006 ROC raised a Job Card for the job it had been retained to do by Interfreight. The job description on the card, which I am satisfied was an accurate description of ROC’s retainer by Interfreight, was as follows:
“Low loader/ Step deck. Supply fit hydraulics for rear ramps – with Honda engine.”
The Job Card nominated “parts as [per] job sheet”. The job sheet, also dated 15 August 2006, identified the parts used for the job and recorded that the fitter was Dion, which was a reference to Dion Matsaniotis, who was at that time a third-year apprentice hydraulic fitter employed by ROC. Interfreight obtained some material from EZI Metal to do the job as recorded in the sales orders dated 17 and 18 August 2006.
I am satisfied that ROC attached the bases of the hydraulic cylinders on both the right and left hand rear of the trailer to clevis mounts, which were already on the trailer when it arrived at ROC’s premises. Once ROC had performed this work, it followed its usual practice and tested the hydraulic system by raising and lowering the ramps between 15 and 20 times. I am satisfied that at no time while the trailer was in its custody and control did ROC remove the ramps in order to install the hydraulic system. I accept the explanation given by Adrian Hall that ROC had an overhead crane with a winch on it which was capable of raising and lowering the ramps while the work on the hydraulic system was being done.
On 24 August 2006 ROC issued an invoice to Interfreight in the sum of $4,174.50 inclusive of GST for installing the hydraulic system on the trailer.
I accept the evidence of Robert Cox (a hydraulic fitter who had been employed by ROC and its predecessor) that he never welded lugs on a truck (or trailer) while he was at ROC. He was adamant that ROC would not have done such work. I accept his evidence generally, including his explanation of what occurred in the following passage:
“Q. From time to time did you also have to weld mounting lugs for hydraulic systems?
A. On cylinders I would, yes, on the actual cylinder, but not on the actual truck.
Q. When you say you wouldn't weld on the actual truck, was there any particular reason why you wouldn't weld on the actual truck?
A. Yes, because we'd, if it needed a, a, a structural weld, like a lug welded on for a structural reason, we would send it to a body builder who built, who would build trucks, and that was their trade, to weld structural stuff on, on trucks, big heavy lugs, eg 25 mil plate on trucks would be done by a body builder.
Q. Did you always use the same - when I say you, I mean ROC - did you always use the same body builder?
A. No, we'd just say to the customer, "Take it to a body builder, up to your choice, and get it by done by those, those people."
Q. And you're not aware of any situation at all where ROC has sent for example a trailer off to somebody else for welding?
A. We used to tell them if it needed structural work done, we would say, "We don't do it. Take it to a body builder to get it done correctly, by a body builder." But we wouldn't specifically use anyone. We'd just say, "Take it to whoever you like."”
In the following exchange, Mr Cox also rejected the proposition that ROC would remove mounting lugs from a truck or trailer:
“Q. Would you have occasion, from time to time, to remove mounting lugs which had been previously installed on a truck or trailer or other item of equipment?
A. No, 'cause if we were to remove it you had to put, one had to be put back on, so we'd tell them to go to a bodybuilder and have one put on. If it was of those dimensions that you would because it was structural we'd tell them to go to a bodybuilder and get it done by a bodybuilder 'cause that was their trade, not mine.”
The primary case against ROC: that it installed the clevis mounts
ROC did not bear the onus of proving that it did not weld the left clevis mount (that ultimately failed) to the trailer. However, I am satisfied that ROC did not weld the clevis mounts to the trailer for the following reasons:
(1)Although none of the ROC employees or principals who were called to give evidence could recall the job, the business records produced by ROC in relation to the job (which I accept, on the basis of Adrian Hall’s evidence were “complete and scrupulously accurate”) did not record that any such work (installation of the clevis mounts) had been done by ROC. Nor were there any drawings to suggest that such work was undertaken by ROC. The absence of business records can be used to draw a negative inference: s 69(4) of the Evidence Act 1995 (NSW).
(2)ROC did not usually perform such work (welding of a clevis mount to a trailer) except in defined and specialised situations. Had Interfreight requested ROC to do such work in the present case, I am satisfied that ROC, in accordance with its usual practice, would have directed Interfreight to go to a body builder to have the clevis mount welded to the rear of the trailer.
(3)The clevis mount was welded using a stick welder. ROC had one welder, a MIG (metal inert gas) welder, which it used exclusively. It did not have a stick welder on the premises. I accept Adrian Hall’s evidence that: “Any backyard place has got a stick welder.”
(4)The clevis mount was comprised of 25mm metal. Had ROC required metal of that thickness it would have obtained the clevis mount from another company known as Flame-Cut. There is no record of ROC’s having ordered any such metal to perform the work for Interfreight or having charged Interfreight for such metal. Moreover ROC neither retained leftover or used metal; nor did it “cannabalise” metal that had been used for other purposes. Rather, it disposed of such metal into a scrap bin, the contents of which were sold at regular intervals (usually monthly) to a scrap metal merchant.
(5)I do not accept the evidence of either Mr Tabuso or Mr Sanchez in these proceedings except where against interest or corroborated (see below where credibility of witnesses is addressed).
It was not necessary for ROC to prove who welded the clevis mount to the trailer. In any event I am satisfied that ROC did not install either of the clevis mounts on the trailer. Accordingly, the plaintiff’s primary case against ROC has not been made out.
There was a suggestion that Interfreight had provided two second hand rams to ROC to be used in the installation of the hydraulic system. These rams were not in fact used as ROC installed new rams. It was put by Mr Cavanagh SC, who appeared with Ms Dinkha on behalf of ROC, that Mr Sanchez had tried to install the hydraulic system when he installed the ramps in about May 2006 but had found the task beyond him. I am not satisfied that Mr Sanchez made any such attempt. Accordingly it is not necessary to consider the two second hand rams further. I note that there is no suggestion that the accident was caused by a defective hydraulic system, as opposed to the failure of the defective weld which attached the left clevis mount to the back of the trailer.
The plaintiff’s secondary case against ROC: that it should have tested or replaced the clevis mounts
Mr Barham, who appeared on behalf of the first two defendants, suggested to Adrian Hall in cross-examination that it was incumbent on ROC to replace the clevis mounts which I am satisfied were on the trailer when it was delivered to ROC. The following exchange ensued:
“Q. And I'm suggesting to you, in circumstances like that, you would have removed or caused to be removed both clevis mounts and put your own on?
A. Not necessarily, no. If I done every job that come into our yard and cut the mounts of because I thought, well, maybe at a later date they're going to break, you'd never make any money. Now, if, if, if it looked all right, it was most probably inspected and, and, and looked at. That's the way we operate and we functionally operate, operate them to see whether there's any deflection.”
It was also put to Adrian Hall that ROC ought to have inspected the welds on the trailer before returning it to Interfreight. The following exchange ensued:
“Q. It's the case, isn't it, that ROC would never deliberately release a - when I say release, I mean, let back to a customer to be used on public roads, a vehicle where there is a suspect weld, to the knowledge of ROC?
A. No, no, we have a very good reputation.
Q. It's fair to say then that ROC would have inspected all of the welds, before it released the truck back to - I withdraw that, the trailer back to the customer?
A. Yes, they would look at it, yes, they would have functionally looked at it, with it operating.”
It was also put to various witnesses called on behalf of ROC that ROC ought to have reinforced the weld by which the clevis mount was attached to the trailer to take account of the possibility of someone misusing the ramps and weakening the weld. Adrian Hall’s response to the proposition was to ask rhetorically:
“I mean, how, how - where do you stop?”
Further allegation against ROC: that its work had been faulty leading to the return of the trailer to its workshop
It was submitted by the first two defendants that the trailer had been returned to ROC after the work had been done because the ramps were faulty and did not go up and down without needing to be pushed. Adrian Hall was cross-examined about this by Mr Barham. The basis for the cross-examination was the following notation on ROC’s records relating to the job:
“1. Can we adjust pressure on unit we have done ramps don’t come right up have to push.
2. Can we use smaller motor to take up less room.
3. John will move water tank.”
The following exchange occurred between Mr Barham and Adrian Hall in the course of cross-examination:
“Q. "Not moving fully back," or something like that? Does that indicate to you that somebody brought the trailer back because the ramps weren't going fully up?
A. No. No, I'd say it just, it's the over centre part. So you get a ramp vertically and then you go over, over centre, and I'd say that could be on, just on the over centre side.
Q. When you say you'd say, you don't know; you're just guessing, aren't you?
A. I don't know. Honestly, I don't know.”
Adrian Hall did not agree with the proposition that the trailer had been returned to ROC. Moreover, neither Mr Tabuso, nor Mr Sanchez gave any evidence to that effect. Indeed, Mr Tabuso’s evidence in chief (in his affidavit sworn 14 March 2014) was that when the trailer was returned on about 25 August 2006 he checked it to see that it was operating correctly and found that it was. In these circumstances, I am not prepared to infer from the notation that the ramps were brought back to ROC at a later stage because they were not working.
