SUPREME COURT OF QUEENSLAND

CITATION: Shamrock Civil Engineering Pty Ltd v Honan Insurance

Group Pty Ltd [2024] QSC 313
PARTIES: SHAMROCK CIVIL ENGINEERING PTY LTD
ABN 68 066 655 856
(plaintiff)
v
HONAN INSURANCE GROUP PTY LTD
ABN 67 005 372 396
(first defendant)
CLEANAWAY SOLID WASTE PTY LTD
ACN 120 175 635
(second defendant)
CLEANAWAY PTY LTD
ACN 000 164 938
(third defendant)
QBE INSURANCE (AUSTRALIA) PTY LIMITED
ACN 003 191 035
(fourth defendant)
CHASE UNDERWRITING PTY LTD
ACN 156 554 808
(first third party)
QBE INSURANCE (AUSTRALIA) PTY LIMITED
ACN 003 191 035
(second third party)
FILE NO: BS 6807/23
DIVISION: Trial
PROCEEDING: Application
ORIGINATING Supreme Court at Brisbane
COURT:
DELIVERED ON: 13 December 2024
DELIVERED AT: Brisbane
HEARING DATE: 10 December 2024
JUDGE: Freeburn J
ORDERS: 1. The application for summary judgment is dismissed.
2. I will hear the parties on costs.
CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL
PRINCIPLES – CONSTRUCTION AND
INTERPRETATION OF CONTRACTS – where the
plaintiff, Shamrock, seeks summary judgment on a
counterclaim brought by the second and third defendants,
Cleanaway – where the parties entered an agreement
 2

concerning a dump site owned by Cleanaway for Shamrock

to construct a cell where waste can be placed – where
following heavy rainfall, a lake formed on the site, which
then became putrid – where Cleanaway claims that clause 10
of the relevant contract requires Shamrock to reimburse
Cleanaway for remedying the site – whether the claim should
be summarily dismissed
Uniform Civil Procedure Rules 1999 (Qld), r 239
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd
(2015) 256 CLR 104; [2015] HCA 37, cited
Re Mining Technologies v EJ Hampson [1996] QSC 254,
cited
Ranicar v Frigmobile Pty Ltd [1983] Tas R 113, explained
Switzerland Insurance Australia Ltd v Dundean Distributors
Pty Ltd [1998] 4 VR 692, cited
COUNSEL: DB O’Sullivan KC, with PD Lane, for the plaintiff
DP O’Brien KC, with S McLeod, for the second and third
defendants
SOLICITORS: McCullough Robertson for the plaintiff
Gadens for the second and third defendants

Introduction
[1] The second and third defendants, Cleanaway, own and operate a waste dump at
New Chum, a suburb of Ipswich. By a Master Agreement, Cleanaway engaged
Shamrock to undertake earthworks and other related works at the New Chum site.1
Shamrock was required to construct a cell, that is an open area where waste can be
placed. 2

[2] In late February 2022 there was very heavy rainfall at the New Chum site. This
resulted in major flooding. The flooding caused the site to resemble a lake. That
lake became putrid as material stored at the dump leached out into the water. The
lake started to stink. An environmental order was issued against Cleanaway.

[3] Cleanaway alleges that it has incurred $30,962,566 to drain the swamp and address
the noxious odours, including treating the contaminated water comprising landfill
leachate. 3

[4] A cross-claim made by Cleanaway against Shamrock is that, pursuant to an

indemnity clause in the Master Agreement, Shamrock is obliged to reimburse
Cleanaway for the nearly $31 million spent on draining the swamp and addressing
the environmental problems.

