NSW Court of Appeal Upholds Indemnity Claim Decision

The Court of Appeal dismissed an appeal challenging a District Court decision on an indemnity claim arising from a construction accident. The Court held that the insurer did not need to prove the insured's liability to a third party if the settlement amount was objectively reasonable.

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: [COMPANY] v [NAME] [2024] NSWCA 91 Hearing dates: 19 March 2024 Date of orders: 24 April 2024 Decision date: 24 April 2024 Before: Payne JA at [1]; [NAME] at [2]; [NAME] at [82] Decision: (1) The appeal is dismissed with costs. Catchwords: [NAME] — public liability [NAME] — where [NAME] was builder responsible for construction site — where formworker slipped and fell from scaffolding — where [NAME] repudiated the [NAME] because of misrepresentations by [NAME] — whether the [NAME] responded to liability assumed by a consent judgment — whether [NAME] needed to prove that he was liable to the formworker — whether the settlement amount was reasonable APPEALS — amendment of notice of appeal — whether leave should be granted to run a new ground of appeal — where argument not put below — where argument may have been met by further evidence at trial Legislation Cited: [NAME] Act 1984 (Cth) Cases Cited: CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1; [2007] HCA 36 Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1; [1974] HCA 3 James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53; [1998] HCA 78 Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363 Superannuation & Corporate Services Pty Ltd v Turner [2020] NSWCA 246 Vero Insurance Ltd v Baycorp Advantage Ltd [2004] NSWCA 390; 23 ACLC 199 Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2018] NSWCA 100; 359 ALR 314 Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2017] NSWSC 259 Category: Principal judgment Parties: [COMPANY] (Appellant) [NAME] (Respondent) Representation: Counsel: [redacted] CP [NAME] (Respondent)

Solicitors: [redacted] [NAME] (Respondent) File Number(s): 2023/00278712 Publication restriction: Nil Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Date of Decision: 31 August 2023 Before: Gibb DCJ File Number(s): 2021/233407

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The respondent, [NAME], was the named [NAME] in a [NAME] of [NAME] with the appellant, [COMPANY] ([NAME]) (the [NAME]). The [NAME] related to a construction [NAME] (the [NAME]). Pursuant to cl 5.00 of the [NAME] was required to indemnify [NAME] "for all sums that you become legally liable to pay as compensation", subject to conditions not relevant to the appeal. Clause 10.01 provided that, unless [NAME] obtained [NAME]'s prior written consent, he was not to admit liability or settle any third-party claim. In October 2018, whilst the [NAME] was in force, [NAME], a formworker on the [NAME], was injured when he slipped and fell from scaffolding. In August 2020, [NAME] made a claim for indemnity under the [NAME]. In a telephone call with [NAME]'s solicitor in relation to the incident, [NAME] said that although he was the registered builder on the [NAME], he was helping a friend who had asked him to give his builder's licence number; and it was his friend who controlled the site. [NAME] confirmed this information in a statement he signed in December 2020. This was inconsistent with the application submitted to his [NAME] broker, which included a signed copy of the construction contract naming him as the construction manager. In May 2021, [NAME] avoided the [NAME] on the basis that [NAME] had made fraudulent non-disclosures regarding the [NAME], which (on his report) was not his [NAME]; had made a further non-disclosure in circumstances where the [NAME] was performed by an unlicensed builder; and had entered into an unlawful agreement with his friend to loan his building licence. In August 2021, [NAME] commenced proceedings against [NAME] in the District Court, seeking damages for negligence and breach of statutory duty. [NAME] admitted that he was the builder responsible for the [NAME] and otherwise denied liability. On 4 May 2022, [NAME] also brought a cross-claim against [NAME], seeking damages for what he alleged was [NAME]'s wrongful termination of the [NAME]. In his cross-claim, and in his evidence, [NAME] asserted that he was, in fact, the builder in charge of the site, and that he had managed the build from the outset. He also gave evidence that he had deliberately not told [NAME] the truth in 2020. On 2 August 2023, the primary judge gave judgment by consent in favour of [NAME] against [NAME] in the sum of $430,000 and an order that each party bear their own costs. [NAME] objected to the entry of the consent judgment, which the primary judge noted in the orders. In giving judgment for [NAME] on the cross-claim, the primary judge found that [NAME] was the builder responsible for the performance and administration of the [NAME] and that the [NAME] should have responded to [NAME]'s claim. Thus, [NAME] had repudiated the [NAME] through its wrongful termination and [NAME] had no choice but to accept that fact. As to the scope of cl 5.00 of the [NAME] held that the clause was activated by entry into the consent judgment per se, in circumstances where [NAME]'s consent was not available given its avoidance of the [NAME]. [NAME] also determined that the settlement to which the consent judgment gave effect was objectively reasonable, based on a reasonable assessment of the risk that [NAME] faced as the defendant to [NAME]'s claim. [NAME]'s notice of appeal alleged that [NAME] erred by: making findings which, it contended, were not available on the admissible evidence and were relied upon to conclude that [NAME] incurred a liability to [NAME] to which the [NAME] responded (numbered grounds 2 to 4); holding that cl 5.00 responded to liability assumed pursuant to a consent judgment (ground 5); and, in the alternative to ground 5, entering the consent judgment over [NAME]'s objection (ground 6). In oral submissions, Senior Counsel for [NAME] said the central issue on the appeal was whether an [NAME], who gives false information to an [NAME] which then denies indemnity based on that false information, may rely on the avoidance as a basis for not having to prove [NAME]'s liability to the third-party claimant. [NAME] sought leave to amend the notice of appeal to raise this point (proposed ground 5C). [NAME] also raised a further five grounds, alleging that the primary judge erred in: failing to find that [NAME] was required to prove that he was liable to [NAME] and that he had failed to do so (proposed grounds 5A and 5B); finding that a managerial failure in respect to a defect in the scaffolding was [NAME]'s responsibility (proposed ground 5D) and that it was highly likely that [NAME] would have secured a verdict against [NAME] (proposed ground 5E); and finding that the settlement was objectively reasonable (proposed ground 5F). [NAME] resisted [NAME]'s application for leave to rely on proposed ground 5C, submitting that the manner in which [NAME] now framed its challenge was not run below; and that to permit [NAME] to run it now would cause him prejudice. [ADDRESS] held ([NAME], Payne JA and [NAME] agreeing), dismissing the appeal: As to the application for leave to amend the notice of appeal: (1) Leave to rely on proposed ground 5C is refused: [56]. The point was not run below: [51]. There would be prejudice to [NAME] if [NAME] were permitted to raise the point on appeal because, if [NAME] had run the point at trial, [NAME] would have had an opportunity to lead evidence that was directed to the question of what was before or otherwise available to the [NAME] at the time that it avoided the [NAME], that disproved his statement to [NAME] that he was not the builder: [55]-[56]. (2) Leave to rely on the other proposed grounds of appeal is granted: [57]. As to ground 5: (3) On its proper construction, the scope of cl 5.00 in the [NAME] includes liability that has been determined by a bona fide compromise agreement: [64]. This is consistent with cl 10.01: [65]. Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363; Vero Insurance Ltd v Baycorp Advantage Ltd [2004] NSWCA 390; 23 ACLC 199; Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2018] NSWCA 100; 359 ALR 314 considered. As to ground 6: (4) The consent judgment that the primary judge entered did not unilaterally determine [NAME]'s liability under the [NAME] for the sum that [NAME] was ordered to pay [NAME]. The settlement did not preclude [NAME] from contending that it was not liable under the [NAME], on the construction of cl 5.00 on which it relied and/or because [NAME] had not proved that he was liable to [NAME], or that the settlement was not objectively reasonable: [68]. James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53; [1998] HCA 78 distinguished. As to grounds 5A and 5B: (5) [NAME] did not need to establish that he was liable to [NAME] in the manner that [NAME] alleged in the amended statement of claim; and the primary judge did not need to be satisfied that [NAME] was so liable. Rather, it was for [NAME] to show that the amount of the settlement was reasonable having regard to the relevant circumstances, which included the position in which [NAME] found himself and what he might have been held liable to pay if there had been a contest leading to a judgment or arbitral award: [72]. Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2017] NSWSC 259 applied; Vero Insurance Ltd v Baycorp Advantage Ltd [2004] NSWCA 390; 23 ACLC 199; Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2018] NSWCA 100; 359 ALR 314 considered; CGU Insurance Ltd v AMP Financial Planning Pty Ltd (2007) 235 CLR 1; [2007] HCA 36 distinguished. As to grounds 2, 3, 4, 5D and 5E: (6) These grounds mischaracterise the inquiry that the primary judge was undertaking. When understood as an inquiry into the reasonableness of the settlement, and not an inquiry into [NAME]'s liability per se, the primary judge's approach was consistent with an inquiry into the circumstances at the time of [NAME]'s entry into the settlement. The settlement was objectively reasonable for the reasons given by the primary judge: [78]. As to ground 5F: (7) The ground was premised on [NAME] needing to prove that he was liable to [NAME] as alleged in the amended statement of claim, which was rejected: [80].