The condition of the trailer in 2007
On 13 June 2007 a defect notice was issued in respect of the trailer in the course of a random inspection when the truck to which it was attached passed through the HVIS location at Marulan. The defects were rectified.
On 17 August 2007 the trailer was inspected for the purpose of renewing its registration. It passed on the first inspection.
On 21 August 2007 a further defect notice was issued in respect of the trailer when the truck to which it was attached passed through the HVIS location at Mt White. Defects in the axles were identified and were rectified by the time of an inspection at Lismore on 22 August 2007.
Damage to the rear of the trailer in late August 2007
When the trailer was returned to Interfreight’s depot on or about 23 August 2007 Mr Tabuso noticed that the right hand clevis mount on the trailer was damaged. He inferred that the damage was the result of impact. Daniel Perish, a welder employed by Interfreight, put in two stiffening plates to reinforce the clevis mount on the right-hand side. I accept Mr Tabuso’s evidence that:
(1)Mr Perish had the expertise to do the work of reinforcing the right clevis mount;
(2)He would have expected Mr Perish to check the left clevis mount at the same time as he did the work to reinforce the right clevis mount; and
(3)Mr Perish had the expertise to remove the left hand clevis mount and re-weld it, if he considered such work to be required.
An entry dated 23 August 2007 in the exercise book for the trailer kept by Mr Tabuso recorded:
“Spoke to Dave Driver he found place to get cleared. Defected Mt White. Defected cleared at Lismore.
Fitted new slack adjuster 2nd axle D/S [drive side]
Welded ram bottom drivers side damaged. Repaired Honda motor and several lights.
Prepare for rego pit inspection.
[illegible] adjust brakes, brake reline 3rd axle
New drums Did not do wheel bearings.”
[Italics added for emphasis.]
The first three lines of this entry would appear to relate to the defect notice dated 21 August 2007 in respect of defects rectified on 22 August 2007. The last three lines would appear to relate to future maintenance. However, the fourth and fifth lines relate to the damage occasioned to the right (driver’s side) of the trailer which affected the area where the ram (hydraulic cylinder) was welded to the trailer (at the clevis mount, or bracket).
Interfreight’s instructions to Mr Popovic on 16 September 2007
On 16 September 2007 Mr Tabuso instructed Mr Popovic to drive a truck and the subject trailer to the Patrick Terminal at Port Botany to pick up a 40-foot container. Although Mr Popovic had driven a truck to which that trailer was attached on previous occasions, the trailer was also used by other drivers who were employed by Interfreight. At that time, Mr Popovic was aware that the right ramp on the trailer had been damaged in a previous incident. His understanding was that it had been repaired.
The system for loading trailers at Patrick Terminal at Port Botany
The system that applied at Patrick Terminal was that, on arrival, each driver would visit the office to complete the paperwork relating to the collection of shipping containers. When this was done, a number would be allocated to the driver. The driver would return to his or her truck to wait in the queue of vehicles in the container terminal. When the truck’s allocated number came up on the board, the container would be loaded onto the truck. The driver of the vehicle would then be responsible for elevating and securing the ramps at the rear end of the trailer, commonly with a dog and chain, before leaving the terminal.
At about 9.40pm, when the number allocated to Mr Popovic was displayed on the board he lowered the ramps (using the hydraulic rams) so that the container could be loaded (although, as it happened, this was not necessary as, according to Mr Popovic, the container was lowered (presumably by a crane) onto the trailer). After the container had been loaded onto the trailer, Mr Popovic used the controls for the hydraulic system to lift the rams to elevate the ramps of the trailer to the vertical so that he could secure them with the dog and chain. The right ram operated to lift the right ramp but the left ram did not work correctly. As a result, the left ramp stopped short before it reached a position where it could be secured by the dog and chain.
The subject accident: 16 September 2007
At about this time, the plaintiff was nearby as he, too, had driven a truck and trailer to the Patrick Terminal at Port Botany. He was employed by Yun Cheng Transport Pty Ltd, a company of which he was sole director, which was in the business of collecting and delivering shipping containers. His work involved driving the truck to a nominated depot for the collection of a shipping container and then delivering the container to the nominated destination.
While he was waiting for his number to come up on the board, the plaintiff noticed that Mr Popovic was having difficulty getting the left hand ramp into a position where he could fasten the chain. The plaintiff’s evidence was that Mr Popovic saw that he was watching him and motioned to him to help him with the ramp. Mr Popovic denied that he asked the plaintiff to help him with the ramp. For the purposes of determining liability it is not necessary to decide this question. Whether Mr Popovic intended to ask the plaintiff to help him, or whether this was what the plaintiff understood his intention to be, the plaintiff went to help him. The plaintiff realised that Mr Popovic was not permitted to drive his truck away unless and until the load was secured and the ramps were secured in an elevated position by a dog and chain. Accordingly, the plaintiff appears to have felt some obligation to go to his assistance in order that the loading of containers on the various trucks in the terminal, including the plaintiff’s, could continue.
At the time the plaintiff went to help Mr Popovic, Mr Popovic knew that he was having difficulty with the left ramp. On at least one prior occasion Mr Popovic had had a similar difficulty but had been able to chain the ramp by exerting some force on the ramp to push it closer to the chain. I am satisfied that Mr Popovic appreciated that the hydraulic system which was connected to the left ramp was not operating as it should have been. In these circumstances he ought to have known that it was particularly dangerous for anyone to be standing underneath it.
Both men tried to get the ramp to a sufficiently upright position to enable Mr Popovic to fasten the dog and chain to the ramp to secure it. The plaintiff stood underneath the left ramp trying to push it up while Mr Popovic, who was at the side, attempted to fasten the dog and chain. According to the plaintiff, there was nowhere else for him to stand since he needed to apply force to the left hand ramp to push it up so that it could be attached by the chain to the dog to secure it. Mr Popovic tried to work the lever for the hydraulic system to elevate the left ramp. It is not clear from the evidence whether, at the time the ramp collapsed, he was pulling the ramp from the side, or attempting to elevate it using the hydraulic lever.
Suddenly the weld by which the clevis mount (to which the left hydraulic ram was affixed) was attached to the rear of the trailer failed. The cylinder dropped, taking the ramp with it.
Mr Popovic went to the office at Patrick Terminal to call an ambulance. He was interviewed by police later that evening at about 10.10pm.
The WorkCover investigation
On 18 September 2007 Mr Rolland took the left-hand clevis mount for the purposes of inspecting and testing it as part of the WorkCover investigation. He also took possession of the exercise book in which Interfreight recorded the work carried out on the trailer. At some later stage, he returned both items to Mr Tabuso. The left clevis mount was in Mr Tabuso’s possession at the time Steven Hall and Neil Travers, an insurance loss adjuster, made a site visit to Interfreight’s premises in 2010 on instructions from the solicitors for NTI (referred to in more detail below).
On 15 May 2008 Mr Rolland interviewed Mr Tabuso for the purposes of the WorkCover investigation. Mr Tabuso said that the ramp collapsed because the ram bracket (the clevis mount) sheared off when the weld “let go”. He said that a few weeks before the accident, Interfreight had done some work on the trailer because he noticed some structural damage to the rear of it, which he inferred had been sustained when another vehicle (such as a forklift) ran into the back of it. Mr Tabuso explained to Mr Rolland that work was done to give extra support to the bottom bracket (clevis mount) of the hydraulic ram for the right side ramp because the “breakage on that side was structural”. I do not accept this explanation or the distinction he sought to draw.
When Mr Rolland asked Mr Tabuso whether Interfreight had considered adding extra support to the bracket on the left side hydraulic ram, Mr Tabuso said that it had not considered it because there was no apparent damage to the left hand side. I do not accept the truth of Mr Tabuso’s statement that there was no apparent damage to the left hand side. Mr Tabuso’s statements and evidence have not excluded the possibility that the left clevis mount was re-welded in August 2007 at the same time as the right clevis mount was reinforced by Mr Perish. This matter is relevant to causation, which is addressed further below in the context of the case against ROC.
Mr Tabuso was asked by Mr Rolland when work was last done on the lower brackets of the hydraulic rams that lift the ramps. He answered that “it was all rebuilt about two years ago” and that the work was done by Hoxton. I note that this timing corresponds with the evidence of Mr Tabuso and Mr Sanchez that Hoxton rebuilt the ramps in about May 2006. For the reasons given above I do not accept that, in so far as Mr Tabuso said that Hoxton installed the clevis mounts, he was telling the truth.
Repairs carried out after the accident
Mr Tabuso denied that Interfreight had repaired the left clevis mount after the accident and gave evidence that he could not recall who repaired the left hand clevis mount after the accident. I do not accept his evidence, which, in my view, was given in an attempt to bolster his version (which I do not accept) that Interfreight had not installed the clevis mounts in the first place.
The liquidation of Interfreight
An order for Interfreight’s winding up was made by the Court on 24 March 2009 following an application filed on 22 January 2009. As referred to above, it was deregistered on 28 April 2012.
