Stojan Kotevski v T & S Simeonov Pty Limited, Integrated Construction (Management Services) Pty Ltd (Third Party) and Commercial Union Assurance Company Australia Limited (Fourth Party) [1997] ACTSC 31 (9 May 1997)

SUPREME COURT OF THE ACT

STOJAN KOTEVSKI v. T & S SIMEONOV PTY LIMITED, INTEGRATED CONSTRUCTION
(MANAGEMENT SERVICES) PTY LTD (Third Party) and COMMERCIAL UNION
ASSURANCE COMPANY AUSTRALIA LIMITED (Fourth Party)
No. SC188 of 1994
Number of pages - 5
Insurance - Evidence

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY MILES CJ

CATCHWORDS

Insurance - public liability insurance - contribution or indemnity claim by third party against fourth party - whether exclusion clause in policy applies - it does - no ambiguity in exclusion clause itself - construction of policy - meaning of term "the Insured" - meaning of phrase "in connection with".

Evidence - relevance - interpretation - whether proposal is part of contract of insurance - no indication that whole of contract not contained within policy itself - s.24 Insurance Contracts Act does not apply - proposal may not be used to aid interpretation of policy.

Evidence - relevance - interpretation - whether document of agreement between third party and another insurer assists in interpretation of policy issued by fourth party - it does not.

Insurance Contracts Act 1984 (Cth), s.24

Commissioner for Superannuation v. Benham (1989) 86 ALR 239 at 243 Commissioner for Superannuation v. Miller [1985] FCA 445; (1985) 8 FCR 153 Commissioner for Superannuation v. Perrett (1989) 89 ALR 385 Darlington Futures Ltd v. Delco Australia Pty Ltd (1986) 68 ALR 385 at 391

HEARING

CANBERRA, 26 March 1997 9:5:1997

Counsel for the third party: Mr. L. King, SC

Solicitors for the third party: Mallesons Stephen Jacques

Counsel for the fourth party: Mr. M. Williams

Solicitors for the fourth party: Phillips Fox

ORDER

THE COURT ORDERS THAT:
1. The claim by the third party against the fourth party claim be dismissed. 2. The third party pay the fourth party's costs.

DECISION

MILES CJ
1. This matter has resolved into a dispute over a claim by a third party against a fourth party. The facts are not in dispute.

2. On 22 June 1992 the Australian Capital Territory appointed the third party, Integrated Construction (Management Services) Pty Ltd (Integrated Construction) as project manager for a project described as "Public Hospitals Redevelopment Project Package 10C - Extensions and Refurbishment to Building 2". The project involved building works at the site of what was then called the Woden Valley Hospital at Garran, now the Canberra Hospital.

3. On 5 November 1992 Integrated Construction entered into a site agreement with the defendant, T & S Simeonov Pty Ltd (Simeonov) to carry out excavation work at the site. The title page of the site agreement bore the words: "Woden Valley Hospital Package 10C - Entry Precinct Detailed excavation, etc."

4. The site agreement described the works as "the trade package briefly described on the title page of this document and associated with the refurbishment and extension of Building No. 2 at Woden Valley Hospital".

5. On 4 June 1993 the fourth party Commercial Union Insurance (Commercial Union) issued to Simeonov a Certificate of Currency of a Public Liability - Plant Operator Insurance Policy. The insurance policy defined the Insured as follows (the definition clause): "INSURED - means: (a) any person, firm, partnership, company or subsidiary company named as Insured in the Schedule including their (1) employees but only whilst in the course of their employment (2) social club (3) first aid services (b) any principal in a contractual relationship arising out of the performance of work undertaken by the Insured on behalf of such principal. ....."

6. The Schedule to the insurance policy is not in evidence but it is common ground that the insured named is Simeonov.

7. The insurance policy also contained an exclusion clause providing that Commercial Union would not be liable for, inter alia: "1. Claims in respect of Personal Injury or Damage to Property arising directly or indirectly out of or caused by or in connection with the erection, demolition, alteration of or additions to buildings by or on behalf of the Insured, except an alteration or addition not exceeding in cost the sum of $20,000."

8. It is agreed that the cost of the excavation work was $94,218, and therefore in excess of the $20,000 cost nominated in the exclusion clause.

9. It is agreed that on 8 December 1992 the insurance policy was in force as between Simeonov and Commercial Union. On that date the plaintiff was working at the rim of an excavation about seven metres deep which had been carried out by Simeonov in accordance with the site agreement. The excavation had been carried out in order to house a lift well still to be constructed. Whilst attempting to shift a rock, the plaintiff over-balanced and fell into the excavation, sustaining injury. The plaintiff sued Simeonov in negligence and for breach of his contract of employment. Simeonov claimed contribution from Integrated Construction as third party in accordance with the obligation of the latter under the site agreement to provide a safety officer and for breach of its duty as occupier of the site and further for breach of the Scaffolding and Lifts Regulations.

