The decision in Browning v Bitupave Ltd & Cessnock City Council & Anor  NSWSC 19 proves instructive in the areas of the scope of a Council's duty and contractual indemnity clauses.
The plaintiff, Browning, suffered serious injuries, including brain damage, when she lost control of her car whilst driving along Lovedale Road in the Hunter Valley, New South Wales at approximately 7.30am on 11 May 2002.
The accident occurred near road works being carried out by Bitupave Limited (Bitupave) under a contract it had with Cessnock City Council (Council).
At the time of the accident, Bitupave was carrying out resealing works which involved spraying a bituminous seal on the road and then spreading a layer of loose aggregate, which was later embedded by a roller. Browning alleged, amongst other things, that the road should not have been opened to unrestricted traffic prior to final sweeping. This had been scheduled to take place approximately one hour after Browning's accident.
Browning was unable to give evidence about the accident, due to total amnesia of the events leading up to and immediately after the accident. The only eyewitness evidence was from the truck driver with whom Browning had collided. It was the truck driver's evidence that there was excessive loose gravel on the resurfaced roadway and that the road was slippery.
Council had erected various road work signs leading up to the section of Lovedale Road which was being resealed, including signs restricting the speed limit to 40 kilometres per hour over the road works. However, the Supreme Court held that the signs were not adequate and that the road should not have been opened before final sweeping had occurred, or if it was opened, travel should have been controlled as it had been during the resealing works.
Council sought indemnity under the contract between Council and Bitupave alleging that Bitupave, (pursuant to the tender specifications) undertook 'the whole risk of carrying out the contract'.
Bitupave argued that Council had remained the 'superintendent' of the works and had inspected and 'approved' the works on the afternoon prior to Browning's accident.
The Court found that all liability for Browning's injuries rested with Bitupave and accordingly a verdict was entered in Council's favour against Browning. The Court held that Council had not breached its duty of care to Browning.
The Court accepted Council's submission that on the basis of the High Court decision in Leichhardt Municipal Council v Montgomery  HCA 6, Council had a duty to take reasonable care, which was not discharged merely by engaging the services of Bitupave. However, Council did not have a duty to ensure that the employees of Bitupave did not behave carelessly. The Court accepted Council's submission that whatever duty Council had to Browning in this case, the duty had been discharged by appointing Bitupave to carry out the works.
The Court held that Bitupave was 'the person charged with the responsibility' of carrying out the work safely. It held that the activity which created the risk of harm to Browning was the decision to open the road before the loose gravel had been swept and that Bitupave had made the decision to open the road, not Council.
On the question of Council being indemnified by Bitupave, the Court relied on the High Court decision of Davis v Commissioner for Main Roads (1968) 117 CLR 529, stating that the dominant purpose of the indemnity clause in the contract between Council and Bitupave was announced by its opening words, which required Bitupave to undertake the 'whole' risk of carrying out the contract.
Browning's damages had been agreed between the parties at $2.4 million. The Court entered judgment in her favour for $2,040,000 against Bitupave. This figure represented a 15% discount for Browning's contributory negligence. Browning was found to have been travelling at a speed closer to 60 kilometres per hour, than the 40 kilometres signposted.
The decision is significant for Council as it applies the High Court decision of Leichhardt Council v Montgomery affirming that Council's duty to Browning was to use a competent contractor. However, Council was not obliged to ensure the contractor's employees were not careless.
The decision is also significant as it clearly states that a contractual indemnity clause which prescribes, as in the present case, that the contractor shall undertake the 'whole' risk of carrying out the contract, means just that and entitles the principal to an indemnity regardless of whether the principal's acts or omissions contributed to the loss.
When parties enter into contracts containing indemnity clauses, they should carefully check the wording and if necessary obtain legal advice.
DLA Phillips Fox acted for Council in this matter.
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