The insurance claim
The provision of the claim form
Shortly after the accident, Mr Tabuso contacted Warren Gelle, Interfreight’s insurance broker, to inform him of Interfreight’s intention to make a claim. Mr Gelle visited Interfreight’s premises and gave Mr Tabuso a blank claim form, which bore the insignia and logo of NTI and was entitled “COMMERCIAL MOTOR VEHICLE CLAIM FORM”.
The submission of the claim
On 14 July 2008 Mr Popovic filled in and signed the claim form. Mr Popovic’s handwriting was identified by Mr Tabuso in the witness box. Mr Tabuso explained why the claim form was filled in by Mr Popovic in the following terms:
“. . . it’s policy at our work that when an accident happens we hand the claim - or ring Warren, at the time Warren Gelle. Warren Gelle faxes out a claim form and the claim form is filled in by the driver because the driver was involved in the accident and at the accident site. He signs it. . .”
NTI’s receipt of the claim and its instructions to its solicitors
NTI’s solicitor, Brent Hedges of Walker Hedges and Co, received instructions from Ian Levitt, NTI’s Liability and Technical Manager, on 2 June 2009. Mr Hedges was asked to consider the issue of liability as between the plaintiff and the second to fourth defendants as well as the question whether the claim might fall within the statutory compulsory third party policy (of which the NRMA was the relevant insurer).
The site visit conducted on behalf of NTI in November 2010
In November 2010 NTI’s solicitors retained Steven Hall to attend Interfreight’s premises at Prestons for a site visit with Mr Travers, for the purposes of investigating the claim.
Mr Tabuso, who was present at the site visit, produced the left clevis mount the failure of which had caused the accident (which I infer had, by that time, been returned to him by WorkCover which had taken possession of it after the accident as part of its investigation). Steven Hall and Mr Travers examined the failed bracket and returned it to Mr Tabuso. They did not remove it from Interfreight’s premises. The bracket was not available to be produced to the other experts retained for the purposes of these proceedings. It was not suggested that its disappearance was other than accidental. The other experts called to give evidence in the proceedings were prepared to defer to Steven Hall’s expertise in welding and his observation of the actual weld which Mr Tabuso had shown to him in the course of the site visit.
Steven Hall gave evidence that when he inspected the failed bracket he saw evidence of cutting and grinding marks on the bracket which was consistent with someone having previously cut the bracket off and ground it. He agreed with the proposition that its appearance was consistent with its having been cut and ground off on at least one occasion since its (assumed) installation in 2006.
In the course of the site visit in November 2010 Mr Tabuso told Steven Hall that both clevis mounts had been installed and welded into position by Hoxton. This statement accorded with what Mr Tabuso had told Mr Rolland at the WorkCover interview in May 2008 but was not, in my view, truthful.
However, at the site visit, (according to Steven Hall) Mr Tabuso “made continual reference to the strengthening of the brackets and surrounding area”. Steven Hall had difficulty reconciling the statements Mr Tabuso made at the site visit with photographs of the trailer taken subsequently. He noted the following in his report:
“The brackets in the photos appear to be of a different design than the one shown by Mr Tabuso during my site visit.
. . .
I am not fully convinced that the bracket produced by the owner [John Tabuso] has not been removed and replaced additionally to what had been mentioned at the time of the site visit. The bracket may have been removed and reused by the various companies carrying [out] the work on the trailer or by the owner himself if the bracket had in fact broken off in the time before the said accident involving Mr Zhang.”
I accept Steven Hall’s evidence that he prepared his report shortly after the site visit and that he could still recall the details of the site visit, including the substance of what Mr Tabuso said to him, when he prepared the report.
Credibility of witnesses
The plaintiff
The plaintiff gave evidence through an interpreter. I formed the impression that his English was very basic and not of a standard that would permit him to understand any explanation that Mr Popovic might have given him about the apparent malfunction with respect to the left ramp. I accept the plaintiff’s evidence that they did not really speak to each other.
The only significant challenge to the plaintiff’s evidence was put by Mr Barham, on behalf of Mr Popovic. The plaintiff’s evidence was that Mr Popovic had asked him to help with the ramps, whereas Mr Popovic maintained that he had not asked for help. I accept the plaintiff’s evidence that he understood that Mr Popovic was asking for help.
Mr Popovic
It appeared to me that when Mr Popovic gave evidence he was still very distressed by what had happened to the plaintiff. Not only had he witnessed, at close hand, the sudden collapse of the ramp, but he had himself tried to push it up only moments before. Nonetheless I consider that his evidence was generally reliable and was broadly consistent with the statement he gave to police on the evening of the accident and to the WorkCover inspector on 19 November 2007. I accept that he did not intend to ask the plaintiff to help him. However, when the plaintiff understood that he was being asked to help, Mr Popovic did not tell him to stay away and, indeed, used him to push the ramp upwards in an attempt to get it into a position where it could be secured by the dog and chain.
As referred to above, I accept what Mr Popovic said, in his statement to WorkCover, that he had previously had difficulty with the left ramp on the trailer.
Mr Tabuso and Mr Sanchez
I propose to give reasons relating to the credibility of Mr Tabuso and Mr Sanchez together since their credibility is related in that they gave similar evidence which I am satisfied was false.
Neither Mr Tabuso nor Mr Sanchez was a reliable or truthful witness in the proceedings. There was a substantial inconsistency between Mr Tabuso’s statements to WorkCover and Steven Hall (NTI’s expert) that the left clevis mount that failed at the time of the accident and the right clevis mount (that was reinforced in August 2007) had been welded to the rear of the trailer by Hoxton in about May 2006; and his subsequent evidence that the work was done by ROC and that he had specifically observed that the trailer did not have clevis mounts installed when it left Interfreight’s premises to be delivered to ROC in 2006.
In my view, once Mr Tabuso appreciated that NTI had declined indemnity, he got together with Mr Sanchez to concoct a story with a view to implicating ROC in these proceedings to which they both adhered in their sworn evidence in these proceedings.
Mr Tabuso gave evidence that he called ROC in June or early July 2006 to ask them to install a full hydraulic system for the ramps at the rear of the trailer. Mr Tabuso’s evidence was that on 3 July 2006 someone from ROC rang to say that they were ready to do the work on the trailer. Mr Tabuso and Mr Sanchez gave evidence that they both recalled the day, 3 July 2006, on which Mr Tabuso asked Mr Sanchez to deliver the trailer to ROC to have the hydraulic system installed to elevate the ramps. They said that when the trailer left the premises of Interfreight, neither the right nor the left lugs (clevis mounts) had been installed at the rear of the trailer. I am satisfied that this evidence was deliberately false.
Neither Mr Tabuso nor Mr Sanchez was able to identify any document or other aide-memoire to support their corresponding recollection that the trailer was delivered to ROC on that day. Indeed Mr Sanchez agreed that he had written to this Court by letter dated 11 September 2015 saying that he had no documents to produce in answer to a subpoena seeking documents in his possession relevant to the proceedings (I note that the invoices referred to above were produced by Calabro in answer to a subpoena issued to it).
The objective contemporaneous documentary evidence is inconsistent with the trailer having been delivered to ROC on 3 July 2006. A defect notice was issued on 8 August 2006 at Penrith, which recorded that the loading ramps were not fitted at the time of inspection. The trailer was inspected at the HVIS location at Minto on 11 August 2006. On the basis of these documents, I find that the trailer was not delivered to ROC’s premises until after 11 August 2006 and was probably delivered on or about 15 August 2006, being the date on which the job sheet in respect of the trailer was raised by ROC. I reject Mr Tabuso’s evidence that he organised for the trailer to be dropped off at ROC’s premises in early July 2006. Moreover, the entry added much later to the exercise book for the trailer, to indicate that the trailer was delivered on 10 August 2006 is inconsistent with the defect notice and record of inspection on 11 August 2006 as well as his evidence that it was delivered in early July 2006.
I note that Mr Barham endeavoured to support Mr Tabuso’s credit by referring to the solicitor’s involvement in preparing the affidavits of Mr Sanchez and Mr Tabuso in the following terms:
“The reality is, your Honour, I've cross‑examined people and I've been told by judges everyone knows, solicitors prepare affidavits, they do it on instructions but they prepare the affidavits, people look at them and they sign them. There's a document which supports, those invoices support, that is, the Hoxton Truck & Trailer invoices, support that the work was done, and it was done I think in late June or early July, the last date was 3 July. That supports that the ramps were done. There's no question that Mr Sanchez made the ramps. He did a good job of it.”
I reject the proposition (if this is what was meant by Mr Barham’s submission) that a solicitor might draft an affidavit from contemporaneous documents rather than from the direct instructions of the deponent and simply put the draft in front of the deponent to have him read and sign it. Accordingly, although I assume that the affidavits were drafted by the defendants’ solicitor, I would not infer, without evidence, that the date of 3 July 2006 came from the solicitor rather than from the deponents themselves. Neither Mr Tabuso nor Mr Sanchez said, when cross-examined about the provenance of the date of 3 July 2006, that it been suggested by Vincent Macri (Interfreight’s solicitor) or that he had inserted it in the drafts of the affidavits which they ultimately swore or affirmed. Nor was Mr Macri called to give evidence to that effect.