1
In fact, Cleanaway and Shamrock entered into an agreement on about 5 December 2019 for
construction works. The contract comprised a New Chum Statement of Works dated 5 December
2019, the Master Agreement dated 30 November 2015 and various documents listed in the annexures
to the Master Agreement. The New Chum contract was varied in October and November 2021 to
include additional works.
2
These facts are explained in Shamrock’s submissions.
3
Again, these facts are taken from the description in Shamrock’s submissions.
 3

[5] Shamrock applies for summary judgment pursuant to rule 293 of the Uniform Civil
Procedure Rules 1999 (Qld). Shamrock contends that Cleanaway has no real
prospects of succeeding on its indemnity claim and that the cross-claim by
Cleanaway should be dismissed.

[6] Before entering summary judgment the court must be satisfied of the two matters
described in rule 293, namely:
(a) Cleanaway has no real prospect of succeeding on this claim; and
(b) there is no need for a trial of this claim.

Clause 10(a)
[7] Clause 10 of the Master Agreement is as follows:
10. Contractor’s Indemnity
The Contractor shall be liable for and shall indemnify the Principal
against:
(a) any liability, loss claim or proceeding whatsoever in respect
of loss, destruction or damage to any property, real or
personal, arising out of or in the course of or by reason of
the execution of the Works; and
(b) any liability, loss, claim or proceeding whatsoever arising at
common law or under statute in respect of personal injury to
or the death of any person whomsoever arising out of or in
the course of or by reason of the execution of the Works,
but the Contractor’s liability under this Clause shall be reduced
proportionately to the extent that an act or omission of the Principal,
or its employees or agents contributed to the loss, damage, death or
injury. For the purposes of this Clause the Project Manager, any
quantity surveyor or other consultant shall be an agent of the
Principal but tenants, their visitors, invitees, and contractors shall
not be agents of the Principal.
This clause shall not apply to:
(c) the extent that the liability of the Contractor is limited by
another provision of this Deed;
(d) claims in respect of the right of the Principal to construct the
Works on the Site; and
(e) damage which is the unavoidable result of the construction of
the Works in accordance with this Deed. [emphasis added]

[8] Cleanaway pleads that the rainfall caused flood damage, that is:
(a) ponding of water;
(b) damage to a wall;
(c) seepage and run-off of water;
(d) The production of leachate caused by the interaction of the water ponded and
landfill waste.
 4

[9] The expenses of nearly $31 million comprise:

(i) dewatering, dosing, leachate management, and removal of debris;
(ii) repairing damage to the wall;
(iii) professional fees to the address environmental issues associated with
the presence of leachate and ponded water;
(iv) fleet, fuel and equipment costs.

The Interpretation Exercise

[10] There is a preliminary issue. Shamrock makes these submissions:
Essentially, Cleanaway says that because of the circumstances that Shamrock
had a contract to do earthmoving and related works when heavy rain fell and
flooded the New Chum site, Shamrock is obliged to indemnify Cleanaway for
its clean-up costs.
Whilst it is in theory possible that parties might agree to an arrangement of this
kind, whereby a contractor indemnifies his or her principal against the risks of
a natural disaster, a bargain in those terms would be difficult to fathom.
The contractor is paid to do construction work. Payment is not, ordinarily,
intended to provide compensation for taking on the risk of a natural
disaster. Under a contract of insurance, of course, the insurer is paid to take
on precisely this kind of risk.
For these reasons, it is submitted that very clear words would be required
before a Court would conclude that the presumed intention of the parties was
that by clause 10 of the Master Agreement, Shamrock agreed to provide an
indemnity to Cleanaway, unlimited in scope, against the risk of the principal
suffering loss from flooding, earthquake, fire or other natural disaster. 4
[emphasis added]

[11] In oral submissions, the argument was put in more forceful terms. It was contended
that the parties have considered inclement weather in their contract and there is no
hint that the indemnification obligation in clause 10(a) was intended to “outflank”
all other clauses on which the parties have agreed. And it was argued that it was
improbable that the parties intended to give Cleanaway a right to an indemnity, even
if the work was done brilliantly by Shamrock. It was said that a reasonable
businessperson would recoil at such an interpretation. 5

[12] I do not accept that approach. The process of contract interpretation does not start
with an assessment of what the parties can be presumed to have intended. There are
obvious dangers in beginning the interpretation exercise with an idea of what might
be expected in a particular bargain, and in requiring clear words in order for the
court’s interpretation to depart from what was expected. Different people will have
different expectations. Shamrock’s approach introduces a subjective element at the
outset.