JUDGMENT 1. PAYNE JA: I agree with [NAME]. 2. [NAME]: The respondent, [NAME], was the named [NAME] in a [NAME] of [NAME] with the appellant [NAME], [COMPANY] ([NAME]). The [NAME] related to a construction [NAME] located in [ADDRESS], Campsie (the [NAME]). On 18 October 2018, a formworker on the [NAME], was injured when he slipped and fell from a height whilst walking on the scaffolding. [NAME] commenced proceedings against [NAME] in the District Court, seeking damages for negligence and breach of statutory duty. [NAME] admitted that he was the builder responsible for the [NAME] and otherwise denied liability. [NAME] also brought a cross-claim against [NAME], seeking damages for what he alleged was [NAME]'s wrongful termination of the [NAME] of [NAME], and a second cross-claim against the [NAME] of the scaffolding company, [NAME] ([NAME]), which had been deregistered.

3. It was common ground that [NAME]'s [NAME] with [NAME] was in force on the date of the incident involving [NAME]. However, in telephone calls with [NAME]'s solicitor in 2020 in relation to the incident, [NAME] said that although he was the registered builder on the [NAME], he was helping out a friend who had asked him to give his builder's licence number; and it was his friend who controlled everything on the site. [NAME] confirmed this information in a statement he signed in December 2020. [NAME] avoided the [NAME], which the primary judge described as "the inevitable product of [NAME]'s statements and actions in 2020".

4. In his cross-claim against [NAME], and in his evidence, [NAME] asserted that he was, in fact, the builder in charge of the site, and that he had managed the build from the outset. He also gave evidence that he had deliberately not told [NAME] the truth in 2020.

5. On day two of the hearing of [NAME]'s claim and the cross-claims, the primary judge made orders by consent giving judgment for [NAME] against [NAME], and ordering that [NAME] pay [NAME] the sum of $430,000, with each party to bear their own costs. The primary judge made those orders over the objection of [NAME], which was not a party to [NAME]'s claim. [NAME] also dismissed the cross-claim involving the scaffolding company's [NAME] with no order as to costs.

6. The hearing of [NAME]'s cross-claim against [NAME] proceeded. In giving judgment for [NAME] on the cross-claim, the primary judge found that [NAME] was the builder responsible for the performance and administration of the [NAME]. [NAME] also found that: 1. [NAME] was [NAME] under the [NAME] of [NAME] with [NAME], which should have responded to [NAME]'s claim.

2. The [NAME] of [NAME] "was terminated wrongfully, albeit because of [[NAME]'s] actions". 3. [NAME] repudiated the contract of [NAME] and [NAME] had no choice but to accept that fact.

4. Entry into the consent judgment per se activated the insuring clause in the [NAME], in circumstances where [NAME]'s consent was not available given its avoidance of the [NAME].

5. The settlement to which the consent judgment gave effect was objectively reasonable, based on a reasonable assessment of the risk that [NAME] faced as the defendant to [NAME]'s claim.

1. The focus of [NAME]'s challenge to the primary judge's decision evolved over the course of the appeal. The notice of appeal alleged five errors on the part of the primary judge. The first three grounds of appeal (numbered grounds 2 to 4), under the heading "Findings made on consideration of the limited facts in evidence", were directed at findings that [NAME] made which, it contended, were not available on the admissible evidence. Next, under the heading "Interpretation of insuring clause in respect of assumed liability", [NAME] alleged that the primary judge erred in holding that the insuring clause responded to liability assumed by [NAME] pursuant to a consent judgment (ground 5). In the alternative, [NAME] alleged that [NAME] should not have entered the consent judgment in favour of [NAME] against [NAME] (ground 6).

2. In oral submissions, however, Senior Counsel for [NAME] said that the central issue on the appeal was an issue [NAME] advanced in its reply at [22], namely: "Can an [NAME] who gives false information to an [NAME] that denies indemnity on the basis of that false information then rely on an avoidance based on that false information as a basis for not having to prove the liability of [NAME] to the third-party claimant?" 1. [ADDRESS] raised with Senior Counsel that neither that issue, nor its underlying premise – that the primary judge erred in concluding that [NAME] had wrongfully repudiated the [NAME] – was reflected in the notice of appeal. Senior Counsel for [NAME] then foreshadowed applying, and ultimately applied, for leave to amend the notice of appeal to add a further six grounds, variously alleging that the primary judge erred in: 1. failing to find that [NAME] was required to prove that he was liable to [NAME] and that he had failed to do so (proposed grounds 5A and 5B); 2. finding that [NAME] wrongfully repudiated the [NAME] of [NAME] (proposed ground 5C); 3. finding that a managerial failure in respect to a defect in the scaffolding was [NAME]'s responsibility (proposed ground 5D) and that it was highly likely that [NAME] would have secured a verdict against [NAME] (proposed ground 5E); and 4. finding that the settlement was objectively reasonable (proposed ground 5F). 1. [NAME] resisted [NAME]'s application for leave to rely on proposed ground 5C, submitting that the manner in which [NAME] now framed its challenge was not run below; and that to permit [NAME] to run it now would cause him prejudice. I accept both aspects of that submission and I would refuse leave to rely on proposed ground 5C. I would otherwise grant leave to [NAME] to rely on the proposed additional grounds of appeal, but for the reasons that follow the appeal should be dismissed.