In my view the provenance of the date of 3 July 2006 is likely to have been that it was the date of the last invoice issued by Hoxton to Interfreight and therefore the closest date in time to the invoice issued by ROC for the installation of the hydraulic system. I reject the hypothesis that Mr Tabuso and Mr Sanchez came up with the date independently. I infer that they discussed the matter and decided to give the same evidence on the topic, which they knew at the time to be false. For the reasons given above, I reject Mr Barham’s submission that the date came from the defendant’s solicitor.
Mr Tabuso said that when one of his staff members collected the trailer from ROC’s premises and brought it back to Interfreight’s premises, he noticed that lugs (clevis mounts) had been newly welded onto the rear of the trailer. Mr Sanchez said that when he observed the trailer on 4 September 2006 he noticed that the hydraulic rams were welded to lugs on either side of the rear of the trailer which had not been there previously. I reject this evidence as false.
Mr Tabuso gave evidence in cross-examination that when the trailer came back from ROC it was “all painted, it was all freshly done” and the whole back of the trailer was “all white”. He embellished this evidence in the following exchange with Mr Barham (who appeared for the first two defendants who were, relevantly, in a similar interest to the plaintiff in attributing blame to ROC):
“Q. You were asked a question about seeing a new clevis mount. In fact, you were asked a couple of times. What made you think that the clevis mount was new when it came back from ROC?
A. Because they’re, they’re professionals. They wouldn’t use second‑hand bits of course. It looked like it was all brand new, it was all painted. Why would they use a second‑hand bit?
Q. When you say it was all painted, what were you able to see about the clevis mount?
A. It was welder on the back of the trailer all painted.
Q. Was it painted when you had sent - when I say “it” was the back of the trailer painted when you it off to ROC?
A. It would have been the old paint but there would have been a lot of grinding marks because where little other - little bits and pieces was done, there’s stone chips and all that, so then they freshly painted around where all of the actual cleat, the welding, all that section because the back of the trailer has got to be white by law.”
Mr Tabuso confirmed that when the trailer came back from ROC its rear looked “brand new” because of the paint.
I am satisfied that this evidence was untruthful and given to add verisimilitude to Mr Tabuso’s new version that ROC (and neither Interfreight nor Hoxton) had welded the clevis mounts to the trailer. I prefer the evidence of the ROC witnesses that they did not have any spray painting equipment on the premises and that the only painting they did was to spray the joint of a weld (once the weld had cooled) with a can of paint to protect it. I also accept Adrian Hall’s evidence that ROC was not authorised to paint.
Mr Sanchez’s preparedness to lie about apparently peripheral matters demonstrated his cavalier attitude towards the truth. For example, Mr Sanchez denied that he knew Mr Tabuso either personally or through his business before 2005. Mr Sanchez said that his only relationship with Mr Tabuso was as a result of his contacting him in 2005 to do some work. Mr Sanchez gave evidence that he operated Hoxton’s business from a workshop in Yarrunga Road, Prestons. He agreed in cross-examination that Interfreight was also operating its business from those premises. However, he denied knowing Mr Tabuso. His evidence is to be contrasted with that of Mr Tabuso. Although Mr Tabuso’s evidence is not entirely clear, it appears that he had been apprenticed to one of the two Sanchez brothers (probably Jose) as an eighteen-year old in 1992 and had also worked for Jose Sanchez in the business which Mr Tabuso later purchased through Interfreight. At all events, Mr Tabuso ultimately admitted in cross-examination that he had known Mr (Peter) Sanchez since at least 2003.
Mr Sanchez denied ever doing any welding work on any of Interfreight’s trucks or trailers; he later admitted that he had done some welding work on the trailer when he installed the ramps.
Mr Sanchez also denied that he knew anything about the proceedings and denied that Mr Tabuso had ever told him that Interfreight was being sued. He swore that when he was asked about it in cross-examination was the first time he became aware that Interfreight had been sued. I do not accept this evidence.
Mr Sanchez said that he had not issued any invoices for work done by Hoxton after it was deregistered on 7 May 2006. However, all of the invoices tendered in these proceedings post-dated that date.
Mr Sanchez was vague about many things about which he was asked, such as: why Hoxton was deregistered; whether he continued to operate the company after it was deregistered; whether and what work he had done since Hoxton was deregistered (although he ultimately disclosed what he had done); and when he left the premises Hoxton shared with Interfreight.
When Mr Sanchez was cross-examined about his affidavit (which was sworn on 27 March 2014), he said that he was working at 395 Devonshire Road, Kemps Creek, which is the address recorded on his affidavit as his address. However, he later corrected his evidence by saying that the Devonshire Road address was Mr Tabuso’s premises and that that was where he had manufactured the ramps for the trailer. He later said that it was merely the address that was on the affidavit and that it was where he had sworn the affidavit in the presence of Mr Tabuso’s solicitor, Mr Macri. Mr Sanchez said that Mr Tabuso lived at that address, which was not only business premises but also a private home. He also said that he assumed it to be Mr Tabuso’s private home although he denied that he had had any discussions with Mr Tabuso about the affidavit. Mr Tabuso confirmed in his cross-examination that the Kemps Creek address was not his private home; it was solely a transport depot.
Mr Tabuso was also vague about matters one would expect him to recall and reluctant to answer questions directly, particularly when he could not readily work out their apparent significance. When asked how many trucks Interfreight had, he answered: “Does it really matter?” When asked how many trailers Interfreight owned he said “several” although he was prepared to admit when the figure of 30 was put to him that the figure “could be” correct.
When Mr Tabuso was cross-examined about his statement in the WorkCover interview in May 2008 that Hoxton had done work that involved “defects and repairs to ramp brackets”, he read out the word “bracket” in the singular. The following exchange ensued:
“Q. You used the plural in your answer [in the WorkCover interview], didn’t you?
A. Well, I’m not really educated. I’m not really good at reading and writing.
Q. You say you didn’t understand the different between brackets and a bracket?
A. Well, maybe he wrote down the wrong thing and he assumed brackets when I said maybe brackets ten years ago.”
In my view, Mr Tabuso had an acute awareness of the significance of his having told WorkCover in May 2008 that Hoxton had installed both brackets (left and right) on the rear of the trailer. Mr Tabuso appreciated that his earlier statements which implicated Hoxton were inconsistent with his evidence at trial that it was ROC which installed them.
The ROC witnesses
Four witnesses were called by ROC to give evidence: Adrian Hall, Mr Fahmy, Mr Cox and Mr Matsaniotis. A draft statement was obtained from John Tichonzuk, who was not available at the time of the hearing. The draft statement, accordingly, was not tendered. I draw no adverse inference from his absence. However, even were I to do so, it is difficult to see how that would advance matters since the inference to be drawn would only be that the witness’s evidence would not have assisted ROC’s case.
Adrian Hall
I accept Adrian Hall as a reliable witness. Mr Hall was a part-owner and director of ROC and the business partner of Mr Fahmy. Although he was a qualified fitter machinist, he described himself as a “jack of all trades” who acted as sales person and would also prepare quotations. He had no recollection of the particular task. He gave his evidence in a straightforward, responsive way and was not defensive about any aspect of it. He made several concessions which could be regarded as being against the interests of ROC (although they did not have that effect because of my factual findings). For example, he agreed that:
(1)If ROC it had become aware that a weld was suspect, it would have notified the customer.
(2)If the welding around the left clevis mount had looked the same when the trailer was delivered to ROC in August 2006 as it did when it failed in September 2007, it would have been desirable to improve on the connection to make it more secure.
(3)Had the clevis mounts not been present on the trailer when it was delivered to ROC, he would have suggested that a one-piece vertical mount be profile cut and welded onto the trailer so that the rams could be attached to it.
Nabil Fahmy
Mr Fahmy gave his evidence in a straightforward, responsive manner. He explained how the records of ROC were kept and in particular that documents relating to a particular job, including invoices from outside suppliers were kept together with the job sheet. I accept his evidence, based on the records and ROC’s usual practice, that ROC did not install clevis mounts.
Dion Matsaniotis
Mr Matsaniotis was a third-year apprentice at ROC when the trailer came in for the hydraulic cylinders to be fitted. I am satisfied that he had a reasonably good recollection of what generally occurred in the workshop at ROC at the time. I accept his evidence that he did not install mounts for a hydraulic ram on any occasion in the course of his work with ROC.
Robert Cox
Mr Cox was a hydraulic fitter employed by ROC in 2000. He was at ROC in August 2006 when it performed the work on the trailer. He has since retired. He did some welding, including welding mounting lugs for hydraulic cylinders on the actual cylinders. I accept his evidence that ROC did not weld clevis mounts to vehicles but would send customers to a body builder for that work to be performed.
The reliability of ROC’s records
The plaintiff relied on Prasad v Minister for Immigration, Local Government and Ethnic Affairs (1991) 101 ALR 109 in support of the proposition (at 122 per Heerey J) that:
“Experience of the world shows that the files and other records of even the best run organisations, government and private, large and small, can usually not be treated as infallible.”