4
Shamrock submissions, [15]-[17].
5
Counsel for Shamrock also contrasted the contract price of $3.7m (later $7m) with the claim here of
$31m.
 5

[13] The leading modern statement on interpretation of commercial contracts is to be

found in the reasons of French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty
Ltd v Wright Prospecting Pty Ltd: 6
The rights and liabilities of parties under a provision of a contract are
determined objectively, by reference to its text, context (the entire text of the
contract as well as any contract, document or statutory provision referred to in
the text of the contract) and purpose.
In determining the meaning of the terms of a commercial contract, it is
necessary to ask what a reasonable businessperson would have understood
those terms of mean. That inquiry will require consideration of the language
used by the parties in the contract, the circumstances addressed by the contract
and the commercial purpose or objects to be secured by the contract.
Ordinarily, this process of construction is possible by reference to the contract
alone. Indeed, if an expression in a contract is unambiguous or susceptible of
only one meaning, evidence of surrounding circumstances (events,
circumstances and things external to the contract) cannot be adduced to
contradict its plain meaning.
However, sometimes, recourse to events, circumstances and things external to
the contract is necessary …” 7

[14] As Herzfeld and Price say in their text Interpretation:

“… the only relevant meaning is that which the text conveys. This follows
from the need to ascertain the intention expressed in the document. Although
… context and purpose are relevant, ultimately the court must attribute
meaning to the words actually used. 8

[15] And so, the starting point is not whether or not a bargain in the terms alleged would
be difficult to fathom, or whether a particular interpretation would be a surprising
construction of a commercial contract, 9 and there is no requirement for clear words
if the bargain appears to deviate from expectations. The starting point is the words
actually used. That approach is consistent with the objective theory of contract, 10
and the modern approach of objective interpretation. 11

[16] Incidentally, there are two further and related problems with Shamrock’s approach.
First, as explained, what may be expected in a particular bargain can be in the eye
of the beholder. Experienced principals and experienced contractors might have
very different expectations of a building contract. For example, even standard form
construction contracts prepared by peak bodies contain substantively different
provisions, sometimes influenced by the interests of their membership.

6
(2015) 256 CLR 104.
7
Ibid [46]-[49].
8
Herzfeld and Prince, Interpretation (Thomson Reuters, 3rd ed, 2024) [19.60] (‘Herzfield and
Prince’). This passage, in the previous edition, was quoted with approval by Stevenson J in Heavy
Plant Leasing Pty Ltd (In Liq) v McConnell Dowell Constructors (Aust) Pty Ltd (No 2) (2022) 163
ACSR 562, [19]. These authorities are all discussed in Rusbridge v Lake Fox Limited [2024] QSC
279, [21]-[23].
9
This was an approach put in oral submissions.
10
See Taylor v Johnson (1983) 151 CLR 422, 428-429. See also the discussion by Professor Carter,
Contract Law in Australia, (J W Carter Publishing, 8th ed, 2023), [1-10].
11
Herzfeld and Prince (supra), [19.60].
 6

[17] Second, there may well be good commercial reasons for a provision that Shamrock,
the contractor, shall be liable for and shall indemnify the principal against liabilities
and losses in respect of loss, destruction or damage to any property, real or personal,
arising out of or in the course of or by reason of the execution of the works.
Shamrock explicitly accepted all risks in connection with the construction of the
works. 12 But the contract also envisaged that Shamrock would take out various
insurances, including contract works insurance. 13 Thus, Shamrock would be the
entity to take on the risk as between the two contracting parties, but Shamrock could
cover its risks by insurance. That insurance may cover for risks even where the
damage is attributable to the conduct or one or other of the parties or where the risk
is the result of neutral causes (such as weather). 14

[18] In this case, starting with the words, the words of the indemnity clause have two
relevant requirements:
(a) the costs claimed are “in respect of loss, destruction or damage to any
property, real or personal”; and
(b) the damage can be described as “arising out of or in the course of or by
reason of the execution of the Works”.