10. Integrated Construction claimed contribution or indemnity from Commercial Union as fourth party in accordance with the insurance policy issued to Simeonov.

11. On 26 March 1997 the plaintiff recovered judgment by consent against Simeonov for $400,000 together with costs. On the same day, also by consent, Simeonov recovered judgment against Integrated Construction for $60,000 with no order as to costs.

12. As a consequence of the foregoing, Integrated Construction pursued its claim for indemnity against Commercial Union. Commercial Union relies on the exclusion clause.

13. It was submitted on behalf of Integrated Construction that its claim did not fall within the exclusion clause because the excavation work carried out by Simeonov and in which the plaintiff was engaged at the time of his injury was not done "by or on behalf of the Insured" in that Integrated Construction was not excavating, but merely supervising or managing the project. However, in my view, this submission is to be rejected. The exclusion clause is not restricted to activities carried out or to be carried out by the person named as the Insured. It extends to injury caused "by or in connection with" alteration of or additions to buildings by or on behalf of the Insured. The words, "in connection with" are words of wide import. The Full Court of the Federal Court in Commissioner for Superannuation v. Benham (1989) 86 ALR 239 at 243 endorsed the judgment of Beaumont J in Commissioner for Superannuation v. Miller [1985] FCA 445; (1985) 8 FCR 153 in which is Honour said at 160: "In its ordinary meaning 'connected with' suggests a link or an association." A similar wide approach to those words was also adopted by Jenkinson J in Commissioner for Superannuation v. Perrett (1989) 89 ALR 385.

14. The person nominated in the insurance policy as the Insured is Simeonov, who was the party actually carrying out the excavation. It is apparent, therefore, on the face of the insurance policy itself, that the supervision of the work included supervision of the excavation which was carried out in connection with what was being done by or on behalf of Simeonov.

15. It was but faintly argued that the plaintiff's injury sustained during the excavation work was not caused by anything done or omitted by or in connection with "the alteration of or addition to buildings". However, the agreed facts lead to a contrary conclusion. The lift well, which was to be housed in the excavation, was to be part of an extension or addition to Building No. 2 of the existing hospital. The fact (if it be a fact) that no part of the structure of the extension or addition was at that stage completed, does not mean that the excavation was not carried out "in connection with" an addition to a building.

16. It was further submitted for Integrated Construction that the term "Insured" in the insurance policy should be read as applying only to Integrated Construction (and not to Simeonov), that Integrated Construction was not engaged in the carrying out of alteration of or additions to buildings, so that the plaintiff's injury did not occur in circumstances which were in any way connected with alterations or additions to buildings "by or on behalf of" Integrated Construction. However, in my view, the policy is clear that the term "Insured" includes both the party named as the Insured (Simeonov) and "any principal in a contractual relationship arising out of the performance of work undertaken by the Insured on behalf of such principal". Although the term "Insured" where used as in the phrase above, must mean the person named as insured, the policy is clearly intended to provide indemnity to all categories of persons falling within the general definition of Insured (subject to the exclusion).

17. It was submitted on behalf of Integrated Construction that the exclusion clause in the insurance policy should be read contra proferentem. The principle has been described by the High Court in Darlington Futures Ltd v. Delco Australia Pty Ltd (1986) 68 ALR 385 at 391 in the following terms: "These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity."

18. In my view, there is no ambiguity in the exclusion clause itself. The only possible ambiguity that arises is the term "the Insured" in para.(b) of the definition clause. However, it is quite apparent that when taken in context, that term there means the person nominated as the insured. Otherwise the term "the Insured" in the exclusion clause would include both the person so nominated and any person who is a principal within the meaning of para.(b) of the definition clause, which is nonsensical.

19. Counsel for Commercial Union tendered a proposal for insurance for the relevant period and also a memorandum of insurance effected by Integrated Constructions with another insurer. Although these documents were admitted into evidence, the admission was subject to a later ruling as to the relevance. Ultimately, I reject both documents. The proposal is not part of the contract of insurance and, in my view, s.24 of the Insurance Contracts Act 1984 (Cth) does not appear to apply. Nothing in the insurance policy indicates that the whole of the contract is not contained within the policy itself. The proposal may not be used to aid the interpretation of the policy. As for the document evidencing an agreement as to the insurance between Integrated Construction and another insurer, there is simply no way in which this document can be used to interpret or assist in interpreting the policy issued by Commercial Union to Simeonov.

20. In my view, the exclusion clause applies and the third party is not entitled to the indemnity claimed. Unless the parties wish to be heard on the form of relief, I propose to order that the claim by the third party against the fourth party claim be dismissed, and the third party pay the fourth party's costs.