The plaintiff contended that, given the reservations that one ought have with respect to any record-keeping (such as those expressed by Heerey J in the passage set out above), it could not be inferred either that ROC’s records were complete (so as to permit the negative inference to be drawn) or that they were accurate. My findings regarding the work ROC performed are based on the evidence of its four witnesses of its usual practice (see Connor v Blacktown District Hospital [1971] 1 NSWLR 713), including with respect to record-keeping; on its records, which have not been shown to be deficient in any material respect; and on the basis of the other evidence in the proceedings outlined in the narrative above (including the unreliability of Mr Tabuso and Mr Sanchez, including as to the time at which the trailer was delivered to ROC and whether or not the clevis mounts had been affixed before that time). Although one would not assume that ROC’s records are “infallible”, I regard them as reliable, for the reasons given with respect to business records generally: see Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542 at 548-549 per Hope JA.
The expert evidence
The experts prepared a joint report and gave concurrent evidence. The plaintiff called Neil Gillies, an engineer. NTI called three experts: Dr Bruce Moulton, an engineer; Mr Travers, an insurance loss adjuster; and Steven Hall, an expert in welding. ROC called Dr Robert Casey, engineer.
Inspection of the actual bracket
As referred to above Steven Hall inspected the mount when he visited Interfreight’s premises in November 2010. He was the only expert (apart from Mr Travers who also saw the bracket but whom I was not satisfied was relevantly an expert) to do so, as the bracket disappeared thereafter. In his report he said:
“I am not fully convinced that the bracket produced by the owner has not been removed and replaced additionally to what had been mentioned at the time of the site visit. The bracket may have been removed and reused by the various companies carrying the work on the trailer or by the owner himself if the bracket had in fact broken off in the time before the said incident involving Mr Zhang.
The condition of the bracket in terms of welding is well below standards acceptable for such an operation. Also the bracket has appeared to have been damaged during one or several of its removal procedures thus resulting, in my opinion, to be unsatisfactory for its intended purpose.
Any reputed company carrying such repair/modification to an existing trailer would have a code of ethics as to their quality of work and not reused any component deemed unsatisfactory. Therefore, the bracket in its current form would most likely to have been discarded and not used.
2.0 Defects
The bracket indicates (visual examination) severe defects not only in the welding but also in the surrounding parent material. The defects/damage in the parent material is a direct result of the bracket been removed (it is possible to assume that it may have carried out on several occasions) from the trailer and reused to consolidate the repair/modification. Who undertook the removal at this stage is unclear. The welding of the bracket to the body of the truck has a number of visual defects. As a result of those defects, the mechanics (ramp going up and down) of the ramp/hydraulics has been severely disrupted. The ramp may have been working satisfactorily until placed in a position where extra force was required due to some unknown circumstance. (indicated by the owner when the ramp could not be relocated to its correct position) Partial failure may have occurred by the bracket being dislodged from the trailer with complete failure occurring when the bracket broke away causing the ramp to fall.
2.1 Type of defects.
Visual inspection of the bracket has indicated a number of defects. Bracket material has been removed during the process of removing the bracket from the truck body. This has been carried out previously by the oxy acetylene gouging process where the removal of old weld metal is the objective. Once the weld metal had been removed, the bracket would have fallen off. Oxy acetylene gouging is commonly used in the metals industry as a method of salvaging component parts for reuse. Ill directed gouging will remove parent metal at the same time as weld metal severely weakening the bracket when relocating takes place.
Tradespersons are trained to remove weld metal and not expose the parent metal to any form of damage. Weld metal must then fill the gap previously been removed by the gouging process as means of having a full fusion weld between the bracket and the trailer body. Added to the problem is that heavy grinding has also been carried out as a means of cleaning up the bracket of old weld metal before reattaching the bracket in its new position. This has also made it more difficult to obtain a fusion weld between the surfaces in question.
The lack of fusion is evident on the bracket.
. . .
Whilst the design of the bracket has some question marks against it, the installation is of a very poor quality. The writer has little doubt that the welding of the bracket has contributed to the accident.
The number and type of defects are severe to the point that failure was just a matter of time. It is apparent to the writer that a non-tradesperson has carried out the work. That is a person with little or no welding experiences and knowledge at the task at hand.”
Each of the experts deferred to Steven Hall’s observations of the failed weld since he had seen the actual piece whereas the other experts had only seen photographs.
Whether the left clevis mount had been welded on more than one occasion
I do not accept Mr Tabuso’s evidence (which was inconsistent with his statement to WorkCover and to Steven Hall) that the clevis mount had been installed by ROC and neither removed nor rewelded by Interfreight at any time up to the time of the plaintiff’s accident. He is not, for the reasons given above, a reliable witness.
Dr Moulton considered, on the basis of the photographic evidence, that the left clevis mount had probably been second-hand (used for another purpose before it was installed on the trailer).
Mr Gillies noted that the photographs of the subject weld indicated that the weld was not uniform. He hypothesised that the weld might have been re-welded at a later stage because there was “more than one run”.
Mr Gillies postulated that the left clevis mount might have been re-welded in August 2007 when the right clevis mount was damaged and reinforced with plates. Mr Gillies opined that the better course (in this event) would have been to reinforce the left clevis mount in the same manner as had occurred with the right clevis mount: namely, to put reinforcing plates around it to support and strengthen the joint. Mr Gillies adverted to the disadvantages of re-welding a joint and explained that where a weld is connected to a thin piece of plate, adding weld to the joint does not make it stronger. Rather, it tends to make it more susceptible to failure through cracking at the joint with the thinner material.
The condition of the weld that failed
While the other experts agreed that the weld was “defective”, Mr Gillies preferred that the welding be described as “poor”. For the purposes of the issues to be determined in these proceedings, I regard the difference as a semantic one.
The cause of the failure
The experts agreed that the left clevis mount failed through the weld because the weld was defective, or poor. It is possible that the weld had begun to fail which prevented the left ramp being elevated to its maximum. The additional force applied to raise the ramp then caused the failing weld to fail completely.
Dr Casey opined that the survival of the weld for a considerable time since the installation of the clevis mount suggested that an additional force was applied proximate to its failure to cause the defective weld to fail at that time. Other experts disagreed with this proposition and contended that it might simply have been that the force on the day of the accident was “the straw that broke the camel’s back”.
Although Dr Casey had postulated that the additional force could have been produced when the ramp hit the stopper, he accepted that if the ramp was still 50cms away from the vertical, it would not have hit its stopper. Accordingly I took him to accept that this hypothesis had been excluded by the evidence.
Steven Hall opined that the ramp met some sort of resistance which caused Mr Popovic to use increased force to raise the ramp. The combination of the increased force and the weakness in the weld, or defective weld, was an effective mechanism for failure.
Whether the deficiency in the weld would have been apparent prior to its failure and, if so, for what period prior to its failure
Dr Casey said that the deficiency in the weld would not necessarily have been evident from an inspection of the weld.
Mr Gillies initially said that the cracking would have been evident before the day of the accident because it would have become progressively larger over time with each raising and lowering of the ramp and that it would have been discerned by a moderately close inspection. However, he refined this opinion in the course of concurrent evidence by saying that the cracking in the weld which culminated in its failure on 16 September 2007 may have been visible about a month before that date although it was difficult to give any definite assessment as to the time at which the cracking would have been evident. The estimate of one month was derived from a calculation of 10% of the 13 months between the installation of the hydraulic system and the failure of the left clevis mount. As I am satisfied that the clevis mounts were not installed by ROC in August 2006, this calculation becomes moot. Although Mr Gillies expressly agreed with the proposition that the cracking in the left hand clevis mount would have been apparent for some weeks before the plaintiff’s accident, he also gave a range of between one week and four months. Ultimately he said that he could not say when the initial crack would have been discernible and, in particular, whether it would have been discernible on 23 August 2007 when the work was done to reinforce the right clevis mount even if a “thorough inspection” had been carried out.
Whether ROC as the installer of the hydraulic system (but not the installer of the left clevis mount) ought to have tested the strength of the weld that attached the clevis mount to the trailer
Dr Casey, Steven Hall and Dr Moulton considered that, if ROC had suspected a problem with the clevis mount or the weld, they should have brought it to the attention of Interfreight or refused to install the hydraulics. This evidence was consistent with the evidence of Adrian Hall himself that, if when inspecting the clevis mounts, there had been a visible defect he would have raised it with Interfreight.
Mr Gillies expressed his opinion in slightly different terms from the other experts in the joint report. He said:
“If the lugs or mounts were already fitted then the installer of the hydraulics system would have had to calculate resultant forces when using the hydraulics by using information about the overall configuration so components of the hydraulics could have been selected.
Given the combination of components selected would then determine the maximum forces in the pivots and a competent installer should have been able to assess whether the attachment points for the components would overload at various connection pints (sic).
The irregular external appearance of welding was indicative of poor welding and should have alerted any competent installer of hydraulics of the possibility of a deficient attachment and so an assessment of their suitability should have been made and that brought to the attention of the semi-trailer owner.”