Background to the proceedings in the District Court

The [NAME]

1. On or about 14 August 2017, [NAME] and [NAME], through the underwriting agency [COMPANY] ([NAME]), entered into a [NAME] of [NAME] for the period 14 August 2017 to 14 November 2018 (the [NAME]). On 26 September 2018, the [NAME] was varied to increase the [NAME] value and extend the period of [NAME] to 14 May 2019. 2. [NAME] was the named [NAME], and [NAME] was the [NAME]. As part of the application that he submitted to his [NAME] broker, [NAME] provided a signed copy of the construction contract for the [NAME] which named him as the construction manager.

3. Under the heading "[NAME] details", the [NAME] type was identified as "Building Residential: New", and the Campsie address was provided. In Section 2 of the [NAME], titled "Public Liability", cl 5.00 provided: "5.00 Insuring Clause We will indemnify you for all sums that you become legally liable to pay as compensation for Personal Injury or Property Loss or Advertising Liability that: a. happens within the Territorial Limit during the Period of [NAME]; and b. results from an Occurrence in connection with the Business. Cover under this Section of the [NAME] is subject to all terms of this [NAME] in so far as they can apply."

1. It was common ground that [NAME] sustained a Personal Injury within the Territorial Limit during the Period of [NAME], as those terms were defined in the [NAME]. The primary judge also found that [NAME]'s claim resulted from an Occurrence in connection with the Business, where an "Occurrence" was defined to mean an event that [NAME] neither expected nor intended, "Business" meant "performance and administration of the [NAME] to which this [NAME] applies" and included incidental operations such as occupation of the premises, and "[NAME]" meant the [NAME] covered by the [NAME]. This latter conclusion rested, in part, on [NAME]'s finding that [NAME] was the builder on site, which was in issue before the primary judge but was not pursued on the appeal.

2. I note for completeness that cl 5.01 of the [NAME] provided coverage for certain defence costs: "5.01 We will also indemnify you for the following costs, but only if they are incurred by us or with our consent – which will not be unreasonably withheld. Cover for these costs is in addition to the Limit of Indemnity shown in the Schedule. a. Defence and associated costs incurred in connection with any liability or allegation of liability to which this [NAME] applies even if the allegation is groundless, false or fraudulent. This includes bringing or defending appeals in connection with such liability." (Emphasis in original.) 1. [NAME]'s liability pursuant to cl 5.01 was also in issue before the primary judge, and [NAME] determined that [NAME] was liable to pay [NAME]'s legal costs. [NAME] did not challenge that conclusion on the appeal.

2. The [NAME] also allowed for admissions, compromise and settlement, with cl 10.01, in the General Conditions, providing as follows: "10.01 Admission of Liability This condition applies to [NAME] under Section Two [which relevantly included cl 5.00]. Unless you have obtained our prior written consent, neither you nor any of your Employees may: a. admit liability or guilt in connection with any Occurrence; or b. do anything that might be seen as an admission of liability or guilt unless permissible in law; or c. settle any third party claim, even though it may be within the amount of the Deductible."

The incident involving [NAME]

1. It was common ground that on 18 October 2018, there was an incident on the site involving [NAME]. Documents obtained from [NAME] were in evidence, including a "WSMS Incident Notification Report" regarding the incident. Under the heading "Brief Description of Facts", that report stated: "Formworker fell from scaffolding on level 1 or 2, unknown at this stage, resulting in a fall of between 3-6m to ground level. No witnesses."

1. A series of SafeWork prohibition and improvement notices were issued to [NAME], along with a fine. A [NAME] "Inspectors Report", dated 19 December 2018, recorded that [NAME] (the director of [NAME]'s employer), and [NAME] had been interviewed, and provided a summary of events that supported a fall from a similar height as recorded in the WSMS Incident Notification Report, albeit from a higher level than recorded in that report: "IP was working on level 3 formwork deck when he has fallen through a gap between the scaffold and the formwork deck. IP struck the scaffold on the way down and landed on level 1 (6m fall in total)."

1. The actions taken on the site after the incident included that the perimeter scaffold had been "improved to close all gaps between structure & scaffold". The taking of those actions was consistent with what was recorded in an Inspection Report dated 22 October 2018, in which a [NAME] inspector observed "gaps between building & scaffold & missing deck planks on level 3".

The actions of [NAME] in relation to the [NAME]

1. On or about 25 August 2020, [NAME] made a claim for indemnity under the [NAME]. However, as I have noted above, in a telephone conversation between [NAME] and [NAME]'s solicitor about the claim, [NAME] said that he had been the registered builder on the [NAME] at the request of a friend, [NAME], and that he made no financial gain on the [NAME]. [NAME] confirmed this account in a statement he signed on 15 December 2020, in which he claimed that [NAME] controlled everything on the site.

2. On 14 May 2021, [NAME], through [NAME], sent a letter to [NAME] avoiding the contract of [NAME], relying on ss 21 and 28 of the [NAME] Act 1984 (Cth). [NAME] stated that [NAME] had made fraudulent non-disclosures regarding the [NAME] that was [NAME], which (on his report) was not his [NAME]; and a further non-disclosure in circumstances where the [NAME] was performed by an unlicensed builder. Additionally, [NAME] referred to the unlawful nature of the agreement between [NAME] and [NAME] pursuant to which [NAME] loaned [NAME] his building licence, on the basis of which the [NAME] was also entitled to avoid the contract ab initio.

The proceedings in the [NAME]'s claim 1. On 16 August 2021, [NAME] commenced proceedings in the District Court against [NAME], seeking damages for negligence and breach of statutory duty. [NAME] later joined the [NAME] of [NAME].

2. In his amended statement of claim, [NAME] relevantly alleged, and [NAME] admitted, that [NAME] was the builder who carried out work and had the care, control and management of the [NAME] site at Campsie, and that he engaged [NAME] to erect the scaffolding on the site for the use of workers and contractors (ASOC [1], Defence [1]). [NAME] alleged that when he was working at the site as a formworker on 18 October 2018, he was injured when "he fell through scaffolding falling approximately 6 metres from the scaffolding on which he was standing to the ground sustaining serious injury, loss and damage" (ASOC [9]). He alleged that he sustained the injury, loss and damage as a result of [NAME]'s negligence and/or breach of statutory duty, with [NAME] owing him a duty of care to act in such a manner as to avoid injury to him whilst he was working on site under [NAME]'s control, management and supervision (ASOC [3], [10]-[12]).

[NAME]'s cross-claim against [NAME]

1. On 4 May 2022, [NAME] filed the cross-claim against [NAME], seeking an indemnity for [NAME]'s claim and costs, and for damages for breach of the [NAME]. [NAME] also filed a second cross-claim against [NAME] as the [NAME] of [NAME].

2. In his claim for breach of contract against [NAME] relevantly alleged that he was the builder of the [NAME], and that [NAME]'s denial of the claim and avoidance of the [NAME] was wrongful and in breach of the [NAME] (at [18]-[19]). He sought damages equivalent to any award of compensation that he was ordered to pay [NAME], as well as the costs of defending the proceedings (at [20]).