[19] Each can be considered in turn.

“loss, destruction or damage to any property, real or personal”

[20] Counsel for Shamrock contends that:

The words “damage to property” appearing in clause 10 have a well-

established meaning. They mean a “physical alteration or change” to the
property damaged. A mere change in the usefulness or value of property, by
reason of physical events not involving a physical alteration or change to the
property, does not constitute damage to property. 15

[21] First, there is a subtle difference between the phrase analysed by counsel for
Shamrock (“damage to property”) and the actual phrase used (“damage to any
property”). 16 There are also differences in the contractual context. And, as will be
explained, I am not confident that the phrase has a ‘well-established’ meaning.
Given that the ultimate question for the court is the meaning of the particular
document in issue, dependent on construing it as a whole, and with reference to any
admissible extrinsic evidence peculiar to that document, it is very difficult to see
how a decision on the meaning of one document could ever be strictly binding in
relation to another. 17

[22] Second, even accepting that the cases relied on by Shamrock can be regarded as
persuasive, they appear to have limited utility.

12
Clause 2.3.
13
Clause 11.2.
14
Of course, much depends on the terms of the policies which Shamrock takes out pursuant to clause
11.
15
Shamrock submissions, [26].
16
Note that in Ranicar v Frigmobile Pty Ltd [1983] Tas R 113 at 117 Green CJ commented that the
addition of the words “any” and “whatsoever” gave the clause a wider ambit than it otherwise would
have had.
17
Herzfeld and Prince (supra), [19-100].
 7

[23] Ranicar v Frigmobile Pty Ltd 18 is described by counsel for Shamrock as the leading
case. The facts were that on 11 September 1980, the plaintiffs entered into a written
agreement to supply frozen scallops to a Canadian company. A week later, on 18
September 1980, Frigmobile took possession of those frozen scallops and delivered
them to a wharf in Melbourne with a view of them being loaded on a vessel bound
for Canada. Whilst at that wharf the scallops were examined by an officer of the
Commonwealth Department of Primary Industry. They were found to be at a
temperature between -6°C and -12°C. The Exports (Fish) Regulations required that
the temperature of the scallops was not to rise above -18°C. Accordingly the
scallops were rejected for export and the plaintiffs were unable to fulfil their
agreement to sell to the Canadian company. They were able to sell the scallops on
the domestic Australian market, but for less than they would have received had they
completed the sale to the Canadian company.

[24] Green CJ said:

… the meaning which I should prima facie give to the phrase “damage to”
when used in relation to goods, is a physical alteration or change, not
necessarily permanent or irrepairable, which impairs the value or usefulness of
the thing said to have been damaged. 19

[25] And then, applying that meaning to the facts, His Honour reached this conclusion:

In my view, the changes caused by enzymic activity and chemical oxidation of

the fats in the scallops did not constitute damage to the scallops. Although
clearly physical changes, they were not such as to significantly effect the
marketability, edibility or other material qualities of the scallops. Further, the
plaintiffs' loss did not arise out of those changes. Their loss arose out of their
inability to export the scallops, which caused solely by the fact that they were
stored at a temperature above -18°c. Even had the scallops undergone no
change of any kind, the mere fact that they were stored at a temperature above
-18° would have been sufficient to prevent the plaintiffs from being able to
export them. The question which remains is whether in the circumstances
of this case that change in temperature amounted to damage in the
scallops. In my view, it plainly did. An alteration in temperature
undeniably involves a physical change to a substance and in this case that
change had the effect of removing one of the primary qualities which the
scallops had - their exportability. As a result, it is plain that their usefulness
was impaired and their value reduced. That is not to say, of course, that in
every case a change in temperature would amount to damage. It would depend
upon the circumstances and the nature of the goods. 20 [emphasis added]