I am not satisfied that, at the time the trailer was in ROC’s possession in August 2006, the welding exhibited “irregular external appearance”. In these circumstances, and in light of Mr Gillies’ oral evidence, I understood his final position (on the basis of my findings) to accord with that of the other experts.
Findings as to the condition of the weld and its appearance
I am satisfied that the left clevis mount was second hand. It was welded to the rear of the trailer in a defective manner. The weld was redone, either at about the same time as the original weld or at a later stage (possibly in August 2007 after the impact damage which led to the reinforcement of the right clevis mount). I am not satisfied that its appearance at the time it was in ROC’s possession in August 2006 was the same or similar to its appearance on the day of the accident. I am not satisfied that the weld appeared to be defective in August 2006. Although I am satisfied that there would have been some physical indication that the weld was defective prior to its failure on 16 September 2007, the evidence does not enable me to make a finding as to the timing of such physical indication.
Liability of Mr Popovic (the first defendant)
The facts which I have found which are set out in the narrative above include that the plaintiff was standing beneath the left ramp, endeavouring to push it upwards while Mr Popovic was either operating the hydraulic system to get it to lift or pulling it manually from the side so that he could attach the dog and chain to it to hold it in the vertical position so that the trailer could be driven away. The weld failed at this time and caused the left ramp to fall suddenly before the plaintiff had a chance to move out of the way. At the time Mr Popovic knew that the left ramp could not be elevated normally and required extra force, either through manual pushing or through additional force applied through the hydraulic system. Although he knew that there was a problem, he nonetheless permitted the plaintiff to stand under the ramp and enlisted his help in the task of raising the ramp.
In these circumstances, Mr Popovic (and through him, Interfreight) owed the plaintiff a duty to take reasonable care for his safety. Although the instructions Interfreight had given to Mr Popovic when he started as its employee were economical, they did at least include the injunction not to stand under the ramp. Mr Popovic not only permitted the plaintiff to stand under the ramp, but did so in circumstances where he knew the ramp was not operating normally and could not be elevated to its vertical position by the usual operation of the hydraulic system.
I turn to the characterisation of the risk of harm, bearing in mind the summary of principles in United Church in Australia Property Trust (NSW) v Miller; Miller v Lithgow City Council [2015] NSWCA 320 at [102]-[122] per Leeming JA (Basten and Simpson JJA agreeing). In my view, the risk of harm was that the left ramp, which was not able to be elevated normally by the use of the hydraulic system, would fall and cause injury to someone because of its weight. The likely seriousness of the harm was considerable and foreseeable. A person in Mr Popovic’s position was reasonably required to take the precaution of ensuring that no one stood under a ramp, particularly in circumstances where he knew there to be a malfunction in the elevation mechanism for the left ramp. In failing to take such precautions (having regard to the principles referred to in ss 5B and 5C of the Civil Liability Act 2002 (NSW)), he was negligent. I am satisfied that Mr Popovic breached the duty he owed to the plaintiff by permitting the plaintiff to stand under the ramp which he knew was not operating normally, thereby exposing the plaintiff to the risk that the ramp would fall and injure him (being the relevant risk of harm).
Section 5 of the Queensland Act provided:
“5 Application of this Act
(1) This Act applies to personal injury caused by, through or in
connection with a motor vehicle if, and only if, the injury—
(a) is a result of—
(i) the driving of the motor vehicle; or
(ii) a collision, or action taken to avoid a collision,
with the motor vehicle; or
(iii) the motor vehicle running out of control; or
(iv) a defect in the motor vehicle causing loss of control of the vehicle while it is being driven; and
(b) is caused, wholly or partly, by a wrongful act or omission in respect of the motor vehicle by a person other than the injured person.
(2) For an uninsured motor vehicle, subsection (1) applies only if the motor vehicle accident out of which the personal injury arises happens on a road or in a public place.
(3) However, this Act does not apply to personal injury caused by, through or in connection with—
(a) a tractor, backhoe, bulldozer, end-loader, forklift,
industrial crane or hoist, or other mobile machinery,
other than an agricultural machine; or
(b) an agricultural machine; or
(c) a motor vehicle adapted to run on rail or tram tracks; or
(d) an amphibious vehicle; or
(e) a motor vehicle of a class prescribed by regulation;
unless the motor vehicle accident out of which the injury arises happens on a road . . .”
Section 23(1) of the Queensland Act provided:
“23 Statutory policy of insurance
(1) When transport administration registers or renews the registration of a motor vehicle—
(a) a policy of insurance in terms of the schedule comes into force for the motor vehicle when the registration or renewal of registration takes effect; and
(b) the licensed insurer selected under this part in or in relation to the relevant application is the insurer under the policy.
The Schedule to the Queensland Act provided:
Schedule Policy of insurance section 23(1)
1 Extent of insurance cover
(1) This policy insures against liability for personal injury caused
by, through or in connection with the insured motor vehicle
anywhere in Australia.
(2) This policy extends to liability for personal injury caused by,
through or in connection with a trailer attached to the insured
motor vehicle or that results from the trailer running out of
control after becoming accidentally detached from the insured
motor vehicle.
(3) The liability mentioned in subsection (1) or (2)—
(a) is a liability for personal injury to which the Motor
Accident Insurance Act 1994 applies; and
. . .”
The same point can be made about the Queensland Act and the policy as was made with respect to the New South Wales Act. If the exclusion 2(b)(8) is read as the opposing parties contend, double insurance with the statutory compulsory third party scheme insurance is avoided.
The regulatory compulsory third party scheme: the Northern Territory provisions
The opposing parties also relied on the applicable Northern Territory legislation, Motor Accidents (Compensation) Act 1979 (NT) (the NT Act), which provided for a statutory compensation scheme for accidents in that jurisdiction and vehicles registered in that jurisdiction. Unlike in Queensland and New South Wales, the Northern Territory scheme was no-fault scheme.
Section 4A was inserted into the Act by the Motor Accidents (Compensation) Amendment Act 2007 (NT), which was assented to on 17 May 2007 and commenced on 1 July 2007. It relevantly provided:
“4A Motor accidents
(1) A motor accident is an occurrence:
(a) caused by or arising out of the use of a motor vehicle; and
(b) resulting in the death of, or injury to, a person.
(2) A motor accident is caused by or arises out of the use of a motor vehicle if, and only if, it results directly from:
(a) the driving of the motor vehicle; or
(b) the motor vehicle moving out of control; or
(c) a collision, or action to avoid a collision, with the motor vehicle (whether the motor vehicle is stationary or moving).
. . .”
Before the commencement of the amendment, the previous definition of “accident” in the NT Act extended to occurrences on a public street “caused by or arising out of the use of a motor vehicle”, but was not limited to use that involved driving, or the vehicle moving out of control or colliding or avoiding a collision.
The Second Reading Speech made on 21 February 2007 for the Motor Accidents (Compensation) Amendment Bill (NT) (which inserted s 4A) explained the principal features of the statutory scheme in force in the Northern Territory, as well as the effect of the amendments. It read in part as follows:
“The MACA [Motor Accidents (Compensation) Act] scheme is premised on the no-fault principle, but with some exclusions introduced over time by successive governments to contain scheme costs. In other words, compensation benefits for Territory residents injured in a motor vehicle accident or for the dependents of persons killed in a motor vehicle accident are usually provided automatically regardless of who is at fault. No-fault-based motor accident compensation avoids the need for costly and potentially stressful litigation in order to obtain compensation.
. . .
MACA also provides equivalent statutory benefits for residents injured interstate in Northern Territory registered vehicles and indemnifies drivers of Territory registered vehicles against compensation claims by non-residents for accidents occurring outside the Territory.
...
The substantive provisions in the bill are:
· access to common law damages for accidents in the Territory is abolished. This means that a single system of statutory benefits will apply for all motor vehicle accidents in the Territory, regardless of the residency of the claimant;”
The Northern Territory Act is more nuanced since it applies differently to accidents in the Northern Territory and accidents elsewhere involving Northern Territory registered vehicles. Nonetheless the amendments had commenced by the date of the policy and limited the extent of the compulsory third party policy to vehicles which were being driven (whereas the Act had previously applied to the use of motor vehicles without that limitation). The Northern Territory Act would appear to complement the Fleet Motor policy through exclusions 2(b)(8) and 2(b)(10), if 2(b)(8) is interpreted in the way for which the opposing parties contended.
Whether the Commercial Motor Vehicle Policy (which I have found was not the applicable policy) can be taken into account as a surrounding circumstance
It was also contended by Mr Cavanagh that the Commercial Motor Vehicle Policy formed part of the “surrounding circumstances” which could be taken into account for the purposes of resolving any ambiguity. He relied on the wording of the corresponding provision to exclusion clause 2(b)(8) in that regard. I reject the argument that the wording of that policy formed part of the factual matrix. As appears from the quotation from Codelfa Construction Pty Ltd v State Rail Authority of New South Wales the surrounding circumstances must be “known to both parties” to the contract. The only basis for supposing that any of the insured persons were aware of the terms of the Commercial Motor Vehicle Policy was that the claim form filled in by Mr Tabuso was expressed to be a claim form under the Commercial Motor Vehicle Policy. I am not satisfied that this circumstance makes it more likely than not that the insured had any idea of the terms of that policy, as opposed to the Fleet Motor Policy (which I have found formed part of the contract between them). Accordingly, I do not regard the terms of the Commercial Motor Policy as relevant to the question of construction of exclusion clause 2(b)(8) in the Fleet Motor policy.
