Twentieth Super Pace v Australian Rail Track Corporation [2006] VSC 353
In the Supreme Court of Victoria, at a separate trial of liability, Gillard J held that a train operator proved that a track buckle, not a dislodged brake beam, caused a derailment, so that the network manager was liable to it in contract and under an indemnity clause that applied between the parties as well as in negligence, its liability extending to its maintenance contractor under a non-delegable duty, and that the manager's counterclaim must be dismissed [1], [140], [280], [287], [288], [291], [292].
What the court decided
A freight train operated by the plaintiff derailed in country Victoria on a hot day in January 2002 [1]. The defendant managed and maintained the network [3]. Its maintenance contractor Works Infrastructure, which was not joined, had carried out re-sleepering works at the site in the preceding month [4], [6]. Each party claimed against the other in contract, under a mutual indemnity clause and in negligence [135], [146], [147].
The defendant argued that the indemnity clauses applied only to claims made against a party by a third party [138]. The defendant's indemnity covered "all Claims on, against or by the Operator" [135]. Gillard J held that the words were clear and that the indemnity applied as between the parties and was not confined to proceedings brought by a third party [140]. He held that, insofar as the plaintiff relied on the indemnity, the burden of establishing that the clause did not apply was on the defendant [143]. The indemnity was subject to an escape clause for claims arising from the plaintiff's relevant breach or for property damage not caused or contributed to by the defendant [142]. His Honour said he need go no further on interpretation, because the indemnity claim raised the same factual issue as the contract claim, namely the cause of the derailment [143].
Counsel for the plaintiff submitted that, driver error and external force being excluded, excluding a rolling stock fault must establish a track fault [214]. His Honour did not accept that excluding the brake beam theory would necessarily prove a track defect, because there must be some evidence supporting that conclusion [215]. Drawing on Rhesa Shipping S.A. v Edmunds, he said that each party had assumed the burden of proving its own theory of the cause [216], [221]. He accepted that excluding the defendant's theory would be taken into account in support of the plaintiff's case [224].
His Honour found a prima facie case that a track buckle caused the derailment, based on the recent works, inadequate compaction and ballast, the gradient, the curve, the speed and the heat [253], [264]. The plaintiff had to exclude a wagon defect before the court could find that a track defect was the cause [264]. His Honour placed no reliance on the evidence of the defendant's witness Mr Scott, apart from his direct observations, finding that he speculated and relied on facts that were wrong [204], [278]. He found that the plaintiff had proved that the brake beam dislodged after the derailment and was not a cause of it [279], [280]. It followed that the plaintiff had proved breach of contract and was entitled to the indemnity [280], [291].
On negligence, it was not in dispute that the defendant owed the plaintiff a duty of care [145], [281]. His Honour found negligence by both the defendant and Works Infrastructure, including inadequate creep monitoring and the defendant's failure to re-survey the area [281], [282]. Applying Burnie Port Authority v General Jones Pty Ltd, his Honour said that a train operator is extremely vulnerable and very dependent on the track owner keeping the track safe [284], [286]. He held that the defendant owed a non-delegable duty and was liable for the contractor's negligent conduct [287]. He held that the defendant's negligence was a cause of the derailment and the plaintiff succeeded in negligence [288].
The defendant failed to prove a breach of contract by the plaintiff, and its indemnity claim failed because the plaintiff proved the escape clause matters [289]. Its negligence claim also failed and his Honour held that the counterclaim must be dismissed [290], [292]. He said he would hear the parties on the orders to be made and the future conduct of the proceeding [293].
Why it matters
An indemnity expressed to cover claims "by" the indemnified party may, on its clear words, extend to direct claims between the parties. The indemnity here was subject to fault-based carve-outs, so in practice it turned on the same causation question as the contract claim. It is also a reminder that, where the cause of an event is contested, disproving the opponent's theory supports but does not of itself prove one's own case. The non-delegable duty finding was made without argument to the contrary from the defendant [283].
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.