3. In its defence to the cross-claim filed on 12 July 2022, [NAME] denied that its avoidance of the [NAME] was wrongful and in breach of the [NAME] (at [18]-[19]). In further answer to the whole of the cross-claim, [NAME] made a series of further allegations. Those allegations included, relevantly, that [NAME] had made a series of misrepresentations and non-disclosures when applying for the [NAME] in breach of s 21 of the [NAME] Act, but for which [NAME] would not have entered into the [NAME] or would not have entered into it for the same premium and on the same terms and conditions. If [NAME] was not entitled to avoid the [NAME] on the basis of one or more of those misrepresentations and non-disclosures, it alleged that it was entitled to reduce its liability under the [NAME] to nil in circumstances where [NAME] would not have underwritten the [NAME] (at [24]-[30]).

4. As [NAME] observed in oral submissions on the appeal, [NAME] did not advance any allegations that assumed (contrary to its primary position) that [NAME] was the builder. For example, [NAME] did not allege that even if [NAME] was the builder its termination of the [NAME] was justified by reason of the representations [NAME] had made to it, such that it could not be said to have wrongfully repudiated the contract at the time it terminated the [NAME]. Nor did it seek to rely on s 54 of the [NAME] Act to reduce its liability having regard to the prejudice it suffered by reason of [NAME]'s conduct in making representations to it (that he was not the builder) on which it relied to avoid the [NAME], which representations were false to his knowledge.

The consent judgment on [NAME]'s claim and the cross-claim against [NAME]

1. The hearing commenced before the primary judge on 1 August 2023. The SafeWork documents to which I referred above were admitted without objection, as was an expert report of [NAME] to which I will refer below. As I noted above, on 2 August 2023 the primary judge gave judgment by consent in favour of [NAME] against [NAME] in the sum of $430,000 and an order that each party bear their own costs. [NAME] objected to the entry of the consent judgment, which the primary judge noted in the orders.

Progress of [NAME]'s cross-claim against [NAME]

1. The consent judgment left only [NAME]'s cross-claim against [NAME]. [NAME] ruled that the evidence that had been tendered on [NAME]'s claim was tendered on the cross-claim. In relation to the report of [NAME] confirmed that the history of the incident on which he relied in providing his opinion was not proof of the truth of that history.

2. On 2 August 2023, [NAME] filed an amended statement of cross-claim, and on 3 August 2023, [NAME] filed an amended defence in which it withdrew each of the allegations it had advanced in further answer to the cross-claim (see [27] above). In articulating what remained of its case, Counsel for [NAME] accepted that one issue was whether [NAME] was the builder, and submitted that the second issue was whether [NAME] was liable to [NAME], which he submitted was a matter that had to be proved on admissible evidence.

3. As I noted above, [NAME] did not raise any alternative claim by way of defence that was premised on accepting that [NAME] was the builder and that he falsely represented the contrary, leading to [NAME] justifiably avoiding the [NAME]. Counsel for [NAME] confirmed that it was not running a case of that kind in the following exchange with the primary judge on the question of its liability for [NAME]'s legal costs (which was in issue below but not on the appeal): "[NAME]: Am I right in this, that the issue boils down to (1) was he the builder, and if the answer to that is yes then (2) what is the proper quantification of the [NAME] where it's a given that it must include legal costs? SLEIGHT: Yes, there is one gloss I say to that, and the gloss on it is that it's a condition of the legal costs that our consent is obtained but the consent will not be unreasonably withheld. [NAME]: But that doesn't actually make sense because you can't simultaneously decline [NAME] and constrain their legal costs. SLEIGHT: There will be argument, your [NAME], that because of the conduct – and we have seen the conduct of [NAME] telling us a particular statement of events, it wasn't unreasonable for us to decline to pay his legal costs. [NAME]: But you didn't decline to pay his legal costs. You declined [NAME]. SLEIGHT: Yes. [NAME]: But that's where I'm trying to get. Is your proposition you were entitled to decline [NAME] because he wasn't the builder, or are you saying that you declined [NAME] because if he was the builder he was otherwise naughty? SLEIGHT: He was otherwise? [NAME]: Naughty. SLEIGHT: No, we've dropped that one. We've said he's not the builder and it's not within the scope of cover." (Emphasis added.) 1. [NAME] gave evidence on the cross-claim. In his evidence in chief, when asked what happened to him on 18 October 2018, [NAME] said: "So I was working normal. I was walking on the scaffolder [as transcribed], then I slipped and I fell all the way down." The evidence before the primary judge included medical reports relating to [NAME]'s injuries, together with documents relating to a claim that [NAME] had made for compensation under the Workers Compensation Act 1987 (NSW). 1. [NAME] also gave evidence and was cross-examined. He maintained that he was the sole builder in charge of the [NAME] and that he was on the site daily, managing the build and securing the site. [NAME] gave evidence that he had deliberately lied about his role during the telephone call with [NAME]'s solicitor about the claim, stating "I didn't want to have anything to do with [[NAME]] or courts or solicitors. I didn't want to have – I just wanted to be as far away as possible from these people". [NAME]'s evidence that he was the builder in charge of the site was corroborated by three other witnesses who regularly attended the site, along with contemporaneous records.

2. There were two expert engineering reports in evidence. Relevantly, [NAME], a civil and structural engineer, provided a report on the instructions of [NAME], the [NAME] for [NAME]. In his report, dated 21 July 2023, he observed that what had occurred on the site on 18 October 2018 was "somewhat unclear", noting that there were two versions of events: "[10] In one version of events, he was attempting to step from the roof-level onto a nearby scaffold when he fell through a gap that existed between the building and the surrounding scaffold. He then dropped some 6 metres down onto a concrete slab at ground level. [11] In a second version of events, [NAME] stepped onto a soft plywood plank, which cracked, slid away and fell down with him. The plank was covering a 2m x 0.6m (approx.) hole." (Footnotes omitted.) 1. [NAME] made a number of comments on what he described as "managerial aspects" on the site. In his opinion, the absence of bridging material between the formwork decking and the perimeter scaffold raised two questions: when such material should be installed if proper fall protection is to be provided, and who should install it. [NAME] answered those questions on the basis of two scenarios:

1. Where the construction sequence involved the formwork deck being built up near-to an adjacent scaffold rather than the other way around: on that scenario (which [NAME] considered most likely), a safety problem arises when a formworker who is operating on the deck of the formwork seeks to move between the two structures and a significant gap exists between the two, and "there emerges a clear safety obligation (on behalf of either the builder, the formworker or the scaffolder) to provide bridging decking or to fill-in any safety-gaps between the two structures".

2. Where the scaffold has been set up as an access structure with suitable stairs and was in daily use by the formworkers: on that scenario, suitable safety infills would need to be installed "(by whoever)" before the scaffold level was made active and a worker was allowed to step across from the scaffold to the deck.

1. Under the heading "Root cause of the incident", [NAME] expressed the view that "the injury to [NAME] occurred as a result of a managerial failure to provide suitable safety infills between a growing structure and a previously erected perimeter scaffold structure". [NAME] also remarked that in so far as [NAME] may have stepped on a piece of timber that had been placed across the gap, which failed to support him, such a plank "would have been installed in response to a perceived hazard after roof level had been achieved" (footnote omitted). As to who the author of the plank placement might have been, [NAME] considered it unlikely that it would have been the scaffolders "since the scaffolders normally only deal with metal components or full scaffold planks".