The parties’ commercial purpose
The commercial purpose of the parties to the contract of insurance appears to have been to provide insurance cover on various bases for the vehicles listed in the schedule. Both the insurer and the insured can be taken to have appreciated that there was no need for NTI to provide cover to the insured for matters which were already covered by third party insurance provided by the statutory scheme that applied to registered motor vehicles and that there was no commercial utility in its doing so. This commercial purpose is consistent with the inclusion of other exclusions, which exclude from cover those matters covered by other statutory insurance or cover. For example, exclusion 2(b)(4) excludes liability:
“for any claim in respect of which insurance is required according to law.”
Exclusion 2(b)(7) provides that NTI will not pay:
“for any liability imposed by the provisions of:
(i) any worker’s or workman’s compensation legislation,
or
(ii) any accident compensation legislation,
or
(iii) any industrial award or agreement or determination.”
Exclusions 2(b)(9) and (10) provide that NTI will not pay:
“(9) for any liability for death or bodily injury by a Queensland or New South Wales registered trailer whilst that trailer is being towed by a Motor Vehicle or running out of control having become accidentally detached therefrom at the time the death or bodily injury occurs.
(10) for death or bodily injury caused by or in connection with Your Motor Vehicle, if Your Motor vehicle is registered in the Northern Territory of Australia.”
When exclusion 2(b)(8) is read against the background of the statutory framework, the wording referring to Queensland in that clause (“a defect in the motor vehicle causing loss of control of the vehicle while it is being driven”) and the second part of the clause (referring to backhoes and so on) appear to come directly from s 5 of the Queensland Act.
It is not clear that the draftsperson of the Fleet Motor Policy had in mind the precise differences between the New South Wales, Queensland and Northern Territory legislation, although it can be inferred that he or she did have the wording of the Queensland legislation in mind when drafting exclusion 2(b)(8). A review of the legislation referred to by the opposing parties does not, in my view, adequately explain why exclusion 2(b)(8) has been worded as it has. I have been unable to discern a rationale that accounts for all the words in that exclusion and others contained in Section 2(b) of the Fleet Motor Policy.
However, an interpretation of cl 2(b)(8) which applies the words “whilst it is being driven” to all vehicles, and not just to those in Queensland, would, in my view, advance the assumed commercial purpose of the parties to provide/ obtain cover that is complementary to the cover provided by statutory third party insurance.
The construction of exclusion 2(b)(8)
In Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 Mason, Wilson, Brennan, Deane and Dawson JJ said at 510, with respect to exclusion clauses:
"[T]he 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."
In Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; 217 CLR 424 at [17]-[23], the plurality (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ) considered the principle that ambiguous contractual provisions in a contract of guarantee are to be construed strictly in favour of the surety. After addressing the differences between guarantees and indemnities, the plurality observed that the common factor is that “both are designed to satisfy a liability owed by someone other than the guarantor or indemnifier to a third person” ([23]). On this basis, the plurality concluded that the principles applicable to contracts of guarantee (including the principle referred to above) are relevant to the construction of indemnity clauses: see also Erect Safe Scaffolding (Australia) Pty Ltd v Sutton [2008] NSWCA 114; 72 NSWLR 1 (Erect Safe) at [11] per Giles JA. Although a contract of insurance is, in part, a contract of indemnity, in that the insurer may agree to indemnify the insured in respect of the insured’s liability to a third person, it “has the object or purpose of sharing the risk of, or spreading loss from, a contingency”: Todd v Alterra at Lloyds Ltd (on behalf of the underwriting members of Syndicate 1400) [2016] FCAFC 15 (Todd) at [38] per Allsop CJ and Gleeson J. As their Honours said in Todd at [40]:
“From the nature, character and purpose of insurance there is no reason, and no precedent, for according an insurer the tenderness accorded to guarantors and indemnifiers as reflected in the general principle recently restated in Bofinger 239 CLR at 292 [53].”
A liberal interpretation in favour of the insured should be adopted as long as it is consistent with the words of the policy and the commercial purpose of the policy: Australian Casualty Co. Ltd v Federico (1986) 160 CLR 513 at 520-521 per Gibbs CJ. I infer that the insurer drafted the contract, which appears to be in a standard form (hence the need for the schedule which adapts it to each insured) and has a superior knowledge and expertise relating to principles of insurance to that of the insured. Accordingly, I consider it appropriate to use the contra proferentem maxim to assist in the resolution of the ambiguity created by the express words of the exclusion clause and the difficulties of making sense of them and reconciling them with the parties’ commercial purpose. In the circumstances of the present case an ambiguous contractual provision such as cl 2(b)(8) is to be construed against the insurer. NTI accepted (and indeed specifically submitted) that, in the event of an ambiguity, the construction which favours the insured will prevail.
The insurer has failed to make clear that the exclusion in cl 2(b)(8) applies to the present case. I am not persuaded that the words “whilst it is being driven” were intended to be confined to vehicles in Queensland only. I prefer the construction where these words are to be read as if a comma preceded them, to indicate that the phrase limits the operation of the exclusion. On this construction the exclusion clause 2(b)(8) does not apply to the present case as the trailer was not being driven at the relevant time. This construction would advance the commercial purpose identified above, and take account of the statutory schemes for compulsory third party motor vehicle insurance which, for the reasons given above, I consider to form part of the surrounding circumstances that can be taken into account in the case of ambiguity.
Further, the construction which I prefer is consistent with the wording of exclusion 4(d) (which is contained in Section 6 of the policy). If exclusion 2(b)(8) were given the wide meaning for which NTI contended, it is difficult to see what work would be remaining for exclusion 4(d) in Section 6 to do.
I note for completeness that it was not suggested (nor could it have been in light of Insurance Commission of Western Australia v Container Handlers Pty Ltd [2004] HCA 24http:// 218 CLR 89 at [52], [133] and [153]) that the trailer was being driven at the time of the accident. The judgment in favour of the NRMA is consistent with an acceptance by the parties that the trailer was not being driven at the relevant time.
NTI accepted that the policy covers the incident, but for the exclusions. As I have found that none of the exclusions applies, there will be judgment for the plaintiff and the first and second defendants against NTI.
Additional arguments regarding the application of exclusion 2(b)(8)
For completeness I am required to address the other submissions put regarding the application of exclusion cl 2(b)(8), although they do not arise, having regard to my conclusion that the exclusion does not apply because the trailer was not being driven at the time of the accident.
Whether Mr Popovic’s liability to the plaintiff was “arising out of or in any way connected with a defect in” the trailer
ROC argued that the exclusion did not apply to Mr Popovic in any event (irrespective of my conclusion on the construction question addressed above) because his liability for the plaintiff’s bodily injury was not “arising out of or in any way connected with a defect in” the trailer. ROC submitted that Mr Popovic was only the driver and therefore had no responsibility for the defect and therefore would not be liable in respect of the defect. Mr Cavanagh relied on Erect Safe at [12] per Giles JA.
Erect Safe concerned a claim for damages brought by Mr Sutton, who was employed by Dalma, a formwork company which was subcontracted to Australand, the head contractor, who was engaged in the construction of a large multi-storeyed building. Erect Safe was also subcontracted to Australand and was responsible for erecting and maintaining scaffolding on the site. Mr Sutton sued Australand and Erect Safe for damages in negligence. Australand cross-claimed against Erect Safe on the basis of an indemnity clause in the subcontract between Erect Safe and Australand which, relevantly, provided that the subcontractor, Erect Safe, must indemnify Australand Constructions (the head contractor) against liability incurred by Australand Constructions arising out of the performance of the Subcontract Works and its other obligations under the Subcontract. The primary judge entered judgment against both defendants; found that Erect Safe was liable to indemnify Australand in respect of its liability to the plaintiff; and entered judgment for Australand on the cross-claim accordingly.
The judgment against Erect Safe on the cross-claim was overturned on appeal. The Court of Appeal (Giles JA and McClellan CJ at CL, Basten JA dissenting) accepted Erect Safe’s argument that the indemnity clause did not extend to Australand’s liability to Mr Sutton. Their Honours found that Australand’s liability arose by reason of its own negligence, rather than the performance of the subcontract works by Erect Safe, which had merely been the occasion for the loss, not its cause (which was Australand’s breach of the duty it owed to Mr Sutton) and that this was insufficient to engage the indemnity.