[26] The assistance provided by that case is limited. That was a case where the issue was
whether under an exclusion clause and a policy of insurance there was damage to
the scallops. Here, the question is whether the damage to a batter wall, 21 and
flooding leading to a putrid lake on part of the land, 22 qualifies as “damage to any
property, real or personal”. In so far as Ranicar v Frigmobile Pty Ltd is a guide, it
is at least strongly arguable that the putrid lake on the land constitutes a physical
alteration or change to the land, not necessarily permanent or irreparable, and that

18
[1983] Tas R 113.
19
Ibid 116.
20
Ibid 117.
21
This aspect is conceded to be ‘damage’.
22
The part of the land/site in question is cell 3B East/North.
 8

the putrid lake impairs the value or usefulness of the land. There is, it seems to me,
a good argument that the putrid lake on cell 3B East/North comprised damage to
real property.

[27] In Switzerland Insurance Australia Ltd v Dundean Distributors Pty Ltd23 Phillips
JA referred to a number of cases, including Ranicar, and said:

In my view these cases plainly establish, at least for the purposes of the present
appeal, the proposition for which counsel was contending, namely, that
“damage”, within the meaning of section 5 of the policy, occurs if the subject
matter (which, I have said, included the software) is interfered with in such a
way as to render it less useful or valuable and in consequence time and
money are required to restore that use or value: see especially Ranicar at
Tas. R. 116-17. 24 [emphasis added]

[28] Here, it seems plain that cell 3B East/North was rendered less useful or valuable,
and time and money was required to restore its usefulness and value.

[29] The other cases relied on, many of which involve the interpretation of insurance
policies, do not support the idea that the words “damage to property” appearing in
clause 10(a) has a well-established meaning, or that the meaning is restricted to
those situations where there is a “physical alteration or change” to the property.
Instead, the cases illustrate that the concept of ‘damage’ can have a broad meaning,
depending on the context.

[30] In Re Mining Technologies v EJ Hampson 25 White J considered the situation where

certain equipment was temporarily entombed, but not physically damaged, in an
underground mine. The issue was whether the temporary entombment, and the costs
associated with extraction, qualified as “loss or damage to...machinery/equipment”
under an insurance policy. Her Honour found that she was unable to construe the
entombment of the equipment, where no physical damage or change was sustained
to it, as constituting “damage” within the meaning of the policy. However, the
decision is hardly surprising given the absence of any physical alteration or change
to the equipment and the purpose of the policy – to indemnify the insured for the
loss or damage to its equipment rather than the loss of use of the equipment.

[31] That case is in contradistinction to this case where the land is physically affected by
presence of a swamp filled with contaminated water.

[32] Consequently, in my view, there is a real prospect that Cleanaway will establish at
trial that the $31 million in costs claimed are “in respect of loss, destruction or
damage to any property, real or personal”.

“arising out of or in the course of… the execution of the Works”

[33] Can the damage claimed be described as “arising out of or in the course of or by
reason of the execution of the Works”? Shamrock contends that:
…even assuming the costs claimed were caused by damage to property…, that
the flooding happened to occur during the currency of the contract is
insufficient to engage the indemnity. Clause 10 contemplates damage to

23
[1998] 4 VR 692.
24
Ibid 714.
25
[1996] QSC 254.
 9

property, or injury to a person, that has a causal nexus with the execution of
the Works. Indemnity is provided for property damage or personal injury
“arising out of or in the course of or by reason of the execution of the Works”.
That is not this case… 26 [emphasis added]

[34] The expression “arising out of or in the course of or by reason of the execution of
the Works” has three components. The damage can arise:
(a) out of the execution of the work; or
(b) in the course of the execution of the work; or
(c) by reason of the execution of the work.

[35] Component (c) certainly involves what could be described as a causal nexus
between the damage and the execution of the work. Component (a) requires that the
damage arise from the actual execution of the work. Component (b) is the least
stringent of the alternatives. It merely requires that the damage arise during the
course of the work. Understandably, the argument focussed on component (b).