The decision of the primary judge 1. Both parties accepted that it was necessary for [NAME] to show that he had incurred a loss to which the [NAME] needed to respond. They were at issue on how that was to be done. [NAME] submitted that it was sufficient for him to rely on the consent judgment, and to establish that the settlement was reasonable in the circumstances. [NAME], on the other hand, submitted that [NAME] had to establish that he was liable to [NAME], and that he could not do that by the consent judgment.

2. As I noted above, the primary judge found that [NAME] was the builder responsible for the performance and administration of the [NAME]. Consistently with the propositions she had put to the parties during the hearing, [NAME] also found that the [NAME] "should have responded to the claim; but was terminated wrongfully, albeit because of the plaintiff's [scil cross-claimant's] actions".

3. In circumstances where [NAME] had established that [NAME] had repudiated the [NAME], the focus moved to [NAME]'s claim for damages. [NAME] noted that although the [NAME] did not preclude consent judgments or settlements, cl 10.01 required [NAME]'s consent in respect of any admission of liability (see [17] above). [NAME] had not obtained [NAME]'s consent, but "nor was it available where the [NAME] had avoided the contract of [NAME]", thus depriving the requirement of consent of any force or effect for the purposes of the damages claim.

4. The primary judge accepted [NAME]'s submission that [NAME] bore the onus to show by admissible evidence that he had incurred a liability to [NAME] to which the [NAME] should respond. However, contrary to [NAME]'s contention, [NAME] accepted [NAME]'s submission that a consent judgment may fall within the terms of cl 5.00 of the [NAME], as "all sums that you become legally liable to pay as compensation for Personal Injury". [NAME] relied in this respect on cl 10.01 of [NAME], which allowed for compromise and settlement, notwithstanding that consent of the [NAME] was also required.

5. The primary judge also concluded that the settlement was objectively reasonable. [NAME] referred to [NAME]'s submissions in this respect, which relied on the value of the claim, which was for $1 million plus costs and, by contrast, the consent judgment which was for $430,000 inclusive of costs. [NAME] stated that "[i]f that is not right, the same result follows from a consideration of the limited facts in evidence". Read in context, the "that" to which [NAME] was there referring was the objective reasonableness of the settlement as a matter of quantum, with [NAME] going on to find the settlement was also objectively reasonable from the perspective of [NAME]'s liability.

6. As to the latter, the primary judge found that [NAME] was in occupation of the whole site, and was responsible for its management as well as the management and coordination of all trades and workers on the site. Referring to the evidence of [NAME] considered that if, as he opined, there was a management failure, "regardless of any contribution by the scaffolder or the formworker, responsibility for the management, co-ordination, and control of all trades as well as the site fell to [NAME]". [NAME] further stated: "At the very least there is substantial likelihood that [[NAME]] would have been found liable in negligence for what the expert called the 'managerial failure' in respect of his control and occupation of the site (and trades). On the civil standard it is (highly) likely that a verdict would have been secured against [[NAME]], with a low (to negligible) likelihood of success in the cross-claim against the [NAME] for the scaffolder (where the evidence of a slip and fall with no failure of any part of the scaffold)." 1. [NAME] also considered that there was a high probability that any outcome would have resulted in a judgment sum (plus costs) exceeding the sum quantified in the consent judgment "by a comfortable margin". [NAME] referred to the evidence led by [NAME] that: the plaintiff ([NAME]) sought damages exceeding $1 million plus costs; workers' compensation payments had been made of $151,172.94; and additional out-of-pocket expenses were identified as $7,331.60. [NAME] also noted that: [NAME] had been diagnosed with a soft tissue injury; he was born in 1980 and had limited work capacity/opportunity; and that the medico-legal opinions supported permanent work restrictions and on-going need for medical treatment and care. [NAME] did have a pre-existing injury, but [NAME] had to take [NAME] as he found him. 2. [NAME] found that if the consent judgment was not itself evidence of liability, the most likely outcome of the proceedings was a finding that [NAME] was liable in negligence (in his capacity as manager/occupier of the site) for damages of a sum equivalent to the WorkCover payments and out of pockets, plus sums for future economic loss and treatment, and for non-economic loss. The primary judge concluded: "[[NAME]] has proven the objective reasonableness of [the] settlement sum (embodied in the consent judgment), based upon a reasonable assessment of the risk faced by [[NAME]] in his capacity as the (first) defendant to the plaintiff's claim. In that respect, the likely length of a contested hearing (which involved a third party (the underwriter for the scaffolder) as well as the [NAME] and the plaintiff) with exposure to further and additional costs liabilities also is relevant."

Application for leave to amend the notice of appeal 1. I have noted at [8] above the critical question that [NAME] submitted arose on the appeal. Senior Counsel for [NAME] submitted that at the time of the consent judgment, the [NAME] was not in breach of its obligations because it had avoided the [NAME] on a justified basis. The position of [NAME] was thus analogous, he submitted, to the position of the [NAME] in the High Court's decision in [NAME] (2007) 235 CLR 1; [2007] HCA 36 ("[NAME]"), as an [NAME] that (in his words) "had not at the time wrongfully avoided the [NAME]". He further submitted that, consistently with the reasoning in the joint judgment of Gleeson CJ and Crennan J in that case, it was not sufficient for [NAME] to establish proof of settlement. Rather, he also had to establish that he was liable to [NAME], and the evidence before the primary judge was not capable of so establishing. Although the primary judge had found that [NAME]'s termination was justified (in the sense that it was "the inevitable product" of [NAME]'s actions) at the time of termination, in Senior Counsel's submission [NAME] then erred in concluding that its repudiation was wrongful.

2. These contentions found reflection in grounds 5A to 5C of the proposed amended notice of appeal: "5A [NAME] ought to have found that the respondent was required to prove that he was liable to the plaintiff. 5B [NAME] ought to have found that [the] respondent failed to prove that he was liable to the plaintiff. 5C [NAME] erred in finding that the appellant wrongfully repudiated the contract of [NAME]."

1. Relatedly, [NAME] also sought to include proposed ground 5F, which challenged the primary judge's finding that the settlement was objectively reasonable. In circumstances where [NAME] had made no written submissions about the objective reasonableness of the settlement, let alone written submissions challenging [NAME]'s conclusion in that regard, Senior Counsel explained proposed ground 5F as follows: "Can I just clarify what – I'm not seeking to make any further submissions, that's a ground which supports or allows the submissions I already made this morning, which is that if we are wrong, and the respondent has cross-claimed that he's not required to prove that he was liable to the plaintiff, then the alternative argument is that because he didn't prove that he was liable to the plaintiff, the finding that the settlement was objectively reasonable was wrong. It's just a different way of putting the same factual point. It depends on what the test is."