In the present case, I have found Mr Popovic liable for the plaintiff’s loss because he, being aware that the elevation of the left ramp was compromised by a defect, failed to take reasonable steps to prevent the plaintiff standing under the left ramp and indeed permitted and encouraged him to stand there. The words “arising out of” and “in any way connected with” are words of wide import: see Government Insurance Office of NSW v RJ Green & Lloyd Pty Ltd (1966) 114 CLR 437 at 446-447. I am satisfied that Mr Popovic’s liability arose out of and in connection with the defect because his failure to take steps notwithstanding his knowledge of the defect was what made him liable. That he was not responsible for the defect (and could not have identified the precise defect at the time) is not to the point. Accordingly, I do not regard the reasoning in Erect Safe Scaffolding (Australia) Pty Ltd as providing any real guidance in the circumstances of the present case.
It was not suggested that the reasoning in Erect Safe would be of assistance to Interfreight in bringing its liability outside the exclusion clause since, as was accepted by ROC, its liability arose on many bases, at least some of which could be said to be arising out of the defect.
Section 46 of the Insurance Contracts Act
It was also argued by the opposing parties that s 46 of the Insurance Contracts Act applied. It provides:
“Pre-existing defect or imperfection
(1) This section applies where a claim under a contract of insurance (other than a contract of insurance that is included in a class of contracts declared by the regulations to be a class of contracts in relation to which this section does not apply) is made in respect of a loss that occurred as a result, in whole or in part, of a defect or imperfection in a thing.
(2) Where, at the time when the contract was entered into, the insured was not aware of, and a reasonable person in the circumstances could not be expected to have been aware of, the defect or imperfection, the insurer may not rely on a provision included in the contract that has the effect of limiting or excluding the insurer's liability under the contract by reference to the condition, at a time before the contract was entered into, of the thing.”
Whether s 46 of the Insurance Contracts Act applies in terms
The opposing parties submitted that s 46 applies in terms because cl 2(b)(8) was a provision that had the effect of excluding the insurer’s liability under the policy by reference to the condition, at a time before the contract was entered into, of the thing (in this case, the defect).
The relevant time the contact was entered into was the time the contract of insurance was renewed. Section 11 of the Insurance Contracts Act relevantly provides:
“(9) Subject to subsection (10), a reference in this Act to the entering into of a contract of insurance includes a reference to:
(a) in the case of a contract of life insurance--the making of an agreement by the parties to the contract to extend or vary the contract;
(b) in the case of any other contract of insurance--the making of an agreement by the parties to the contract to renew, extend or vary the contract; or . . .”
In the present case, the contract was renewed as at 19 June 2007.
NTI submitted that s 46 did not apply because cl 2(b)(8) did not purport to exclude liability by reference to the condition of the vehicle at the time the contract was entered into. It relied on Nelson v The Holland Insurance Company Pty Ltd [2010] NSWSC 199; 77 NSWLR 313 (Einstein J) which it submitted that I was bound to follow unless satisfied that it was clearly wrong.
In Nelson v The Holland Insurance Company Pty Ltd, the insured (Nelson) argued that the effect of s 46 of the Insurance Contracts Act was that where a reasonable person in his position was not at the time of entry into the contract aware of, and could not reasonably have been expected to be aware of, the defect (in the vessel in that case), the insurer could not refuse to indemnify him. Justice Einstein accepted the insurer’s arguments, including the following:
(1)an exclusion of a particular event (or state) without reference to when it occurred does not engage s 46; and
(2)the exclusion did not operate “by reference” to the condition of the thing at the time the contract was entered into.
His Honour followed the principle in Asteron Life Ltd (formerly Royal & Sun Alliance Financial Services Ltd) v Zeiderman [2004] NSWCA 47; 59 NSWLR 585 which was articulated by Spigelman CJ at [16] (Meagher JA and Bergin J agreeing on that point):
“An insurer is entitled to exclude cover for particular events, irrespective ofwhen they occur, and an exclusionary provision of that character does not fallwithin the statutory preclusion in either s 46 or s 47 of the Act because it could not be said that a limitation or exclusion was made “by reference to” acondition of a thing or a sickness or disability at the time the contract wasentered into. When the time of entry into the contract is irrelevant to theexclusion, the sections do not apply.”
The exclusion in cl 2(b)(8) does not operate by reference to whether there was a defect at the time the contract was entered into since it purports to exclude liability which arises out of or in connection with a defect in the motor vehicle whenever the defect arose. In the present case, the timing at which the vehicle was, or became, defective was irrelevant. On the basis of Nelson v The Holland Insurance Company Pty Ltd, s 46 does not apply to cl 2(b)(8). The opposing parties have not persuaded me that Nelson v The Holland Insurance Company Pty Ltd is plainly wrong. Accordingly, I am bound to follow it. In my view, s 46 does not apply to cl 2(b)(8) since the time of entry into the contract is irrelevant to the operation of the exclusion.
Whether, if s 46 otherwise applies, it is excluded because the Fleet Motor Policy is a ‘broad form’ policy
Regulation 30 of the Insurance Contracts Regulations 1985 (the Regulations) relevantly provides:
“Classes of contracts of insurance in relation to which section 46 of the Act does not apply
For the purposes of section 46 of the Act, each of the following classes of contracts is declared to be a class of contracts in relation to which that section does not apply:
. . .
(e) contracts of insurance commonly known as 'broad form' accidental loss and damage insurance contracts.”
NTI contended that the Fleet Motor Policy was a “broad form” policy. Mr McCulloch submitted:
“The word ‘broad form’ [sic] is well understood and covers those policies which include a number of different types of cover, as does the NTI policy.”
He referred to Sutton on Insurance Law, 4th ed, at [23.1220], which I take to include a reference to [23.1210] where the authors said:
“A public liability policy is designed to cover the insured’s liability for personal injury and property damage to the “public”. The core of the causes of the injury of damage is torts and similar wrongs. A product liability policy is designed to cover the insured’s liability for personal injury and property damage caused by the insured’s products. The policies are frequently sold together in an insurance product called a ‘broadform’ policy.”
Although Mr McCulloch drew a distinction between ‘broadform’ (one word) in the texts and ‘broad form’ (two words) in the regulation, the significance and effect of the distinction was not developed.
Mr King SC, who appeared with Mr Palmer for the plaintiff, submitted that a broadform policy covered a much wider range of risks than the Fleet Motor policy in the present case, and referred to Sutton, Insurance Law in Australia, 3rd ed, at [9.24], which described so-called broadform policies in the following terms:
“It is becoming an increasingly common practice for firms and corporations in a substantial way of business to have special forms of policies which have been specially negotiated on their behalf by insurance brokers and which are tailored to meet their particular requirements. These policies provide cover for a variety of risks such as loss or damage to buildings and property; burglary and loss of money insurance; personal injury (widely defined) to officers and other employees of the assured; public liability; products liability; consequential loss through business interruption following on property damage; fidelity guarantee; loss of or damage to electronic equipment; and machinery/boiler insurance. The certificate of insurance lists the parties, the period of insurance, the maximum liability and any excess (or “deductibles”) payable by the assured in each section, a brief description of the property insured and the amount of the premium, while the schedule attached to the certificate provides full details of the cover. There are general conditions and general exclusions covering the whole of the various types of insurance (with the frequent inclusion of a waiver of subrogation rights against directors or employees of the assured), and these are supplemented by special clauses applicable only to a particular type of risk.”
I have not found the submissions on what amounts to a broadform policy (much less a ‘broad form’ one) particularly helpful. The proposition that one can recognise one from common experience would appear to be undermined by the fact that it is an issue in the case. Suffice it to say that I am not persuaded that the Fleet Motor policy is a ‘broad form’ policy within the meaning of reg 30. Although it purports to cover a number of risks it would not appear to meet the description in the 3rd edition of Sutton, Insurance Law in Australia, set out above since the risks, although various, relate largely, if not exclusively, to motor vehicles. Accordingly, s 46 is not excluded although, for the reasons given above, it does not apply in terms to exclusion 2(b)(8) on the basis of Asteron and Nelson.
Contributory negligence
The first, second and seventh defendants alleged in their pleaded defences that the plaintiff was guilty of contributory negligence. However, no submissions were directed to this allegation either in the written submissions or orally notwithstanding that it fell within the separate question relating to the determination of liability. On this basis, I assume that the allegation was not pressed. There will, accordingly, be no deduction for contributory negligence.
Apportionment
The question of apportionment was not specifically addressed in the submissions. The first and second defendants had common representation and a common insurer (NTI). As I have not heard submissions on this question, I assume that the question of apportionment does not need to be determined. In any event, it is moot in light of my findings that NTI is liable to indemnify the first and second defendants (and would have been liable to indemnify the third had it not been deregistered).
Orders
For the foregoing reasons I make the following orders:
(1)Judgment for the plaintiff against the first, second and sixth defendants.
(2)Judgment for the seventh defendant on the plaintiff’s claim and on the second and fourth cross-claims.
(3)Judgment for the first and second defendants on the first cross-claim.
(4)Dismiss the third cross-claim.
(5)Reserve the question of costs.
(6)Direct that submissions relating to the appropriate costs orders be provided to my Associate within seven days and any submissions in response within a further seven days.
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