[36] The ordinary and literal meaning of component (b) does not require a causal nexus
with the execution of the works. All it requires is that the damage arise in the course
of the work. As counsel for Cleanaway described it, the requirement is for some
proximity to the work in time and place.

[37] Comparing components (a) and (b) is instructive. Component (a) does require some
connection with the work. Presumably the draftsperson’s intention with component
(b) was not to duplicate component (a). But that may well be the effect of
Shamrock’s contention:
It is submitted that these words require that the property damage or personal
injury for which indemnity is granted, has some nexus with the actual
performance of the Work. It is not enough that the damage occurs, or the injury
is suffered, during the term of the Master Agreement. 27

[38] Shamrock submits that components (a) and (c) both involve a causative link
between the damage and the execution of the works and, because component (b) sits
between those two components, those two components give content to or colour the
words in the middle.

[39] It is necessary to give effect to the contract interpretation authorities discussed

above. Applying the principle that the relevant meaning is that which the text
conveys, I would think there is more than a reasonable prospect that the court will
ultimately prefer the literal view of component (b). Indeed, there are three problems
with Shamrock’s argument. First, and perhaps this is a minor problem, the position
of component (b), sitting between components (a) and (c) may not necessarily be
the result of any deliberate choice by the draftsperson. The respective positions
could easily be the result of syntax choices. Second, it is difficult to see how the
mere location of component (b) ‘colours’ its meaning. And, third, what precise
meaning should be given to component (b)? What is the nexus with the work that
component (b) requires if one does not apply the literal meaning of the words?
There is no clear answer to that. Shamrock says that some causal link or nexus must
26
Shamrock submissions, [20].
27
Shamrock submissions, [32].
 10

be shown but the formulation of that causal link or nexus is not obvious, particularly
when components (a) and (c) already require that the damage arise out of the
execution of the work or by reason of the execution of the work.

[40] Of course, care needs to be taken not to re-write the parties’ bargain.

[41] Shamrock points out that there are two carve-outs from the operation of clause 10.
One is to the effect that Shamrock’s liability to indemnify under clause 10 was to be
reduced proportionately to the extent that an act or omission of Cleanaway
“contributed to” the loss or damage. The second carve out was that the indemnity
clause does not apply to damage which was the “unavoidable result” of the
construction of the works. However, those two carve outs apply in specific
circumstances. They do not make clause 10 nonsensical or inoperable. Clause 10
and the carve-outs can be given effect.

[42] Shamrock contends that it would be commercially absurd to construe clause 10(b)
as giving an indemnity for injury or death to any person who happened to be injured
or killed on the site during the currency of Shamrock’s contract and:
(a) irrespective of whether Shamrock was on site at the time;
(b) irrespective of whether Shamrock was carrying out work at the time; and
(c) irrespective of whether Shamrock had any connection at all to the incident;

[43] I am unable to see the commercial absurdity in circumstances where the contract
contemplates that Shamrock will have control of the site during construction and
where the contract expressly contemplates that Shamrock will take out four
different types of insurance policies, including in the name of Cleanaway as well as
the subcontractors and consultants. It is likely that the parties contemplated that any
liability Shamrock is concerned would fall within those policies.

[44] Shamrock submits that the Contracts Works insurance is capped at $3.7 million, the
contract sum. However, there is no cap. The contract specifies various minimum
limits which are required by the policies.

[45] In my view, none of those matters require the court to ignore what are the plain
words of component (b). Cleanaway’s argument that the damage occurred in the
course of the execution of the work is, in my view, an argument with good
prospects.

Conclusion
[46] For those reasons I am not satisfied of the two matters described in rule 293,
namely:
(a) that Cleanaway has no real prospect of succeeding on this claim; and
(b) that there is no need for a trial of this claim.

[47] The application for summary judgment will be dismissed.