1. Although it was the focus of the oral submissions, Senior Counsel accepted that [NAME]'s reliance on the justification for its termination of the [NAME] at the time of termination only arose in its reply. He submitted that the argument was responsive to [NAME]'s reliance, in his written submissions, on authorities regarding the consequences of wrongful repudiation of a [NAME] of [NAME], in terms of what [NAME] needed to demonstrate to establish the [NAME]'s liability under the [NAME]. He submitted that [NAME] had not relied on these authorities before the primary judge. 2. [NAME] may not have drawn the attention of the primary judge to the authorities on which he now relies, it is clear from the submissions that were advanced on his behalf that [NAME] relied on [NAME] having repudiated the contract as part of his argument that all he needed to do was demonstrate that: (i) the settlement was a legal liability within the terms of cl 5.00 of the [NAME]; and (ii) the settlement was objectively reasonable. So much is apparent from the following exchange in the course of the opening on the cross-claim: "[NAME] [[NAME]]: I think that was in some correspondence but [it] doesn't matter because as at the date of 14 May 2021, the policies are voided. SLEIGHT [Counsel for [NAME]]: Exactly. I think we are ad idem. [NAME]: Yes, so that's a repudiation and once that occurs, well -- [NAME]: It is a repudiation if you were the builder. It is not a repudiation if you were not. [NAME]: That is so. [NAME]: But then your obligations are not so much prudent [NAME], but a party with a claims duty to mitigate. [NAME]: That is so. [NAME]: I think because you are no longer acting under the [NAME], you are acting now as someone with a potential claim." (Emphasis added.) 1. [NAME] did not run any responsive argument that sought to draw the distinction that it now emphasises between its position at the point of settlement and its position in the event that [NAME] found that [NAME] was the builder. It did contend that it was not sufficient for [NAME] to rely on the consent judgment to establish [NAME]'s liability under the [NAME], and that he had to prove that he was liable to the plaintiff. However, [NAME] put that point on the basis of the scope of coverage of the [NAME], as opposed to putting it on the basis that its termination of the [NAME] was justified at the point of settlement and did not constitute a wrongful repudiation.

2. On more than one occasion, the primary judge raised with Counsel for [NAME] whether [NAME] was relying on such a distinction. In closing submissions, Counsel for [NAME] referred to [NAME] (2010) 240 CLR 444; [2010] HCA 9, describing it as a case in which the parties were in dispute as to what was the limit of indemnity under the [NAME] and the issue was who bore the burden of establishing whether or not the loss or the risk fell within the limit of the indemnity. The primary judge sought to clarify the basis of [NAME]'s reliance on that case: "[NAME]: Isn't this slightly different because of the repudiation argument? Their argument is you repudiated the contract. You didn't repudiate the contract if you weren't liable. SLEIGHT: But your [NAME], strictly, of course, if we say the contract was at an end because of their conduct; yes. However the contract -- [NAME]: I think it's a very trivial distinction here, but it comes down, does it not, to – if this [NAME] should respond, then you repudiated it because it should respond because he's the builder. If he's not the builder, you didn't repudiate; you terminated, and none of it matters. So the question is, they have to prove he was the builder within the relevant meaning of the clause, in order to establish that your termination was wrongful; not that you breached the contract by failing to respond. SLEIGHT: Yes, your [NAME], but in assessing damages they have to show that their liability for which they claim indemnity came within the terms of the [NAME]. In other words -- [NAME]: That there was a liability. SLEIGHT: The first defendant was liable to the plaintiff." (Emphasis added.)

1. Shortly thereafter, there was this further exchange between the primary judge and Counsel for [NAME]: [NAME]: Okay. But let us just deal with it in conceptual terms. To the extent that the reasonableness of the [NAME]'s conduct would come into play, that would probably only be on a costs issue, because where we are here is not, 'Did the [NAME] act reasonably', but 'Did the [NAME], when it acted, get it right'. Now on the defendant's case, the [NAME] got it wrong because the defendant told a fib. That is the short point of the defendant's case. That makes the [NAME]'s conduct entirely reasonable. It creates a curious position in the repudiation stakes because the repudiation which did give rise on the defendant's case to a wrongful termination, arose out of a wrongful act by the defendant, but it does not change the fact that even if the defendant's act was wrongful, if in fact the man is the builder, the repudiation is wrong. SLEIGHT: Your [NAME], what it does raise is this. That the first defendant conducted itself in a manner that the repudiation wasn't wrongful. [NAME]: But I think it is wrongful. I think it remains wrongful, is the problem, because there is not a basis to terminate. The reason why the [NAME] thinks it has got a basis, is the fault of the defendant, but that actually would become relevant, only if it is the defendant's action that repudiates the contract. SLEIGHT: I'm not sure that's correct, because the first defendant has to pave in a way, entitling my client to repudiate, and it has indulged in behaviour, in my submission, that would entitle my client to repudiate. [NAME]: Let us assume that is the case. That is not the way the case has been run, and that is why I have been asking on every occasion, is it the builder or not builder. This case, as I understand it, was run on the basis, 'If he is the builder, you are liable and you will' -- SLEIGHT: Yes, your [NAME], because I took the view that whilst the repudiation was wrongful, if at one stage – at certain stage, the first defendant came along and said, 'It's a pack of lies. I really was the builder.' So we can't just repudiate and walk away if – what it does is justify our original conduct in repudiating the contract. [NAME]: It does in costs terms. It makes reasonable action that otherwise might be unreasonable, but in terms of contractual structure, we seem to have the curious position that the only breach invoked for the termination is the – is not actually a breach. You say you terminated the contract because you told us you were not – this was not your [NAME], in essence. In essence, what you are saying is, we should never have given you any [NAME] in the first place because this was never an insurable [NAME]. SLEIGHT: That's what was originally said. Yes, your [NAME]. [NAME]: That is the position that remains, because what you have not run is a case that says, 'All right, we should have given it to you but your naughtiness in telling us a pack of fibs that got us to this position, now provides a separate basis to terminate the contract', because that is not the way the case was run. SLEIGHT: No, it's not, your [NAME], and I took a particular view on that, that that naughtiness doesn't go on forever. That once, you know, once -- [NAME]: Once he says, 'No, well that was a lie and I'm back in business, then things would change'. SLEIGHT: I thought that as a – so that is not the way it's been run." (Emphasis added.)

1. In Superannuation & Corporate Services Pty Ltd v Turner [2020] NSWCA 246, Gleeson JA ([NAME] agreeing) summarised the applicable principles regarding leave to run a point not run below: "[143] … The relevant principles in this regard are clear. The High Court has repeatedly emphasised that a party is bound by the conduct of his or her case. In [University of [NAME] v [NAME] (No 2)] [1985] HCA 28; (1985) 59 ALJR 481 [at 483], the plurality said … : 'Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.' [144] As explained in Water Board v Moustakas (1988) 180 CLR 491 at 497; [1988] HCA 12 if: 'all the facts [have] been established beyond controversy or where the point is one of construction or of law, then a Court of Appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied.' [(Citations omitted.)] [145] In Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598, the High Court said at [51]: 'It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial.' [Citations omitted.]"

1. In resisting the application for leave to amend to rely on ground 5C, [NAME] submitted if [NAME] had run this point at trial, that he would have had an opportunity to lead evidence that was directed to the question of what was before or otherwise available to the [NAME], at the time that it avoided the [NAME], that disproved his statement to [NAME] that he was not the builder. That might have included evidence from [NAME]'s [NAME] broker, and evidence as to the circumstances in which [NAME] made the signed statement in December 2020.

2. Having regard to the manner in which the matter was run before the primary judge, and the prejudice that [NAME]'s Counsel identified were the matter permitted to be run now, I would refuse leave to [NAME] to amend the notice of appeal to include proposed ground 5C. Resolution of the issue that [NAME] sought to raise by that ground must await another occasion. 3. [NAME] did not identify any prejudice in relation to the remaining proposed grounds of appeal. Although proposed grounds 5A and 5B were explained on the basis that they were integrally related to proposed ground 5C, I would grant leave to raise them on the appeal. In light of the basis on which the matter was run below those grounds, and the other proposed grounds, may be dealt with shortly.

The grounds of appeal 1. In its written submissions, [NAME] relied on the following two findings of the primary judge as alternative findings (AWS [24]-[25]):

1. As a matter of construction of cl 5.00 of the [NAME], entry into the consent judgment activated [NAME]'s liability under that clause.

2. The same result followed from a consideration of the limited facts in evidence.

1. On the basis of its characterisation of the second of these findings as one of legal liability, [NAME] submitted in writing that notwithstanding the consent judgment, whether [NAME] was liable to [NAME] was key to the proper resolution of the case, as an affirmative answer would render the issues concerning entry of the consent judgment irrelevant (AWS [29]).

Accordingly, it submitted that its grounds challenging [NAME]'s conclusions on liability (grounds 2 to 4) should be considered first. 2. [NAME]'s submission rests on a mischaracterisation of the second of the findings in [58], which was directed not to legal liability per se, but to the reasonableness of the settlement into which [NAME] had entered. As I have addressed in [42] above, [NAME] considered whether the settlement was objectively reasonable first as a matter of quantum and then, in the alternative ("[i]f that is not right"), from the perspective of liability. The manner in which [NAME] expressed the findings with which [NAME] took issue in grounds 2 to 4, by reference to likelihood, reflected that [NAME] was determining whether the settlement was objectively reasonable, having found that [NAME] repudiated the [NAME] and that [NAME] accepted that repudiation.

3. Once the structure of the primary judge's reasons is properly understood, it is preferable to start with ground 5, by which [NAME] challenged [NAME]'s conclusion that cl 5.00 of the [NAME] responded to the liability that [NAME] assumed "and, in particular, such liability assumed by a consent judgment" (ground 5).

Construction of the [NAME]

1. Pursuant to cl 5.00 of the [NAME] was required to indemnify [NAME] "for all sums that you become legally liable to pay as compensation". [NAME] referred to a number of authorities that, in its submission, suggested that an [NAME]'s cause of action against an [NAME] usually accrues on the happening of the loss. It followed, in [NAME]'s submission, that the insuring clause required that the [NAME] respond to and provide cover immediately when (in this case) [NAME] incurred a liability to [NAME], being the moment [NAME] suffered injury from the fall. [NAME] submitted that this, together with the use of the passive voice, required an interpretation of cl 5.00 by which the liability to which the [NAME] responded was imposed by operation of law (as opposed to a liability that was assumed by agreement).

2. In so far as [NAME] relied on cl 10.01 in support of her construction, [NAME] submitted that it was a condition which regulated how [NAME] should conduct itself after it has incurred liability to which the insuring clause responded.

Accordingly, its operation was not directly relevant to the interpretation of the insuring clause. Further, and in any event, cl 10.01 was consistent with the insuring clause not responding to assumed liability because the clause prevented [NAME] conducting itself in a manner that would incur liability without the consent of the [NAME]. [NAME] submitted that [NAME]'s finding, that the [NAME] could not be said to have precluded consent judgments or settlements, conflated the interpretation and operation of cl 10.01 with the insuring clause in cl 5.00.

3. I do not accept [NAME]'s submissions. The primary judge's construction of cl 5.00, by which, as in this case, liability that has been determined by a bona fide compromise agreement would be within the scope of the indemnity, accords with the much-cited decision in Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363 at 373 ("[NAME]"). In Vero Insurance Ltd v Baycorp Advantage Ltd [2004] NSWCA 390; 23 ACLC 199 ("[NAME]"), Tobias JA (Giles and McColl JJA agreeing) considered a [NAME] which defined "Loss" in similar terms to cl 5.00 of the [NAME] but which also included the words "whether determined by judgment or settlement". His [NAME] stated at [48]: "The definition of 'Loss' is such that, even if the words 'whether determined by judgment or settlement' were not used, the expression 'legally liable' refers to a legal liability established by judgment, arbitral award or settlement: see The Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1 at 25-6; Cacciola v Fire & All Risk's Insurance Co Ltd (1971) 1 NSWLR 691 at 695; Costi v Rodwell (1985) VR 287 at 289."

1. Referring to [NAME] and [NAME] in Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2018] NSWCA 100; 359 ALR 314 ("[COMPANY])") at [2], Meagher JA described expressions involving legal liability in liability [NAME] contracts as being generally understood since Lord Denning's decision in [NAME] as "referring to liability as determined, rather than the liability asserted by a third party claimant or the underlying liability that accrues upon a legal injury". That entry into a settlement is a determination of liability that falls within the scope of cl 5.00 of the [NAME] properly construed was supported, as [NAME] observed, by the terms of cl 10.01 of the [NAME]. True it is that cl 10.01 is qualified by a requirement for the [NAME]'s consent, but that does not gainsay that its terms are consistent with a construction of the insuring clause that indemnifies against a liability as a result of a settlement. Contrary to [NAME]'s submissions, reasoning in that manner does not conflate the interpretation and operation of the two clauses.

2. I note that [NAME] advanced ground 6 in the alternative to ground 5. In the written submissions on ground 6, [NAME] contended that [NAME] should not have entered the consent judgment at the behest of the parties as the judgment "unilaterally" affected its rights (AWS [60]). It relied in this regard on James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53; [1998] HCA 78 ("[NAME]").

3. The decision in [NAME] concerned a statutory right to contribution in s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) for two categories of joint tortfeasor: (a) one who is liable for damage; and (b) one who would, if sued, be liable for that same damage. In [NAME], after a trial involving three defendants had commenced, consent judgments were entered in favour of the plaintiff against two defendants, and in favour of the third defendant against the plaintiff. [ADDRESS], by majority, concluded that a claim by the two defendants found liable against the third defendant was no longer available under s 5(1)(c), as that defendant did not satisfy either of the categories of joint tortfeasor.

4. By contrast with the legal effect of the consent judgment in [NAME], the consent judgment that the primary judge entered did not determine [NAME]'s liability under the [NAME] for the sum that [NAME] was ordered to pay [NAME]. The settlement did not preclude [NAME] from contending that it was not liable under the [NAME] on the construction of cl 5.00 on which it relied, or because [NAME] had not proved that he was liable to [NAME], or that the settlement was not objectively reasonable. Ground 6 should be dismissed.

Liability of [NAME] and the reasonableness of the settlement 1. As I noted above, by grounds 5A and 5B, [NAME] contended that the primary judge should have found that it was necessary for [NAME] to prove that he was liable to [NAME], and that he had failed to do so. Grounds 2, 3 and 4 were also premised on this contention, taking issue with particular findings that [NAME] made on the basis that the findings were not supported by admissible evidence.

2. In the face of [NAME]'s conclusion that [NAME] wrongfully repudiated the [NAME]'s contentions were inconsistent with settled authority. In [NAME] at [48], Tobias JA made the following observations regarding similar circumstances (Giles and McColl JJA agreeing): "There are divergent lines of authority as to what, in such cases, [NAME] must prove where there has been a settlement without the [NAME]'s consent. One line of authority favours [NAME] and establishes that provided the settlement is reasonable, the [NAME] is liable to pay the settlement sum: eg, [NAME] v [NAME] (1933) 34 SR (NSW) 88; General Omnibus Company v London General Insurance Company Ltd [1936] IR 596; Distillers at 9, 25. However the cases, which favour this approach, would seem to do so on the basis that the [NAME] has wrongfully repudiated liability."

1. In [COMPANY]) at [57], Barrett AJA relied on certain passages in Distillers Co Bio-Chemicals (Aust) Pty Ltd v Ajax Insurance Co Ltd (1974) 130 CLR 1; [1974] HCA 3 as authority for the proposition that in certain circumstances an [NAME] can prove the existence and quantum of a legal liability to pay compensation by proving that it entered into a settlement agreement with the claimant that was objectively reasonable. His [NAME] also referred with apparent approval to the decision of the primary judge, Hammerschlag J, in Weir Services Australia Pty Ltd v AXA Corporate Solutions Assurance [2017] NSWSC 259 ("[COMPANY]"), in which his [NAME] held at [135] that an [NAME] can rely on a reasonable settlement to found a claim against an [NAME] only if four conditions are satisfied: "(1) the [NAME] has wrongfully repudiated the contract; (2) [NAME] accepted that repudiation and brought the contract to an end; (3) [NAME] enters into an arrangement with a third party claimant to pay an amount in respect of a liability, to which, if found, the [NAME] would have responded; and (4) the amount of the settlement is reasonable having regard to the relevant circumstances at the time. Relevant circumstances can include the position in which [NAME] finds itself as a result of the repudiation and what it might have been held liable to pay if there had been a contest leading to a judgment or arbitral award." (Emphasis added.)

1. As [NAME] submitted, and as the primary judge found, [NAME] had repudiated the [NAME] and he had accepted that repudiation. Having entered into a settlement with [NAME], it was for him also to show that the amount of the settlement was reasonable having regard to the relevant circumstances which, as Hammerschlag J noted in the fourth condition, included the position in which [NAME] found himself and what he might have been held liable to pay if there had been a contest leading to a judgment or arbitral award. He did not need to establish that he was liable to [NAME] in the manner that [NAME] alleged in the amended statement of claim; and the primary judge did not need to be satisfied that [NAME] was so liable. 2. [NAME]'s reliance on [NAME] as requiring that level of proof and correlative satisfaction was misplaced. As [NAME] submitted, that decision is not authority for the proposition that where an [NAME] has wrongfully avoided a [NAME] an [NAME] is required to prove by admissible evidence that it is legally liable to the third-party claimant. [COMPANY] ([NAME]), as the [NAME], and [COMPANY] ([NAME]), as [NAME], were parties to a professional indemnity [NAME] of [NAME]. [NAME] informed [NAME] that it had become aware of possible claims against it by persons who had received unsatisfactory financial advice from its representatives. [NAME] advised [NAME] to act as a prudent uninsured. Taking the view that it had a liability towards several investors, [NAME] proceeded to enter into settlements with those investors without any of them making a claim as defined under the [NAME]. After the settlements were made, [NAME] denied liability to indemnify [NAME] under the [NAME]. 3. [NAME] sued [NAME] claiming, relevantly, that [NAME] was estopped from denying indemnity, that it had breached the duty to act with the utmost good faith implied in the contract by statute, and that the settlements were reasonable. The Full Federal Court had remitted questions to the primary judge for further consideration, the first three of which related to whether there was an estoppel or breach of duty of utmost good faith. As Gleeson CJ and Crennan J observed at [18]: "The hypothesis of the first three questions posed for reconsideration by Heerey J is that [NAME] did not establish by admissible evidence that it was legally liable to the investors. It was accepted in argument in this Court that the remitter is not intended to give [NAME] an opportunity to reopen its case, and adduce further evidence. If [NAME], at the trial, had established by admissible evidence that it was legally liable to the investors, then the first three questions formulated by the [ADDRESS] would not arise. It is necessary to note why the questions arise." (Emphasis in original.)

1. As [NAME] submitted, the [NAME] in [NAME] defined liability in a manner that excluded settlements with injured persons who had not yet brought legal proceedings, in contrast to the [NAME] in this case, which was "occurrence based". Further, and of more significance, [NAME] did not involve circumstances in which the [NAME] had denied cover or avoided the [NAME]. Rather, [NAME] had not taken a position on the question of indemnity.

2. In grounds 2 to 4 of the amended notice of appeal, [NAME] took issue with [NAME] making the following findings on the admissible evidence, which findings it described as being relied on by [NAME] to conclude that [NAME] incurred a liability to [NAME] to which cl 5.00 of the [NAME] responded: 1. at the very least there was a substantial likelihood that [NAME] would have been found liable in negligence for what [NAME] described as a managerial failure in respect of his control and operation of the site (ground 2(a) and ground 5E); and 2. on the civil standard it was "(highly) likely" that a verdict would have been secured against [NAME] (ground 2(b)). 1. [NAME] took particular issue with [NAME]'s reliance on the expert report of [NAME], for two reasons. First, it submitted that when the report was tendered by [NAME] on the cross-claim against [NAME], it was admitted with the restriction as to the history recorded, on which [NAME]'s opinion was predicated (ground 3). It also submitted that even accepting [NAME]'s conclusion that [NAME] had responsibility for the management, coordination and control of the site and all trades, it did not follow that there was a substantial likelihood that [NAME] would have been found liable for the "managerial failure" (ground 5D). It submitted that such a finding required evidence that any culpable failure on behalf of [NAME] materially contributed to [NAME]'s fall and there was no admissible evidence to that end (ground 4).

2. For the reasons I have set out above, these grounds mischaracterise the inquiry that the primary judge was undertaking. When understood as an inquiry into the reasonableness of the settlement, and not an inquiry into [NAME]'s liability per se, [NAME]'s approach was consistent with the inquiry on the fourth condition in [COMPANY], namely, as to the circumstances at the time of [NAME]'s entry into the settlement. As [NAME] submitted, the settlement was objectively reasonable for the reasons given by the primary judge, having regard to the amount in issue and: 1. [NAME]'s evidence and the contemporaneous records indicating that he slipped on the scaffolding; 2. the reports and various notices issued following [NAME]'s investigation; 3. [NAME]'s expert report (the assumptions in which were similar to what was contained in the contemporaneous reports, regardless of any discretionary restriction as to the use of the histories in evidence); 4. the evidence of workers' compensation payments, medical expenses, and the impact of the incident on [NAME]'s earning capacity; and 5. the upcoming hearing on liability and the costs associated with that hearing.

1. It follows from the above that I would dismiss grounds of appeal 2, 3, 4, 5A, 5B, 5D, 5E of the amended notice of appeal.

2. In relation to ground 5F of the amended notice of appeal, as I noted above at [48] this ground was an alternative way of putting [NAME]'s argument on liability, namely, that unless [NAME] proved that he was liable to [NAME] as alleged in the amended statement of claim, the settlement could not be described as objectively reasonable. For the reasons I have addressed above I do not accept the premise of that argument.

Conclusion 1. I would make the following order: 1. The appeal is dismissed with costs. 1. [NAME]: I agree with [NAME].

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Amendments 24 April 2024 - In coversheet, name of appellant amended from "[COMPANY]" to "[COMPANY]". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 April 2024